EXPENSE RATIO

The percentage of the assets that were spent to run a mutual fund (as of the last annual statement). This includes expenses such as management and advisory fees, overhead costs and 12b-1 (distribution and advertising ) fees. The expense ratio does not include brokerage costs for trading the portfolio , although these are reported as a percentage of assets to the S.E.C. by the funds in a Statement of Additional Information (SAI). The SAI is available to shareholders on request. Neither the expense ratio or the SAI includes the transaction costs of spreads , normally incurred in unlisted securities and foreign stocks . These two costs can add significantly to the reported expenses of a fund. The expense ratio is often termed an Operating Expense Ratio (O.E.R.).