WHERE DO YOU FIND A MUTUAL FUND'S EXPENSE RATIO?
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You won't find a mutual fund's expense ratio in a
newspaper listing the net asset value (NAV) and returns of major
funds. Yet expense ratios are not difficult to find.
The place to look is the mutual fund's prospectus.
The prospectus provides information on a fund's management
and a financial statement—including the fund's expense ratio. You
can request a prospectus directly from the fund, through its Web
site or from the SEC's EDGAR database.
Prospectuses can be challenging to read, but thanks
to a 1988 SEC ruling, the fund's expenses are usually easy to
understand. The expense ratio includes the 12b-1 fee (if there is
one), along with the total management and operating expenses. The
financial statement also lists any sales charges, such as
commissions to buy, redeem, or exchange shares.
For example, one fund reported the following
Total Operating Expenses (Expense Ratio)
Comparing a fund's expense ratio with that of other funds that have the
same investment objectives can help you determine which funds
achieve the most bang for the buck.
Now, let's look at the general range for most expense ratios.