Smith Barney and Gabelli Asset Management recently made important disclosure revisions to their funds’ prospectuses regarding broker compensation and fees.

The moves come ahead of an important rule proposal from regulators that would require broker/dealers to disclose the fees and commissions related to mutual funds at the point of sale. The proposal is expected to be put out for public comment this week.

In a filing with the Securities and Exchange Commission, Smith Barney said that it would no longer impose a 1% initial sales charge on Class L shares, effective February 2. As a result, shareholders will buy L shares at the net asset value and the cash laid out at the point of sale will be immediately invested in those shares.

"This may help offset the higher expenses of Class L shares, but only if a fund performs well," Smith Barney said in the filing. L Shares do not convert into any other share class.

If, however, the shares are redeemed within 1 year from the date of purchase, investors will pay a 1% deferred sales charge.

Brokers selling L shares will receive a commission of up to 1% of the shares they sell and continue to receive an annual fee of up to 1% of the average daily net assets. The fee will be imposed in the thirteenth month after purchase, Smith Barney said.

Gabelli issued a supplement to its prospectuses informing shareholders that their brokers may charge a processing fee for assisting them in buying or selling shares of the fund. "This charge is set by the broker and does not benefit the fund or its adviser in any way," Gabelli said in the filing. This processing fee is in addition to the sales charges and other costs outlined in the prospectus.

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