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Frequently asked questions about 12b-1 fees

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Sunday, March 21, 2010

Securities and Exchange Commission Chairman Mary Schapiro has asked agency staff members to recommend possible changes to the 12b-1 fees that many mutual funds charge investors. Schapiro says one key problem is confusion about what services the fees cover. Here's a look at 12b-1s:

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1. What are they? The SEC adopted a rule -- called 12b-1 -- that allowed mutual funds to begin charging the fees to investors in 1980. The rule allowed 12b-1s to be assessed alongside management and other ongoing expenses that funds pass on to customers to oversee investment portfolios and provide other services.

2. How many funds charge 12-b1s? About 65 percent of fund share classes.

3. How do I find out if i'm being charged 12-b1s? A fund's prospectus and other disclosures must list a breakdown of the charges that make up a fund's overall expense ratio. If the 12b-1 is among the charges, the fee will be listed.


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