Mutual Funds in Retirement Plans Continue to See Fee Reductions

PITTSBURGH, PA, May 31, 2005 -- Invesmart, Inc., the national retirement financial services firm, has released the latest findings of its Retirement Portfolio Cost Barometer, a guide to help plan sponsors and participants evaluate the competitiveness of the investment management fees being charged in their retirement plans. Through its Barometer, Invesmart has determined that 58 basis points or less represents a reasonable standard for the investment management fees that a plan participant should pay annually. This compares to fees of 63 basis points or less as measured by the Barometer in November 2004, and 65 basis points in April of the same year. Several portfolios are structured ranging from conservative to aggressive risk profiles. The barometer is based on the most expensive portfolio within that spectrum.

"Management fees continue to head in the right direction and plan participants are the ultimate beneficiaries of these fee moderations," said Rob Rossi, Director of Investment Research for Invesmart. "We still see room for fee reductions across the board. As fund companies continue to pass along growing economies of scale to their investors, we think we'll see fees decline further by the end of this year."

The largest fee decreases were in the International Equity category which decreased by 9 basis points to 0.64% since November 2004. This represents a 12 percent decline over the past six months.

In the interest of full fee disclosure, Invesmart recommends that sponsors urge their plan providers to separate investment management fees from servicing and marketing fees in the expense ratios of the mutual funds in their plans. Service and marketing charges often embedded in expense ratios include finder's fees, 12b-1 fees, dealer concessions, shareholder servicing reimbursements and sub-transfer agent arrangements. Invesmart is urging retirement plan sponsors and plan participants to request, review and question all these fees.

Evaluating Investment Management Fees: The Retirement Portfolio Cost Barometer

To calculate the Retirement Portfolio Cost Barometer, Invesmart considered the investment management fees of 67 best-of-breed institutional quality mutual funds selected from a universe of 2,400 funds representing 180 fund families. The investment management fees were calculated by netting from the fund expense ratio the revenue sharing for service and marketing available in the funds in the form of finder's fees, 12b-1 fees, dealer concessions, shareholder servicing reimbursements and sub-transfer agent arrangements. The 67 funds represent the range of investment style, managers and asset categories that allow a participant to build a well-diversified portfolio appropriate for investing retirement assets. Invesmart will continue to monitor mutual funds investment management fees and update the Barometer at least twice annually.

Following are the asset categories included in the Barometer and the average investment management fees for each category: Large Cap U.S. Equity: 44 basis points (bps); Small/Mid Cap U.S. Equity: 90 bps; International Equity: 64 bps; U.S. Fixed Income: 43 bps; and Cash Alternatives/Ultra-short Term Bonds 32 bps.

Retirement Portfolio Cost Barometer Methodology

The Retirement Portfolio Cost Barometer was constructed according to the following methodology:

• The 67 best-of-breed funds were selected from a universe of more than 2,400 mutual funds in 180 fund families appropriate for use in retirement plans.
• The selection was based on an unbiased and independent institutional-quality investment research process taking into consideration: (a) level and consistency of historical performance, (b) current and historical portfolio characteristics, (c) consistency and specificity of style, (d) management team quality and security selection discipline.
• The 67 selected mutual funds cover five core asset categories -- Large Cap U.S. Equity, Small/Mid Cap U.S. Equity, International Equity, U.S. Fixed Income, and Cash/Ultra Short-term Bond -- and allow for broad diversification between manager style (growth and value) and among managers and asset categories.
• The mutual fund management fees were calculated by netting from the fund expense ratio the revenue sharing for servicing and marketing available in the funds in the form of finder's fees, 12b-1 fees, dealer concessions, shareholder servicing reimbursements and sub-transfer agent arrangements.
• Within each portfolio, Equity was allocated as follows: 65% to Large Cap U.S. Equity, 20% to Small/Mid Cap U.S. Equity, and 15% to International Equity. Fixed Income was allocated as follows: 10% to High Yield Bonds Funds, 45% to Intermediate Term Government and Corporate Bond Funds and 45% to Short-term Government and Corporate Bond Funds.
• The Barometer calculation supports a broad range of allocations among stocks, bonds and cash to cover the spectrum of participants' risk profiles.

About Invesmart

Invesmart, Inc. is a national full-service retirement financial services firm. Invesmart combines one-on-one, personalized service and technology to help financial service intermediaries advise companies of all sizes in establishing and administering retirement plans. Invesmart provides investment advisory services through Invesmart Advisors, Inc. and brokerage services through Invesmart Securities, LLC, member NASD. Invesmart, Invesmart Advisors and Invesmart Securities are wholly owned subsidiaries of Invesmart, Inc., a Delaware corporation. Invesmart represents over 5,500 (DC) retirement plans. Headquartered in Pittsburgh, Pennsylvania, the firm has 14 offices nationwide. Visit Invesmart's website at www.invesmart.com.

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