Mutual funds are typically available to the retail investor in a variety of share types: A, B, C, I are some examples. Costs associated with mutual fund investing may include commission, annual management fee, 12-1b, etc. Most mutual funds are sold with a commission. B shares are shares of mutual funds that are sold to the investor without an upfront sales commission. In its place the annual management fee is increased for a period of time, usually several years. This fee, like the commission, is designed to recoop the distribution expense the fund company incurs by paying an advisor, registered representative, or stockbroker a commission for the sale to his client. He earns a part of the commission charged to the end user, the investor. He earns either a part of the up front fee or a part of the onging annual fee. The fee is ultimately paid by the retail investor as an expense. B shares annual costs, therefore, are considerably higher than the costs of the same mutual fund sold as an A share (with a commission). These fees may last for 5, 6, 7 or 8 years. At the end of the designated time period, the annual fee typically reduces to that of the contemporary A share fund. The resulting drag upon net earnings by the investor is real and ongoing. An annual expense of 1% or more over 7 years will have a deliterious impact upon the total return of the mutual fund. In addition, A shares have 'break ponts'; that is, the purchase of more than $50,000 will result in a lower commission charged on the next dollar invested. $100,000 invested may pay a commission of 5% on the first $50,000 and 4% on the next $50,000. The advantage thus is to the large invesment, as the cost of investing declines. With B shares, the cost is constant, typically up to $250,000. The disadvantage is obvious. An A share investor might pay a net commission of 2.5% upfront on $250,000 invested into one mutual fund or fund family. A B share investor will pay as much as 2%+ each year for 7 or 8 years for the same investment. An incredible number of retail investor complaints have been driven to the SEC and FINRA over the past two decades as a result of these sales practices, most settled in favor of the investor. A prime example of a government agency actually doing what it is supposed to do - protect the citizen from unscrupulous companies. Many funds are available with no sales load, no commission. These are typically better comparative performers than their 'loaded' compatriots, all else being equal. Why would an investor pay a commission these days? Perhaps for the same reason that a hungry diner will eat at a fast food outlet rather than cooking a healthy meal at home - it is easier and quicker, if more harmful long term.