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Finance Dictionary and Glossary of Investment Terms
12b-1 funds
Definition 1.
A type of mutual fund that charges 12b-1 fees instead of commissions. The fees, charged every year, cover promotional and distribution costs and can be significant.
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Definition 2.
Mutual funds that do not charge an up-front or back-end commission, but instead take out up to 1.25% of average daily fund assets each year to cover the costs of selling and marketing shares, an arrangement allowed by the SEC's Rule 12B-1 (passed in 1980).
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