Final answer:
Generally, asset-based sales charges are lowest for Class A shares, mainly due to lower annual fees, the possibility of breakpoints, and the fact that the front-end sales load is a one-time charge. Class B and Class C shares typically have higher annual expenses, while Class D shares may vary but can also have lower sales charges.
Step-by-step explanation:
The question pertains to the cost structure of different classes of mutual fund shares, particularly regarding asset-based sales charges. Class A shares typically have a front-end sales load, meaning an initial commission or sales charge is applied at the time of purchase. However, they often have lower annual fees and may offer breakpoints for larger investments, reducing the sales charge percentage. Class B shares usually have a contingent deferred sales charge (CDSC), which decreases over time the longer you hold the shares and eventually might disappear. Class C shares often carry a level load, which does not decrease over time. While Class B and Class C shares usually do not have a front-end sales charge, they often have higher annual expenses. Class D shares, where available, are often sold directly by the fund company and may have lower sales charges overall, but this varies by fund. Therefore, the asset-based sales charges will generally be lowest when holding Class A shares, especially for investors who can take advantage of breakpoints and are considering a long-term investment horizon.