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Now that I'm a total believer in Index Funds over Mutual Funds, I have been thrilled to find out my company has just added an index fund to their 401K offerings.

But I'm a little concerned about the fees associated with it -- it's the State Street S&P 500 Flagship Fund Series A. The Fund Declaration states the following:

1. The Trustee will receive 1/2 the income generated the the securities lending program, the remaining to accrue to the benefit of the Fund,

2. The Trustee charges an investment managment fee of 1.75 basis points of the net asset value of such funds,

3. The Fund will charge an annual fee of $12,000 for administration AND an annual audit fee of $2,500.

What's the deal? Are these relatively small in acutality, or would I be foolish (small f) to even consider this option?

Please help a new index fund investor wannabe!
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