Discount of graded funds refers to the practice of grading funds to convert the net value of A and B shares under the parent fund regularly or irregularly in order to adjust leverage or rationally distribute the interests of holders. The conversion of graded funds can be divided into regular conversion and irregular conversion. 1. Regular conversion of upward and downward discounts of graded funds. Funds that are not listed and traded only have regular conversion. Regular switching means switching at a fixed time. Generally, there are two situations: the first working day of each year or the open day after the fund completes 1 operation cycle. Some funds convert AB shares separately; Some funds switch parent funds and A shares, but not B shares (only on a regular basis). When the fund is converted regularly, it will be converted regardless of the net value of the fund. When switching from time to time, the upper fold and the lower fold are handled differently. When and how the graded fund will be converted will be explained in the fund prospectus. 2. Irregular conversion of discount and discount of graded funds usually only graded funds listed and traded will make irregular conversion. Graded funds need to have trigger conditions from time to time. The irregular folding of graded funds is usually when the net value of the parent fund rises to a certain extent (for example, 1.5), at which time the B share may have exceeded 2, so the purpose of folding at this time is to restore the high leverage characteristics of the fund; However, the discount of graded funds is usually that the net value of B shares falls to 0.25, the main purpose of which is to protect the interests of A-share holders. Simply put, rising too well or falling too badly will lead to irregular conversion of graded funds.