The new agreement would (for most funds):
- add breakpoints to the management fee
- unbundle the management fee from the administration fee
- eliminate an “outdated” expense cap of 2%, which had been included under a state law requirement, now repealed
No More Free “Lunch”
In the past, Strong says it performed certain accounting services at no additional cost to the funds, but says it can no longer do so. In a press release, Strong indicated that it expects the administration fee for Investor Class, Advisor Class, and Class Z shares to increase.
Strong also intends to make changes to its transfer agent fees.
Breaking It Down
The proposed change in breakpoints would reduce fees on certain stock and bond funds by 2.5 basis points at breakpoints of $4 billion and $6 billion. All but 10 of the stock and bond funds will institute the breakpoints.
Unbundling management fees will reduce those fees, and introduce a new administration fee. If approved, the amount of the new administration fee will be greater than the reduction in the management fee by”
- 5 basis points for stock funds
- 3 basis points for bond funds
- 2 basis points for money market funds
No immediate impact on Fund expenses is anticipated from the removal of the expense cap.
Shareholders of the Strong Discovery Fund will also be asked to vote on a reorganization into the Strong Enterprise Fund.
Proxy mailings will begin in late May 2001, with shareholder meetings currently scheduled for late July 2001.
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