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Fund Times

Fund Times: The Sky Falls on Chicken Little

Plus, an antiterror fund name change, a terrible convertible fund dies, and more.

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Morningstar Fund Analyst Pan Chicken Little Growth (CHKNX) pulled a shocker last week when it filed with the SEC to say that the advisor couldn't afford the fee subsidy for November and the fund would take a one-time hit of $0.32 to NAV as a result. Sure enough, at the end of Friday, the fund took a hit of nearly 3% to NAV as it fell $0.43 to $15.41. (The Performance History section of the fund's Web site has been shut off.)

The fund said that because the advisor couldn't afford the fee subsidy, its expense ratio was rising from 3.0% to 12.5%. The filing stated that the fund's trustees "have requested that the advisor reimburse these expenses as soon as possible. ... The advisor has advised the board of trustees that it is actively seeking to raise capital to reimburse the Fund for all accrued reimbursable expenses; however, there is no guarantee that the advisor will be able to obtain such funds."

Lawrence Jones has a position in the following securities mentioned above: OAKLX. Find out about Morningstar’s editorial policies.

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