Share class FAQs

The CDSC on Class C and 529-C shares (and Class A, 529-A and ABLE-A shares purchased without a sales charge and redeemed within a year) may be waived for certain transactions, including:

• Permitted exchanges of shares, except if the shares were acquired and then redeemed within the period during which a CDSC would apply to the initial shares purchased
• Tax-free returns of excess contributions to IRAs
• Redemptions due to death or postpurchase disability of the investor (this generally excludes accounts registered in the names of trusts and other entities)
• Class 529 share redemptions due to a beneficiary’s death, postpurchase disability or receipt of a scholarship (to the extent of the scholarship award)
• Redemptions due to the complete termination of a trust upon the death of the trustor/grantor or beneficiary, but only if such termination is specifically provided for in the trust document
• Required minimum distributions from retirement accounts and payments through systematic withdrawal plans, up to 12% of the account value each year combined

The investor or financial professional 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.

If withdrawals are used for purposes other than qualified education expenses for CollegeAmerica or disability expenses for ABLEAmerica, the earnings will be subject to a 10% federal tax penalty in addition to federal and, if applicable, state income tax. States take different approaches to the income tax treatment of withdrawals. For example, withdrawals for K-12 expenses may not be exempt from state tax in certain states.

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 professionals 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.

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 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.

Yes. We are committed to helping investors get the most from their investments. Find out more about reducing sales charges on Class A, 529-A and ABLE-A share purchases.

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, Invest529®, Prepaid529^SM and CollegeWealth®) for the same beneficiary is $550,000 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 A, C, F-1 and F-2 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 learn more about exchanges, visit the Account Resource Center and select the appropriate account type.