12B-1 Fund

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12B-1 Fund

A mutual fund that charges shareholders a small percentage of the fund's market value, instead of a load (or sales fee). That is, a 12B-1 Plan does not require shareholders to pay a fee when buying or selling shares; rather, they simply deduct what is owed to the shareholder once per year. Usually a 12B-1 plan charges less than 1%.
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In an effort to protect against the fund's adviser using undue influence to extract fees, the rule provides that a 12b-1 plan and any related agreements must be initially approved by a majority of the fund's shareholders, and by both a majority of the fund's board of directors, and a majority of the fund directors who are not interested persons of the fund and who have no direct or indirect financial interest in the operation of the plan or in any related agreements.
Investment companies with board-contingent plans to recognize a liability for excess costs, computed in the same way as for an enhanced 12b-1 plan, when the company's board commits to pay such costs.
We've eliminated our Rule 12b-1 plan to simplify our pricing and remove the potential additional costs," said Crawford.
This cold reality ought to trouble a conscientious mutual fund director called on to approve a 12b-1 plan.
The minimum initial investment is $10,000, and shares are offered without sales commissions or 12b-1 plan fees.
Subject to approval by the Fund's Board of Directors, the Distributor intends to eliminate the 12b-1 plan.
After 27 years of 12b-1 plan adoptions and renewals, no proof of 12b-1 fees' cost-effectiveness has surfaced.
The cumulative amount of $351,648 is a charge that resulted from adopting a ruling made by the Financial Accounting Standards Board (FASB) which required the expensing of the costs incurred by an investment adviser in connection with the distribution of shares of a fund that does not have both a 12b-1 plan and a contingent deferred sales charge (CSDC).
386) Meanwhile, the funds' boards and the funds' shareholders were duped, with fund assets being diverted for marketing costs via the back door as administrative costs, rather than as charges under a proper 12b-1 plan.
The minimum initial investment for each Portfolio of Vanguard New York Tax-Free Fund is $3,000, and shares are offered without sales commissions, redemption fees, or 12b-1 plan fees.
They were: the involvement of independent legal counsel or experts; the nature and causes of the fund's specific distribution problems or circumstances; the manner in which the 12b-1 plan addresses problems or circumstances; the merits of possible alternative plans; the inter-relationship between the plan and activities of other persons; possible benefits of the plan to any other person relative to those expected to inure to the fund; the effect of the plan on existing shareholders; and evaluation of success of the plan.
The minimum initial investment for each Portfolio is $3,000, and shares are offered without sales commissions, redemption fees, or 12b-1 plan fees.