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Class A Shares:
Charges a front-end sales charge. This sales charge is deducted upfront from your investment, and the sales charge generally declines the larger the investment. Class A shares may be better for large investments and those with long holding period. The fund company will assume you want Class A shares unless you specify otherwise.  The front-end sales charge on Class A can be up to 5.75% for transactions less than $50,000. See prospectus for more detail.

Breakpoint discounts on purchases of Class “A” shares
You may qualify for discounts on Class "A" shares by submitting a Letter of Intent Form declaring your intention to invest within the next 13 months an amount over a breakpoint level. The first breakpoint level is typically $50,000 for Pioneer equity funds and $100,000 for Pioneer fixed-income funds. Please refer to the prospectus of each fund for breakpoint levels associated with that fund, and for other ways to qualify for reduced sales charges. If applicable complete the Letter of Intent Form and have your signature notarized by a Notary Public. Mail the completed Letter of Intent Form to Lamaute Capital for our processing and transmission to the fund company prior to your sending an application to the fund company.

Class B Shares:
Does not impose a sales charge at the time of purchase. All of your dollars are immediately invested for you. But your expenses, as measured by the expense ratio may be higher. You also may pay a contingent deferred sales charge (CDSC), when you sell your Class B shares. The CDSC normally declines to zero after holding the investments a number of years. Once the CDSC is eliminated, Class B shares often then "convert" into Class A shares. When they convert, they will begin to charge the same asset-based sales charge as the Class A shares. May be better for investments held 5 or more years, and generally for investment amounts less than $150,000.

The contingent deferred sales charge for Class B shares can be up to 4% for redemptions made in the first two years. Retirement plan loans are not treated as redemptions. See prospectus for more detail.

Class C Shares:
Class C shares often do not impose a sales charge at the time of purchase, but they may impose a CDSC or other redemption fees. In most cases Class C shares expense ratio are higher than Class A shares and even than Class B shares if you hold for a long time.
Generally better for investments than you plan to redeem or value the flexibility to redeem in the short term, and generally for amounts less than $750,000.

A front-end load of 1% for Class C shares, and a 1% contingent deferred sales charge often applies for redemptions in the first year.  See prospectus for more detail.
 
BREAKPOINT DISCLOSURE STATEMENT 
Before investing in mutual funds, it is important that you understand the sales charges, expenses, and management fees that you will be charged, as well as the breakpoint discounts to which you may be entitled.  Understanding these charges and breakpoint discounts will assist you in identifying the best investment for your particular needs and may help you reduce the cost of your investment.  This disclosure document will give you general background information about these charges and discounts.  However, sales charges, expenses, management fees, and breakpoint discounts vary from mutual fund to mutual fund.  Therefore, you should discuss these issues with your financial advisor and review each mutual fund’s prospectus and statement of additional information, which are available from your financial advisor, to get the specific information regarding the charges and breakpoint discounts associated with a particular mutual fund.

Sales Charges
 
Investors that purchase mutual funds must make certain choices, including which funds to purchase and which class share is most advantageous.  Each mutual fund has a specified investment strategy.  You need to consider whether the mutual fund’s investment strategy is compatible with your investment objectives.  Additionally, most mutual funds offer different share classes.  Although each share class represents a similar interest in the mutual fund’s portfolio, the mutual fund will charge you different fees and expenses depending upon your choice of share class.  As a general rule, Class A shares carry a “front-end” sales charge or “load” that is deducted from your investment at the time you buy fund shares.  This sales charge is a percentage of your total purchase.  As explained below, many mutual funds offer volume discounts to the front-end sales charge assessed on Class A shares at certain pre-determined levels of investment, which are called “breakpoint discounts.”  In contrast, Class B and C shares usually do not carry any front-end sales charges.   Instead, investors that purchase Class B or C shares pay asset-based sales charges, which may be higher than the charges associated with Class A shares.   Investors that purchase Class B and C shares may also be required to pay a sales charge known as a contingent deferred sales charge when they sell their shares, depending upon the rules of the particular mutual fund.  

Breakpoint Discounts 
Most mutual funds offer investors a variety of ways to qualify for breakpoint discounts on the sales charge associated with the purchase of Class A shares.   In general, most mutual funds provide breakpoint discounts to investors who make large purchases at one time.   The extent of the discount depends upon the size of the purchase.  Generally, as the amount of the purchase increases, the percentage used to determine the sales load decreases.   In fact, the entire sales charge may be waived for investors that make very large purchases of Class A shares.  Mutual fund prospectuses contain tables that illustrate the available breakpoint discounts and the investment levels at which breakpoint discounts apply.  Additionally, most mutual funds allow investors to qualify for breakpoint discounts based upon current holdings from prior purchases through “Rights of Accumulation,” and future purchases, based upon “Letters of Intent.”   This document provides general information regarding Rights of Accumulation and Letters of Intent.   However, mutual funds have different rules regarding the availability of Rights of Accumulation and Letters of Intent.   Therefore, you should discuss these issues with your financial advisor and review the mutual fund prospectus to determine the specific terms upon which a mutual fund offers Rights of Accumulation or Letters of Intent.

Rights of Accumulation – Many mutual funds allow investors to count the value of previous purchases of the same fund, or another fund within the same fund family, with the value of the current purchase, to qualify for breakpoint discounts.  Moreover, mutual funds allow investors to count existing holdings in multiple accounts, such as IRAs or accounts at other broker-dealers, to qualify for breakpoint discounts.   Therefore, if you have accounts at other broker-dealers and wish to take advantage of the balances in these accounts to qualify for a breakpoint discount, you must advise your financial advisor about those balances.   You may need to provide documentation establishing the holdings in those other accounts to your financial advisor if you wish to rely upon balances in accounts at another firm.  

In addition, many mutual funds allows investors to count the value of holdings in accounts of certain related parties, such as spouses or children, to qualify for breakpoint discounts. Each mutual fund has different rules that govern when relatives may rely upon each other’s holdings to qualify for breakpoint discounts.   You should consult with your financial advisor or review the mutual fund’s prospectus or statement of additional information to determine what these rules are for the fund family in which you are investing. If you wish to rely upon the holdings of related parties to qualify for a breakpoint discount, you should advise your financial advisor about these accounts.  You may need to provide documentation to your financial advisor if you wish to rely upon balances in accounts at another firm.

Mutual funds also follow different rules to determine the value of existing holdings.   Some funds use the current net asset value (NAV) of existing investments in determining whether an investor qualifies for a breakpoint discount.   However, a small number of funds use the historical cost, which is the cost of the initial purchase, to determine eligibility for breakpoint discounts.  If the mutual fund uses historical costs, you may need to provide account records, such as confirmation statements or monthly statements, to qualify for a breakpoint discount based upon previous purchases.  You should consult with your financial advisor and review the mutual fund’s prospectus to determine whether the mutual fund uses either NAV or historical costs to determine breakpoint eligibility.

Letters of Intent – Most mutual funds allow investors to qualify for breakpoint discounts by signing a Letter of Intent, which commits the investor to purchasing a specified amount of Class A shares within a defined period of time, usually 13 months.  For example, if an investor plans to purchase $50,000 worth of Class A shares over a period of 13 months, but each individual purchase would not qualify for a breakpoint discount, the investor could sign a Letter of Intent at the time of the first purchase and receive the breakpoint discount associated with $50,000 investments on the first and all subsequent purchases.  Additionally, some funds offer retroactive Letters of Intent that allow investors to rely upon purchases in the recent past to qualify for a breakpoint discount.  However, if an investor fails to invest the amount required by the Letter of Intent, the fund is entitled to retroactively deduct the correct sales charges based upon the amount that the investor actually invested.   If you intend to make several purchases within a 13 month period, you should consult your financial advisor and the mutual fund prospectus to determine if it would be beneficial for you to sign a Letter of Intent.   

As you can see, understanding the availability of breakpoint discounts is important because it may allow you to purchase Class A shares at a lower price.  The availability of breakpoint discounts may save you money and may also affect your decision regarding the appropriate share class in which to invest.   Therefore, you should discuss the availability of breakpoint discounts with your financial advisor and carefully review the mutual fund prospectus and its statement of additional information, which you can get from your financial advisor, when choosing among the share classes offered by a mutual fund.   If you wish to learn more about mutual fund share classes or mutual fund breakpoints, you may wish to review the investor alerts available on the NASD Web site.  See www.nasdr.com/alert_mfclasses.htm, and www.nasdr.com/alert_breakpoints.htm or visit the many mutual fund Web sites available to the public.
 

To obtain more information about class of shares in mutual funds call us or refer to an NASD publication on Understanding Mutual Fund Classes



 
 
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