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U.S. Securities and Exchange Commission

Distribution [and/or Service] (12b-1) Fees

So-called “12b-1 fees” are fees paid by a mutual fund out of fund assets to cover distribution expenses and sometimes shareholder service expenses.

These 12b-1 fees get their name from the SEC rule that authorizes a fund to pay them.  The rule permits a fund to pay distribution fees out of fund assets only if the fund has adopted a plan (“12b-1 plan”) authorizing their payment.

“Distribution fees” include fees paid for marketing and selling fund shares, such as compensating brokers and others who sell fund shares, and paying for advertising, the printing and mailing of prospectuses to new investors, and the printing and mailing of sales literature.

Some 12b-1 plans also authorize and include “shareholder service fees,” which are fees paid to persons to respond to investor inquiries and provide investors with information about their investments.  A fund may pay shareholder service fees without adopting a 12b-1 plan.  If shareholder service fees are part of a fund’s 12b-1 plan, these fees will be included in the “Shareholder Fees” category of the fee table in the fund’s prospectus.  If shareholder service fees are paid outside a 12b-1 plan, then they will be included in the “Other Expenses” category of the fee table in the fund’s prospectus.


We have provided this information as a service to investors.  It is neither a legal interpretation nor a statement of SEC policy.  If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.

Modified: 11/08/2013