Mutual Fund Shares (A, B, and C Shares)
Sales charges or “load” may be applied either at the point of purchase or the point of sale. Sales charges that are included in the investor’s purchase of shares are called a front-end load. Sales charges that are included in the investor’s sale of shares are called a back-end load. Shares are categorized into classes based on how the fund recovers sales charges and other expenses. A, B, and C shares are the most common classes and are described below.
A shares are sold at a public offering price of NAV + front-end load. The load comes off the top of the amount invested, reducing the amount of money available to buy shares. Thus, if an investor has $10,000 to invest in a mutual fund and there is a 5% front-end load, $500 will go to the broker selling the fund and only $9,500 will be used to purchase shares. A shares are