Share Class FAQs
The CDSC on Class C and 529-C shares (and Class A and 529-A shares purchased without a sales charge and redeemed within a year) may be waived for certain transactions, including:
The investor or advisor must inform American Funds that a transaction qualifies for a sales charge waiver when the transaction is made.
Please see fund prospectuses and statements of additional information for more details.
Class F-1 shares have lower annual expenses than Class C shares. To keep long-term investors from paying higher fees over time, Class C shares, including shares acquired by dividends, convert to Class F-1 shares after an investor has owned them for 10 years.
Yes. Effective December 1, 2017, all eligible 529-C shares will automatically convert to 529-A shares before the end of their 10-year anniversary month. This change ultimately benefits 529-C shareholders as they will incur lower 12b-1 expenses after conversion.
By purchasing Class C shares, an investor elects to pay the cost of acquiring fund shares over time through an asset-based sales charge rather than immediately paying a sales charge up front.
Class C share 12b-1 expenses include an annual 1% fee to reimburse American Funds for dealer commissions paid to financial advisors in the first year of share ownership and to pay dealers for providing ongoing service to their clients who own Class C shares.
Since expenses and dividends are paid from a fund’s income, the expense difference associated across share classes will affect the amount of the dividend distributions. Classes with higher expenses will have lower dividends.
Since each check could be subject to a contingent deferred sales charge, check writing is not available on these share classes. This option is only available for Class A shares on certain non-retirement account types.
Fund managers buy and sell securities throughout the year, sometimes at a profit, sometimes at a loss. When profits outweigh losses, they accumulate and contribute to the rise of the net asset value (NAV), or share price, of the fund’s shares. When that profit is paid out to investors as a capital gain distribution, its NAV will be reduced by the amount of the distribution.
However, this doesn’t mean that investors are losing money. Investors can either take capital gain distributions in cash or reinvest them, as most investors do. If capital gains are reinvested, the number of shares in the account will increase, leaving the total value of the account unaffected by the distribution.
Because we want to make sure that investors choose the share class with the lowest long-term costs. Class C share purchases are allowed only up to $500,000. Purchases of that size or larger would qualify for a reduced Class A share sales charge of 2% or less, which might be more cost-effective than paying the higher Class C share annual expenses over a number of years. Investors eligible to invest in Class A and 529-A shares without a sales charge cannot invest in Class C and 529-C shares.
Class 529 share investments are limited to $500,000 per beneficiary across all share classes. Investments in a CollegeAmerica® account cannot be made if the value of all 529 plans maintained by Virginia 529℠ (CollegeAmerica, Virginia 529 prePAIDSM, Virginia 529 inVESTSM and CollegeWealthSM) for the same beneficiary is $500,000 or more.
Since expenses and dividends are paid from a fund’s income, the expense difference associated across share classes will affect the amount of the dividend distributions. Share classes with higher expenses will typically have lower dividends.
Exchanges are generally allowed only within the same class of shares because of the different expenses associated with each class. However, investors may exchange from Class A shares of American Funds U.S. Government Money Market Fund to other share classes.
Class F-1, A and C shares generally may be exchanged into the corresponding 529 share class without a sales charge. Additionally, exchanges from UGMA or UTMA custodial accounts to a 529 account may create significant legal and tax consequences.
To find out more about exchanges, refer to our Share Class Pricing and Details page.
Effective August 14, 2017, accounts with aggregated assets of less than $1 million that do not qualify for NAV purchases will begin to accrue 12b-1 service fees to dealer firms in the first month of purchase. Accounts with aggregated assets of $1 million or more that qualify for NAV purchases with an associated commission will continue to accrue 12b-1 service fees to dealers beginning in the 13th month after purchase.
For Class A shares purchased at NAV with an associated commission, the CDSC period on redemptions will be extended from 12 months to 18 months.
Class A share assets purchased prior to August 14, 2017, including purchases through a statement of interest, will not be impacted by these changes and will continue to pay 12b-1 service fees in the 13th month after purchase and be subject to a 12-month CDSC holding period if purchased at NAV with an associated commission.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses, summary prospectuses or the collective investment trust's Characteristics statement, which can be obtained from a financial professional, Capital or your relationship manager, and should be read carefully before investing. CollegeAmerica is distributed by American Funds Distributors, Inc. and sold through unaffiliated intermediaries.
Depending on your state of residence, there may be an in-state plan that provides state tax and other state benefits, such as financial aid, scholarship funds and protection from creditors, not available through CollegeAmerica. Before investing in any state's 529 plan, investors should consult a tax advisor.