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Principal Underwriter/Distributor

The principal underwriter, also known as the fund’s distributor, is the entity in charge of selling (also called distributing) fund shares and often is an affiliate of the fund’s adviser. Distributors are registered under the 1934 Act as broker-dealers, and are subject to strict rules governing how they offer and sell securities directly to investors or indirectly through other intermediaries, such as brokers or financial advisers. The distributor’s services are provided pursuant to a contract with the fund, and the distributor’s compensation is typically tied, in part, to the assets of the fund. The reason that funds have different classes of shares is that each class reflects different distribution arrangements applicable to each class. Nondistribution expenses tend to be the same for all classes of shares.