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Investopedia explains '12B-1 Fund'
The name 12B-1 comes from the Investment Company Act of 1940's Rule 12B-1, which allows fund companies to act as distributors of their own shares. Rule 12B-1 further states that a mutual fund's own assets can be used to pay distribution charges. Originally, the rule was intended to pay advertising and marketing expenses; today, however, a very small percentage of the fee actually goes toward these costs.
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