Fund Classes

Fund Classes

Known as “multi-class funds,” some mutual funds offer investors different types of shares, known as “classes.” Each class will invest in the same “pool” (or investment portfolio) of securities and will have the same investment objectives and policies. But each class will have different shareholder services and/or distribution arrangements with different fees and expensesand, therefore, different performance results. A multi-class structure offers investors the ability to select a fee and expense structure that is most appropriate for their investment goals (including the time that they expect to remain invested in the fund).

For example, you might find a multi-class fund with three classes of shares that are sold to the general public—Class A, Class B, and Class C—and a class that is sold only to institutional investors—Class I.

• Class A shares might have a front-end sales load (a type of fee that investors pay when they purchase fund shares).
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• Class B shares might not have any front-end sales load, but might have a contingent deferred sales load (CDSL) (a type of fee that investors pay only when they redeem fund shares, and that typically decreases to zero if the investors hold their shares long enough) and a12b-1 fee (an annual fee paid by the fund for distribution and/or shareholder services). Class B shares also might convert automatically to a class of shares with a lower 12b-1 fee if held by investors long enough.
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• Class C shares might have a 12b-1 fee and a CDSL or front-end sales load, but the CDSL or sales load would be lower than Class B’s CDSL or Class A’s front-end sales load, and the Class would not convert to another class.
• Class I would be sold only to institutional investors and might have different fees and expenses.