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12b-1 fees are marketing fees of the fund. It is measured as a percentage of the fund's average net assets and are payable every year. This recurring cost can add up to much more than even exorbitant transaction charges.

12b-1 is basically the Securites and Exchange Commission (SEC) rule that allows funds to charge you up to 1% of assets per year for the cost of marketing the fund to you and other shareholders. That's right, funds charge you for the cost of reeling you in. Revenues generated under 12b-1 may go to pay the broker who sold you on the fund or for that slick advertising on CNBC that originally caught your eye or that glossy brochure the investment company mailed you.

You can read more about this at:

www.fool.com/funds/fund2.htm

kazoo
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