New York (Aug. 14, 2003) -- Some domestic mutual funds currently closed to new investments are continuing to charge 12b-1 fees to investors even though there’s no longer a need to market the fund, Standard & Poor’s funds research reported.

As of July, S&P said 139 funds with a total of 232 share classes were charging an average 12b-1 fee -- fees paid out of the fund’s assets to cover distribution expenses and shareholder service expenses -- of 0.62 percent. Seventy-four funds were charging the maximum rate of 1 percent of the fund’s net assets annually, S&P said.

"They're bad enough in open funds, but they seem unconscionable in closed funds," said Coral Gables, Fla., financial planner Harold Evensky. "Their reasoning for it is that they're compensated for continuing to give advice. But very few people know they're paying for it and maybe even less are getting continuing ongoing advice. I have no problem with commissions, but people need to know what they are and they need to be getting something for it," he added.

The top five fund management companies (based on the total number of funds under management) charging the fee on funds closed to new investments are some of the biggest names in the industry. Idex Mutual Funds lists 53 funds that are closed to new investments yet charge a 12b-1 fee. INVESCO Funds Group lists 23, ING Investments lists 19, Dreyfus Corporation lists 16, and General Electric Investment Corporation lists 12, S&P reported.

Equity funds represented the highest percentage of closed funds still charging a 12b-1 fee. As of last month, the average closed equity fund charged its investors a 0.65 percent 12b-1 fee. International equity funds based in the U.S. charged an average fee of 0.61 percent. Fixed income funds and money market funds impose average fees of 0.48 percent and 0.52 percent respectively. A full list of the 232 mutual funds closed to new investments that still charge a 12b-1 fee, is available online at

-- Tracey Miller-Segarra

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