Aug. 4, 2003 — Standard & Poor’s uncovered a list of domestic mutual funds currently closed to new investments but continuing to charge a 12b-1 fee to investors even though there is no longer a need to market the funds.

As of last month, Standard & Poor’s fund research found 139 funds with a total of 232 share classes charging an average 12b-1 fee of 0.62%. Out of them, 74 funds are charging the SEC-enforced maximum rate of 1% of net assets annually. The 12b-1 fee, enacted in 1980, is used by funds to cover sales and marketing expenses.

Standard & Poor’s database of over 15,000 domestic mutual funds showed equity funds make up 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% 12b-1 fee. Among international equity funds based in the U.S., 39 have been charging an average fee of 0.61%. Fixed income funds (29), and money market funds (6), round out the group of chargers, imposing average 12b-1 fees of 0.48% and 0.52%, respectively.

In addition, Standard & Poor’s found that the top five fund management companies, determined by the total number of funds under its management still charging a 12b-1 fee on funds closed to new investments, are some of the biggest names in the industry. IDEX Funds currently list 53 funds closed to new investments but charging a 12b-1 fee. INVESCO Funds Group (23), ING Investments (19), Dreyfus Corp. (16), and General Electric Investment Corp. (12) round out the top five fund management companies charging 12b-1 fees on funds that are closed.

“We spoke with a random sampling of fund companies imposing a 12b-1 fee on their closed fund and found that most consider the 12b-1 a necessary fee to charge since the fund remained open to existing investors,” explained Phil Edwards, Standard & Poor’s managing director of funds research. “Standard & Poor’s feels this is an insufficient explanation, especially in an environment dominated by single digit returns.”

A full list of the mutual funds closed to new investments but still charging a 12b-1 fee can be found atwww.standardandpoors.com.