ProductsQuestion 9 of 110
A 12b-1 fee charged by a mutual fund is used primarily to pay for:
a.Distribution and shareholder servicing costs, such as marketing and compensation to selling firms
b.The portfolio manager's advisory fee
c.Brokerage commissions incurred when the fund trades securities
d.Custodial and transfer agent recordkeeping only
Explanation
Rule 12b-1 under the Investment Company Act of 1940 permits a fund to use fund assets to pay for distribution and shareholder servicing, and the fee is deducted from assets annually rather than charged at the point of sale. The advisory fee, portfolio transaction costs, and custodial fees are separate expense line items disclosed in the prospectus.
Law Reference: Investment Company Act of 1940Practice all 110 questions free — no signup required.
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