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Kevin McCormally: I am Kevin McCormally of Kiplinger’s, I am here with Manny Schiffres, the Executive Editor of Kiplinger’s Personal Finance magazine to talk about Mutual Funds. Manny there’s a lot of confusion in the Mutual Funds market place with different classes of shares of different initials, what’s going on there?

Manny Schiffres: Well, these are different ways of financial companies have come out with selling the funds. There are A-shares, B-shares, C-shares, I-shares, K-shares, N-shares Z-shares, all over the map, it’s a nightmare.

Kevin McCormally: OK, so how do I as an investor know which kind of share I want to buy.

Manny Schiffres: Well, first, you have to understand most of the confusion focuses on three A letters of the alphabet; A,B and C. These are all funds that are sold by brokers or commission based financial planners. And these letters represent different ways for extracting commission for when you buy these funds.

Kevin McCormally: Okay, so what’s the deal with A-share?

Manny Schiffres: A-share is typically charged front-end commissions, typically 5.75% for Stock Funds, little bit less for Bond Funds. And they have what are known as 12B-1 fees, these are just extra charges called marketing fees that are part of the funds overall annual expenses, but they are very small about 0.25% a year.

Kevin McCormally: OK, we had a front-end load, now what’s a B-share?

Manny Schiffres: B-shares have big 12B-1 fees, usually about 1% a year and they are combined with what are known as Contingent Deferred Sales Charges, which is a fancy way of saying a gradually declining redemption fee. If you stay in the fund long enough that back-end charge will disappear but in the mean time you are paying roughly 1% a year in the so called 12B-1 fees.

Kevin McCormally: How do the investors decide which is the best for them?

Manny Schiffres: Well, it really depends on what kind of investor you are. If you are a long term investor and you think you can hold on to a fund for ten years, probably A-share is your best. If you are a very short term investor, if you think you might be out in a year, year-and-a-half, two years, then the C-shares work out best, the B-shares are somewhere in the middle. But best of all there are calculators on the web. If you just go to nasd.com. that is the website of NASD, the self regulatory body of the securities industry, you can just plug in the name of the funds in their different share classes and estimated return and the number of years you expect to hold the fund. And it will tell you precisely the total amount of expense you will pay over that holding period.

Kevin McCormally: OK, thank you Manny.