Rule 12b-1 relates to which aspect of mutual funds?

• A. Asset-based sales loads
• B. Front-end sales charges
• C. Audit fees
• D. Distribution of dividends policy

Answer: (A)

Rule 12b-1 allows mutual funds to pay for distribution costs from the fund’s assets. Those costs—marketing, advertising, broker commissions, and other selling-related expenses—are treated as ongoing charges levied against the fund’s assets, i.e., asset-based fees. That’s why asset-based sales loads best describe what 12b-1 covers: a continuing fee tied to the fund’s assets to support distribution. Front-end sales charges are paid at purchase and aren’t governed by 12b-1; audit fees are for the fund’s auditors, not distribution; and a dividend distribution policy concerns how profits are paid to shareholders, not how distribution costs are funded.