12b-1 fees

Expenses2

1. 720-940Financial Services—Brokers and Dealers720 Other Expenses

   This short subtopic addresses how brokers and dealers in securities account for mutual fund distribution costs. Its only substantive instruction is a cross-reference: for 12b-1 fees and contingent deferred sales charges, apply the cost guidance in Subtopic 946-720 (Investment Companies—Other Expenses). Its scope follows the broker-dealer Overall Subtopic scope in Section 940-10-15.

2. 720-946Financial Services—Investment Companies720 Other Expenses

   This Subtopic tells investment advisers and mutual fund distributors how to account for costs incurred to distribute fund shares. The general rule: if the adviser does not receive both 12b-1 fees and contingent-deferred sales fees, the distribution/offering costs fail the definition of an asset and must be expensed as incurred (with initial offering costs treated as start-up costs under Subtopic 720-15). Distributors of no-front-end-load mutual funds instead defer and amortize incremental direct costs and expense indirect costs as incurred.