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 A 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 A shares after an investor has owned them for 8 years.
Class 529-A shares have lower annual expenses than Class 529-C shares. To keep long-term investors from paying higher fees over time, Class 529-C shares, including shares acquired by dividends, convert to Class 529-A shares after an investor has owned them for 5 years.
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.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the mutual fund prospectuses, summary prospectuses and CollegeAmerica Program Description, which can be obtained from a financial professional, and should be read carefully before investing. Similar information about collective investment trusts can be obtained from Capital Group or participants’ plan provider or employer. 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.
This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.