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Rating:Two More Fund Firms to Ax B Shares Not Rated 4.0 Email Routing List Email & Route  Print Print
Friday, April 4, 2008

Two More Fund Firms to Ax B Shares

Reported by Erin Kello

More fund companies are eliminating the controversial B shares. Nuveen Investments and First American Funds have become the latest fund companies to set a date to end sales of B shares.

In an SEC filing dated March, 31, Chicago-based Nuveen said it plans to only issue B shares in exchange for B shares from another Nuveen fund. Furthermore, this option will only be available through December 31. The full paragraph pertaining to the issue can be found below.

Class B shares will only be issued (i) upon the exchange of Class B shares from another Nuveen fund, (ii) for purposes of dividend reinvestment, and (iii) through December 31, 2008, for defined contribution plans and investors using automatic investment plans with investments in Class B shares as of March 31, 2008. Furthermore, the reinstatement privilege for Class B shares will no longer be available as of December 31, 2008.

Minneapolis-based First American, in a filing dated April 1, said that it will cut off sales of B shares as of June 30. The company will allow shareholders holding class B shares after the closing date to exchange them for B shares of another First American fund. The specific except from the filing can be found below.

Effective at the close of business on or about June 30, 2008 (the "Closing Date"), no new or additional investments, including investments through any systematic investment plan, will be allowed in Class B shares of the First American funds, except through permitted exchanges. After the Closing Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another First American fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the prospectus. Any dividends or capital gains on Class B shares of a fund will be reinvested in Class B shares of the fund at net asset value, unless you have otherwise chosen to receive distributions in cash. For Class B shares outstanding as of the Closing Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion feature remain unchanged.

In recent years many fund companies, including Franklin Templeton, Hotchis & Wiley, Quaker Funds and JPMorgan have ended the sale of B shares. Many fund companies were also the target of lawsuits by investors claiming they were not told it would have been cheaper to invest in other share classes.  

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