Like so many small investors, Arline Winerman put most of her money in mutual funds because it seemed like a smart, simple thing to do.

“I didn’t want to have to do the research and figure out which stocks are good,” says the 74-year-old retired fifth-grade teacher and school administrator. “I let the mutual fund take care of my money,” giving her more time to devote to her true passion: line dancing.

But in 2003, when charges of illegal trading practices rocked the mutual fund industry, she started paying more attention to her investments—and to the fees she was being charged.

“I’m very conservative with money,” Winerman says from her condo looking out over Tampa Bay in Florida. “I don’t have a lot and I’m very careful of how I spend it.”

The more she studied the fees, the more exorbitant she found them. That concern led Winerman and two other retirees to file a lawsuit against Harris Associates, an investment advisory firm that runs the Oakmark group of mutual funds, in which all three plaintiffs put money. The investors alleged that Harris’s fees were set so high that they amounted to a violation of the vaguely defined “fiduciary duty” the company has under law to look out for the financial interests of its investors—an accusation the firm rejected.

A federal district court and the Seventh Circuit Court of Appeals each sided with the defendant in the case, Jones v. Harris. And in its opinion, the Seventh Circuit appeared to make it more difficult for disgruntled investors to successfully contest mutual fund fees.

The case ultimately reached the U.S. Supreme Court, and the stakes were high. Until now, investors have had little luck challenging these fees. If the high court upheld the Seventh Circuit’s ruling, it would become even harder. The mutual fund industry has nearly $11 trillion in assets, including 401k retirement plans and college savings plans. Any court ruling that made it easier or harder for investors to successfully challenge how fund managers are compensated could impact the $90 billion in fees the industry collects each year.

But a murky opinion issued on March 30 allowed both sides to claim a sliver of victory. The Supreme Court rejected the tougher standard endorsed by the appeals court, and largely kept in place the existing standard, which has proven friendly to the mutual fund industry.

Preparing for retirement

Mutual funds—pooled investments in stocks, bonds and other assets—are an important investment vehicle, especially for retirees and those planning for retirement. According to a recent report on mutual fund investors from the Investment Company Institute, a trade association for the sector, saving for retirement was one of the financial goals cited by 94 percent of households that own mutual funds. More than three-quarters of those households said saving for retirement was their primary financial goal.

Many investors are like Winerman, preferring the ease of mutual funds to the close attention required for managing a portfolio of individual stocks. Winerman says she would check her mutual fund statements once in a while, but she didn’t read every chart she received, “and if I did, I probably wouldn’t understand it.”

But the fine print is important. Just consider this example, from the Labor Department’s Employee Benefits Security Administration:

“Assume that you are an employee with 35 years until retirement and a current 401(k) account balance of $25,000. If returns on investments in your account over the next 35 years average 7 percent and fees and expenses reduce your average returns by 0.5 percent, your account balance will grow to $227,000 at retirement, even if there are no further contributions to your account. If fees and expenses are 1.5 percent, however, your account balance will grow to only $163,000. The 1 percent difference in fees and expenses would reduce your account balance at retirement by 28 percent.”