Definition of mutual fund B-shares

Some U.S. mutual funds offer several different classes of shares of the same fund. Each class has the same investment objective and the money invested in all of the share classes is pooled together.

However, each class maintains different fees and shareholder servicing agreements. B-shares, which are being phased-out by many fund shops, charge higher annual expenses than A-shares and also include surrender charges, which are paid when an investor redeems his/her shares within a defined period of time. When the time-period for potential surrender charges ends, B-shares typically convert to A-shares. [1]

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