Tuesday, September 16, 2008

En Passant: 12b-1 Fees

Here is a quick review of 12b-1 fees from my Series 6 studying. The 12b-1 Fees on a mutual fund are used to cover some costs faced by the underwriter distributing the mutual fund. These fees are assessed once a year and may include:
1) Advertising
2) Underwriting Compensation
3) Dealer & Sales Personnel Compensation
4) Printing and Mailing Prospectuses
5) Printing and Mailing Sales Literatiure
The 12b-1 fees can be approved by the majority of shareholders, directors, and disinterested directors. The fees only need majority approval by the majority of shareholders and the disinterested directors to be stopped. These fees are intended only to cover marketing and advertising costs.

Okay, that's it for today. Good luck in the markets.

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