Home 12b-1 Resource Center
In 1980, the SEC adopted Rule 12b-1 under the Investment Company Act of 1940. This Rule permits funds to compensate brokers and other financial intermediaries out of fund assets, subject to specific conditions, for services they provide shareholders related to the distribution of fund shares.
For most of their history, 12b-1 fees have been widely used on a continuing basis as a substitute for sales loads and to pay for ongoing services that benefit fund shareholders. While some investors prefer to buy mutual funds directly from the company sponsoring them, the majority of investors who invest in mutual funds outside of 401(k) plans today seek professional help from brokers and other financial intermediaries in making investment decisions. These financial intermediaries provide investors initial and ongoing assistance to help them achieve their financial goals. Intermediaries also perform various administrative, recordkeeping, and transfer agent services on behalf of funds.
Intermediaries can be compensated for these services in a variety of ways. Rule 12b-1 and the use of multiple share classes allows funds the ability to offer investors greater choice and flexibility in how and when to pay for these services.
12b-1 fees are reflected in the fund’s expense ratio and fully disclosed as a separate line item in the fee table near the front of each fund’s prospectus.
The SEC is currently considering potential changes to Rule 12b-1. In the past, ICI has supported retaining the basic framework of Rule 12b-1. To help ensure that investors understand these fees, however, ICI has proposed improving disclosure about 12b-1 fees and how they are used. In addition, ICI has recommended modernizing the guidance provided to boards regarding the factors they may consider in approving and continuing 12b-1 plans.
This resource center provides information and resources on Rule 12b-1 and 12b-1 fees. It includes ICI research and analysis.
- ICI Submits Supplemental Economic Analysis on the SEC Proposal to Replace Rule 12b-1 With a New Distribution Framework (pdf)
Wed Dec 01 00:00:00 EST 2010
- Investment Company Institute Cost-Benefit Analysis of SEC Rule 12b-1 Reform Proposal (pdf)
Wed Dec 01 00:00:00 EST 2010
- Trends in the Fees and Expenses of Mutual Funds, 2009 (pdf)
Tue Apr 13 00:00:00 EDT 2010
- Navigating Intermediary Relationships (pdf)
Wed Sep 30 00:00:00 EDT 2009
- Report of the Working Group on Rule 12b-1 (pdf)
Wed May 30 00:00:00 EDT 2007
- History of 12b-1 Fees, Appendix II of the Working Group Report (pdf)
Tue May 29 00:00:00 EDT 2007
- How Mutual Funds Use 12b-1 Fees (pdf)
Thu Feb 24 00:00:00 EST 2005
- Mutual Fund Distribution Channels and Distribution Costs (pdf)
Fri Jul 11 00:00:00 EDT 2003
- Use of Rule 12b-1 Fees by Mutual Funds in 1999 (pdf)
Sat Apr 01 00:00:00 EST 2000
SEC Roundtables & Proposals on 12b-1 Fees
- ICI Submits Supplemental Economic Analysis on the SEC Proposal to Replace Rule 12b-1 With a New Distribution Framework (pdf) Dec 1, 2010
- ICI Comment Letter on the SEC Proposal to Replace Rule 12b-1 with a New Distribution Framework (pdf) Nov 5, 2010
- IDC Comment Letter on SEC's Proposal To Replace Rule 12b-1 with New Regulatory Framework (pdf) Nov 5, 2010
- SEC Sunshine Act Notice for July 2010 Open Meeting Jul 14, 2010
- ICI Comment Letter on Rule 12b-1 (pdf) Jul 19, 2007
- IDC Comment Letter on Rule 12b-1 Reform (pdf) Jul 19, 2007
- ICI Recommends Refinements to Rule 12b-1 Jul 19, 2007
- ICI Welcomes SEC Scrutiny of Rule 12b-1 Jun 19, 2007
- Materials for SEC Roundtable on 12b-1 Fees Jun 19, 2007