When it comes to distribution costs, mid-tier mutual fund companies have traveled a difficult road in recent years. They pay the same as larger firms--and sometimes more--to distribute their products through wholesalers, but they don't see the returns on the investment.

Executives speaking last Wednesday at a seminar on distribution at the National Investment Company Association's East Coast Regional Meeting in Boston, said mid-sized firms are reevaluating budgets in response to the weak economy and will likely abandon some distribution channels, seek out larger firms to buy their companies, or develop less-expensive, Internet-based distribution models.

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