When are the 12b-1 fees incurred by a mutual fund?

12b-1 fees are ongoing fees that mutual funds charge to cover marketing and distribution expenses. These fees are deducted from the assets of the portfolio, which directly impacts the net asset value (NAV) of the fund. This means that as long as the fund remains operational and the investor holds shares, 12b-1 fees will be continuously deducted from the total assets, effectively reducing the value of each share over time. This structure is integral to how mutual funds can fund activities such as promotions, advertisements, and other related costs aimed at increasing the fund's assets.

In contrast, the other choices would not correctly describe when 12b-1 fees are incurred. For instance, fees do not specifically occur at the point of purchase or reinvestment of dividends; they are not tied to a specific transaction but are rather ongoing expenses related to the management of the fund. Additionally, they do not incur at the fund's maturity since mutual funds do not have a standard maturity date like bonds do.