12b-1 fee

(redirected from Distribution Fees)

12B-1 Fee

A fee one must pay in a 12B-1 Plan. A 12B-1 plan is a mutual fund that, instead of a load (or sales fee), annually charges shareholders a small percentage of the fund's market value, which is called a 12B-1 fee. Instead of assessing a fee when buying or selling shares as most mutual funds do, 12B-1 fees are deductions from the fund's market value per shareholder. Usually a 12B-1 fee is less than 1% of the market value.

12b-1 fee

A type of mutual fund expense in which the fund's operators use a portion of the firm's assets to pay for costs of distributing the fund. The fee is included in the fee table of a fund's prospectus. National Association of Securities Dealers' rules establish an annual limit on the size of the fee. The name is derived from the SEC rule that describes the fee. Also called distribution fee.

12b-1 fee.

A number of load and no-load mutual funds levy 12b-1 fees on the value of your mutual fund account to offset the fund's promotional and marketing expenses.

These asset-based fees, which get their name from the Securities and Exchange Commission (SEC) ruling that describes them, typically amount to somewhere between 0.5% and 1% annually of the net assets in the fund.

A fund that charges 12b-1 fees must detail those expenses, along with other fees it imposes, in its prospectus.

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