When it comes to mutual fund share classes, A-B-C is as easy as one, two, fee. Yep, you read it right. The class of share you buy in a mutual fund affects how much you pay to both the broker and fund company in fees, surcharges and marketing costs.

No matter what type of share you buy, you’re going to end up taking some kind of hit or charge. The manager of the fund has to get paid somehow, explains David Root Jr. president of D. B. Root & Company Financial Planning. in Pittsburgh.

There’s no hard-and-fast investing rule to mutual fund share classes. They range from A shares to B shares to C shares to even, Z shares.

Take ‘A’ load off

A shares — If you buy a mutual fund’s A shares, you’re buying a fund and paying the commission — or load — right off the top. Typically, this fee is around 5 percent of your investment, but can legally go as high as 8.5 percent, according to Chris Wloszczyna, director of public information at the Investment Company Institute. in Washington, D.C.

Say you invested $10,000 in a fictional mutual fund called the Malarkey Fund A. If you paid a 5 percent up-front load charge, you’d pay $500 in commissions off the bat and have $9,500 left to invest.

If you paid an 8.5 percent load, you’ll get spanked to the tune of $850! So you start with $9,150 in the pot to buy the fund’s shares at the day’s closing price, known as net asset value.

Fortunately, I don’t know anyone who has charged 8.5 percent in years, Wloszczyna remarks.

You’ll also be socked with marketing costs called 12b-1 fees plus management charges built into what is known as expense ratios. The higher the expense ratio percentage, the greater the fee. The higher your portfolio value, the more you pay. So if your fund grows to $11,000 and you have a fund with a 1 percent expense ratio, you’ll pay an additional $110 in fees. Assuming that you paid a 5 percent load charge, that’s a grand total of $610 in expenses. Zoinks!

But an investor should be more concerned with investment return and management performance than charges that nickel and dime you, Root says. He feels that the fund’s track record is more important than how much you get slapped with fees.

Backwards march!

B shares — If you buy class B shares in our fictional Malarkey Fund, you’re paying in the rear so to speak. The B shares charge fees called back-end loads based on how long you hold the fund. These decline over a period of generally six to eight years, Root says. Using the $10,000 investment, you would pay no fee upfront, and you would only pay a commission should you withdraw the money invested within the time frame.

To your benefit, the full 10 grand is invested off the top. Plus, if you hold the fund for more than the required time, you avoid the commission charge.

But should the money be withdrawn in the first few years, it’s penalty time. Say the load is 7 percent after two years and your investment has grown to $12,000 — you’ll pay $840 in fees. Just think of the bank motto penalty for early withdrawal.

In either situation, you’re looking at paying a higher expense ratio with B shares, states Kunal Kapoor, an analyst with Chicago-based Morningstar. an independent source for researching fund costs and performance.

The expenses include those annoying 12b-1 marketing fees, which tend to be higher for B shares than A shares.

From ‘C’ to ‘D’

C shares — These are funds designed for people who want to make short-term mutual fund investments, according to Root. You can hold them long-term — but you’ll get socked with higher fees. C shares typically have high expense ratios due to high 12b-1 fees. In most cases there is a 1 percent back-end load if you pull out within a certain time frame.

C share funds have more flexibility for investors to get in — and get out.

D shares — Less common than the first three classes are D shares, hybrids of different types of fund classes. There is no specific example for D shares. They vary from fund to fund. Some D shares have front-end loads and no 12b-1 fees. Others have high 12b-1 fees and no load charges.

Alphabet soup

Other types of funds out there are M, T, Y and Z shares. Both M and T shares are similar to C shares and are just a particular fund company’s way of coming up with a new type of hybrid for short-term investors, experts say. Y shares are for institutional investors — the big shots on Wall Street, and Z shares are for fund company employees.

Now that you know your mutual fund ABCs, perhaps you’re thinking, What about no-load funds? These are mutual funds that don’t require commissions, and have low expense fees.

To be honest, if you’re doing your own investing, the smart way to go is to buy no-load funds, Kapoor advises. But if you use an adviser, then your best option is to go to a fee-based fund. In other words, find someone you trust, and let them do the worrying.

No-load contendere

No-load funds are indicated in many mutual fund tables with the initials NL. Some examples of no-loads include the T. Rowe Price family of funds in Baltimore and a group of no-load funds offered by Stein Roe Mutual Funds in Chicago.

Finally, the lowest of expense charges are for index funds. These are investments tied to a particular stock index, such as the Standard & Poor’s 500. Since there is very little management required on these types of funds, the expenses are lower.

Fund companies are required to disclose all fees and expenses in the prospectus. An investment adviser must give you a copy of the prospectus before making a mutual fund sale.

No matter what kind of fund you own, expect the fund company to chip away at it every year somehow. That’s how they make their money. The trick is to find a mutual fund that makes it worth your while.