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NEW QUESTION: 1
A fund's 12b-1 fees may not be used to pay which of the following?
A. mailing sales literature to existing and prospective customers
B. compensating brokers who sell shares of the fund
C. administrative expenses of the fund's investment adviser
D. printing prospectuses
A fund's 12b-1 fees may not be used to pay the administrative expense of the fund's
investment adviser. This would be part of the fund's management fees. SEC rule 12b-1 authorizes a fund
to pay for distribution costs out of a fund's assets only if the fund has adopted a 12b-1 plan. The SEC
defines these distribution costs to include the costs of marketing and selling the fund shares, including
compensating brokers who help to sell the shares, and printing and mailing prospectuses and sales
literature to existing and prospective customers.
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