Funds collected from 12b-1 fees cannot be used for what type of expense?

The correct choice highlights a fundamental rule pertaining to 12b-1 fees, which are primarily designed to cover distribution costs related to mutual funds. Specifically, these fees can be utilized for marketing and selling fund shares, as well as for services provided to shareholders. However, they cannot be applied to expenses directly related to executing trades in the fund's portfolio.

Commissions for executing trades are considered transaction costs associated with managing the fund's investments rather than costs associated with promoting the fund to investors or maintaining relationships with existing shareholders. These transaction costs are typically accounted for within the fund’s operating expenses and are not covered by 12b-1 fees. This distinction is crucial as it ensures that investors understand how their fees are being allocated within their investment management structure.