What Are Class B Mutual Fund Shares?
Holding Period Owners of Class B shares typically have to hold the shares for a specified number of years. If they sell the shares early they will be charged a penalty, called a contingent deferred sales charge. Contingent Deferred Sales Charge A contingent deferred sales charge is levied on Class B shareholders when they sell their shares early. This fee is a set percentage of the the total value of their mutual fund holding. The sales charge usually decreases each year. For example, a mutual fund may impose a 5 percent contingent deferred sales charge if the shares are sold within one year of purchase. This percentage will be reduced by 1 percent a year so that there will be no penalty if you sell the shares after five years. Management Fees The management fees that a mutual fund company charges are usually higher on their Class B shares than they are on their Class A shares. Conversion Many Class B shares convert to Class A shares after a predetermined number of years. This is benef
