File Nos.333-09079
811-07733
As filed with the Securities and Exchange Commission on July 29, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
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Pre-Effective Amendment No. ___ / /
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Post-Effective Amendment No. 2 / X /
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
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Amendment No. 3 / X /
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(Check appropriate box or boxes)
PIONEER WORLD EQUITY FUND
(Exact Name of Registrant as Specified in Charter)
60 State Street, Boston, Massachusetts 02109
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 742-7825
Joseph P. Barri, Hale and Dorr LLP, 60 State Street,
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
___ immediately upon filing pursuant to paragraph (b)
X on July 29, 1998 pursuant to paragraph (b)
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___ 60 days after filing pursuant to paragraph (a)(1)
___ on [date] pursuant to paragraph (a)(1)
___ 75 days after filing pursuant to paragraph (a)(2)
___ on [date] pursuant to paragraph (a)(2)of Rule 485.
If appropriate, check the following box:
___This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest (without
par value)
<PAGE>
PIONEER WORLD EQUITY FUND
Class A, Class B and Class C Shares
Cross-Reference Sheet Showing Location in Prospectus and Statement of
Additional Information of Information
Required by Items of the Registration Form
FORM N-1A ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS OR STATEMENT
OF ADDITIONAL INFORMATION
1. Cover Page Prospectus - Cover Page
2. Synopsis Prospectus - Expense Information
3. Condensed Financial Information Prospectus - Financial Highlights
4. General Description of Registrant Prospectus - Cover Page; Investment
Objective and Policies; Management of
the Fund; Fund Share Alternatives;
Share Price; How to Buy Fund Shares;
How to Sell Fund Shares; How to
Exchange Fund Shares; The Fund
5. Management of the Fund Prospectus - Management of the Fund;
Shareholder Services
5A. Management's Discussion of Fund
Performance Not Applicable
6. Capital Stock and Other Securities Prospectus - Investment Objective and
Policies; Management of the Fund; Fund
Share Alternatives; Share Price; How to
Buy Fund Shares; How to Sell Fund
Shares; How to Exchange Fund Shares;
Dividends, Distributions and Taxation;
The Fund
7. Purchase of Securities Being
Offered Prospectus - Management of the Fund;
Distribution Plans; Fund Share
Alternatives; Share Price; How to Buy
Fund Shares; How to Sell Fund Shares;
How to Exchange Fund Shares;
Shareholder Services
8. Redemption or Repurchase Prospectus - Fund Share Alternatives;
How to Buy Fund Shares; How to Sell
Fund Shares; How to Exchange Fund
Shares; Shareholder Services
9. Pending Legal Proceedings Not Applicable
<PAGE>
10. Cover Page Statement of Additional Information -
Cover Page
11. Table of Contents Statement of Additional Information -
Cover Page
12. General Information and History Statement of Additional Information -
Description of Shares
13. Investment Objectives and Policies Statement of Additional Information -
Investment Policies and Restrictions;
Appendix A
14. Management of the Fund Statement of Additional Information -
Management of the Fund
15. Control Persons and Principal
Holders of Securities Statement of Additional Information -
Management of the Fund
16. Investment Advisory and Other
Services Statement of Additional Information -
Management of the Fund; Investment
Adviser; Underwriting Agreement and
Distribution Plans; Shareholder
Servicing/Transfer Agent; Custodian;
Principal Underwriter; Independent
Public Accountants; Appendix C
17. Brokerage Allocation and Other
Practices Statement of Additional Information -
Portfolio Transactions
18. Capital Stock and Other Securities Statement of Additional Information -
Description of Shares
19. Purchase, Redemption and Pricing
of Securities Being Offered Statement of Additional Information -
Letter of Intent; Systematic Withdrawal
Plan; Determination of Net Asset Value
20. Tax Status Statement of Additional Information -
Tax Status
21. Underwriters Statement of Additional Information -
Underwriting Agreement and Distribution
Plans; Principal Underwriter
22. Calculation of Performance Data Statement of Additional Information -
Investment Results; Appendix B
23. Financial Statements Statement of Additional Information -
Financial Statements
<PAGE>
PIONEER WORLD EQUITY [PIONEER LOGO]
FUND
CLASS A, CLASS B AND CLASS C SHARES
PROSPECTUS
JULY 29, 1998
PIONEER WORLD EQUITY FUND (the "Fund") seeks long-term growth of capital.
The Fund pursues this objective by investing in a diversified portfolio
consisting primarily of equity securities of issuers selected on a worldwide
basis. Any current income generated from these securities is incidental to the
investment objective of the Fund. The Fund is a diversified open-end investment
company designed for investors seeking to achieve capital growth and
diversification through worldwide investments. There is no assurance that the
Fund will achieve its investment objective.
Investments in non-U.S. securities entail significant risks in addition
to those customarily associated with investing in U.S. securities. The Fund is
intended for investors who can accept the risks associated with its investments
and may not be suitable for all investors. See "Investment Objective and
Policies" for a discussion of these risks.
FUND RETURNS AND SHARE PRICES FLUCTUATE AND THE VALUE OF YOUR ACCOUNT
UPON REDEMPTION MAY BE MORE OR LESS THAN YOUR PURCHASE PRICE. SHARES IN THE
FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK
OR OTHER DEPOSITORY INSTITUTION, AND THE SHARES ARE NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER GOVERNMENT AGENCY.
This Prospectus provides information about the Fund that you should know
before investing. Please read and retain it for your future reference. More
information about the Fund is included in the Statement of Additional
Information, also dated July 29, 1998 as supplemented or revised from time to
time, which is incorporated into this Prospectus by reference. A copy of the
Statement of Additional Information may be obtained free of charge by calling
Shareholder Services at 1-800-225-6292 or by written request to the Fund at 60
State Street, Boston, Massachusetts 02109. Other information about the Fund has
been filed with the Securities and Exchange Commission (the "SEC") and is
available upon request and without charge by calling 1-800-225-6292 or through
the SEC's Internet web site (http://www.sec.gov).
TABLE OF CONTENTS PAGE
--------------------------------------------------------- -----
I. EXPENSE INFORMATION ..................................... 2
II. FINANCIAL HIGHLIGHTS .................................... 3
III. INVESTMENT OBJECTIVE AND POLICIES ....................... 6
IV. MANAGEMENT OF THE FUND .................................. 8
V. FUND SHARE ALTERNATIVES ................................. 9
VI. SHARE PRICE ............................................. 10
VII. HOW TO BUY FUND SHARES .................................. 10
VIII. HOW TO SELL FUND SHARES ................................. 13
IX. HOW TO EXCHANGE FUND SHARES ............................. 14
X. DISTRIBUTION PLANS ...................................... 15
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION ................... 16
XII. SHAREHOLDER SERVICES .................................... 17
Account and Confirmation Statements .................... 17
Additional Investments ................................. 17
Automatic Investment Plans ............................. 17
Financial Reports and Tax Information .................. 17
Distribution Options ................................... 17
Directed Dividends ..................................... 17
Direct Deposit ......................................... 17
Voluntary Tax Withholding .............................. 18
Telephone Transactions ................................. 18
FactFone(SM) ........................................... 18
Retirement Plans ....................................... 18
Telecommunications Device for the Deaf (TDD) ........... 18
Systematic Withdrawal Plans ............................ 18
Reinstatement Privilege (Class A Shares Only) .......... 18
XIII. THE FUND ................................................ 19
XIV. INVESTMENT RESULTS ...................................... 19
APPENDIX ................................................ 19
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
I. EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses
that you, as a shareholder, will bear directly or indirectly when you invest in
the Fund. The table reflects annual operating expenses based upon actual
expenses incurred for the fiscal year ended March 31, 1998.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------------- ---------------- ------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Initial Sales Charge on
Purchases (as a percentage of
offering price) ................... 5.75%(1) None None
Maximum Sales Charge on
Reinvestment of Dividends ......... None None None
Maximum Deferred Sales Charge
(as a percentage of purchase
price or redemption proceeds,
as applicable) ................... None(1) 4.00% 1.00%
Redemption Fee(2) ................... None None None
Exchange Fee ........................ None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
net assets):
Management Fee (after fee
reduction)(3) ..................... 0.20% 0.20% 0.20%
12b-1 Fees .......................... 0.18% 1.00% 1.00%
Other Expenses (including
accounting and transfer agent
fees, custodian fees and printing
expenses)(3, 4).................... 1.41% 1.48% 1.53%
---------- ----- -----
TOTAL OPERATING EXPENSES
(after fee reduction)(4)............ 1.79% 2.68% 2.73%
========== ===== =====
</TABLE>
- --------------------
(1) Purchases of $1 million or more and purchases by participants in certain
group plans are not subject to an initial sales charge but may be subject
to a contingent deferred sales charge ("CDSC") as further described under
"How to Sell Fund Shares."
(2) Separate fees (currently $10 and $20, respectively) apply to U.S. and
international wire transfers of redemption proceeds.
(3) Pioneering Management Corporation ("PMC") has agreed not to impose a
portion of its management fee and to make other arrangements, if
necessary, to reduce Class A expenses to 1.75% of the average daily net
assets attributable to Class A shares. The portion of Fund-wide expenses
attributable to Class B and Class C shares will be reduced only to the
extent they are reduced for Class A shares. This agreement is voluntary
and temporary and may be revised or terminated at any time. The agreement
is expected to remain in effect for the current fiscal year.
EXPENSES ABSENT FEE REDUCTION
CLASS A CLASS B CLASS C
--------- --------- ----------
Management Fee ................... 1.00% 1.00% 1.00%
Total Operating Expenses ......... 2.59% 3.48% 3.53%
(4) Expenses do not reflect reductions due to certain expense offset
arrangements. Because of those arrangements actual "Other Expenses" were
1.37%, 1.44% and 1.47% and actual "Total Operating Expenses" were 1.75%,
2.64% and 2.67% for Class A, Class B and Class C shares, respectively, for
the fiscal year ended March 31, 1998. See "Financial Highlights."
EXAMPLE:
You would pay the following expenses on a $1,000 investment, with or
without redemption at the end of each time period, assuming a 5% annual return,
reinvestment of all dividends and distributions and that the percentage amounts
listed under "Annual Operating Expenses" remain the same each year.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Class A Shares $75 $111 $149 $256
Class B Shares*
--Assuming complete
redemption at end of period $67 $113 $162 $280
--Assuming no redemption $27 $ 83 $142 $280
Class C Shares**
--Assuming complete
redemption at end of period $38 $ 85 $144 $306
--Assuming no redemption $28 $ 85 $144 $306
</TABLE>
- --------------------
* Class B shares convert to Class A shares eight years after purchase;
therefore, Class A expenses are used after year eight.
** Class C shares redeemed during the first year after purchase are subject to
a 1% CDSC.
THE EXAMPLE IS DESIGNED FOR INFORMATION PURPOSES ONLY, AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURN. ACTUAL FUND
EXPENSES AND RETURN WILL VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN
THOSE SHOWN.
For further information regarding management fees, Rule 12b-1 fees and
other expenses of the Fund, see "Management of the Fund," "Distribution Plans"
and "How to Buy Fund Shares" in this Prospectus and "Management of the Fund"
and "Underwriting Agreement and Distribution Plans" in the Statement of
Additional Information. The Fund's payment of a Rule 12b-1 fee may result in
long-term shareholders paying more than the economic equivalent of the maximum
sales charge permitted under the Conduct Rules of the National Association of
Securities Dealers, Inc.
The maximum initial sales charge is reduced on purchases of specified
amounts of Class A shares and the value of shares owned in other Pioneer mutual
funds is taken into account in determining the applicable initial sales charge.
See "How to Buy Fund Shares." No sales charge is applied to exchanges of Fund
shares for shares of other publicly available Pioneer mutual funds. See "How to
Exchange Fund Shares."
2
<PAGE>
II. FINANCIAL HIGHLIGHTS
The following information has been audited by Arthur Andersen LLP,
independent public accountants. Arthur Andersen LLP's report on the Fund's
financial statements as of March 31, 1998 appears in the Fund's Annual Report
which is incorporated by reference in the Statement of Additional Information.
The information listed below should be read in conjunction with those financial
statements. The Annual Report includes more information about the Fund's
performance and is available free of charge by calling Shareholder Services at
1-800-225-6292.
PIONEER WORLD EQUITY FUND
SELECTED DATA FOR A CLASS A SHARE OUTSTANDING FOR EACH PERIOD:
<TABLE>
<CAPTION>
OCTOBER 31, 1996
(COMMENCEMENT OF OPERATIONS)
YEAR ENDED MARCH 31, TO
1998 MARCH 31, 1997
---------------------- ----------------------------
<S> <C> <C>
Net asset value, beginning of period ......................... $ 16.67 $ 15.00
------- -------
Increase (decrease) from investment operations:
Net investment income (loss) ................................ $ (0.01) $ 0.01
Net realized and unrealized gain (loss) on investments and
foreign currency transactions .............................. 3.54 1.69
------- -------
Net increase (decrease) from investment operations ......... $ 3.53 $ 1.70
Distributions to shareholders:
Net realized gain ........................................... (0.17) (0.03)
------- -------
Net increase (decrease) in net asset value ................... $ 3.36 $ 1.67
------- -------
Net asset value, end of period ............................... $ 20.03 $ 16.67
======= =======
Total return* ................................................ 21.36% 11.32%
RATIOS/SUPPLEMENTAL DATA
Ratio of net expenses to average net assets .................. 1.79%+ 1.80%**+
Ratio of net investment income (loss) to average net assets .. (0.07)%+ 0.08%**+
Portfolio turnover rate ...................................... 39% 18%**
Average brokerage commission per share ....................... $0.0086 $0.0128
Net assets, end of period (in thousands) ..................... $32,088 $17,723
Ratios assuming no waiver of management fees and assumption of
expenses by PMC and no reduction for fees paid indirectly:
Net expenses ............................................... 2.59% 3.70%**
Net investment income (loss) ............................... (0.87)% (1.82)%**
Ratios assuming waiver of management fees and assumption of
expenses by PMC and reduction for fees paid indirectly:
Net expenses ............................................... 1.75% 1.75%**
Net investment income (loss) ............................... (0.03)% 0.13%**
</TABLE>
- ---------
*Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
**Annualized.
+Ratios assuming no reduction for fees paid indirectly.
3
<PAGE>
II FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A CLASS B SHARE OUTSTANDING EACH PERIOD:
<TABLE>
<CAPTION>
OCTOBER 31, 1996
(COMMENCEMENT OF OPERATIONS)
YEAR ENDED MARCH 31, TO
1998 MARCH 31, 1997
---------------------- -----------------------------
<S> <C> <C>
Net asset value, beginning of period ................................ $ 16.59 $ 15.00
------- -------
Increase (decrease) from investment operations:
Net investment income (loss) ....................................... $ (0.14) $ (0.03)
Net realized and unrealized gain (loss) on investments and
foreign currency transactions ..................................... 3.47 1.62
------- -------
Net increase (decrease) from investment operations ............... $ 3.33 $ 1.59
Distributions to shareholders:
Net realized gain .................................................. (0.17) --
------- -------
Net increase (decrease) in net asset value .......................... $ 3.16 $ 1.59
Net asset value, end of period ...................................... $ 19.75 $ 16.59
======= =======
Total return* ....................................................... 20.25% 10.60%
RATIOS/SUPPLEMENTAL DATA
Ratio of net expenses to average net assets ......................... 2.68%+ 2.85%**+
Ratio of net investment income (loss) to average net assets ......... (0.97)%+ (0.99)%**+
Portfolio turnover rate ............................................. 39% 18%**
Average brokerage commission per share .............................. $0.0086 $0.0128
Net assets, end of period (in thousands) ............................ $11,112 $ 5,306
Ratios assuming no waiver of management fees and assumption of
expenses by PMC and no reduction for fees paid indirectly:
Net expenses ...................................................... 3.48% 4.51%**
Net investment income (loss) ...................................... (1.77)% (2.65)%**
Ratios assuming waiver of management fees and assumption of
expenses by PMC and reduction for fees paid indirectly:
Net expenses ...................................................... 2.64% 2.77%**
Net investment income (loss) ...................................... (0.93)% (0.91)%**
</TABLE>
- ---------
*Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
**Annualized.
+Ratios assuming no reduction for fees paid indirectly.
4
<PAGE>
II FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A CLASS C SHARE OUTSTANDING FOR EACH PERIOD:
<TABLE>
<CAPTION>
OCTOBER 31, 1996
(COMMENCEMENT OF OPERATIONS)
YEAR ENDED MARCH 31, TO
1998 MARCH 31, 1997
---------------------- -----------------------------
<S> <C> <C>
Net asset value, beginning of period ................................ $ 16.62 $ 15.00
------- -------
Increase (decrease) from investment operations:
Net investment income (loss) ....................................... $ (0.11) $ (0.07)
Net realized and unrealized gain (loss) on investments and
foreign currency transactions ..................................... 3.43 1.69
-------
Net increase (decrease) from investment operations ............... $ 3.32 $ 1.62
Distributions to shareholders:
Net realized gain .................................................. (0.17) --
------- -------
Net increase (decrease) in net asset value .......................... $ 3.15 $ 1.62
Net asset value, end of period ...................................... $ 19.77 $ 16.62
======= =======
Total return* ....................................................... 20.16% 10.80%
RATIOS/SUPPLEMENTAL Data
Ratio of net expenses to average net assets ......................... 2.73%+ 3.74%**+
Ratio of net investment income (loss) to average net assets ......... (1.11)%+ (1.77)%**+
Portfolio turnover rate ............................................. 39% 18%**
Average brokerage commission per share .............................. $0.0086 $0.0128
Net assets, end of period (in thousands) ............................ $ 1,264 $ 365
Ratios assuming no waiver of management fees and assumption of
expenses by PMC and no reduction for fees paid indirectly:
Net expenses ...................................................... 3.53% 4.91%**
Net investment income (loss) ...................................... (1.91)% (2.94)%**
Ratios assuming waiver of management fees and assumption of
expenses by PMC and reduction for fees paid indirectly:
Net expenses ...................................................... 2.67% 3.69%**
Net investment income (loss) ...................................... (1.05)% (1.72)%**
</TABLE>
- ---------
*Assumes initial investment at net asst value at the beginning of each period,
reinvestment of all distributions, the complete redemption of the investment
at net asset value at the end of each period, and no sales charges. Total
return would be reduced if sales charges were taken into account.
**Annualized.
+Ratios assuming no reduction for fees paid indirectly.
5
<PAGE>
III. INVESTMENT OBJECTIVE AND POLICIES
THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK LONG-TERM GROWTH OF CAPITAL.
The Fund pursues its objective by investing in a diversified portfolio of
Equity Securities (as defined below) of issuers selected on a worldwide basis.
The Fund's investment objective and certain investment restrictions designated
as fundamental in the Statement of Additional Information may be changed by the
Board of Trustees only with shareholder approval. Certain other investment
policies, strategies and restrictions on investment are noted throughout the
Prospectus and as set forth in the Statement of Additional Information. These
non-fundamental investment policies, strategies and restrictions may be changed
at any time by a vote of the Board of Trustees.
Under normal circumstances, at least 80% of the Fund's total assets are
invested in equity securities consisting of common stock and securities with
common stock characteristics, such as preferred stock, warrants and debt
securities convertible into common stock and depositary receipts for such
securities ("Equity Securities"). While maintaining the worldwide nature of the
Fund's portfolio, PMC currently intends to focus on securities of issuers
located in countries with established markets. Established markets generally
include, but are not limited to: Australia, Austria, Belgium, Canada, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, New Zealand, the
Netherlands, Norway, Spain, Sweden, Switzerland, the United Kingdom and the
United States. These countries are currently included in the MSCI World Index.
Under normal circumstances, the Fund will invest at least 65% of its total
assets in at least three countries (which may include the U.S.). The Fund may
invest up to 25% of its total assets in countries with emerging markets. The
Fund may invest up to 20% of its total assets in Other Eligible Investments (as
defined below), consisting of liquid instruments and fixed-income securities.
The Fund may employ active management techniques, including techniques used in
an attempt to hedge currency and other risks associated with the Fund's
investments. See the Appendix to this Prospectus for additional information.
In selecting securities for investment by the Fund, PMC assesses the
general attractiveness of specific countries based on an analysis of internal
conditions, including political stability, financial practices, market
practices, economic growth prospects, levels of interest rates and inflation,
general market valuations and potential changes in currency relationships.
Based on the relative return and risk among countries, a target weighting is
set for the allocation of the Fund's assets among countries. As a parallel
process, which involves many of the same factors as, and influences the outcome
of, country allocation, PMC performs a fundamental analysis of each company
being considered for inclusion in the Fund's portfolio. In performing this
fundamental analysis, PMC considers a variety of factors, including financial
condition, growth prospects, asset valuation, management expertise, existing or
potential dividend payments, stock liquidity and the market valuation of the
company. The specific size of the Fund's investment in any one company is
determined by the relationship of the relative return and risk among individual
investments. Because current income is not the Fund's investment objective, the
Fund will not restrict its investments to securities of issuers with a record
of timely dividend payments.
OTHER ELIGIBLE INVESTMENTS
The Fund may also invest up to 20% of its total assets in debt securities
of corporate and governmental issuers that PMC believes offer opportunities for
long-term capital appreciation due to favorable credit quality, interest rate
or currency exchange rate changes. The Fund's Other Eligible Investments
consist of: (a) commercial paper and other short-term commercial obligations;
(b) obligations (including certificates of deposit and bankers' acceptances) of
banks; (c) obligations issued or guaranteed by a governmental issuer, including
governmental agencies or instrumentalities; and (d) fixed-income securities of
corporate issuers. These securities may be denominated in any currency. Other
Eligible Investments in which the Fund invests will be rated, at the time of
investment, Prime-1, Baa or better by Moody's Investors Service, Inc.
("Moody's"), or A-1, BBB or better by Standard and Poor's Ratings Group ("S&P")
or determined by PMC to be of equivalent credit quality. In the event that the
credit quality of a security falls below such ratings criteria subsequent to
purchase, the Fund may nevertheless retain such securities as long as PMC
determines it is advisable to do so. The value of debt securities, particularly
those with longer maturities, can generally be expected to rise as interest
rates decline and to fall as interest rates rise. Movements in currency
exchange rates may offset or amplify such fluctuations, as measured in U.S.
dollars.
For temporary defensive purposes, the Fund may invest up to 100% of its
total assets in Other Eligible Investments. The Fund will assume a temporary
defensive posture when political and economic factors affect securities markets
to such an extent that PMC believes there to be extraordinary risks in being
substantially invested in Equity Securities.
INVESTMENT MANAGEMENT TECHNIQUES
In pursuit of its objective, the Fund may employ certain active investment
management techniques including forward foreign currency exchange contracts,
options and futures contracts on currencies, securities, securities indices and
options on such futures contracts. These techniques may be employed in an
attempt to hedge foreign currency and other risks associated with the Fund's
portfolio securities and for certain other permissible non-hedging purposes.
The risks associated with the Fund's transactions in options and futures, which
are considered to be derivative securities, may include some or all of the
following: market risk, leverage and volatility risk, correlation risk, credit
risk and liquidity and valuation risk. The Fund may also enter into repurchase
agreements, invest in restricted and illiquid securities and lend portfolio
securities. See the Appendix to this Prospectus and the Statement of Additional
Information for a description of these investment practices and securities and
associated risks.
RISK FACTORS
Investing in the securities of foreign issuers involves certain
considerations and risks which are not typically associated with investing in
securities of U.S. issuers. In many
6
<PAGE>
foreign countries, issuers generally are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. companies. Also in many foreign
countries, there is less government supervision and regulation of foreign
securities exchanges, brokers and listed companies than exists in the United
States. Interest and dividends, or in some cases capital gains, from foreign
investments may be subject to withholding or other foreign taxes which will
decrease the net return on such investments.
In addition, the value of securities denominated or quoted in
international currencies may also be adversely affected by fluctuations in the
relative rates of exchange between the currencies of different nations and by
exchange control regulations. The Fund's investment performance may be
significantly affected, either positively or negatively, by currency exchange
rates because the U.S. dollar value of securities denominated or quoted in
another currency will increase or decrease in response to changes in the value
of such currency in relation to the U.S. dollar. There may also be less
publicly available information about foreign issuers compared to reports and
ratings published about U.S. issuers. Some foreign securities markets have
substantially less trading volume than U.S. markets and securities of some
foreign issuers are less liquid and more volatile than securities of comparable
U.S. issuers.
Brokerage commissions in foreign countries are generally fixed, and other
transaction costs related to securities transactions are generally higher than
in the United States. Most of the Fund's foreign securities are held by foreign
subcustodians that satisfy certain eligibility requirements. Foreign
subcustodian arrangements are significantly more expensive than U.S. custody.
In addition, foreign settlement of securities transactions is subject to local
law and custom that is not, generally, as well established or as reliable as
U.S. regulations and custom applicable to settlement of securities
transactions. Accordingly, there is generally perceived to be a greater risk of
loss in connection with securities transactions in many foreign countries.
Additionally, in some foreign countries, there is the possibility of
expropriation, nationalization or confiscation of assets and property,
limitations on the removal of securities, property or other assets of the Fund,
political or social instability, or diplomatic developments which could affect
U.S. investments in those countries. PMC will take these factors into
consideration in managing the Fund's investments.
INVESTMENT IN EMERGING MARKETS
The Fund may invest up to 25% of its total assets in securities of issuers
in countries with emerging economies or securities markets. Emerging economies
or securities markets will generally include, but not be limited to: Argentina,
Brazil, Chile, China, Columbia, Czech Republic, Greece, Hungary, India,
Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru,
the Philippines, Poland, Portugal, Russia, Singapore, Sri Lanka, Taiwan,
Thailand, Turkey, Venezuela and Zimbabwe. With the exception of Portugal,
Morocco and Singapore, these countries are currently included in the MSCI
Emerging Markets Index. The Fund will generally focus on emerging markets that
do not impose unusual trading requirements which tend to restrict the flow of
investments. In addition, the Fund may invest in unquoted securities, including
securities of issuers located in such emerging markets. The Fund will not
invest more than 10% of its total assets in securities of issuers in any one
emerging market.
Political and economic structures in many of such countries may be
undergoing significant evolution and rapid development, and such countries may
lack the social, political and economic stability characteristic of more
developed countries. Certain of such countries may have in the past failed to
recognize private property rights and have at times nationalized or
expropriated the assets of private companies. As a result, the risks of
investing in such countries, including the risks of nationalization or
expropriation of assets, may be heightened. In addition, unanticipated
political or social developments may affect the value of the Fund's
investments. The small size and inexperience of the securities markets of
certain countries and the limited trading volume in such markets may make the
Fund's investments in such countries less liquid and more volatile than
investments in more developed markets.
In addition, security settlement and clearance procedures in some emerging
countries may not fully protect the Fund against loss or theft of its assets in
situations that may arise that may not be foreseeable. By way of example and
without limitation, a fraudulent or otherwise deficient security settlement or
a conversion, theft or default by a broker, dealer or other intermediary could
result in losses to the Fund. Neither PMC nor the Fund's custodian is liable to
the Fund or its shareholders for such losses incurred by the Fund in the
absence of willful misfeasance, bad faith or gross negligence in the
performance of their respective duties.
The Fund may invest in emerging market companies that are relatively
small, lesser-known companies. Although many such companies offer greater
growth potential than larger, more mature, better-known companies, investing in
the securities of such companies also involves greater risk and the possibility
of greater portfolio price volatility. Among the reasons for the greater price
volatility of these smaller companies are the lower degree of liquidity in the
markets for such stocks and the greater sensitivity of small companies to
changing economic conditions. These companies may have higher investment risk
than that associated with larger companies due to greater business risks of
small size and limited product lines, markets, distribution channels and
financial and managerial resources.
In addition to risks associated with investments in foreign private
issuers, investments in foreign governmental securities entail risk that the
foreign government will repudiate its underlying obligation or alter any
favorable tax treatment associated with the obligation. There may be difficulty
in enforcing outside the U.S. legal rights against foreign governments.
INVESTMENTS IN DEPOSITARY RECEIPTS
The Fund may hold securities of foreign issuers in the form of American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs") and
7
<PAGE>
other similar instruments or other securities convertible into securities of
eligible issuers. Generally, ADRs in registered form are designed for use in
U.S. securities markets and EDRs and GDRs and other similar global instruments
in bearer form are designed for use in non-U.S. securities markets.
ADRs are denominated in U.S. dollars and represent an interest in the
right to receive securities of foreign issuers deposited in a U.S. bank or
correspondent bank. ADRs do not eliminate all the risk inherent in investing in
the securities of non-U.S. issuers. However, by investing in ADRs rather than
directly in equity securities of non-U.S. issuers, the Fund will avoid currency
risks during the settlement period for either purchases or sales. EDRs and GDRs
are not necessarily quoted in the same currency as the underlying securities
which they represent. For purposes of the Fund's investment policies,
investments in ADRs, EDRs, GDRs and similar instruments will be deemed to be
investments in the underlying equity securities of the foreign issuers. The
Fund may acquire depositary receipts from banks that do not have a contractual
relationship with the issuer of the security underlying the depositary receipt
to issue and secure such depositary receipt. To the extent the Fund invests in
such unsponsored depositary receipts there may be an increased possibility that
the Fund may not become aware of events affecting the underlying security and
thus the value of the related depositary receipt. In addition, certain benefits
(i.e., rights offerings) which may be associated with the security underlying
the depositary receipt may not inure to the benefit of the holder of such
depositary receipt.
PORTFOLIO TURNOVER
The Fund will be substantially fully invested at all times, except as
described above. However, the volatility of certain non-U.S. markets and the
need for PMC to allocate and reallocate the Fund's investments among several
markets can be expected to generate a portfolio turnover rate higher than that
of funds investing exclusively in equity securities of issuers in the U.S. or
other developed countries. Changes in the portfolio may be made promptly when
determined to be advisable by reason of developments not foreseen at the time
of the initial investment decision, and usually without reference to the length
of time a security has been held. Accordingly, portfolio turnover rates are not
considered a limiting factor in the execution of investment decisions. See
"Financial Highlights" for actual portfolio turnover rates. A high rate of
portfolio turnover (100% or more) involves correspondingly greater transaction
costs which must be borne by the Fund and its shareholders.
IV. MANAGEMENT OF THE FUND
The Fund's Board of Trustees has overall responsibility for management and
supervision of the Fund. The Board meets at least quarterly. By virtue of the
functions performed by PMC as investment adviser, the Fund requires no
employees other than its executive officers, all of whom receive their
compensation from PMC or other sources. The Statement of Additional Information
contains the name and general business and professional background of each
Trustee and executive officer of the Fund.
Investment advisory services are provided to the Fund by PMC pursuant to a
management contract between PMC and the Fund. Under the contract PMC is
responsible for the overall management of the Fund's business affairs, subject
only to the authority of the Board of Trustees. PMC is a wholly owned
subsidiary of The Pioneer Group, Inc. ("PGI"), a publicly traded Delaware
corporation. Pioneer Funds Distributor, Inc. ("PFD"), an indirect wholly owned
subsidiary of PGI, is the principal underwriter of shares of the Fund. John F.
Cogan, Jr., Chairman and President of the Fund, Chairman and a Director of PMC
and PFD, and President and a Director of PGI, owned approximately 14% of the
outstanding capital stock of PGI as of the date of this Prospectus.
Mr. David Tripple, President and Chief Investment Officer of PMC and
Executive Vice President of each Pioneer mutual fund, has general
responsibility for PMC's investment operations and chairs committees of PMC's
U.S. equity and international equity managers which review PMC's research and
portfolio operations, including those of the Fund. Mr. Tripple joined PMC in
1974.
The Fund is covered by a team of managers and analysts which does research
for and oversees the management of other funds with similar objectives. Members
of the team meet regularly to discuss holdings, prospective investments and
portfolio composition. Dr. Norman Kurland, a Senior Vice President of PMC and
Vice President of the Fund, is the senior member of the team. Dr. Kurland
joined PMC in 1990.
Day-to-day management of the Fund has been the responsibility of Mr.
Patrick M. Smith, Vice President of the Fund and PMC, since November 1996. Mr.
Smith joined PMC in 1992 and has 13 years of investment experience.
In addition to the Fund, PMC also manages and serves as the investment
adviser for other mutual funds and is an investment adviser to certain other
institutional accounts. PMC's and PFD's executive offices are located at 60
State Street, Boston, Massachusetts 02109. In an effort to avoid conflicts of
interest with the Fund, the Fund and PMC have adopted a Code of Ethics that is
designed to maintain a high standard of personal conduct by directing that all
personnel defer to the interests of the Fund and its shareholders in making
personal securities transactions.
Under the terms of its contract with the Fund, PMC assists in the
management of the Fund and is authorized in its discretion to buy and sell
securities for the account of the Fund. PMC pays all the ordinary operating
expenses, including executive salaries and the rental of office space, relating
to its services for the Fund with the exception of the following which are to
be paid by the Fund: (i) charges and expenses for fund accounting, pricing and
appraisal services and related overhead, including, to the extent such services
are performed by personnel of PMC, or its affiliates, office space and
facilities and personnel compensation, training and benefits; (ii) the charges
and expenses of auditors; (iii) the charges and expenses of any custodian,
transfer agent, plan agent, dividend disbursing agent and registrar appointed
by the Fund; (iv) issue and transfer taxes, chargeable to the Fund in
connection with securities transactions to which the
8
<PAGE>
Fund is a party; (v) insurance premiums, interest charges, dues and fees for
membership in trade associations and all taxes and corporate fees payable by
the Fund to federal, state or other governmental agencies; (vi) fees and
expenses involved in registering and maintaining registrations of the Fund
and/or its shares with regulatory agencies, state or blue sky securities
agencies and foreign countries, including the preparation of prospectuses and
statements of additional information for filing with regulatory agencies; (vii)
all expenses of shareholders' and Trustees' meetings and of preparing, printing
and distributing prospectuses, notices, proxy statements and all reports to
shareholders and to governmental agencies; (viii) charges and expenses of legal
counsel to the Fund and the Trustees; (ix) distribution fees paid by the Fund
in accordance with Rule 12b-1 promulgated by the SEC pursuant to the Investment
Company Act of 1940, as amended (the "1940 Act"); (x) compensation of those
Trustees of the Fund who are not affiliated with or interested persons of PMC,
the Fund (other than as Trustees), PGI or PFD; (xi) the cost of preparing and
printing share certificates; and (xii) interest on borrowed money, if any. In
addition to the expenses described above, the Fund pays all brokers' and
underwriting commissions chargeable to the Fund in connection with securities
transactions to which the Fund is a party.
Orders for the Fund's portfolio securities transactions are placed by PMC,
which strives to obtain the best price and execution for each transaction. In
circumstances in which two or more broker-dealers are in a position to offer
comparable prices and execution, consideration may be given to whether the
broker-dealer provides brokerage or research services or sells shares of any
Pioneer mutual fund for which PMC or any affiliate serves as investment adviser
or manager. See the Statement of Additional Information for a further
description of PMC's brokerage allocation practices.
As compensation for its management services and certain expenses which PMC
incurs, PMC is entitled to a management fee equal to 1.00% per annum of the
Fund's average daily net assets up to $300 million, 0.85% of the next $200
million and 0.75% of the excess over $500 million. The fee is normally computed
daily and paid monthly. See "Expense Information" in the Prospectus and
"Investment Adviser" in the Statement of Additional Information.
Certain information technology experts currently predict the possibility
of a widespread failure of computer systems and certain other equipment which
will be triggered on or after certain dates--primarily January 1, 2000--due to
a systemic inability to process date-related information. This scenario,
commonly known as the "Year 2000 Problem," could have an adverse impact on
individuals and businesses, including the Fund and other mutual funds and
financial organizations. PMC and its affiliates are taking steps believed to be
adequate to address the Year 2000 Problem with respect to the systems and
equipment controlled by the Fund's investment adviser, broker-dealer and
transfer agent. In addition, other entities providing services to the Fund and
its shareholders are being asked to provide assurances that they have
undertaken similar measures with respect to their systems and equipment.
Although PMC is not expecting any adverse impact on it or its clients from the
Year 2000 Problem, it cannot provide complete assurances that its efforts or
the efforts of its key vendors will be successful.
V. FUND SHARE ALTERNATIVES
The Fund continuously offers three classes of shares designated as Class
A, Class B and Class C shares, as described more fully in "How to Buy Fund
Shares." If you do not specify in your instructions to the Fund which class of
shares you wish to purchase, exchange or redeem, the Fund will assume that your
instructions apply to Class A shares.
CLASS A SHARES. If you invest less than $1 million in Class A shares, you
will pay an initial sales charge. Certain purchases may qualify for reduced
initial sales charges. If you invest $1 million or more in Class A shares, no
sales charge will be imposed at the time of purchase; however, shares redeemed
within 12 months of purchase may be subject to a CDSC. Class A shares are
subject to distribution and service fees at a combined annual rate of up to
0.25% of the Fund's average daily net assets attributable to Class A shares.
CLASS B SHARES. If you plan to invest up to $250,000, Class B shares are
available to you. Class B shares are sold without an initial sales charge, but
are subject to a CDSC of up to 4% if redeemed within six years. Class B shares
are subject to distribution and service fees at a combined annual rate of 1% of
the Fund's average daily net assets attributable to Class B shares. Your entire
investment in Class B shares is available to work for you from the time you
make your investment, but the higher distribution fee paid by Class B shares
will cause your Class B shares (until conversion) to have a higher expense
ratio and to pay lower dividends, to the extent dividends are paid, than Class
A shares. Class B shares will automatically convert to Class A shares, based on
relative net asset value, eight years after the initial purchase.
CLASS C SHARES. Class C shares are sold without an initial sales charge,
but are subject to a 1% CDSC if they are redeemed within the first year after
purchase. Class C shares are subject to distribution and service fees at a
combined annual rate of up to 1% of the Fund's average daily net assets
attributable to Class C shares. Your entire investment in Class C shares is
available to work for you from the time you make your investment, but the
higher distribution fee paid by Class C shares will cause your Class C shares
to have a higher expense ratio and to pay lower dividends, to the extent
dividends are paid, than Class A shares. Class C shares have no conversion
feature.
Selecting a Class of Shares. The decision as to which class to purchase
depends on the amount you invest, the intended length of the investment and
your personal situation. If you are making an investment that qualifies for
reduced sales charges, you might consider Class A shares. If you prefer not to
pay an initial sales charge on an investment of $250,000 or less and you plan
to hold the investment for at least six years, you might consider Class B
shares. If you prefer not to pay an initial sales charge and you plan to hold
your investment for one to eight years, you may prefer Class C shares.
9
<PAGE>
Investment dealers or their representatives may receive different
compensation depending on which class of shares they sell. Shares may be
exchanged only for shares of the same class of another Pioneer mutual fund, and
shares acquired in the exchange will continue to be subject to any CDSC
applicable to the shares of the Fund originally purchased. Shares sold outside
the U.S. to persons who are not U.S. citizens may be subject to different sales
charges, CDSCs and dealer compensation arrangements in accordance with local
laws and business practices.
VI. SHARE PRICE
Shares of the Fund are sold at the public offering price, which is the net
asset value per share, plus any applicable sales charge. The net asset value
per share of a class of the Fund is determined by dividing the value of its
assets, less liabilities attributable to that class, by the number of shares of
that class outstanding. The net asset value is computed once daily, on each day
the New York Stock Exchange (the "Exchange") is open, as of the close of
regular trading on the Exchange.
Securities are valued at the last sale price on the principal exchange or
market where they are traded. Securities which have not traded on the date of
valuation or securities for which sales prices are not generally reported are
valued at the mean between the current bid and asked prices. Securities quoted
in foreign currencies are converted to U.S. dollars utilizing foreign exchange
rates employed by the Fund's independent pricing services. Generally, trading
in foreign securities is substantially completed each day at various times
prior to the close of regular trading on the Exchange. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also generally
determined prior to the close of regular trading on the Exchange. Occasionally,
events which affect the values of such securities and such exchange rates may
occur between the times at which they are determined and the close of regular
trading on the Exchange and will therefore not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of such
securities occur during such period, then these securities may be valued at
their fair value as determined in good faith by the Trustees. All assets of the
Fund for which there is no other readily available valuation method are valued
at their fair value as determined in good faith by the Trustees.
VII. HOW TO BUY FUND SHARES
YOU MAY BUY FUND SHARES FROM ANY SECURITIES BROKER-DEALER WHICH HAS A
SALES AGREEMENT WITH PFD. IF YOU DO NOT HAVE A SECURITIES BROKER-DEALER, PLEASE
CALL 1-800-225-6292. SHARES WILL BE PURCHASED AT THE PUBLIC OFFERING PRICE,
THAT IS, THE NET ASSET VALUE PER SHARE NEXT COMPUTED AFTER RECEIPT OF A
PURCHASE ORDER, PLUS ANY APPLICABLE SALES CHARGE, EXCEPT AS SET FORTH BELOW.
The minimum initial investment is $1,000 for Class A, Class B and Class C
shares, except as specified below. The minimum initial investment is $50 for
Class A accounts being established to utilize monthly bank drafts, government
allotments, payroll deduction and other similar automatic investment plans.
Separate minimum investment requirements apply to retirement plans and to
telephone and wire orders placed by broker-dealers; no sales charge or minimum
requirements apply to the reinvestment of dividends or capital gains
distributions. The minimum subsequent investment is $50 for Class A shares and
$500 for Class B and Class C shares, except that the subsequent minimum
investment amount for Class B and C share accounts may be as little as $50 if
an automatic investment plan is established (see "Automatic Investment Plans").
TELEPHONE PURCHASES. Your account is automatically authorized to have the
telephone purchase privilege unless you indicate otherwise on your Account
Application or by writing to Pioneering Services Corporation ("PSC"). The
telephone purchase option may be used to purchase additional shares for an
existing Pioneer mutual fund account; it may not be used to establish a new
account. Proper account identification will be required for each telephone
purchase. A maximum of $25,000 per account may be purchased by telephone each
day. The telephone purchase privilege is available to Individual Retirement
Accounts ("IRAs") but may not be available to other types of retirement plan
accounts. Call PSC for more information.
YOU ARE STRONGLY URGED TO CONSULT WITH YOUR FINANCIAL REPRESENTATIVE PRIOR
TO REQUESTING A TELEPHONE PURCHASE. To purchase shares by telephone, you must
establish your bank account of record by completing the appropriate section of
your Account Application or an Account Options Form. PSC will electronically
debit the amount of each purchase from this predesignated bank account.
Telephone purchases may not be made for 30 days after the establishment of your
bank of record or any change to your bank information.
Telephone purchases will be priced at the net asset value plus any
applicable sales charge next determined after PSC's receipt of a telephone
purchase instruction and receipt of good funds (usually three days after the
purchase instruction). You may always elect to deliver purchases to PSC by
mail. See "Telephone Transactions" for additional information.
CLASS A SHARES
You may buy Class A shares at the public offering price, including a sales
charge, as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS A % OF DEALER
----------------------- ALLOWANCE
NET AS A % OF
OFFERING AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
- -------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.50 4.71 4.00
$100,000 but less than
$250,000 3.50 3.63 3.00
$250,000 but less than
$500,000 2.50 2.56 2.00
$500,000 but less than
$1,000,000 2.00 2.04 1.75
$1,000,000 or more -0- -0- see below
</TABLE>
The schedule of sales charges above is applicable to purchases of Class A
shares of the Fund by (i) an individual, (ii) an
10
<PAGE>
individual and his or her spouse and children under the age of 21 and (iii) a
trustee or other fiduciary of a trust estate or fiduciary account or related
trusts or accounts including pension, profit-sharing and other employee benefit
trusts qualified under Section 401 or 408 of the Internal Revenue Code of 1986,
as amended (the "Code"), although more than one beneficiary is involved. The
sales charges applicable to a current purchase of Class A shares of the Fund by
a person listed above is determined by adding the value of shares to be
purchased to the aggregate value (at the then current offering price) of shares
of any of the other Pioneer mutual funds previously purchased and then owned,
provided PFD is notified by such person or his or her broker-dealer each time a
purchase is made which would qualify. Pioneer mutual funds include all mutual
funds for which PFD serves as principal underwriter. At the sole discretion of
PFD, holdings of funds domiciled outside the U.S., but which are managed by
affiliates of PMC, may be included for this purpose.
No sales charge is payable at the time of purchase on investments of $1
million or more, or on purchases by participants in certain group plans
(described below) subject to a CDSC of 1% which may be imposed in the event of
a redemption of Class A shares within 12 months of purchase. See "How to Sell
Fund Shares". PFD may, in its discretion, pay a commission to broker-dealers
who initiate and are responsible for such purchases as follows: 1% on the first
$5 million invested; 0.50% on the next $45 million; and 0.25% on the excess
over $50 million. These commissions will not be paid if the purchaser is
affiliated with the broker-dealer or if the purchase represents the
reinvestment of a redemption made during the previous 12 calendar months.
Broker-dealers who receive a commission in connection with Class A share
purchases at net asset value by 401(a) or 401(k) retirement plans with 1,000 or
more eligible participants or with at least $10 million in plan assets will be
required to return any commission paid or a pro rata portion thereof if the
retirement plan redeems its shares within 12 months of purchase. See also "How
to Sell Fund Shares." In connection with PGI's acquisition of Mutual of Omaha
Fund Management Company and contingent upon the achievement of certain sales
objectives, PFD may pay to Mutual of Omaha Investor Services, Inc. 50% of PFD's
retention of any sales commission on sales of the Fund's Class A shares through
such dealer. From time to time, PFD may elect to reallow the entire initial
sales charge to participating dealers for all Class A sales with respect to
which orders are placed during a particular period. Dealers to whom
substantially the entire sales charge is reallowed may be deemed to be
underwriters under the federal securities laws.
QUALIFYING FOR A REDUCED SALES CHARGE. Class A shares of the Fund may be
sold at a reduced or eliminated sales charge to certain group plans ("Group
Plans") under which a sponsoring organization makes recommendations to, permits
group solicitation of, or otherwise facilitates purchases by, its employees,
members or participants. Class A shares of the Fund may be sold at net asset
value per share without a sales charge to 401(k) retirement plans with 100 or
more participants or at least $500,000 in plan assets. Information about such
arrangements is available from PFD.
Class A shares of the Fund may also be sold at net asset value per share
without a sales charge to: (a) current or former Trustees and officers of the
Fund and partners and employees of its legal counsel; (b) current or former
directors, officers, employees or sales representatives of PGI or its
subsidiaries; (c) current or former directors, officers, employees or sales
representatives of any subadviser or predecessor investment adviser to any
investment company for which PMC serves as an investment adviser, and the
subsidiaries or affiliates of such persons; (d) current or former officers,
partners, employees or registered representatives of broker- dealers which have
entered into sales agreements with PFD; (e) members of the immediate families of
any of the persons above; (f) any trust, custodian, pension, profit-sharing or
other benefit plan of the foregoing persons; (g) insurance company separate
accounts; (h) certain "wrap accounts" for the benefit of clients of financial
planners adhering to standards established by PFD; (i) other funds and accounts
for which PMC or any affiliate serves as investment adviser or manager; and (j)
certain unit investment trusts. Shares so purchased are purchased for investment
purposes and may not be resold except through redemption or repurchase by or on
behalf of the Fund. The availability of this privilege is conditioned on the
receipt by PFD of written notification of eligibility. Class A shares of the
Fund may be sold at net asset value per share without a sales charge to Optional
Retirement Program (the "Program") participants if (i) the employer has
authorized a limited number of investment company providers for the Program,
(ii) all authorized investment company providers offer their shares to Program
participants at net asset value, (iii) the employer has agreed in writing to
actively promote the authorized investment providers to Program participants and
(iv) the Program provides for a matching contribution for each participant
contribution. Class A shares of the Fund may also be sold at net asset value
without a sales charge in connection with certain reorganization, liquidation or
acquisition transactions involving other investment companies or personal
holding companies.
Reduced sales charges are available for purchases of $50,000 or more of
Class A shares (excluding any reinvestments of dividends and capital gains
distributions) made within a 13-month period pursuant to a Letter of Intent
("LOI") which may be established by completing the Letter of Intent section of
the Account Application. The reduced sales charge will be the charge that would
be applicable to the purchase of the specified amount of Class A shares as if
the shares had all been purchased at the same time. A purchase not made
pursuant to an LOI may be included if the LOI is submitted to PSC within 90
days of such purchase. You may also obtain the reduced sales charge by
including the value (at current offering price) of all your Class A shares in
the Fund and all other Pioneer mutual funds held of record as of the date of
your LOI in the amount used to determine the applicable sales charge for the
Class A shares to be purchased under the LOI. Five percent of your total
intended purchase amount will be held in escrow by PSC, registered in your
name, until the terms of the LOI are fulfilled.
11
<PAGE>
You are not obligated to purchase the amount specified in your LOI. If,
however, the amount actually purchased during the 13-month period is more or
less than that indicated in your LOI, an adjustment in the sales charge will be
made. If a payment to cover actual sales charges is due, it must be paid to PFD
within 20 days after PFD or your dealer sends you a written request otherwise
PFD will direct PSC to liquidate sufficient shares from your escrow account to
cover the amount due. See the Statement of Additional Information for more
information.
Investors who are clients of a broker-dealer with a current sales
agreement with PFD may purchase Class A shares of the Fund at net asset value,
without a sales charge, to the extent that the purchase price is paid out of
proceeds from one or more redemptions by the investor of shares of certain
other mutual funds. In order for a purchase to qualify for this privilege, the
investor must document to the broker-dealer that the redemption occurred within
60 days immediately preceding the purchase of Class A shares; that the client
paid a sales charge on the original purchase of the shares redeemed; and that
the mutual fund whose shares were redeemed also offers net asset value
purchases to redeeming shareholders of any of the Pioneer mutual funds. Further
details may be obtained from PFD.
CLASS B SHARES
You may buy Class B shares at net asset value per share next computed
after receipt of a purchase order without the imposition of an initial sales
charge; however, Class B shares redeemed within six years of purchase will be
subject to a CDSC at the rates shown in the table below. The charge will be
assessed on the amount equal to the lesser of the current market value or the
original purchase cost of the shares being redeemed. No CDSC will be imposed on
increases in account value above the initial purchase price, including shares
derived from the reinvestment of dividends or capital gains distributions.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of purchase until the time of redemption of Class B shares. For
the purpose of determining the number of years from the time of any purchase,
all payments during a quarter will be aggregated and deemed to have been made
on the first day of that quarter. In processing redemptions of Class B shares,
the Fund will first redeem shares not subject to any CDSC, and then shares held
longest during the six-year period. As a result, you will pay the lowest
possible CDSC.
The CDSC for Class B shares subject to a CDSC upon redemption will be
determined as follows:
<TABLE>
<CAPTION>
YEAR SINCE CDSC AS A % OF DOLLAR
PURCHASE AMOUNT SUBJECT TO CDSC
- -------------------------------- -----------------------
<S> <C>
First .......................... 4.0%
Second ......................... 4.0%
Third .......................... 3.0%
Fourth ......................... 3.0%
Fifth .......................... 2.0%
Sixth .......................... 1.0%
Seventh and thereafter ......... -0-
</TABLE>
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class B shares, including the payment of
compensation to broker-dealers.
Class B shares will automatically convert into Class A shares at the
beginning of the calendar quarter that is eight years after the purchase date,
except as noted below. Class B shares acquired by exchange from Class B shares
of another Pioneer mutual fund will convert into Class A shares based on the
date of the initial purchase and the applicable CDSC. Class B shares acquired
through reinvestment of distributions will convert into Class A shares based on
the date of the initial purchase to which such shares relate. For this purpose,
Class B shares acquired through reinvestment of distributions will be
attributed to particular purchases of Class B shares in accordance with such
procedures as the Trustees may determine from time to time. The conversion of
Class B shares to Class A shares is subject to the continuing availability of a
ruling from the Internal Revenue Service (the "IRS") or an opinion of counsel
that such conversions will not constitute taxable events for federal tax
purposes. The conversion of Class B shares to Class A shares will not occur if
such ruling or opinion is not available and, therefore, Class B shares would
continue to be subject to higher expenses than Class A shares for an
indeterminate period.
CLASS C SHARES
You may buy Class C shares at net asset value per share next computed
after receipt of a purchase order without the imposition of an initial sales
charge; however, Class C shares redeemed within one year of purchase will be
subject to a CDSC of 1%. The charge will be assessed on the amount equal to the
lesser of the current market value or the original purchase cost of the shares
being redeemed. No CDSC will be imposed on increases in account value above the
initial purchase price, including shares derived from the reinvestment of
dividends or capital gains distributions. Class C shares do not convert to any
other class of Fund shares.
For the purpose of determining the time of any purchase, all payments
during a quarter will be aggregated and deemed to have been made on the first
day of that quarter. In processing redemptions of Class C shares, the Fund will
first redeem shares not subject to any CDSC, and then shares held for the
shortest period of time during the one-year period. As a result, you will pay
the lowest possible CDSC.
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class C shares, including the payment of
compensation to broker-dealers.
WAIVER OR REDUCTION OF CONTINGENT DEFERRED SALES CHARGE.
The CDSC on Class B shares may be waived or reduced for non-retirement accounts
if: (a) the redemption results from the death of all registered owners of an
account (in the case of an UGMA, an UTMA or a trust account, waiver applies
upon the death of all beneficial owners) or a total and permanent
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disability (as defined in Section 72 of the Code) of all registered owners
occurring after the purchase of the shares being redeemed or (b) the redemption
is made in connection with limited automatic redemptions as set forth in
"Systematic Withdrawal Plans" (limited in any year to 10% of the value of the
account in the Fund at the time the withdrawal plan is established).
The CDSC on Class B shares may be waived or reduced for retirement plan
accounts if: (a) the redemption results from the death or a total and permanent
disability (as defined in Section 72 of the Code) occurring after the purchase
of the shares being redeemed of a shareholder or participant in an
employer-sponsored retirement plan; (b) the distribution is to a participant in
an IRA, 403(b) or employer-sponsored retirement plan, is part of a series of
substantially equal payments made over the life expectancy of the participant
or the joint life expectancy of the participant and his or her beneficiary or
as scheduled periodic payments to a participant (limited in any year to 10% of
the value of the participant's account at the time the distribution amount is
established; a required minimum distribution due to the participant's
attainment of age 70-1/2 may exceed the 10% limit only if the distribution
amount is based on plan assets held in Pioneer mutual funds); (c) the
distribution is from a 401(a) or 401(k) retirement plan and is a return of
excess employee deferrals or employee contributions or a qualifying hardship
distribution as defined by the Code or results from a termination of employment
(limited with respect to a termination to 10% per year of the value of the
plan's assets in the Fund as of the later of the prior December 31 or the date
the account was established unless the plan's assets are being rolled over to
or reinvested in the same class of shares of a Pioneer mutual fund subject to
the CDSC of the shares originally held); (d) the distribution is from an IRA,
403(b) or employer-sponsored retirement plan and is to be rolled over to or
reinvested in the same class of shares in a Pioneer mutual fund and which will
be subject to the applicable CDSC upon redemption; (e) the distribution is in
the form of a loan to a participant in a plan which permits loans (each
repayment of the loan will constitute a new sale which will be subject to the
applicable CDSC upon redemption); or (f) the distribution is from a qualified
defined contribution plan and represents a participant's directed transfer
(provided that this privilege has been preauthorized through a prior agreement
with PFD regarding participant directed transfers).
The CDSC on Class C shares and on any Class A shares subject to a CDSC may
be waived or reduced as follows: (a) for automatic redemptions as described in
"Systematic Withdrawal Plans" (limited to 10% of the value of the account) (b)
if the redemption results from the death or a total and permanent disability
(as defined in Section 72 of the Code) occurring after the purchase of the
shares being redeemed of a shareholder or participant in an employer-sponsored
retirement plan; (c) if the distribution is part of a series of substantially
equal payments made over the life expectancy of the participant or the joint
life expectancy of the participant and his or her beneficiary; or (d) if the
distribution is to a participant in an employer-sponsored retirement plan and
is (i) a return of excess employee deferrals or contributions, (ii) a
qualifying hardship distribution as defined by the Code, (iii) from a
termination of employment, (iv) in the form of a loan to a participant in a
plan which permits loans, or (v) from a qualified defined contribution plan and
represents a participant's directed transfer (provided that this privilege has
been preauthorized through a prior agreement with PFD regarding participant
directed transfers).
The CDSC on any shares subject to a CDSC may be waived or reduced for
either non-retirement or retirement plan accounts if the redemption is made
pursuant to the Fund's right to liquidate or involuntarily redeem shares in a
shareholder's account. The CDSC on any shares subject to a CDSC will not be
applicable if the selling broker-dealer elects, with PFD's approval, to waive
receipt of the commission normally paid at the time of the sale.
BROKER-DEALERS. An order for any class of Fund shares received by a
broker-dealer prior to the close of regular trading on the Exchange is
confirmed at the price appropriate for that Class as determined at the close of
regular trading on the Exchange on the day the order is received, provided the
order is received by PFD prior to PFD's close of business (usually, 5:30 p.m.
Eastern time). It is the responsibility of broker-dealers to transmit orders so
that they will be received by PFD prior to its close of business. PFD or its
affiliates may provide additional compensation to certain dealers or such
dealers' affiliates based on certain objective criteria established from time
to time by PFD. All such payments are made out of PFD's or the affiliate's own
assets. These payments will not change the price an investor will pay for
shares or the amount that the Fund will receive from such sale.
GENERAL. The Fund reserves the right in its sole discretion to withdraw
all or any part of the offering of shares when, in the judgment of the Fund's
management, such withdrawal is in the best interest of the Fund. An order to
purchase shares is not binding on, and may be rejected by, PFD until it has
been confirmed in writing by PFD and payment has been received.
VIII. HOW TO SELL FUND SHARES
YOU CAN ARRANGE TO SELL (REDEEM) FUND SHARES ON ANY DAY THE EXCHANGE IS
OPEN BY SELLING EITHER SOME OR ALL OF YOUR SHARES TO THE FUND.
You may sell your shares either through your broker-dealer or directly to
the Fund. Please note the following:
[bullet] If you are selling shares from a retirement account, other than an
IRA, you must make your request in writing (except for exchanges to
other Pioneer mutual funds which can be requested by phone or in
writing). Call 1-800-622- 0176 for more information.
[bullet] If you are selling shares from a non-retirement account or IRA, you
may use any of the methods described below.
Your shares will be sold at the share price next calculated after your
order is received in good order less any applicable CDSC. Sale proceeds
generally will be sent to you by check, bank wire, or electronic funds transfer
normally within seven days after your order is received in good order. The Fund
reserves the right to withhold payment of the sale proceeds
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until checks received by the Fund in payment for the shares being sold have
cleared, which may take up to 15 calendar days from the purchase date.
IN WRITING. You may sell your shares by delivering a written request,
signed by all registered owners, in good order to PSC; however, you must use a
written request, including a signature guarantee, to sell your shares if any of
the following applies:
[bullet] you wish to sell over $100,000 worth of shares,
[bullet] your account registration or address has changed within the last 30
days,
[bullet] the check is not being mailed to the address on your account
(address of record),
[bullet] the check is not being made out to the account owners, or
[bullet] the sale proceeds are being transferred to a Pioneer mutual fund
account with a different registration.
Your request should include your name, the Fund's name, your Fund account
number, the class of shares to be redeemed, the dollar amount or number of
shares to be redeemed, and any other applicable requirements as described
below. Unless instructed otherwise, PSC will send the proceeds of the sale to
the address of record. Fiduciaries and corporations are required to submit
additional documents. For more information, contact PSC at 1- 800-225-6292.
Written requests will not be processed until they are received in good
order by PSC. Good order means that there are no outstanding claims or requests
to hold redemptions on the account, any certificates are endorsed by the record
owner(s) exactly as the shares are registered and the signature(s) are
guaranteed by eligible guarantor. You should be able to obtain a signature
guarantee from a bank, broker, dealer, credit union (if authorized under state
law), securities exchange or association, clearing agency or savings
association. A notary public cannot provide a signature guarantee. Signature
guarantees are not accepted by facsimile ("fax"). For additional information
about the necessary documentation for redemption by mail, please contact PSC at
1-800-225-6292.
BY TELEPHONE OR BY FAX. Your account is automatically authorized to have
the telephone redemption privilege unless you indicate otherwise on your
Account Application or by writing to PSC. Proper account identification will be
required for each telephone redemption. The telephone redemption option is not
available to retirement plan accounts, except IRAs. A maximum of $100,000 per
account per day may be redeemed by telephone or fax and the proceeds may be
received by check or by bank wire or electronic funds transfer. To receive the
proceeds by check: the check must be made payable exactly as the account is
registered and the check must be sent to the address of record which must not
have changed in the last 30 days. To receive the proceeds by bank wire or
electronic funds transfer: the proceeds must be sent to the bank wire address
of record which must have been properly predesignated either on your Account
Application or on an Account Options Form and which must not have changed in
the last 30 days. To redeem by fax, send your redemption request to
1-800-225-4240. You may always elect to deliver redemption instructions to PSC
by mail. See "Telephone Transactions" below. Telephone and fax redemptions will
be priced as described above. YOU ARE STRONGLY URGED TO CONSULT WITH YOUR
FINANCIAL REPRESENTATIVE PRIOR TO REQUESTING A TELEPHONE REDEMPTION.
SELLING SHARES THROUGH YOUR BROKER-DEALER. The Fund has authorized PFD to
act as its agent in the repurchase of shares of the Fund from qualified
broker-dealers and reserves the right to terminate this procedure at any time.
Your broker-dealer must receive your request before the close of business on
the Exchange and transmit it to PFD before PFD's close of business to receive
that day's redemption price. Your broker-dealer is responsible for providing
all necessary documentation to PFD and may charge you for its services.
SMALL ACCOUNTS. The minimum account value is $500. If you hold shares of
the Fund in an account with a net asset value of less than the minimum required
amount due to redemptions or exchanges, the Fund may redeem the shares held in
this account at net asset value if you have not increased the net asset value
of the account to at least the minimum required amount within six months of
notice by the Fund to you of the Fund's intention to redeem the shares.
CDSC ON CLASS A SHARES. Purchases of Class A shares of $1 million or more,
or by participants in a Group Plan which were not subject to an initial sales
charge, may be subject to a CDSC upon redemption. A CDSC is payable to PFD on
these investments in the event of a share redemption within 12 months following
the share purchase, at the rate of 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividend and capital gain distributions) or
the total cost of such shares. Shares subject to the CDSC which are exchanged
into another Pioneer mutual fund will continue to be subject to the CDSC until
the original 12-month period expires. However, no CDSC is payable upon
redemption with respect to Class A shares purchased by 401(a) or 401(k)
retirement plans with 1,000 or more eligible participants or with at least $10
million in plan assets.
GENERAL. Redemptions may be suspended or payment postponed during any
period in which any of the following conditions exist: the Exchange is closed
or trading on the Exchange is restricted; an emergency exists as a result of
which disposal by the Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Fund to fairly
determine the value of the net assets of its portfolio; or the SEC, by order,
so permits.
Redemptions and repurchases are taxable transactions to shareholders. The
net asset value per share received upon redemption or repurchase may be more or
less than the cost of shares to an investor, depending on the market value of
the portfolio at the time of redemption or repurchase.
IX. HOW TO EXCHANGE FUND SHARES
WRITTEN EXCHANGES. You may exchange your shares by sending a letter of
instruction to PSC. Your letter should include your name, the name of the
Pioneer mutual fund out of which you wish to exchange and the name of the
Pioneer
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mutual fund into which you wish to exchange, your fund account number(s), the
Class of shares to be exchanged and the dollar amount or number of shares to be
exchanged. Written exchange requests must be signed by all record owner(s)
exactly as the shares are registered.
TELEPHONE EXCHANGES. Your account is automatically authorized to have the
telephone exchange privilege unless you indicate otherwise on your Account
Application or by writing to PSC. Proper account identification will be
required for each telephone exchange. Telephone exchanges may not exceed
$500,000 per account per day. Each telephone exchange request, whether by voice
or by FactFone(SM), will be recorded. YOU ARE STRONGLY URGED TO CONSULT WITH
YOUR FINANCIAL REPRESENTATIVE PRIOR TO REQUESTING A TELEPHONE EXCHANGE. See
"Telephone Transactions" below.
AUTOMATIC EXCHANGES. You may automatically exchange shares from one
Pioneer mutual fund account for shares of the same class in another Pioneer
mutual fund account on a monthly or quarterly basis. The accounts must have
identical registrations and the originating account must have a minimum balance
of $5,000. The exchange will be effective on the day of the month designated on
your Account Application or Account Options Form.
GENERAL. Exchanges must be at least $1,000. You may exchange your
investment from one class of Fund shares at net asset value, without a sales
charge, for shares of the same class of any other Pioneer mutual fund. Not all
Pioneer mutual funds offer more than one class of shares. A new Pioneer account
opened through an exchange must have a registration identical to that on the
original account.
Shares which would normally be subject to a CDSC upon redemption will not
be charged the applicable CDSC at the time of an exchange. Shares acquired in
an exchange will be subject to the CDSC of the shares originally held. For
purposes of determining the amount of any applicable CDSC, the length of time
you have owned shares acquired by exchange will be measured from the date you
acquired the original shares and will not be affected by any subsequent
exchange.
Exchange requests received by PSC before 4:00 p.m. Eastern time will be
effective on that day if the requirements above have been met, otherwise, they
will be effective on the next business day. PSC will process exchanges only
after receiving an exchange request in good order. There are currently no fees
or sales charges imposed at the time of an exchange. An exchange of shares may
be made only in states where legally permitted. For federal and (generally)
state income tax purposes, an exchange is considered to be a sale of the shares
of the fund exchanged and a purchase of shares in another Pioneer mutual fund.
Therefore, an exchange could result in a gain or loss on the shares sold,
depending on the tax basis of these shares and the timing of the transaction,
and special tax rules may apply.
You should consider the differences in objectives and policies of the
Pioneer mutual funds, as described in each fund's current prospectus, before
making any exchange. For the protection of the Fund's performance and
shareholders, the Fund and PFD reserve the right to refuse any exchange request
or restrict, at any time without notice, the number and/or frequency of
exchanges to prevent abuses of the exchange privilege. Such abuses may arise
from frequent trading in response to short-term market fluctuations, a pattern
of trading by an individual or group that appears to be an attempt to "time the
market," or any other exchange request which, in the view of management, will
have a detrimental effect on the Fund's portfolio management strategy or its
operations. In addition, the Fund and PFD reserve the right to charge a fee for
exchanges or to modify, limit, suspend or discontinue the exchange privilege
with notice to shareholders as required by law.
X. DISTRIBUTION PLANS
The Fund has adopted a Plan of Distribution for each class of shares (the
"Class A Plan," "Class B Plan," and "Class C Plan") in accordance with Rule
12b-1 under the 1940 Act pursuant to which certain distribution and service
fees are paid to PFD.
Pursuant to the Class A Plan, the Fund reimburses PFD for its actual
expenditures to finance any activity primarily intended to result in the sale
of Class A shares or to provide services to holders of Class A shares, provided
the categories of expenses for which reimbursement is made are approved by the
Fund's Board of Trustees. As of the date of this Prospectus, the Board of
Trustees has approved the following categories of expenses for Class A shares
of the Fund: (i) a service fee to be paid to qualified broker-dealers in an
amount not to exceed 0.25% per annum of the Fund's daily net assets
attributable to Class A shares; (ii) reimbursement to PFD for its expenditures
for broker-dealer commissions and employee compensation on certain sales of the
Fund's Class A shares with no initial sales charge (see "How to Buy Fund
Shares"); and (iii) reimbursement to PFD for expenses incurred in providing
services to Class A shareholders and supporting broker-dealers and other
organizations (such as banks and trust companies) in their efforts to provide
such services. Banks are currently prohibited under the Glass- Steagall Act
from providing certain underwriting or distribution services. If a bank was
prohibited from acting in any capacity or providing any of the described
services, management would consider what action, if any, would be appropriate.
Expenditures of the Fund pursuant to the Class A Plan are accrued daily
and may not exceed 0.25% of the Fund's average daily net assets attributable to
Class A shares. Distribution expenses of PFD are expected to substantially
exceed the distribution fees paid by the Fund in a given year. The Class A Plan
may not be amended to increase materially the annual percentage limitation of
average net assets which may be spent for the services described therein
without approval of the Class A shareholders of the Fund.
Both the Class B Plan and the Class C Plan provide that the Fund will
compensate PFD by paying a distribution fee at the annual rate of 0.75% of the
Fund's average daily net assets attributable to the applicable class of shares
and will pay PFD a service fee at the annual rate of 0.25% of the Fund's
average daily net assets attributable to that class of shares. The distribution
fee is intended to compensate PFD for its Class B and Class C distribution
services to the Fund. The service fee is
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intended to be additional compensation for personal services and/or account
maintenance services with respect to Class B or Class C shares. PFD also
receives the proceeds of any CDSC imposed on the redemption of Class B or Class
C shares.
Commissions of 4% of the amount invested in Class B shares, equal to 3.75%
of the amount invested and a first year's service fee equal to 0.25% of the
amount invested, are paid to broker-dealers who have sales agreements with PFD.
PFD may advance to dealers the first-year service fee at a rate up to 0.25% of
the purchase price of such shares and, as compensation therefore, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Commencing in the 13th month following the purchase
of Class B shares, dealers will become eligible for additional annual service
fees of up to 0.25% of the net asset value of such shares.
Commissions of up to 1% of the amount invested in Class C shares,
consisting of 0.75% of the amount invested and a first year's service fee of
0.25% of the amount invested, are paid to broker-dealers who have sales
agreements with PFD. PFD may advance to dealers the first-year service fee at a
rate up to 0.25% of the purchase price of such shares and, as compensation
therefore, PFD may retain the service fee paid by the Fund with respect to such
shares for the first year after purchase. Commencing in the 13th month
following the purchase of Class C shares, dealers will become eligible for
additional annual distribution fees and service fees of up to 0.75% and 0.25%,
respectively, of the net asset value of such shares.
When a broker-dealer sells Class B or Class C shares and elects, with
PFD's approval, to waive its right to receive the commission normally paid at
the time of the sale, PFD may cause all or a portion of the distribution fees
described above to be paid to the broker-dealer.
Dealers may from time to time be required to meet certain criteria in
order to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan or the Class C Plan for which there
is no dealer of record or for which qualification standards have not been met
as partial consideration for personal services and/or account maintenance
services performed by PFD or its affiliates for shareholder accounts.
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION
The Fund has elected to be treated, has qualified and intends to qualify
each year as a "regulated investment company" under Subchapter M of the Code,
so that it will not pay federal income tax on income and capital gains
distributed to shareholders as required under the Code.
Under the Code, the Fund will be subject to a nondeductible 4% federal
excise tax on a portion of its undistributed ordinary income and capital gains
if it fails to meet certain distribution requirements with respect to each
calendar year. The Fund intends to make distributions in a timely manner and
accordingly does not expect to be subject to the excise tax.
The Fund's policy is to pay to shareholders dividends from net investment
income, if any, annually during the month of December and to make distributions
from net long-term capital gains, if any, usually in December. Distributions
from net short-term capital gains, if any, may be paid with such dividends;
dividends from income and/or capital gains may also be made at such other times
as may be necessary for the Fund to avoid federal income or excise tax.
Generally, dividends from the Fund's net investment income, market discount
income, net short-term capital gains and certain net foreign exchange gains are
taxable under the Code as ordinary income, and dividends from the Fund's net
long-term capital gains are taxable as long-term capital gains. The Fund's
distributions of long-term capital gains to individuals or other noncorporate
taxpayers are subject to different maximum tax rates (which will be indicated
in the annual tax information the Fund provides to shareholders), depending
generally upon the sources of, and the Fund's holding periods for the assets
that produce, the gains.
UNLESS SHAREHOLDERS SPECIFY OTHERWISE, ALL DISTRIBUTIONS WILL BE
AUTOMATICALLY REINVESTED IN ADDITIONAL FULL AND FRACTIONAL SHARES OF THE FUND.
FOR FEDERAL INCOME TAX PURPOSES, ALL DIVIDENDS ARE TAXABLE AS DESCRIBED ABOVE
WHETHER A SHAREHOLDER TAKES THEM IN CASH OR REINVESTS THEM IN ADDITIONAL SHARES
OF THE FUND. Information as to the federal tax status of dividends and
distributions will be provided to shareholders annually. For further
information on the distribution options available to shareholders, see
"Distribution Options" and "Directed Dividends" below.
Distributions by the Fund of the dividend income it receives from U.S.
corporations may qualify for the dividends-received deduction for corporate
shareholders, subject to holding-period requirements and debt-financing
restrictions under the Code.
The Fund may be subject to foreign withholding taxes or other foreign
taxes on income (possibly including, in some cases, capital gains) on certain
foreign investments, which will reduce the yield on or return from those
investments. In any year in which the Fund qualifies, it may make an election
that will permit certain of its shareholders to take a credit or a deduction
for their shares of qualified foreign taxes paid by the Fund. Each shareholder
would then include in gross income (in addition to dividends actually received)
his or her share of the amount of qualified foreign taxes paid by the Fund. If
this election is made, the Fund will notify its shareholders annually as to
their share of the amount of qualified foreign taxes paid and the foreign
source income of the Fund.
Dividends and other distributions and the proceeds of redemptions,
exchanges or repurchases of Fund shares paid to individuals and other
non-exempt payees will be subject to 31% backup withholding of federal income
tax if the Fund is not provided with the shareholder's correct taxpayer
identification number and certification that the number is correct and that the
shareholder is not subject to backup withholding or if the Fund receives notice
from the IRS or a broker that such withholding applies. Please refer to the
Account Application for additional information.
The description above relates only to U.S. federal income tax consequences
for shareholders who are U.S. persons,
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i.e., U.S. citizens or residents or U.S. corporations, partnerships, trusts or
estates and who are subject to U.S. federal income tax. Non-U.S. shareholders
and tax-exempt shareholders are subject to tax treatment that is not described
above. Shareholders should consult their own tax advisors regarding state,
local and other applicable tax laws, including the effect of recent federal tax
legislation, in their particular circumstances.
XII. SHAREHOLDER SERVICES
PSC is the shareholder services and transfer agent for shares of the Fund.
PSC, a Massachusetts corporation, is a wholly owned subsidiary of PGI. PSC's
offices are located at 60 State Street, Boston, Massachusetts 02109, and
inquiries to PSC should be mailed to Shareholder Services, Pioneering Services
Corporation, P.O. Box 9014, Boston, Massachusetts 02205-9014. Brown Brothers
Harriman & Co. (the "Custodian") serves as the custodian of the Fund's
portfolio securities and other assets. The principal business address of the
mutual fund division of the Custodian is 40 Water Street, Boston, Massachusetts
02109.
ACCOUNT AND CONFIRMATION STATEMENTS
PSC maintains an account for each shareholder and all transactions of the
shareholder are recorded in this account. Confirmation statements showing the
details of transactions are sent to shareholders as transactions occur, except
Automatic Investment Plan transactions which are confirmed quarterly. The
Pioneer Combined Account Statement, mailed quarterly, is available to all
shareholders who have more than one Pioneer mutual fund account.
Shareholders whose shares are held in the name of an investment
broker-dealer or other party will not normally have an account with the Fund
and might not be able to utilize some of the services available to shareholders
of record. Examples of services that might not be available are purchases,
exchanges or redemptions of shares by mail or telephone, automatic reinvestment
of dividends and capital gains distributions, withdrawal plans, LOIs or rights
of accumulation and newsletters.
ADDITIONAL INVESTMENTS
You may add to your account by sending a check (minimum of $50 for Class A
shares and $500 for Class B and Class C shares) to PSC (account number and
class of shares should be clearly indicated). The bottom portion of a
confirmation statement may be used as a remittance slip to make additional
investments.
Additions to your account, whether by check or through a Pioneer
Investomatic Plan, are invested in full and fractional shares of the Fund at
the applicable offering price in effect as of the close of regular trading on
the Exchange on the day of receipt.
AUTOMATIC INVESTMENT PLANS
You may arrange for regular automatic investments of $50 or more through
government/military allotments, payroll deduction or through a Pioneer
Investomatic Plan. A Pioneer Investomatic Plan provides for monthly or
quarterly investments by means of a preauthorized electronic funds transfer
from your bank account. Pioneer Investomatic Plan investments are voluntary,
and you may discontinue your plan at any time or change your plan elections for
the dollar amount, frequency or investment date by calling PSC at 1-800-225-
6292, or by sending a written request to Shareholder Services, Pioneering
Services Corporation, P.O. Box 9014, Boston, Massachusetts 02205-9014. A change
to your bank information must be made in writing on an Account Options Form.
You should allow up to five business days for PSC to make changes to an
established plan. PSC acts as agent for the purchaser, the broker-dealer and
PFD in maintaining these plans.
FINANCIAL REPORTS AND TAX INFORMATION
As a shareholder, you will receive financial reports at least
semiannually. In January of each year, the Fund will mail you information about
the tax status of dividends and distributions.
DISTRIBUTION OPTIONS
Dividends and capital gains distributions, if any, will automatically be
invested in additional shares of the Fund, at the applicable net asset value
per share, unless you indicate another option on the Account Application.
Two other options available are (a) dividends in cash and capital gains
distributions in additional shares; and (b) all dividends and distributions in
cash. These two options are not available, however, for retirement plans or for
an account with a net asset value of less than $500. Changes in your
distribution options may be made by written request to PSC.
If you elect to receive either dividends or dividends and capital gains in
cash and a distribution check issued to you is returned by the U.S. Postal
Service as not deliverable or a distribution check remains uncashed for six
months or more, the amount of the check may be reinvested in your account. Such
additional shares will be purchased at the then current net asset value.
Furthermore, the distribution option on the account will automatically be
changed to the reinvestment option until such time as you request a different
option by writing to PSC.
DIRECTED DIVIDENDS
You may elect (in writing) to have the dividends paid by one Pioneer
mutual fund account invested in a second Pioneer mutual fund account. The value
of this second account must be at least $1,000 ($500 for Pioneer Fund or
Pioneer II). Invested dividends may be in any amount. There are no fees or
charges for this service. Retirement plan shareholders may only direct
dividends to accounts with identical registrations; e.g., PGI IRA Cust for John
Smith may only go into another account registered PGI IRA Cust for John Smith.
DIRECT DEPOSIT
If you have elected to take distributions, whether dividends or dividends
and capital gains, in cash, or have established a Systematic Withdrawal Plan,
you may choose to have those cash payments deposited directly into your
savings, checking, or NOW bank account. You may establish this service by
completing the appropriate section on the Account Application when opening a
new account or the Account Options Form for an existing account.
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VOLUNTARY TAX WITHHOLDING
You may request (in writing) that PSC withhold 28% of the dividends and
capital gains distributions paid from your account (before any reinvestment)
and forward the amount withheld to the IRS as a credit against your federal
income taxes. This option is not available for retirement plan accounts or for
accounts subject to backup withholding.
TELEPHONE TRANSACTIONS
Your account is automatically authorized to have telephone transaction
privileges unless you indicate otherwise on your Account Application or by
writing to PSC. You may purchase, sell or exchange Fund shares by telephone.
See "How to Buy Fund Shares," "How to Sell Fund Shares" and "How to Exchange
Fund Shares" for more information. For personal assistance, call 1-800-225-6292
between 8:00 a.m. and 9:00 p.m. Eastern time on weekdays. Computer-assisted
transactions may be available to shareholders who have pre-recorded certain
bank information (see "FactFone(SM)"). YOU ARE STRONGLY URGED TO CONSULT WITH
YOUR FINANCIAL REPRESENTATIVE PRIOR TO REQUESTING ANY TELEPHONE TRANSACTION.
To confirm that each transaction instruction received by telephone is
genuine, PSC will record each telephone transaction, require the caller to
provide the personal identification number ("PIN") for the account and send you
a written confirmation of each telephone transaction. Different procedures may
apply to accounts that are registered to non-U.S. citizens or that are held in
the name of an institution or in the name of an investment broker-dealer or
other third party. If reasonable procedures, such as those described above, are
not followed, the Fund may be liable for any loss due to unauthorized or
fraudulent instructions. The Fund may implement other procedures from time to
time. In all other cases, neither the Fund, PSC nor PFD will be responsible for
the authenticity of instructions received by telephone; therefore, you bear the
risk of loss for unauthorized or fraudulent telephone transactions.
During times of economic turmoil or market volatility or as a result of
severe weather or a natural disaster, it may be difficult to contact the Fund
by telephone to institute a redemption or exchange. You should communicate with
the Fund in writing if you are unable to reach the Fund by telephone.
FACTFONE(SM)
FactFone(SM) is an automated inquiry and telephone transaction system
available to Pioneer mutual fund shareholders by dialing 1-800-225-4321.
FactFone(SM) allows you to obtain current information on your Pioneer mutual
fund accounts and to inquire about the prices and yields of all publicly
available Pioneer mutual funds. In addition, you may use FactFone(SM) to make
computer-assisted telephone purchases, exchanges and redemptions from your
Pioneer mutual fund accounts if you have activated your PIN. Telephone purchases
and redemptions require the establishment of a bank account of record. YOU ARE
STRONGLY URGED TO CONSULT WITH YOUR FINANCIAL REPRESENTATIVE PRIOR TO REQUESTING
ANY TELEPHONE TRANSACTION. Shareholders whose accounts are registered in the
name of a broker-dealer or other third party may not be able to use
FactFone(SM). See "How to Buy Fund Shares," "How to Sell Fund Shares," "How to
Exchange Fund Shares" and "Telephone Transactions." Call PSC for assistance.
RETIREMENT PLANS
You should contact the Retirement Plans Department of PSC at
1-800-622-0176 for information relating to tax-deferred retirement plans for
individuals, businesses, and tax-exempt organizations. The Account Application
accompanying this Prospectus should not be used to establish any of these
plans. Separate applications are required.
TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD)
If you have a hearing disability and access to TDD keyboard equipment, you
can call our TDD number toll-free at 1-800- 225-1997, weekdays from 8:30 a.m.
to 5:30 p.m. Eastern time, to contact our telephone representatives with
questions about your account.
SYSTEMATIC WITHDRAWAL PLANS
If your account has a total value of at least $10,000, you may establish a
Systematic Withdrawal Plan ("SWP") providing for fixed payments at regular
intervals. Withdrawals from Class B and Class C share accounts are limited to
10% of the value of the account at the time the SWP is implemented. See "Waiver
or Reduction of Contingent Deferred Sales Charge" for more information.
Periodic payments of $50 or more will be sent to you, or any person
designated by you, monthly or quarterly, and your periodic redemptions of
shares may be taxable to you. Payments can be made either by check or by
electronic funds transfer to a bank account designated by you. If you direct
that withdrawal payments be paid to another person after you have opened your
account, a signature guarantee must accompany your instructions. Purchases of
Class A shares of the Fund at a time when you have a SWP in effect may result
in the payment of unnecessary sales charges and may, therefore, be
disadvantageous.
You may obtain additional information by calling PSC at 1-800-225-6292 or
by referring to the Statement of Additional Information.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY)
If you redeem all or part of your Class A shares of the Fund, you may
reinvest all or part of the redemption proceeds without a sales charge in Class
A shares of the Fund if you send a written request to PSC not more than 90 days
after your shares were redeemed. Your redemption proceeds will be reinvested at
the next determined net asset value of the Class A shares of the Fund after
receipt of the written request for reinstatement. You may realize a gain or
loss for federal income tax purposes as a result of the redemption, and special
tax rules may apply if a reinstatement occurs. In addition, if a redemption
resulted in a loss and an investment is made in shares of the Fund within 30
days before or after the redemption, you may not be able to recognize the loss
for federal income tax purposes. Subject to the provisions outlined under "How
to Exchange Fund Shares" above, you may also reinvest in Class A shares of
other Pioneer mutual funds; in this case you must meet the minimum investment
requirement for each fund you enter.
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The 90-day reinstatement period may be extended by PFD for periods of up
to one year for shareholders living in areas that have experienced a natural
disaster, such as a flood, hurricane, tornado or earthquake.
----------------------------------------------
THE OPTIONS AND SERVICES AVAILABLE TO SHAREHOLDERS, INCLUDING THE TERMS OF
THE EXCHANGE PRIVILEGE AND THE PIONEER INVESTOMATIC PLAN, MAY BE REVISED,
SUSPENDED, OR TERMINATED AT ANY TIME BY PFD OR BY THE FUND. YOU MAY ESTABLISH
THE SERVICES DESCRIBED IN THIS SECTION WHEN YOU OPEN YOUR ACCOUNT. YOU MAY ALSO
ESTABLISH OR REVISE MANY OF THEM ON AN EXISTING ACCOUNT BY COMPLETING AN
ACCOUNT OPTIONS FORM, WHICH YOU MAY OBTAIN BY CALLING 1-800-225-6292.
XIII. THE FUND
The Fund, a diversified open-end management investment company (commonly
referred to as a mutual fund), was established as a Delaware business trust on
July 26, 1996. The Fund has authorized an unlimited number of shares of
beneficial interest. As an open-end investment company, the Fund continuously
offers its shares to the public and under normal conditions must redeem its
shares upon the demand of any shareholder at the then current net asset value
per share less any applicable CDSC. See "How to Sell Fund Shares." The Fund is
not required, and does not intend, to hold annual shareholder meetings although
special meetings may be called for the purposes of electing or removing
Trustees, changing fundamental investment restrictions or approving a
management contract.
The Fund reserves the right to create and issue additional series of
shares. The Trustees have the authority, without further shareholder approval,
to classify and reclassify the shares of the Fund, or any additional series of
the Fund, into one or more classes. As of the date of this Prospectus, the
Trustees have authorized the issuance of three classes of shares, designated
Class A, Class B and Class C. The shares of each class represent an interest in
the same portfolio of investments of the Fund. Each class has equal rights as
to voting, redemption, dividends and liquidation, except that each class bears
different distribution and transfer agent fees and may bear other expenses
properly attributable to the particular class. Class A, Class B and Class C
shareholders have exclusive voting rights with respect to the Rule 12b-1
distribution plans adopted by holders of those shares in connection with the
distribution of shares.
In addition to the requirements under Delaware law, the Declaration of
Trust provides that a shareholder of the Fund may bring a derivative action on
behalf of the Fund only if the following conditions are met: (a) shareholders
eligible to bring such derivative action under Delaware law who hold at least
10% of the outstanding shares of the Fund, or 10% of the outstanding shares of
the series or class to which such action relates, shall join in the request for
the Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such shareholder request and investigate
the basis of such claim. The Trustees shall be entitled to retain counsel or
other advisers in considering the merits of the request and shall require an
undertaking by the shareholders making such request to reimburse the Fund for
the expense of any such advisers in the event that the Trustees determine not
to bring such action.
When issued and paid for in accordance with the terms of the Prospectus
and Statement of Additional Information, shares of the Fund are fully paid and
non-assessable. Shares will remain on deposit with the Fund's transfer agent
and certificates will not normally be issued. The Fund reserves the right to
charge a fee for the issuance of Class A shares certificates; certificates will
not be issued for Class B or Class C shares.
XIV. INVESTMENT RESULTS
The average annual total return (for a designated period of time) on an
investment in the Fund may be included in advertisements, and furnished to
existing or prospective shareholders. The average annual total return for each
class is computed in accordance with the SEC's standardized formula. The
calculation for all classes assumes the reinvestment of all dividends and
distributions at net asset value and does not reflect the impact of federal or
state income taxes. In addition, for Class A shares the calculation assumes the
deduction of the maximum sales charge of 5.75%; for Class B and Class C shares
the calculation reflects the deduction of any applicable CDSC. The periods
illustrated would normally include one, five and ten years (or since the
commencement of the public offering of the shares of a class, if shorter)
through the most recent calendar quarter.
One or more additional measures and assumptions, including but not limited
to historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share values;
or any graphic illustration of such data may also be used. These data may cover
any period of the Fund's existence and may or may not include the impact of
sales charges, taxes or other factors.
Other investments or savings vehicles and/or unmanaged market indices,
indicators of economic activity or averages of mutual fund results may be cited
or compared with the investment results of the Fund. The Fund may also include
securities industry or comparative performance information generally and in
advertising or materials marketing the Fund's shares. Such performance
information may include rankings or listings by magazines, newspapers, or
independent statistical or ratings services, such as Lipper Analytical
Services, Inc. or Ibbotson Associates.
The Fund's investment results will be calculated separately for each class
of shares and will vary from time to time depending on market conditions, the
composition of the Fund's portfolio, operating expenses of the Fund and
expenses attributed to a specific class of shares. All quoted investment
results are historical and should not be considered representative of what an
investment in the Fund may earn in any future period. For further information
about the calculation methods and uses of the Fund's investment results, see
the Statement of Additional Information.
APPENDIX--CERTAIN INVESTMENT PRACTICES
This Appendix provides a brief description of certain securities in which
the Fund may invest and certain transactions it may make. For a more complete
discussion of these and
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other securities and practices, see "Investment Objective and Policies" in this
Prospectus and "Investment Policies and Restrictions" in the Statement of
Additional Information.
OPTIONS ON SECURITIES AND SECURITIES INDICES
The Fund may purchase put and call options on securities in which it may
invest and on securities indices that are composed of securities in which it
may invest to manage cash flow. In addition, to enhance return the Fund may
write (sell) "covered" put and call options on securities in which it may
invest and write (sell) put and call options on securities indices that are
composed of securities in which it may invest. Call options are "covered" by
the Fund when it owns the underlying securities, or owns securities convertible
into or carrying rights to acquire such securities without payment of
additional consideration, which the option holder has the right to purchase,
and put options are "covered" by the Fund when it has established a segregated
account of cash or liquid, high-grade debt obligations sufficient to satisfy
the Fund's obligation to purchase the underlying securities. The Fund receives
a premium from writing a put or call option, which increases the Fund's gross
income in the event the option expires unexercised or is closed out at a
profit. By writing a call option, the Fund limits its opportunity to profit
from any increase in the market value of the underlying security above the
exercise price of the option. By writing a put option, the Fund assumes the
risk that it may be required to purchase the underlying security for an
exercise price higher than its then current market value, resulting in a
capital loss unless the security subsequently appreciates in value.
The Fund will write and purchase options to manage its exposure to foreign
and domestic stocks and stock markets instead of, or in addition to, buying and
selling stock. The Fund may also write or purchase options in an attempt to
hedge market-wide price fluctuations. Distributions to shareholders of any
gains from options transactions will be taxable. Options on securities that are
written or purchased by the Fund will be entered into on U.S. exchanges or the
exchanges of other established markets and in related over-the-counter markets.
Over-the-counter transactions involve certain risks which may not be present in
a transaction on an exchange. The staff of the SEC has taken the position that
over-the-counter options and assets used to cover over-the-counter options are
illiquid and, therefore, together with other illiquid securities, cannot exceed
15% of the Fund's net assets.
The risks associated with the use of options are more fully described
below. The Fund pays brokerage commissions or spreads in connection with its
options transactions. The writing of options could significantly increase the
Fund's portfolio turnover rate.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
To hedge against changes in securities prices, currency exchange rates or
interest rates, the Fund may purchase and sell various kinds of futures
contracts, and purchase and write call and put options on any of such futures
contracts. The Fund may also enter into closing purchase and sale transactions
with respect to any of such contracts and options. The futures contracts may be
based on various stock and other securities indices, foreign currencies and
other financial instruments and indices. The Fund may engage in futures and
related options transactions for hedging and other non-speculative purposes
permitted by regulations of the Commodity Futures Trading Commission. These
transactions involve brokerage costs, require margin deposits and, in the case
of contracts and options obligating the Fund to purchase currencies, require
the Fund to segregate assets to cover such contracts and options.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS AND OPTIONS ON FOREIGN CURRENCIES
The Fund has the ability to hold a portion of its assets in foreign
currencies and to enter into forward foreign currency contracts to facilitate
settlement of foreign securities transactions or to protect against changes in
foreign currency exchange rates. The Fund might sell a foreign currency on
either a spot or forward basis to seek to hedge against an anticipated decline
in the dollar value of securities in its portfolio or securities it intends or
has contracted to sell or to preserve the U.S. dollar value of dividends,
interest or other amounts it expects to receive. Although this strategy could
minimize the risk of loss due to a decline in the value of the hedged foreign
currency, it could also limit any potential gain which might result from an
increase in the value of the currency. Alternatively, the Fund might purchase a
foreign currency or enter into a forward purchase contract for the currency to
preserve the U.S. dollar price of securities it is authorized to purchase or
has contracted to purchase.
The Fund may also engage in cross-hedging by using forward contracts in
one currency to hedge against fluctuations in the value of securities
denominated in a different currency, if PMC determines that there is a pattern
of correlation between the two currencies. Cross-hedging may also include
entering into a forward transaction involving two foreign currencies, using one
currency as a proxy for the U.S. dollar to hedge against variations in the
other foreign currency, if PMC determines that there is a pattern of
correlation between the proxy currency and the U.S. dollar.
If the Fund enters into a forward contract to buy foreign currency for any
purpose, the Fund will be required to place cash or liquid, high-grade debt
securities in a segregated account of the Fund maintained by the Fund's
custodian in an amount equal to the value of the Fund's total assets committed
to the consummation of the forward contract.
The Fund may purchase futures contacts on foreign currencies, put and call
options on such futures contracts and on foreign currencies for the purpose of
protecting against declines in the dollar value of foreign portfolio securities
and against increases in the U.S. dollar cost of foreign securities to be
acquired. The purchase of an option on a foreign currency may constitute an
effective hedge against exchange rate fluctuations.
RISKS AND LIMITATIONS ASSOCIATED WITH TRANSACTIONS IN OPTIONS, FUTURES
CONTRACTS AND FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may employ certain active investment management techniques
including options on securities, options on
20
<PAGE>
securities indices, options on currency, futures contracts and options on
futures, forward foreign currency exchange contracts and currency swaps. Each
of these active management techniques involves (1) liquidity risk that
contractual positions cannot be easily closed out in the event of market
changes or generally in the absence of a liquid secondary market, (2)
correlation risk that changes in the value of hedging positions may not match
the securities market and foreign currency fluctuations intended to be hedged,
and (3) market risk that an incorrect prediction of securities prices or
exchange rates by PMC may cause the Fund to perform less favorably than if such
positions had not been entered. The ability to terminate over-the-counter
options is more limited than with exchange-traded options. Options, futures and
forward foreign currency exchange contracts may involve the risk that the
counterparty to the transaction will not fulfill its obligations. Options,
futures and forward foreign currency exchange contracts are highly specialized
activities which involve investment techniques and risks that are different
from those associated with ordinary portfolio transactions. The Fund may not
enter into futures contracts and options on futures contracts for speculative
purposes. There is no limit on the percentage of the Fund's assets that may be
subject to futures contracts and options on such contracts entered into for
bona fide hedging purposes or forward foreign currency exchange contracts. The
loss that may be incurred by the Fund in entering into futures contracts and
written options thereon and forward foreign currency exchange contracts is
potentially unlimited. The Fund may not invest more than 5% of its total assets
in purchased options other than protective put options.
The Fund's transactions in options, forward foreign currency exchange
contracts, futures contracts and options on futures contracts may be limited by
the requirements for qualification of the Fund as a regulated investment
company for tax purposes. See "Tax Status" in the Statement of Additional
Information.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements not exceeding seven days in
duration. In a repurchase agree-ment, an investor (e.g., the Fund) purchases a
debt security from a seller which undertakes to repurchase the security at a
specified resale price on an agreed future date (ordinarily a week or less).
The resale price generally exceeds the purchase price by an amount which
reflects an agreed-upon market interest rate for the term of the repurchase
agreement. Repurchase agreements entered into by the Fund will be fully
collateralized with U.S. Treasury and/or U.S. Government agency obligations
with a market value of not less than 100% of the obligation, valued daily.
Collateral will be held in a segregated, safekeeping account for the benefit of
the Fund. In the event that a repurchase agreement is not fulfilled, the Fund
could suffer a loss to the extent that the value of the collateral falls below
the repurchase price or if the Fund is prevented from realizing the value of
the collateral by reason of an order of a court with jurisdiction over an
insolvency proceeding with respect to the other party to the repurchase
agreement.
RESTRICTED AND ILLIQUID SECURITIES
The Fund may invest in restricted securities (i.e., securities that would
be required to be registered prior to distribution to the public), including
restricted securities eligible for resale to certain institutional investors
pursuant to Rule 144A under the Securities Act of 1933. The Fund may invest up
to 15% of its net assets in illiquid securities, excluding restricted
securities determined to be liquid pursuant to Rule 144A.
The Board of Trustees of the Fund has adopted guidelines and delegated to
PMC the daily function of determining and monitoring the liquidity of
restricted securities. The Board, however, retains sufficient oversight and is
ultimately responsible for the determinations. Since it is not possible to
predict with assurance exactly how the market for restricted securities sold
and offered under Rule 144A will develop, the Board carefully monitors the
Fund's investments in these securities, focusing on such important factors,
among others, as valuation, liquidity and availability of information. This
investment practice could have the effect of increasing the level of
illiquidity in the Fund to the extent that qualified institutional buyers
become for a time uninterested in purchasing these restricted securities.
Securities of non-U.S. issuers that the Fund acquires in Rule 144A
transactions, but which the Fund may resell publicly in a non-U.S. securities
market, are not considered restricted securities.
21
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THIS PAGE FOR YOUR NOTES.
22
<PAGE>
THE PIONEER FAMILY OF MUTUAL FUNDS
GROWTH FUNDS
GLOBAL/INTERNATIONAL
Pioneer Emerging Markets Fund
Pioneer Europe Fund
Pioneer Gold Shares
Pioneer India Fund
Pioneer International Growth Fund
Pioneer World Equity Fund
UNITED STATES
Pioneer Capital Growth Fund
Pioneer Growth Shares
Pioneer Micro-Cap Fund
Pioneer Mid-Cap Fund
Pioneer Small Company Fund
GROWTH AND INCOME FUNDS
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer Real Estate Shares
Pioneer II
INCOME FUNDS
TAXABLE
Pioneer America Income Trust
Pioneer Bond Fund
Pioneer Short-Term Income Trust
TAX-EXEMPT*
Pioneer Intermediate Tax-Free Fund
Pioneer Tax-Free Income Fund
MONEY MARKET FUND
Pioneer Cash Reserves Fund
*Not suitable for retirement accounts
23
<PAGE>
[Pioneer logo]
PIONEER WORLD EQUITY FUND
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
OFFICERS
JOHN F. COGAN, JR., CHAIRMAN AND PRESIDENT
DAVID D. TRIPPLE, EXECUTIVE VICE PRESIDENT
NORMAN KURLAND, PH.D., VICE PRESIDENT
PATRICK M. SMITH, VICE PRESIDENT
WILLIAM H. KEOUGH, TREASURER
JOSEPH P. BARRI, SECRETARY
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR LLP
INVESTMENT ADVISER
PIONEERING MANAGEMENT CORPORATION
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: 1-800-225-6292
SERVICE INFORMATION
If you would like information on the following, please call:
Existing and new accounts, prospectuses,
applications, service forms
and telephone transactions................................... 1-800-225-6292
FactFone(SM)
Automated fund yields and prices
and account information...................................... 1-800-225-4321
Retirement plans.............................................. 1-800-622-0176
Toll-free fax................................................. 1-800-225-4240
Telecommunications Device for the Deaf (TDD).................. 1-800-225-1997
Visit our web site:..................................... www.pioneerfunds.com
0698-5356
(C)Pioneer Funds Distributor, Inc.
<PAGE>
PIONEER WORLD EQUITY FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
CLASS A, CLASS B AND CLASS C SHARES
JULY 29, 1998
This Statement of Additional Information is not a prospectus, but
should be read in conjunction with the prospectus dated July 29, 1998, as
supplemented or revised from time to time (the "Prospectus"), of Pioneer World
Equity Fund (the "Fund"). A copy of the Prospectus can be obtained free of
charge by calling Shareholder Services at 1-800-225-6292 or by written request
to the Fund at 60 State Street, Boston, Massachusetts 02109. The most recent
Annual Report to Shareholders is attached to this Statement of Additional
Information and is hereby incorporated into this Statement of Additional
Information by reference.
TABLE OF CONTENTS
PAGE
1. Investment Policies and Restrictions........................... 2
2. Management of the Fund......................................... 10
3. Investment Adviser............................................. 15
4. Underwriting Agreement and Distribution Plans.................. 16
5. Shareholder Servicing/Transfer Agent........................... 18
6. Custodian...................................................... 19
7. Principal Underwriter.......................................... 19
8. Independent Public Accountants................................. 20
9. Portfolio Transactions......................................... 20
10. Tax Status..................................................... 21
11. Description of Shares.......................................... 25
12. Certain Liabilities............................................ 26
13. Determination of Net Asset Value............................... 27
14. Systematic Withdrawal Plan..................................... 27
15. Letter of Intent............................................... 28
16. Investment Results............................................. 28
17. Financial Statements........................................... 31
Appendix A -- Description of Short-Term Debt
and Corporate Bond Ratings..................................... 32
Appendix B -- Performance Statistics........................... 37
Appendix B -- Other Pioneer Information........................ 50
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS
AND IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
1
<PAGE>
1. INVESTMENT POLICIES AND RESTRICTIONS
The Prospectus identifies the investment objective and the principal
investment policies of the Fund. Other investment policies of the Fund are set
forth below. Capitalized terms not otherwise defined herein have the meaning
given to them in the Prospectus.
The following policies and restrictions supplement those discussed in
the Prospectus. Whenever an investment policy or restriction states a maximum
percentage of the Fund's assets that may be invested in any security or presents
a policy regarding quality standards, that standard or other restriction shall
be determined immediately after and as a result of the Fund's investment.
Accordingly, any later increase or decrease resulting from a change in values,
net assets or other circumstances will not be considered in determining whether
the investment complies with the Fund's investment objective and policies.
LENDING OF PORTFOLIO SECURITIES
The Fund may lend portfolio securities to member firms of the Exchange,
under agreements which would require that the loans be secured continuously by
collateral in cash, cash equivalents or U.S. Treasury bills maintained on a
current basis at an amount at least equal to the market value of the securities
loaned. The Fund would continue to receive the equivalent of the interest or
dividends paid by the issuer on the securities loaned as well as the benefit of
an increase and the detriment of any decrease in the market value of the
securities loaned and would also receive compensation based on investment of the
collateral. The Fund would not, however, have the right to vote any securities
having voting rights during the existence of the loan, but would call the loan
in anticipation of an important vote to be taken among holders of the securities
or of the giving or withholding of consent on a material matter affecting the
investment.
As with other extensions of credit, there are risks of delay in
recovery or even loss of rights in the collateral should the borrower of the
securities fail financially. The Fund will lend portfolio securities only to
firms which have been approved in advance by the Board of Trustees, which will
monitor the creditworthiness of any such firms. At no time would the value of
the securities loaned exceed 30% of the value of the Fund's total assets.
OPTIONS ON SECURITIES
The Fund may write (sell) covered call options on certain portfolio
securities, but options may not be written on more than 25% of the aggregate
market value of any single portfolio security (determined each time a call is
sold as of the date of such sale). The Fund does not intend to write covered
call options on portfolio securities with an aggregate market value exceeding 5%
of the Fund's total assets in the coming year. As the writer of a call option,
the Fund receives a premium less commission and, in exchange, foregoes the
opportunity to profit from increases in the market value of the security
covering the call above the sum of the premium and the exercise price of the
option during the life of the option. The purchaser of such a call written by
the Fund has the option of purchasing the security from the Fund at the option
price during the life of the option. Portfolio securities on which options may
be written are purchased solely on the basis of investment considerations
consistent with the Fund's investment objective. All call options written by the
Fund are covered; the Fund may cover a call option by owning the securities
subject to the option so long as the option is outstanding or using the other
methods described below. In addition, a written call option may be covered by
purchasing an offsetting option or any other option which, by virtue of its
exercise price or otherwise, covers the
2
<PAGE>
Fund's net exposure on its written option position. The Fund does not consider a
security covered by a call option to be "pledged" as that term is used in the
Fund's policy which limits the pledging or mortgaging of its assets.
The Fund may purchase call options on securities for entering into a
"closing purchase transaction," i.e., a purchase of a call option on the same
security with the same exercise price and expiration date as a "covered" call
already written by the Fund. These closing sale transactions enable the Fund to
immediately realize gains or minimize losses on its options positions. There is
no assurance that the Fund will be able to effect such closing purchase
transactions at a favorable price. If the Fund cannot enter into such a
transaction it may be required to hold a security that it might otherwise have
sold. The Fund's portfolio turnover may increase through the exercise of options
if the market price of the underlying securities goes up and the Fund has not
entered into a closing purchase transaction. The commission on purchase or sale
of a call option is higher in relation to the premium than the commission in
relation to the price on purchase or sale of the underlying security.
SECURITIES INDEX OPTIONS
The Fund may purchase call and put options on securities indices for
the purpose of hedging against the risk of unfavorable price movements adversely
affecting the value of the Fund's securities or securities the Fund intends to
buy. Securities index options will not be used for speculative purposes.
Currently, options on stock indices are traded only on national
securities exchanges and over-the-counter, both in the U.S. and in foreign
countries. A securities index fluctuates with changes in the market values of
the securities included in the index. For example, some stock index options are
based on a broad market index such as the S&P 500 or the Value Line Composite
Index in the U.S., the Nikkei in Japan or the FTSE 100 in the United Kingdom.
Index options may also be based on a narrower market index such as the S&P 100
or on an industry or market segment such as the AMEX Oil and Gas Index or the
Computer and Business Equipment Index.
The Fund may purchase put options in an attempt to hedge against an
anticipated decline in securities prices that might adversely affect the value
of the Fund's portfolio securities. If the Fund purchases a put option on a
securities index, the amount of the payment it would receive upon exercising the
option would depend on the extent of any decline in the level of the securities
index below the exercise price. Such payments would tend to offset a decline in
the value of the Fund's portfolio securities. However, if the level of the
securities index increases and remains above the exercise price while the put
option is outstanding, the Fund will not be able to profitably exercise the
option and will lose the amount
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of the premium and any transaction costs. Such loss may be partially offset
by an increase in the value of the Fund's portfolio securities.
The Fund may purchase call options on securities indices in order to
remain fully invested in a particular foreign stock market or to lock in a
favorable price on securities that it intends to buy in the future. If the Fund
purchases a call option on a securities index, the amount of the payment it
receives upon exercising the option depends on the extent of an increase in the
level of other securities indices above the exercise price. Such payments would
in effect allow the Fund to benefit from securities market appreciation even
though it may not have had sufficient cash to purchase the underlying
securities. Such payments may also offset increases in the price of securities
that the Fund intends to purchase. If, however, the level of the securities
index declines and remains below the exercise price while the call option is
outstanding, the Fund will not be able to exercise the option profitably and
will lose the amount of the premium and transaction costs. Such loss may be
partially offset by a reduction in the price the Fund pays to buy additional
securities for its portfolio.
The Fund may sell the securities index option it has purchased or write
a similar offsetting securities index option in order to close out a position in
a securities index option which it has purchased. These closing sale
transactions enable the Fund to immediately realize gains or minimize losses on
its options positions. However, there is no assurance that a liquid secondary
market on an options exchange will exist for any particular option, or at any
particular time, and for some options no secondary market may exist. In
addition, securities index prices may be distorted by interruptions in the
trading of securities of certain companies or of issuers in certain industries,
or by restrictions that may be imposed by an exchange on opening or closing
transactions, or both, which would disrupt trading in options on such indices
and preclude the Fund from closing out its options positions. If the Fund is
unable to effect a closing sale transaction with respect to options that it has
purchased, it would have to exercise the options in order to realize any profit.
The hours of trading for options may not conform to the hours during
which the underlying securities are traded. To the extent that the options
markets close before the markets for the underlying securities, significant
price and rate movements can take place in the underlying markets that cannot be
reflected in the options markets. The purchase of options is a highly
specialized activity which involves investment techniques and risks different
from those associated with ordinary portfolio securities transactions.
In addition to the risks of imperfect correlation between the Fund's
portfolio and the index underlying the option, the purchase of securities index
options involves the risk that the premium and transaction costs paid by the
Fund in purchasing an option will be lost. This could occur as a result of
unanticipated movements in prices of the securities comprising the securities
index on which the option is based.
FORWARD FOREIGN CURRENCY TRANSACTIONS
The foreign currency transactions of the Fund may be conducted on a
spot, i.e., cash basis at the spot rate for purchasing or selling currency
prevailing in the foreign exchange market. The Fund also has authority to enter
into forward foreign currency exchange contracts involving currencies of the
different countries in which it will invest as a hedge against possible
variations in the foreign exchange rate between these currencies and the U.S.
dollar. This is accomplished through contractual agreements to purchase or sell
a specified currency at a specified future date and price set at the time of the
contract. The Fund's transactions in forward foreign currency contracts will be
limited to hedging either specific transactions or portfolio positions.
Transaction hedging is the purchase or sale of forward foreign currency
contracts with respect to specific receivables or payables of the Fund accruing
in connection with the purchase and sale of its portfolio securities denominated
in foreign currencies. Portfolio hedging is the use of forward foreign currency
contracts to offset portfolio security positions denominated or quoted in such
foreign currencies. There is no guarantee that the Fund will be engaged in
hedging activities when adverse exchange rate movements occur. The Fund may not
necessarily attempt to hedge all of its foreign portfolio positions and will
enter into such transactions only to the extent, if any, deemed appropriate by
PMC. The Fund will not enter into speculative forward foreign currency
contracts.
If the Fund enters into a forward contract to purchase foreign
currency, its custodian bank will segregate cash or liquid securities in a
separate account of the Fund in an amount equal to the value of the
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Fund's total assets committed to the consummation of such forward contract.
Those assets will be valued at market daily and if the value of the assets in
the separate account declines, additional cash or securities will be placed in
the account so that the value of the account will equal the amount of the Fund's
commitment with respect to such contracts.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also limit the opportunity
for gain if the value of the hedged currency should rise. Moreover, it may not
be possible for the Fund to hedge against a devaluation that is so generally
anticipated that the Fund is not able to contract to sell the currency at a
price above the devaluation level it anticipates.
The cost to the Fund of engaging in foreign currency transactions
varies with such factors as the currency involved, the size of the contract, the
length of the contract period and the market conditions then prevailing. Since
transactions in foreign currency and forward contracts are usually conducted on
a principal basis, no fees or commissions are involved. The Fund may close out a
forward position in a currency by selling the forward contract or entering into
an offsetting forward contract.
OPTIONS ON FOREIGN CURRENCIES
The Fund may purchase options on foreign currencies for hedging
purposes in a manner similar to that of transactions in forward contracts. For
example, a decline in the dollar value of a foreign currency in which portfolio
securities are denominated will reduce the dollar value of such securities, even
if their value in the foreign currency remains constant. In an attempt to
protect against such decreases in the value of portfolio securities, the Fund
may purchase put options on the foreign currency. If the value of the currency
declines, the Fund will have the right to sell such currency for a fixed amount
of dollars which exceeds the market value of such currency. This would result in
a gain that may offset, in whole or in part, the negative effect of currency
depreciation on the value of the Fund's securities denominated in that currency.
Conversely, if a rise in the dollar value of a currency is projected
for those securities to be acquired, thereby increasing the cost of such
securities, the Fund may purchase call options on such currency. If the value of
such currency increases, the purchase of such call options would enable the Fund
to purchase currency for a fixed amount of dollars which is less than the market
value of such currency. Such a purchase would result in a gain that may offset,
at least partially, the effect of any currency related increase in the price of
securities the Fund intends to acquire. As in the case of other types of options
transactions, however, the benefit the Fund derives from purchasing foreign
currency options will be reduced by the amount of the premium and related
transaction costs. In addition, if currency exchange rates do not move in the
direction or to the extent anticipated, the Fund could sustain losses on
transactions in foreign currency options which would deprive it of a portion or
all of the benefits of advantageous changes in such rates.
The Fund may close out its position in a currency option by either
selling the option it has purchased or entering into an offsetting option.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
To hedge against changes in securities prices or currency exchange
rates, the Fund may purchase and sell various kinds of futures contracts and
purchase and write (sell) call and put options on any of
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such futures contracts. The Fund may also enter into closing purchase and
sale transactions with respect to any of such contracts and options. The futures
contracts may be based on various securities (such as U.S. Government
securities), securities indices, foreign currencies and other financial
instruments and indices. The Fund will engage in futures and related options
transactions for bona fide hedging and non-hedging purposes as described below.
All futures contracts entered into by the Fund are traded on U.S. exchanges or
boards of trade that are licensed and regulated by the Commodity Futures Trading
Commission (the "CFTC") or on foreign exchanges.
FUTURES CONTRACTS. A futures contract may generally be described as an
agreement between two parties to buy and sell particular financial instruments
for an agreed price during a designated month (or to deliver the final cash
settlement price, in the case of a contract relating to an index or otherwise
not calling for physical delivery at the end of trading in the contract).
When interest rates are rising or securities prices are falling, the
Fund can seek to offset a decline in the value of its current portfolio
securities through the sale of futures contracts. When interest rates are
falling or securities prices are rising, the Fund, through the purchase of
futures contracts, can attempt to secure better rates or prices than might later
be available in the market when it effects anticipated purchases. Similarly, the
Fund can sell futures contracts on a specified currency to seek to protect
against a decline in the value of such currency and a decline in the value of
its portfolio securities which are denominated in such currency. The Fund can
purchase futures contracts on foreign currency to establish the price in U.S.
dollars of a security denominated in such currency that the Fund has acquired or
expects to acquire.
Positions taken in the futures markets are not normally held to
maturity but are instead liquidated through offsetting transactions which may
result in a profit or a loss. While futures contracts on securities or currency
will usually be liquidated in this manner, the Fund may instead make, or take,
delivery of the underlying securities or currency whenever it appears
economically advantageous to do so. A clearing corporation associated with the
exchange on which futures on securities or currency are traded guarantees that,
if still open, the sale or purchase will be performed on the settlement date.
HEDGING STRATEGIES. Hedging, by use of futures contracts, seeks to
establish with more certainty the effective price, rate of return and currency
exchange rate on portfolio securities and securities that the Fund owns or
proposes to acquire. The Fund may, for example, take a "short" position in the
futures market by selling futures contracts in an attempt to hedge against an
anticipated rise in interest rates or a decline in market prices or foreign
currency rates that would adversely affect the value of the Fund's portfolio
securities. Such futures contracts may include contracts for the future delivery
of securities held by the Fund or securities with characteristics similar to
those of the Fund's portfolio securities. Similarly, the Fund may sell futures
contracts in currency in which its portfolio securities are denominated or in
one currency to hedge against fluctuations in the value of securities
denominated in a different currency if there is an established historical
pattern of correlation between the two currencies. If, in the opinion of PMC,
there is a sufficient degree of correlation between price trends for the Fund's
portfolio securities and futures contracts based on other financial instruments,
securities indices or other indices, the Fund may also enter into such futures
contracts as part of its hedging strategy. Although under some circumstances
prices of securities in the Fund's portfolio may be more or less volatile than
prices of such futures contracts, PMC will attempt to estimate the extent of
this volatility difference based on historical patterns and compensate for any
such differential by having the Fund enter into a greater or lesser number of
futures contracts or by attempting to achieve only a partial hedge against price
changes affecting the Fund's securities portfolio. When hedging of this
character is successful, any depreciation in
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the value of portfolio securities will be substantially offset by
appreciation in the value of the futures position. On the other hand, any
unanticipated appreciation in the value of the Fund's portfolio securities would
be substantially offset by a decline in the value of the futures position.
On other occasions, the Fund may take a "long" position by purchasing
futures contracts. This would be done, for example, when the Fund anticipates
the subsequent purchase of particular securities when it has the necessary cash,
but expects the prices or currency exchange rates then available in the
applicable market to be less favorable than prices or rates that are currently
available.
OPTIONS ON FUTURES CONTRACTS. The acquisition of put and call options
on futures contracts will give the Fund the right (but not the obligation) for a
specified price to sell or to purchase, respectively, the underlying futures
contract at any time during the option period. As the purchaser of an option on
a futures contract, the Fund obtains the benefit of the futures position if
prices move in a favorable direction but limits its risk of loss in the event of
an unfavorable price movement to the loss of the premium and transaction costs.
The writing of a call option on a futures contract generates a premium
which may partially offset a decline in the value of the Fund's assets. By
writing a call option, the Fund becomes obligated, in exchange for the premium,
to sell a futures contract, which may have a value higher than the exercise
price. Conversely, the writing of a put option on a futures contract generates a
premium which may partially offset an increase in the price of securities that
the Fund intends to purchase. However, the Fund becomes obligated to purchase a
futures contract which may have a value lower than the exercise price. Thus, the
loss incurred by the Fund in writing options on futures and in entering into
futures transactions is potentially unlimited and may exceed the amount of the
premium received. The Fund will incur transaction costs in connection with the
writing of options on futures.
The holder or writer of an option on a futures contract may terminate
its position by selling or purchasing an offsetting option on the same series.
There is no guarantee that such closing transactions can be effected. The Fund's
ability to establish and close out positions on such options will be subject to
the development and maintenance of a liquid market.
The Fund may use options on futures contracts for bona fide hedging or
non-hedging purposes as discussed below.
OTHER CONSIDERATIONS. The Fund will engage in futures and related
options transactions only for bona fide hedging or non-hedging purposes in
accordance with CFTC regulations which permit principals of an investment
company registered under the 1940 Act to engage in such transactions without
registering as commodity pool operators. The Fund is not permitted to engage in
speculative futures trading. The Fund will determine that the price fluctuations
in the futures contracts and options on futures used for hedging purposes are
substantially related to price fluctuations in securities held by the Fund or
which it expects to purchase. Except as stated below, the Fund's futures
transactions will be entered into for traditional hedging purposes -- i.e.,
futures contracts will be sold to seek to protect against a decline in the price
of securities (or the currency in which they are denominated) that the Fund
owns, or futures contracts will be purchased to seek to protect the Fund against
an increase in the price of securities (or the currency in which they are
denominated) it intends to purchase. As evidence of this hedging intent, the
Fund expects that on 75% or more of the occasions on which it takes a long
futures or option position (involving the purchase of futures contracts), the
Fund will have purchased, or will be in the process of purchasing, equivalent
amounts of related securities or assets denominated in the related currency in
the
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<PAGE>
cash market at the time when the futures or option position is closed out.
However, in particular cases, when it is economically advantageous for the Fund
to do so, a long futures position may be terminated or an option may expire
without the corresponding purchase of securities or other assets.
As an alternative to literal compliance with the bona fide hedging
definition, a CFTC regulation permits the Fund to elect to comply with a
different test, under which the sum of the amounts of initial margin deposits on
the Fund's existing non-hedging futures contracts and premiums paid for
non-hedging options on futures (net of the amount the positions are "in the
money") would exceed 5% of the market value of the Fund's total assets. The Fund
will engage in transactions in futures contracts and related options only to the
extent such transactions are consistent with the requirements of the Code for
maintaining its qualification as a regulated investment company for federal
income tax purposes.
Transaction costs associated with futures contracts and related options
involve brokerage costs, require margin deposits and, in the case of contracts
and options obligating the Fund to purchase securities or currencies, require
the Fund to segregate assets to cover such contracts and options.
While transactions in futures contracts and options on futures may
reduce certain risks, such transactions themselves entail certain other risks.
Thus, while the Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates, securities prices or currency exchange
rates may result in a poorer overall performance for the Fund than if it had not
entered into any futures contracts or options transactions. In the event of an
imperfect correlation between a futures position and a portfolio position which
is intended to be protected, the desired protection may not be obtained and the
Fund may be exposed to risk of loss.
Perfect correlation between the Fund's futures positions and portfolio
positions will be difficult to achieve because no futures contracts based on
foreign corporate equity securities are currently available. The only futures
contracts available to hedge the Fund's portfolio are various futures on U.S.
Government securities and foreign currencies, futures on a municipal securities
index and stock index futures. In addition, it is not possible to hedge fully or
perfectly against the effect of currency fluctuations on the value of foreign
securities because currency movements impact the value of different securities
in differing degrees.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements with "primary dealers" in
U.S. Government securities and member banks of the Federal Reserve System which
furnish collateral at least equal in value or market price to the amount of
their repurchase obligation. The Fund may also enter into repurchase agreements
involving certain foreign government securities. In a repurchase agreement, an
investor (e.g., the Fund) purchases a debt security from a seller which
undertakes to repurchase the security at a specified resale price on an agreed
future date (ordinarily a week or less). The resale price generally exceeds the
purchase price by an amount which reflects an agreed-upon market interest rate
for the term of the repurchase agreement. The primary risk is that, if the
seller defaults, the Fund might suffer a loss to the extent that the proceeds
from the sale of the underlying securities and other collateral held by the Fund
in connection with the related repurchase agreement are less than the repurchase
price. Another risk is that, in the event of bankruptcy of the seller, the Fund
could be delayed in or prohibited from disposing of the underlying securities
and other collateral held by the Fund in connection with the related repurchase
agreement pending court proceedings. In evaluating whether to enter a repurchase
agreement,
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PMC will carefully consider the creditworthiness of the seller pursuant to
procedures reviewed and approved by the Trustees.
INVESTMENT RESTRICTIONS
FUNDAMENTAL INVESTMENT RESTRICTIONS. The Fund has adopted certain
investment restrictions which may not be changed without the affirmative vote of
the holders of a "majority of the outstanding voting securities" (as defined in
the 1940 Act) of the Fund. The Fund may not:
(1)......Issue senior securities, except as permitted by the Fund's
borrowing, lending and commodity restrictions, and for purposes of this
restriction, the issuance of shares of beneficial interest in multiple classes
or series, the purchase or sale of options, futures contracts and options on
futures contracts, forward commitments, forward foreign exchange contracts,
repurchase agreements, fully covered reverse repurchase agreements, dollar
rolls, swaps and any other financial transaction entered into pursuant to the
Fund's investment policies as described in the Prospectus and this Statement of
Additional Information and in accordance with applicable SEC pronouncements, as
well as the pledge, mortgage or hypothecation of the Fund's assets within the
meaning of its fundamental investment restriction regarding pledging, are not
deemed to be senior securities.
(2)......Borrow money, except from banks as a temporary measure to
facilitate the meeting of redemption requests or for extraordinary or emergency
purposes and except pursuant to reverse repurchase agreements and dollar rolls
and then only in amounts not exceeding 33 1/3 of the Fund's total assets
(including the amount borrowed) taken at market value. The Fund will not use
leverage to attempt to increase income. The Fund will not purchase securities
while outstanding borrowings exceed 10% of the Fund's total assets.
(3)......Guarantee the securities of any other company, or mortgage,
pledge, hypothecate or assign or otherwise encumber as security for indebtedness
its securities or receivables in an amount exceeding the amount of the borrowing
secured thereby.
(4)......Act as an underwriter, except as it may deemed to be an
underwriter in a sale of restricted securities held in its portfolio.
(5)......Invest in real estate, commodities or commodity contracts,
except that the Fund may invest in financial futures contracts and related
options and in any other financial instruments which may be deemed to be
commodities or commodity contracts in which the Fund is not prohibited from
investing by the Commodity Exchange Act and the rules and regulations
thereunder.
(6)......Make loans, except by the purchase of debt obligations in
which the Fund may invest consistent with its investment policies, by entering
into repurchase agreements or through the lending of portfolio securities, in
each case only to the extent permitted by the Prospectus and this Statement of
Additional Information.
(7)......With respect to 75% of its total assets, purchase securities
of an issuer (other than the U.S. Government, its agencies or instrumentalities)
if:
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(a) such purchase would cause more than 5% of the Fund's total
assets taken at market value to be invested in the securities of such
issuer, or
(b) such purchase would at the time result in more than 10% of
the outstanding voting securities of such issuer being held by the
Fund.
It is the fundamental policy of the Fund not to concentrate its
investments in securities of companies in any particular industry. Following the
current opinion of the staff of the SEC, the Fund's investments are concentrated
in a particular industry if such investments aggregate 25% or more of the Fund's
total assets. The Fund's policy does not apply to investments in U.S. Government
securities.
The Fund does not intend to enter into any reverse repurchase
agreements or dollar rolls, lend portfolio securities or invest in securities
index put and call warrants, as described in fundamental investment restrictions
(1), (2) and (6) above, during the coming year. In addition, in compliance with
an informal position taken by the staff of the SEC regarding leverage, the Fund
will not purchase securities during the coming year at any time that outstanding
borrowings exceed 5% of the Fund's total assets.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. The following restrictions
have been designated as non-fundamental and may be changed by a vote of the
Fund's Board of Trustees without approval of shareholders.
The Fund may not:
(1) purchase securities for the purpose of controlling management of
other companies;
(2) invest in any security which is illiquid, including (a) securities
which at the time of investment are not readily marketable, (b) securities the
disposition of which is restricted under federal securities laws (excluding
restricted securities that have been determined by the Trustees of the Fund (or
the person designated by them to make such determinations) to be readily
marketable) and (c) repurchase agreements maturing in more than seven days, if,
as a result, more than 15% of the Fund's net assets would be invested in
securities described in (a), (b), and (c) above; or
(3) invest more than 10% of its net assets in restricted securities,
except for restricted securities that have been determined to be readily
marketable pursuant to Rule 144A.
2. MANAGEMENT OF THE FUND
The Fund's Board of Trustees provides broad supervision over the
affairs of the Fund. The officers of the Fund are responsible for the Fund's
operations. The Trustees and executive officers of the Fund are listed below,
together with their principal occupations during the past five years. An
asterisk indicates those Trustees who are interested persons of the Fund within
the meaning of the 1940 Act.
JOHN F. COGAN, JR.*, CHAIRMAN OF THE BOARD, PRESIDENT AND TRUSTEE, DOB: JUNE
1926
President, Chief Executive Officer and a Director of The Pioneer Group,
Inc. ("PGI"); Chairman and a Director of Pioneering Management Corporation
("PMC") and Pioneer Funds Distributor, Inc. ("PFD"); Director of Pioneering
Services Corporation ("PSC"), Pioneer Capital Corporation ("PCC"), Pioneer Real
Estate Advisors, Inc., Pioneer Forest, Inc., Pioneer Explorer, Inc., Pioneer
Management (Ireland) Ltd. ("PMIL") and Closed Joint Stock Company
"Forest-Starma"; President and Director of Pioneer Metals and Technology, Inc.
("PMT"), Pioneer International Corp. ("PIntl"), Pioneer First Russia, Inc.
("First Russia") and Pioneer Omega, Inc. ("Omega"); Chairman of the Board and
Director of
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Pioneer Goldfields Limited ("PGL") and Teberebie Goldfields Limited;
Chairman of the Supervisory Board of Pioneer Fonds Marketing, GmbH, Pioneer
First Polish Investment Fund Joint Stock Company, S.A. and Pioneer Czech
Investment Company, A.S.; Chairman, President and Trustee of all of the Pioneer
mutual funds; Director of Pioneer Global Equity Fund Plc, Pioneer Global Bond
Fund Plc, Pioneer DM Cashfonds Plc, Pioneer European Equity Fund Plc, Pioneer
Central & Eastern Europe Fund Plc and Pioneer US Real Estate Fund Plc; and
Partner, Hale and Dorr LLP (counsel to PGI and the Fund).
MARY K. BUSH, TRUSTEE, DOB: APRIL 1948
4201 CATHEDRAL AVENUE, NW, WASHINGTON, DC 20016
President, Bush & Co., an international financial advisory firm; Director
and/or Trustee of Mortgage Guaranty Insurance Corporation, Novecon Management
Company, Hoover Institution, Folger Shakespeare Library, March of Dimes, Project
2000, Inc. (not-for-profit educational organization), Small Enterprise
Assistance Fund and Wilberforce University; Advisory Board Member, Washington
Mutual Investors Fund, a registered investment company; and Trustee of all of
the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
RICHARD H. EGDAHL, M.D., TRUSTEE, DOB: DECEMBER 1926
BOSTON UNIVERSITY HEALTH POLICY INSTITUTE, 53 BAY STATE ROAD, BOSTON, MA 02215
Alexander Graham Bell Professor of Health Care Entrepreneurship, Boston
University; Professor of Management, Boston University School of Management;
Professor of Public Health, Boston University School of Public Health; Professor
of Surgery, Boston University School of Medicine; University Professor, Boston
University; Director, Boston University Health Policy Institute and Boston
University Program for Health Care Entrepreneurship; Director, CORE (management
of workers' compensation and disability costs - Nasdaq National Market);
Director, WellSpace (provider of complementary health care); Trustee, Boston
Medical Center; Honorary Trustee, Franciscan Children's Hospital; and Trustee of
all of the Pioneer mutual funds.
MARGARET B.W. GRAHAM, TRUSTEE, DOB: MAY 1947
THE KEEP, P.O. BOX 110, LITTLE DEER ISLE, ME 04650
Founding Director, The Winthrop Group, Inc. (consulting firm); Manager of
Research Operations, Xerox Palo Alto Research Center, from 1991 to 1994;
Professor of Operations Management and Management of Technology and Associate
Dean, Boston University School of Management, from 1989 to 1993; and Trustee of
all of the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
JOHN W. KENDRICK, TRUSTEE, DOB: JULY 1917
6363 WATERWAY DRIVE, FALLS CHURCH, VA 22044
Professor Emeritus, George Washington University; Director, American
Productivity and Quality Center; Adjunct Scholar, American Enterprise Institute;
Economic Consultant; and Trustee of all of the Pioneer mutual funds, except
Pioneer Variable Contracts Trust.
MARGUERITE A. PIRET, TRUSTEE, DOB: MAY 1948
ONE BOSTON PLACE, SUITE 2635, BOSTON, MA 02108
President, Newbury, Piret & Company, Inc. (merchant banking firm);
Trustee of Boston Medical Center; Member of the Board of Governors of the
Investment Company Institute; and Trustee of all of the Pioneer mutual funds.
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DAVID D. TRIPPLE*, TRUSTEE AND EXECUTIVE VICE PRESIDENT, DOB: FEBRUARY 1944
Executive Vice President and a Director of PGI; President, Chief
Investment Officer and a Director of PMC; Director of PFD, PCC, PIntl, First
Russia, Omega, Pioneer SBIC Corporation ("Pioneer SBIC"), PMIL, Pioneer Global
Equity Fund Plc, Pioneer Global Bond Fund Plc, Pioneer DM Cashfonds Plc, Pioneer
European Equity Fund Plc, Pioneer Central & Eastern Europe Fund Plc and Pioneer
US Real Estate Fund Plc; and Executive Vice President and Trustee of all of the
Pioneer mutual funds.
STEPHEN K. WEST, TRUSTEE, DOB: SEPTEMBER 1928
125 BROAD STREET, NEW YORK, NY 10004
Of Counsel to Sullivan & Cromwell (law firm); Trustee, The Winthrop Focus
Funds (mutual funds); and Trustee of all of the Pioneer mutual funds.
JOHN WINTHROP, TRUSTEE, DOB: JUNE 1936
ONE NORTH ADGERS WHARF, CHARLESTON, SC 29401
President, John Winthrop & Co., Inc. (private investment firm); Director of
NUI Corp. (energy sales, services and distribution); and Trustee of all of the
Pioneer mutual funds, except Pioneer Variable Contracts Trust.
WILLIAM H. KEOUGH, TREASURER, DOB: APRIL 1937
Senior Vice President, Chief Financial Officer and Treasurer of PGI;
Treasurer of PFD, PMC, PSC, PCC, PIntl, PMT, PGL, First Russia, Omega and
Pioneer SBIC; and Treasurer of all of the Pioneer mutual funds.
JOSEPH P. BARRI, SECRETARY, DOB: AUGUST 1946
Corporate Secretary of PGI and most of its subsidiaries; Secretary of all
of the Pioneer mutual funds; and Partner, Hale and Dorr LLP.
ERIC W. RECKARD, ASSISTANT TREASURER, DOB: JUNE 1956
Manager of Business Planning and Internal Audit of PMC since September
1998; Manager of Fund Accounting of PMC since May 1994; Manager of Auditing,
Compliance and Business Analysis for PGI prior to May 1994; and Assistant
Treasurer of all of the Pioneer mutual funds.
ROBERT P. NAULT, ASSISTANT SECRETARY, DOB: MARCH 1964
General Counsel and Assistant Secretary of PGI since 1995; Assistant
Secretary of PMC, PIntl, PGL, First Russia, Omega and all of the Pioneer mutual
funds; Assistant Clerk of PFD and PSC; and junior partner of Hale and Dorr LLP
prior to 1995.
NORMAN KURLAND, VICE PRESIDENT, DOB: NOVEMBER 1949
Senior Vice President of PMC since 1993; Vice President of PMC from 1990
to 1993; and Vice President of Pioneer India Fund, Pioneer Emerging Markets
Fund, Pioneer Europe Fund, Pioneer International Growth Fund and the
International Growth Portfolio of Pioneer Variable Contracts Trust.
PATRICK M. SMITH, VICE PRESIDENT, DOB: MARCH 1962
Vice President of PMC, Pioneer Europe Fund and the International Growth
Portfolio of Pioneer Variable Contracts Trust.
The Fund's Agreement and Declaration of Trust, dated July 26, 1996 as
amended October 8, 1996 (the "Declaration"), provides that the holders of
two-thirds of its outstanding shares may vote to
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remove a Trustee of the Fund at any meeting of shareholders. See
"Description of Shares" below. The business address of all officers is 60 State
Street, Boston, Massachusetts 02109.
All of the outstanding capital stock of PFD, PMC and PSC is owned,
directly or indirectly, by PGI, a publicly owned Delaware corporation. PMC, the
Fund's investment adviser, serves as the investment adviser for the Pioneer
mutual funds listed below and manages the investments of certain institutional
accounts.
The table below lists all the Pioneer U.S. mutual funds currently
offered to the public and the investment adviser and principal underwriter for
each fund.
Investment Principal
FUND NAME ADVISER UNDERWRITER
Pioneer World Equity Fund PMC PFD
Pioneer International Growth Fund PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer India Fund PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Mid-Cap Fund PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Micro-Cap Fund PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Independence Fund PMC Note 1
Pioneer Gold Shares PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Balanced Fund PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer Interest Shares PMC Note 2
Pioneer Variable Contracts Trust PMC Note 3
Note 1 This fund is available to the general public only through Pioneer
Independence Plans, a systematic investment plan sponsored by PFD.
Note 2 This fund is a closed-end fund.
Note 3 This is a series of ten separate portfolios designed to serve as
investment vehicles for the variable annuity and variable life
insurance contracts of various insurance companies or for certain
qualified pension or retirement plans.
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To the knowledge of the Fund, no officer or Trustee of the Fund owned
5% or more of the issued and outstanding shares of PGI as of the date of this
Statement of Additional Information, except Mr. Cogan who then owned
approximately 14% of such shares. As of June 30, 1998, the Trustees and officers
of the Fund owned beneficially in the aggregate less than 1% of the outstanding
shares of the Fund. As of June 30, 1998, Merrill Lynch Pierce Fenner & Smith,
Inc., for the sole benefit of its customers, 4800 Deer Lake Drive East,
Jacksonville, Florida 32246-6484, owned approximately 102,729 (6.46%) of the
outstanding Class A shares of the Fund, 44,594 (7.02%) of the outstanding Class
B shares of the Fund and 12,375 (16.95%) of the outstanding Class C shares of
the Fund; Deutsche Morgan Grenfell, 1251 Avenue of the Americas, New York, NY
10020-1104, owned approximately 105,791 (6.65%) of the outstanding Class A
shares of the Fund; Matthew W. Beaton and Peter D. Beaton, Trustees for the
Cranberry Growers Service, Inc. Keogh, 2417 Cranberry Highway, Wareham, MA
02571-1002 owned approximately 4,476 (6.31%) of the outstanding Class C shares
of the Fund; and PFD, 60 State Street, Boston, MA 02109-1800, owned
approximately 4489 (6.15%) of the outstanding Class C shares of Fund.
The Fund pays no salaries or compensation to any of its officers. The
Fund pays an annual trustee's fee to each Trustee who is not affiliated with
PGI, PMC, PFD or PSC consisting of two components: (a) a base fee of $750 and
(b) a variable fee, calculated on the basis of average net assets of the Fund.
In addition, the Fund pays a per meeting fee of $150 to each Trustee who is not
affiliated with PGI, PMC, PFD or PSC and pays an annual trustee's fee of $750
plus expenses to each Trustee affiliated with PGI, PMC, PFD or PSC. The Fund
also pays an annual committee participation fee to Trustees who serve as members
of committees established to act on behalf of one or more of the Pioneer mutual
funds. Committee fees are allocated to the Fund on the basis of the Fund's
average net assets. Each Trustee who is a member of the Audit Committee for the
Pioneer mutual funds receives an annual fee equal to 10% of the aggregate annual
trustee's fee, except the Committee Chairperson who receives an annual fee equal
to 20% of the aggregate annual trustee's fee. Members of the Pricing Committee
for the Pioneer mutual funds, as well as any other committee which renders
material functional services to the Boards of Trustees for the Pioneer mutual
funds, receive an annual fee equal to 5% of the annual trustee's fee, except the
Committee Chairperson who receives an annual fee equal to 10% of the annual
trustee's fee. Each Trustee who is not affiliated with PGI, PMC, PFD or PSC also
receives $375 per meeting for attendance at meetings of the Non-Interested
Trustees Committee, except for the Committee Chairperson who receives an
additional $375 per meeting. Any such fees paid to interested Trustees are
reimbursed to the Fund under its management contract.
The following table sets forth certain information with respect to the
compensation of each Trustee of the Fund:
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Pension or Total Compensa-
Retirement tion from the
Aggregate Benefits Accrued Fund and Other
Compensation as Part of the Pioneer Mutual
NAME OF TRUSTEE FROM THE FUND* FUND EXPENSES FUNDS**
John F. Cogan, Jr. $500 $0 $12,000
Mary K. Bush $1,741 $0 $30,000
Richard H. Egdahl, M.D. $1,741 $0 $62,000
Margaret B.W. Graham $1,741 $0 $60,000
John W. Kendrick $1,741 $0 $55,800
Marguerite A. Piret $1,966 $0 $80,000
David D. Tripple $500 $0 $12,000
Stephen K. West $1,848 $0 $63,800
John Winthrop $1,949 $0 $69,000
------ -- -------
Totals $13,727 $0 $444,600
======= == ========
*For the fiscal year ended March 31, 1998.
**For the calendar year ended December 31, 1997.
3. INVESTMENT ADVISER
As stated in the Prospectus, PMC, 60 State Street, Boston,
Massachusetts 02109, serves as the Fund's investment adviser. The management
contract is renewable annually by the vote of a majority of the Board of
Trustees of the Fund (including a majority of the Board of Trustees who are not
parties to the contract or interested persons of any such parties) cast in
person at a meeting called for the purpose of voting on such renewal. This
contract terminates if assigned and may be terminated without penalty by either
party by vote of its Board of Directors or Trustees or a majority of its
outstanding voting securities and the giving of 60 days' written notice.
As compensation for its management services and expenses incurred, PMC
is entitled to a management fee at the rate of 1.00% per annum of the Fund's
average daily net assets up to $300 million, 0.85% of the next $200 million and
0.75% of the excess over $500 million. The fee is normally computed daily and
paid monthly. PMC has agreed not to impose a portion of its management fee and
to make other arrangements, if necessary, to reduce Class A expenses to 1.75% of
the average daily net assets attributable to Class A shares of the Fund. The
portion of Fund-wide expenses attributable to the Class B and Class C shares
will be reduced only to the extent that they are reduced for Class A shares.
This agreement is voluntary and temporary and may be revised or terminated at
any time. The agreement is expected to remain in effect for the fiscal year
ending March 31, 1999.
The Fund paid no management fees for the period October 31, 1996
through March 31, 1997. If PMC's fee reduction and expense limitation had not
been in effect, the Fund would have paid management fees of $47,472 for that
period. During the fiscal year ended March 31, 1998, the management fee was
reduced by $294,131, resulting in an actual management fee paid to PMC during
that period of $72,745.
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<PAGE>
4. UNDERWRITING AGREEMENT AND DISTRIBUTION PLANS
The Fund entered into an underwriting agreement, dated October 9, 1996,
with PFD. The underwriting agreement will continue from year to year if approved
annually by the Trustees. The underwriting agreement provides that PFD will bear
expenses for the distribution of the Fund's shares, except for expenses incurred
by PFD for which it is reimbursed or compensated by the Fund under the
distribution plans (discussed below). PFD bears all expenses it incurs in
providing services under the underwriting agreement. Such expenses include
compensation to its employees and representatives and to securities dealers for
distribution-related services performed for the Fund. PFD also pays certain
expenses in connection with the distribution of the Fund's shares, including the
cost of preparing, printing and distributing advertising or promotional
materials, and the cost of printing and distributing prospectuses and
supplements to prospective shareholders. The Fund bears the cost of registering
its shares under federal, state and foreign securities laws. The Fund and PFD
have agreed to indemnify each other against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. Under the underwriting
agreement, PFD will use its best efforts in rendering services to the Fund.
The Fund has adopted a plan of distribution pursuant to Rule 12b-1
under the 1940 Act with respect to its Class A, Class B and Class C shares (the
"Class A Plan," the "Class B Plan" and the "Class C Plan") (together, the
"Plans").
CLASS A PLAN
Pursuant to the Class A Plan the Fund reimburses PFD for its
expenditures in financing certain activities primarily intended to result in the
sale of the Fund's Class A shares. Certain categories of such expenditures have
been approved by the Board of Trustees and are set forth in the Prospectus. See
"Distribution Plans" in the Prospectus. The expenses of the Fund pursuant to the
Class A Plan are accrued daily at a rate which may not exceed the annual rate of
0.25% of the Fund's average daily net assets attributable to Class A shares.
The Class A Plan does not provide for the carryover of reimbursable
expenses beyond 12 months from the time the Fund is first invoiced for an
expense. The limited carryover provision in the Class A Plan may result in an
expense invoiced to the Fund in one fiscal year being paid in the subsequent
fiscal year and thus being treated for purposes of calculating the maximum
expenditures of the Fund as having been incurred in the subsequent fiscal year.
In the event of termination or non-continuance of the Class A Plan, the Fund has
12 months to reimburse any expense which it incurs prior to such termination or
non-continuance, provided that payments by the Fund during such 12-month period
shall not exceed 0.25% of the Fund's average daily net assets during such
period. For the year ended December 31, 1998, there was an allowable carryover
of distribution expenses reimbursable to PFD of $237.
CLASS B PLAN
The Class B Plan provides that the Fund shall pay PFD, as the Fund's
distributor for its Class B shares, a distribution fee equal on an annual basis
to 0.75% of the Fund's average daily net assets attributable to Class B shares
and will pay PFD a service fee equal to 0.25% of the Fund's average daily net
assets attributable to Class B shares (which PFD will in turn pay to securities
dealers which enter into a sales agreement with PFD at a rate of up to 0.25% of
the Fund's average daily net assets attributable to Class B shares owned by
investors for whom that securities dealer is the holder or dealer of record).
This service fee is intended to be consideration for personal services and/or
account maintenance services
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<PAGE>
rendered by the dealer with respect to Class B shares. PFD will advance to
dealers the first year's service fee at a rate equal to 0.25% of the amount
invested. As compensation therefor, PFD may retain the service fee paid by the
Fund with respect to such shares for the first year after purchase. Dealers will
become eligible for additional service fees with respect to such shares
commencing in the thirteenth month following purchase. Dealers may from time to
time be required to meet certain other criteria in order to receive service
fees. PFD or its affiliates are entitled to retain all service fees payable
under the Class B Plan for which there is no dealer of record or for which
qualification standards have not been met as partial consideration for personal
services and/or account maintenance services performed by PFD or its affiliates
for shareholder accounts.
The purpose of distribution payments to PFD under the Class B Plan is
to compensate PFD for its distribution services to the Fund. PFD pays
commissions to dealers as well as expenses of printing prospectuses and reports
used for sales purposes, expenses with respect to the preparation and printing
of sales literature and other distribution-related services, including, without
limitation, the cost necessary to provide distribution-related services or
personnel, travel, office expenses and equipment. The Class B Plan also provides
that PFD will receive all CDSCs attributable to Class B shares. (See
"Distribution Plans" in the Prospectus.) When a broker-dealer sells Class B
shares and elects, with PFD's approval, to waive its right to receive the
commission normally paid at the time of the sale, PFD may cause all or a portion
of the distribution fees described above to be paid to the broker-dealer.
CLASS C PLAN
The Class C Plan provides that the Fund will pay PFD, as the Fund's
distributor for its Class C shares, a distribution fee, accrued daily and paid
quarterly, equal on an annual basis to 0.75% of the Fund's average daily net
assets attributable to Class C shares and will pay PFD a service fee equal to
0.25% of the Fund's average daily net assets attributable to Class C shares. PFD
will in turn pay to securities dealers which enter into a sales agreement with
PFD a distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the Fund's average daily net assets attributable to Class C
shares owned by investors for whom that securities dealer is the holder or
dealer of record. The service fee is intended to be in consideration of personal
services and/or account maintenance services rendered by the dealer with respect
to Class C shares. PFD will advance to dealers the first year's service fee at a
rate equal to 0.25% of the amount invested. As compensation therefor, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Commencing in the thirteenth month following a
purchase of Class C shares, dealers will become eligible for additional service
fees at a rate of up to 0.25% of the current value of the amount invested and
additional compensation at a rate of up to 0.75% of average net asset value with
respect to such shares. Dealers may from time to time be required to meet
certain other criteria in order to receive service fees. PFD or its affiliates
are entitled to retain all service fees payable under the Class C Plan for which
there is no dealer of record or for which qualification standards have not been
met as partial consideration for personal services and/or account maintenance
services performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class C Plan is
to compensate PFD for its distribution services with respect to the Class C
shares of the Fund. PFD pays commissions to dealers as well as expenses of
printing prospectuses and reports used for sales purposes, expenses with respect
to the preparation and printing of sales literature and other
distribution-related expenses, including, without limitation, the cost necessary
to provide distribution-related services, or personnel, travel, office expenses
and equipment. The Class C Plan also provides that PFD will receive all CDSCs
attributable to Class C shares. (See "Distribution Plans" in the Prospectus.)
When a broker-dealer sells Class C shares and elects,
17
<PAGE>
with PFD's approval, to waive its right to receive the commission normally
paid at the time of the sale, PFD may cause all or a portion of the distribution
fees described above to be paid to the broker-dealer.
GENERAL
In accordance with the terms of the Plans, PFD provides to the Fund for
review by the Trustees a quarterly written report of the amounts expended under
the respective Plans and the purpose for which such expenditures were made. In
the Trustees' quarterly review of the Plans, they will consider the continued
appropriateness and the level of reimbursement or compensation the Plans
provide.
No interested person of the Fund, nor any Trustee of the Fund who is
not an interested person of the Fund, has any direct or indirect financial
interest in the operation of the Plans except to the extent that PFD and certain
of its employees may be deemed to have such an interest as a result of receiving
a portion of the amounts expended under the Plans by the Fund and except to the
extent certain officers may have an interest in PFD's ultimate parent, PGI.
The Plans were adopted by a majority vote of the Board of Trustees,
including all of the Trustees who are not, and were not at the time they voted,
interested persons of the Fund, as defined in the 1940 Act (none of whom had or
have any direct or indirect financial interest in the operation of the Plans),
cast in person at a meeting called for the purpose of voting on the Plans. In
approving the Plans, the Trustees identified and considered a number of
potential benefits which the Plans may provide. The Board of Trustees believes
that there is a reasonable likelihood that the Plans will benefit the Fund and
its current and future shareholders. Under their terms, the Plans remain in
effect from year to year provided such continuance is approved annually by vote
of the Trustees in the manner described above. The Plans may not be amended to
increase materially the annual percentage limitation of average net assets which
may be spent for the services described therein without approval of the
shareholders of the class affected thereby, and material amendments of the Plans
must also be approved by the Trustees in the manner described above. A Plan may
be terminated at any time, without payment of any penalty, by vote of the
majority of the Trustees who are not interested persons of the Fund and who have
no direct or indirect financial interest in the operations of the Plan, or by a
vote of a majority of the outstanding voting securities (as defined in the 1940
Act) of the respective class of the Fund. A Plan will automatically terminate in
the event of its assignment (as defined in the 1940 Act).
During the fiscal year ended March 31 1998, the Fund incurred total
distribution fees pursuant to the Fund's Class A Plan, Class B Plan, and Class C
Plan, respectively, as follows: $49,429, $89,848 and $9,035. Distribution fees
were paid by the Fund to PFD in reimbursement of or as compensation for expenses
related to servicing shareholder accounts and to compensate dealers and sales
personnel.
Upon redemption, Class A shares may be subject to a 1% CDSC, Class B
shares are subject to a CDSC at a rate declining from a maximum of 4% of the
lower of the cost or market value of the shares and Class C shares redeemed
within one year of purchase are subject to a 1% CDSC. During the fiscal year
ended March 31, 1998, CDSCs in the amount of $42,646 were paid to PFD.
5. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with PSC, 60 State Street, Boston,
Massachusetts 02109, to act as shareholder servicing agent and transfer agent
for the Fund. This contract may be terminated without penalty by either party
upon 90 days' written notice.
18
<PAGE>
Under the terms of its contract with the Fund, PSC will service
shareholder accounts, and its duties will include: (i) processing sales,
redemptions and exchanges of Fund shares; (ii) distributing dividends and
capital gains associated with Fund portfolio accounts; and (iii) maintaining
account records and responding to routine shareholder inquiries.
PSC receives an annual fee of $22.75 per Class A, Class B and Class C
shareholder account from the Fund as compensation for the services described
above. PSC is also reimbursed for its out-of-pocket expenditures. The annual fee
is set at an amount determined by vote of a majority of the Trustees (including
a majority of the Trustees who are not parties to the contract with PSC or
interested persons of any such parties) to be comparable to fees for such
services being paid by other investment companies. The Fund may compensate
entities which have agreed to provide certain sub-accounting services such as
specific transaction processing and recordkeeping services. Any such payments by
the Fund are in lieu of the per account fee which would otherwise be paid by the
Fund to PSC.
6. CUSTODIAN
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts
02109, is the custodian (the "Custodian") of the Fund's assets. The Custodian's
responsibilities include safekeeping and controlling the Fund's cash and
securities in the United States as well as in foreign countries, handling the
receipt and delivery of securities, and collecting interest and dividends on the
Fund's investments. The Custodian fulfills its function in foreign countries
through a network of subcustodian banks located in the foreign countries (the
"Subcustodians"). The Custodian also provides fund accounting, bookkeeping and
pricing assistance to the Fund and assistance in arranging for forward currency
exchange contracts as described above under "Investment Policies and
Restrictions."
The Custodian does not determine the investment policies of the Fund or
decide which securities it will buy or sell. The Fund may invest in securities
issued by the Custodian or any of the Subcustodians, deposit cash in the
Custodian or any Subcustodian and deal with the Custodian or any of the
Subcustodians as a principal in securities transactions. Portfolio securities
may be deposited into the Federal Reserve-Treasury Department Book Entry System
or the Depository Trust Company in the United States or in recognized central
depositories in foreign countries. The Trustees periodically review the Fund's
custodian arrangements outside the United States.
7. PRINCIPAL UNDERWRITER
PFD, 60 State Street, Boston, Massachusetts, serves as the principal
underwriter for the Fund in connection with the continuous offering of its
shares. During the period October 31, 1996 through March 31, 1997 and the fiscal
year ended March 31, 1998, net underwriting commissions retained by PFD were
$1,873 and $26,361, respectively. Commissions reallowed to dealers during such
periods were $515,824 and $509,668, respectively.
The Fund will not generally issue Fund shares for consideration other
than cash. At the Fund's sole discretion, however, it may issue Fund shares for
consideration other than cash in connection with a bona fide reorganization,
statutory merger or other acquisition of portfolio securities.
19
<PAGE>
8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, 225 Franklin Street, Boston, Massachusetts 02110,
is the Fund's independent public accountant, providing audit services, tax
return review, and assistance and consultation with respect to the preparation
of filings with the SEC.
9. PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of the Fund by PMC pursuant to authority contained in the management
contract. In selecting brokers or dealers, PMC considers various factors
relating to best execution, including, but not limited to, the size and type of
the transaction; the nature and character of the markets of the security to be
purchased or sold; the execution efficiency, settlement capability, and
financial condition of the dealer; the dealer's execution services rendered on a
continuing basis; and the reasonableness of any dealer spreads. Most
transactions in foreign equity securities are executed by broker-dealers in
foreign countries in which commission rates are fixed and, therefore, are not
negotiable (as such rates are in the United States).
PMC may select broker-dealers which provide brokerage and/or research
services to the Fund and/or other investment companies or accounts managed by
PMC. In addition, consistent with Section 28(e) of the Securities Exchange Act
of 1934, as amended, the Fund may pay commissions to such broker-dealers in an
amount greater than the amount another firm may charge. Such services may
include advice concerning the value of securities; the advisability of investing
in, purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; providing stock quotation services;
furnishing analyses, electronic information services, manuals and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, performance of accounts and comparative fund statistics and
credit rating service information; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement). PMC
maintains a listing of broker-dealers who provide such services on a regular
basis. However, because many transactions on behalf of the Fund and other
investment companies or accounts managed by PMC are placed with broker-dealers
(including broker-dealers on the listing) without regard to the furnishing of
such services, it is not possible to estimate the proportion of such
transactions directed to such dealers solely because such services were
provided. Management believes that no exact dollar value can be calculated for
such services.
The research received from broker-dealers may be useful to PMC in
rendering investment management services to the Fund as well as to other
investment companies or accounts managed by PMC, although not all of such
research may be useful to the Fund. Conversely, such information provided by
brokers or dealers who have executed transaction orders on behalf of such other
accounts may be useful to PMC in carrying out its obligations to the Fund. The
receipt of such research has not reduced PMC's normal independent research
activities; however, it enables PMC to avoid the additional expenses which might
otherwise be incurred if it were to attempt to develop comparable information
through its own staff.
In circumstances where two or more broker-dealers offer comparable
prices and executions, preference may be given to a broker-dealer which has sold
shares of the Fund as well as shares of other investment companies or accounts
managed by PMC. This policy does not imply a commitment to execute all portfolio
transactions through all broker-dealers that sell shares of the Fund.
20
<PAGE>
In addition to the Fund, PMC acts as investment adviser to other
Pioneer mutual funds and certain private accounts with investment objectives
similar to the Fund's. As such, securities may frequently meet the investment
objectives of the Fund, such other mutual funds and such private accounts. In
such cases, the decision to recommend a purchase for one fund or account rather
than another is based on a number of factors. The determining factors in most
cases are the amount of securities of the issuer then outstanding, the value of
those securities and the market for them. Other factors considered in the
investment recommendations include other investments which each fund or account
presently has in a particular industry or country and the availability of
investment funds in each fund or account.
It is possible that, at times, identical securities will be held by
more than one fund and/or account. However, positions in the same issue may vary
and the length of time that any fund or account may choose to hold its
investment in the same issue may likewise vary. To the extent that the Fund,
another Pioneer mutual fund or a private account managed by PMC seeks to acquire
the same security at about the same time, the Fund may not be able to acquire as
large a position in such security as it desires or it may have to pay a higher
price for the security. Similarly, the Fund may not be able to obtain as large
an execution of an order to sell or as high a price for any particular portfolio
security if PMC decides to sell on behalf of another account the same portfolio
security at the same time. On the other hand, if the same securities are bought
or sold at the same time by more than one account, the resulting participation
in volume transactions could produce better executions for the Fund or other
account. In the event that more than one account purchases or sells the same
security on a given date, the purchases and sales will normally be made as
nearly as practicable on a pro rata basis in proportion to the amounts desired
to be purchased or sold by each.
During the period October 31, 1996 though March 31, 1997 and the fiscal
year ended March 31, 1998, the Fund paid or accrued aggregate brokerage and
underwriting commissions of $75,895 and $116,844, respectively.
The Trustees periodically review PMC's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Fund.
10. TAX STATUS
It is the Fund's policy to meet the requirements of Subchapter M of the
Code for qualification as a regulated investment company. These requirements
relate to the sources of the Fund's income, the diversification of its assets
and the distribution of its income to shareholders. If the Fund meets all such
requirements and distributes to its shareholders, in accordance with the Code's
timing requirements, all investment company taxable income and net capital gain,
if any, which it earns, the Fund will be relieved of the necessity of paying
federal income tax.
In order to qualify as a regulated investment company under Subchapter
M, the Fund must, among other things, derive at least 90% of its annual gross
income from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stock, securities or foreign
currencies, or other income (including gains from options, futures and forward
contracts) derived with respect to its business of investing in such stock,
securities or currencies (the "90% income test") and satisfy certain annual
distribution and quarterly diversification requirements. For purposes of the 90%
income test, income the Fund earns from equity interests in certain entities
that are not treated as corporations (e.g., are treated as partnerships or
trusts) for U.S. tax purposes will generally have the same
21
<PAGE>
character for the Fund as in the hands of such entities; consequently, the
Fund may be required to limit its equity investments in such entities that earn
fee income, rental income, or other nonqualifying income.
Dividends from investment company taxable income, which includes net
investment income, net short-term capital gain in excess of net long-term
capital loss, and certain net foreign exchange gains, are taxable as ordinary
income, whether received in cash or reinvested in additional shares. Dividends
from net long-term capital gain in excess of net short-term capital loss ("net
capital gain"), if any, whether received in cash or additional shares, are
taxable to the Fund's shareholders as long-term capital gains for federal income
tax purposes without regard to the length of time shares of the Fund have been
held.
Any dividend declared by the Fund in October, November or December as
of a record date in such a month and paid during the following January will be
treated for federal income tax purposes as received by shareholders on December
31 of the calendar year in which it is declared.
Foreign exchange gains and losses realized by the Fund in connection
with certain transactions involving foreign currency-denominated debt
securities, certain options and futures contracts relating to foreign currency,
foreign currency forward contracts, foreign currencies, or payables or
receivables denominated in a foreign currency are subject to Section 988 of the
Code, which generally causes such gains and losses to be treated as ordinary
income and losses and may affect the amount, timing and character of
distributions to shareholders. Under future regulations, any such transactions
that are not directly related to the Fund's investment in stock or securities
(or its options or futures contracts with respect to stock or securities) may
need to be limited in order to enable the Fund to satisfy the 90% income test.
If the net foreign exchange loss for a year were to exceed the Fund's investment
company taxable income (computed without regard to such loss), the resulting
overall ordinary loss for such year would not be deductible by the Fund or its
shareholders in future years.
If the Fund acquires any equity interest (under proposed regulations,
generally including not only stock but also an option to acquire stock such as
is inherent in a convertible bond) in certain foreign corporations that receive
at least 75% of their annual gross income from passive sources (such as
interest, dividends, certain rents and royalties, or capital gains) or hold at
least 50% of their assets in investments producing such passive income ("passive
foreign investment companies"), the Fund could be subject to federal income tax
and additional interest charges on "excess distributions" received from such
companies or gain from the sale of stock in such companies, even if all income
or gain actually received by the Fund is timely distributed to its shareholders.
The Fund would not be able to pass through to its shareholders any credit or
deduction for such a tax. An election may generally be available that would
ameliorate these adverse tax consequences, but any such election could require
the Fund to recognize taxable income or gain (subject to tax distribution
requirements) without the concurrent receipt of cash. These investments could
also result in the treatment of associated capital gains as ordinary income. The
Fund may limit and/or manage its holdings in passive foreign investment
companies to limit its tax liability or maximize its return from these
investments.
At the time of an investor's purchase of Fund shares, a portion of the
purchase price may be attributable to realized or unrealized appreciation in the
Fund's portfolio or undistributed taxable income of the Fund. Consequently,
subsequent distributions by the Fund on these shares from such appreciation or
income may be taxable to such investor even if the net asset value of the
investor's shares is, as a result of the distributions, reduced below the
investor's cost for such shares and the distributions economically represent a
return of a portion of the investment.
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Redemptions and exchanges are taxable events for shareholders that are
subject to tax. Shareholders should consult their own tax advisers with
reference to their individual circumstances to determine whether any particular
transaction in Fund shares is properly treated as a sale for tax purposes, as
the following discussion assumes, and the tax treatment of any gains or losses
recognized in such transactions. Any loss realized by a shareholder upon the
redemption, exchange or other disposition of shares with a tax holding period of
six months or less will be treated as a long-term capital loss to the extent of
any amounts treated as distributions of long-term capital gain with respect to
such shares.
In addition, if Class A shares redeemed or exchanged have been held for
less than 91 days, (1) in the case of a reinvestment in the Fund or another
mutual fund at net asset value pursuant to the reinvestment privilege, the sales
charge paid on such shares is not included in their tax basis under the Code,
and (2) in the case of an exchange, all or a portion of the sales charge paid on
such shares is not included in their tax basis under the Code, to the extent a
sales charge that would otherwise apply to the shares received is reduced
pursuant to the exchange privilege. In either case, the portion of the sales
charge not included in the tax basis of the shares redeemed or surrendered in an
exchange is included in the tax basis of the shares acquired in the reinvestment
or exchange. Losses on redemptions or other dispositions of shares may be
disallowed under "wash sale" rules in the event of other investments in the Fund
(including those made pursuant to reinvestment of dividends and/or capital gain
distributions) within a period of 61 days beginning 30 days before and ending 30
days after a redemption or other disposition of shares. In such a case, the
disallowed portion of any loss would be included in the federal tax basis of the
shares acquired in the other investments.
For federal income tax purposes, the Fund is permitted to carry forward
a net realized capital loss in any year to offset realized capital gains, if
any, during the eight years following the year of the loss. To the extent
subsequent net realized capital gains are offset by such losses, they would not
result in federal income tax liability to the Fund and are not expected to be
distributed as such to shareholders.
For purposes of the 70% dividends-received deduction generally
available to corporations under the Code, dividends received by the Fund from
U.S. corporations in respect of any share of stock with a tax holding period of
at least 46 days (91 days in the case of certain preferred stock) extending
before and after each dividend held in an unleveraged position and distributed
and designated by the Fund may be treated as qualifying dividends. Any corporate
shareholder should consult its tax advisor regarding the possibility that its
tax basis in its shares may be reduced, for federal income tax purposes, by
reason of "extraordinary dividends" received with respect to the shares and, to
the extent such basis would be reduced below zero, current recognition of income
may be required. In order to qualify for the deduction, corporate shareholders
must meet the minimum holding period requirement stated above with respect to
their Fund shares, taking into account any holding period reductions from
certain hedging or other transactions or positions that diminish their risk of
loss with respect to their Fund shares, and, if they borrow to acquire or
otherwise incur debt attributable to Fund shares, they may be denied a portion
of the dividends-received deduction. The entire qualifying dividend, including
the otherwise deductible amount, will be included in determining the excess (if
any) of a corporation's adjusted current earnings over its alternative minimum
taxable income, which may increase a corporation's alternative minimum tax
liability.
The Fund may be subject to withholding and other taxes imposed by
foreign countries including taxes on interest, dividends and capital gains with
respect to its investments in those countries. Tax conventions between certain
countries and the U.S. may reduce or eliminate such taxes in some cases. If more
than 50% of the Fund's total assets at the close of any taxable year consists of
stock or securities of
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foreign corporations, the Fund may elect to pass through to shareholders
their pro rata shares of qualified foreign taxes paid by the Fund, with the
result that shareholders would be required to include such taxes in their gross
incomes (in addition to dividends and distributions they actually received),
would treat such taxes as foreign taxes paid by them, and may be entitled to a
tax deduction or credit for such taxes, subject to a holding period requirement
and other limitations under the Code.
Qualified foreign taxes generally include taxes that would be treated
as income taxes under U.S. tax regulations but do not include most other taxes,
such as stamp taxes, securities transaction taxes, and similar taxes. If the
Fund makes the election described above, shareholders may deduct their pro rata
portion of qualified foreign taxes paid by the Fund (not in excess of the tax
actually owed by the Fund) in computing their income subject to U.S. federal
income taxation or, alternatively, use them as foreign tax credits, subject to
applicable limitations under the Code, against their U.S. federal income taxes.
Shareholders who do not itemize deductions for federal income tax purposes will
not, however, be able to deduct their pro rata portion of qualified foreign
taxes paid by the Fund, although such shareholders will be required to include
their shares of such taxes in gross income if the Fund makes the election
described above.
If the Fund makes this election and a shareholder chooses to take a
credit for the foreign taxes deemed paid by such shareholder, the amount of the
credit that may be claimed in any year may not exceed the same proportion of the
U.S. tax against which such credit is taken which the shareholder's taxable
income from foreign sources (but not in excess of the shareholder's entire
taxable income) bears to his entire taxable income. For this purpose, long-term
and short-term capital gains the Fund realizes and distributes to shareholders
will generally not be treated as income from foreign sources in their hands, nor
will distributions of certain foreign currency gains subject to Section 988 of
the Code and of any other income realized by the Fund that is deemed, under the
Code, to be U.S.-source income in the hands of the Fund. This foreign tax credit
limitation may also be applied separately to certain specific categories of
foreign-source income and the related foreign taxes. As a result of these rules,
which may have different effects depending upon each shareholder's particular
tax situation, certain shareholders may not be able to claim a credit for the
full amount of their proportionate share of the qualified foreign taxes paid by
the Fund. Shareholders who are not liable for U.S. federal income taxes,
including tax-exempt shareholders, will ordinarily not benefit from this
election. If the Fund does make the election, it will provide required tax
information to shareholders. If the Fund either does not make the election or
pays foreign taxes relating to investments for which it does not satisfy an
applicable holding period requirement, it may deduct foreign taxes that are not
passed through to shareholders in computing its income available for
distribution to shareholders to satisfy applicable tax distribution
requirements.
Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions, and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their tax
advisers for more information.
If, as anticipated, the Fund continues to qualify as a regulated
investment company under the Code, it will not be required to pay any
Massachusetts income, corporate excise or franchise taxes or any Delaware
corporation income tax.
Options written or purchased and futures contracts entered into by the
Fund on certain securities, indices and foreign currencies, as well as certain
foreign currency forward contracts, may cause the Fund to recognize gains or
losses from marking-to-market even though such options may not have lapsed, been
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<PAGE>
closed out, or exercised or such futures or forward contracts may not have been
performed or closed out. The tax rules applicable to these contracts may affect
the characterization as long-term or short-term of some capital gains and losses
realized by the Fund. Certain options, futures and forward contracts relating to
foreign currency may be subject to Section 988, described above, and accordingly
produce ordinary income or loss. Additionally, the Fund may be required to
recognize gain if an option, futures contract, forward contract, or other
transaction that is not subject to the mark-to-market rules is treated as a
"constructive sale" of an "appreciated financial position" held by the Fund
under Section 1259 of the Code. Any net mark-to-market gains and/or gains from
constructive sales may also have to be distributed to satisfy the distribution
requirements referred to above even though no corresponding cash amounts may
concurrently be received, possibly requiring the disposition of portfolio
securities or borrowing to obtain the necessary cash. Losses on certain options,
futures or forward contracts and/or offsetting positions (portfolio securities
or other positions with respect to which the Fund's risk of loss is
substantially diminished by one or more options, futures or forward contracts)
may also be deferred under the tax straddle rules of the Code, which may also
affect the characterization of capital gains or losses from straddle positions
and certain successor positions as long-term or short-term. Certain tax
elections may be available that would enable the Fund to ameliorate some adverse
effects of the tax rules described in this paragraph. The tax rules applicable
to options, futures, forward contracts and straddles may affect the amount,
timing and character of the Fund's income and loss and hence of distributions to
shareholders.
Federal law requires that the Fund withhold (as "backup withholding")
31% of reportable payments, including dividends, capital gain dividends, and the
proceeds of redemptions (including exchanges) and repurchases, to shareholders
who have not complied with IRS regulations. In order to avoid this withholding
requirement, shareholders must certify on their Account Applications, or on
separate IRS Forms W-9, that the Social Security Number or other Taxpayer
Identification Number they provide is their correct number and that they are not
currently subject to backup withholding, or that they are exempt from backup
withholding. The Fund may nevertheless be required to withhold if it receives
notice from the IRS or a broker that the number provided is incorrect or backup
withholding is applicable as a result of previous underreporting of interest or
dividend income.
The description of certain federal tax provisions above relates only to
U.S. federal income tax consequences for shareholders who are U.S. persons,
i.e., U.S. citizens or residents or U.S. corporations, partnerships, trusts or
estates, and who are subject to U.S. federal income tax. This description does
not address the special tax rules that may be applicable to particular types of
investors, such as insurance companies, financial institutions, securities
dealers, or tax-exempt or tax-deferred plans, accounts or entities. Shareholders
should consult their own tax advisers on these matters and on state, local and
other applicable tax laws. Investors other than U.S. persons may be subject to
different U.S. tax treatment, including a possible 30% non-resident alien U.S.
withholding tax (or non-resident alien withholding tax at a lower treaty rate)
on amounts treated as ordinary dividends from the Fund and, unless an effective
IRS Form W-8 or authorized substitute for Form W-8 is on file, to 31% backup
withholding on certain other payments from the Fund.
11. DESCRIPTION OF SHARES
The Declaration permits the Board of Trustees to authorize the issuance
of an unlimited number of full and fractional shares of beneficial interest
(without par value) which may be divided into such separate series as the
Trustees may establish. Currently, the Fund consists of only one series. The
Trustees may, however, establish additional series of shares and may divide or
combine the shares into a
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greater or lesser number of shares without thereby changing the
proportionate beneficial interests in the Fund. The Declaration further
authorizes the Trustees to classify or reclassify any series of the shares into
one or more classes. Pursuant thereto, the Trustees have authorized the issuance
of three classes of shares of the Fund, designated as Class A, Class B and Class
C shares. Each share of a class of the Fund represents an equal proportionate
interest in the assets of the Fund allocable to that class. Upon liquidation of
the Fund, shareholders of each class of the Fund are entitled to share pro rata
in the Fund's net assets allocable to such class available for distribution to
shareholders. The Fund reserves the right to create and issue additional series
or classes of shares, in which case the shares of each class of a series would
participate equally in the earnings, dividends and assets allocable to that
class of the particular series.
Shareholders are entitled to one vote for each share held and may vote
in the election of Trustees and on other matters submitted to a meeting of
shareholders. Although Trustees are not elected annually by the shareholders,
shareholders have, under certain circumstances, the right to remove one or more
Trustees.
The shares of the Fund are entitled to vote separately to approve
investment advisory agreements or changes in investment restrictions, but
shareholders of all series vote together in the election and selection of
Trustees and accountants. Shares of all series of the Fund vote together as a
class on matters that affect all series of the Fund in substantially the same
manner. As to matters affecting a single series or class, shares of such series
or class will vote separately. No amendment adversely affecting the rights of
shareholders may be made to the Declaration without the affirmative vote of a
majority of the Fund's shares. Shares have no preemptive or conversion rights.
Shares are fully paid and non-assessable by the Fund, except as stated below.
12. CERTAIN LIABILITIES
As a Delaware business trust, the Fund's operations are governed by the
Declaration. A copy of the Fund's Certificate of Trust, also dated July 26, 1996
as amended October 8, 1996, is on file with the office of the Secretary of State
of Delaware. Generally, Delaware business trust shareholders are not personally
liable for obligations of the Delaware business trust under Delaware law. The
Delaware Business Trust Act (the "Delaware Act") provides that a shareholder of
a Delaware business trust shall be entitled to the same limitation of liability
extended to shareholders of private for-profit corporations. The Declaration
expressly provides that the Fund is organized under the Delaware Act and that
the Declaration is to be governed by Delaware law. It is nevertheless possible
that a Delaware business trust, such as the fund, might become a party to an
action in another state whose courts refused to apply Delaware law, in which
case the trust's shareholders could become subject to personal liability.
To guard against this risk, the Declaration (i) contains an express
disclaimer of shareholder liability for acts or obligations of the Fund and
provides that notice of such disclaimer may be given in each agreement,
obligation or instrument entered into or executed by the Fund or its Trustees,
(ii) provides for the indemnification out of Fund property of any shareholders
held personally liable for any obligations of the Fund or any series of the Fund
and (iii) provides that the Fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the Fund and
satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss beyond his or her investment because of shareholder liability is
limited to circumstances in which all of the following factors are present: (1)
a court refused to apply Delaware law; (2) the liability arose under tort law
or, if not, no contractual limitation of liability was in effect; and (3) the
Fund itself would be unable to meet its
26
<PAGE>
obligations. In light of Delaware law, the nature of the Fund's business
and the nature of its assets, the risk of personal liability to a Fund
shareholder is remote.
The Declaration further provides that the Fund shall indemnify each of
its Trustees and officers against liabilities and expenses reasonably incurred
by them, in connection with, or arising out of, any action, suit or proceeding,
threatened against or otherwise involving such Trustee or officer, directly or
indirectly, by reason of being or having been a Trustee or officer of the Fund.
The Declaration does not authorize the Fund to indemnify any Trustee or officer
against any liability to which he or she would otherwise be subject by reason of
or for willful misfeasance, bad faith, gross negligence or reckless disregard of
such person's duties.
13. DETERMINATION OF NET ASSET VALUE
The net asset value per share of each class of the Fund is determined
as of the close of regular trading (normally 4:00 p.m., Eastern time) on each
day on which the Exchange is open for trading. As of the date of this Statement
of Additional Information, the Exchange is open for trading every weekday except
for the following holidays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The net asset value per share of each class
of the Fund is also determined on any other day in which the level of trading in
its portfolio securities is sufficiently high so that the current net asset
value per share might be materially affected by changes in the value of its
portfolio securities. The net asset value per share of the Fund is not
determined on any day in which no purchase orders in good order for the shares
of the Fund are received and no shares are tendered for redemption.
The net asset value per share of each class of the Fund is computed by
taking the value of all of the Fund's assets attributable to a class, less the
Fund's liabilities attributable to that class, and dividing the result by the
number of outstanding shares of that class. For purposes of determining net
asset value, expenses of the classes of the Fund are accrued daily.
Securities which have not traded on the date of valuation or securities
for which sales prices are not generally reported are valued at the mean between
the last bid and asked prices. Securities for which no market quotations are
readily available (including those the trading of which has been suspended) will
be valued at fair value as determined in good faith by the Board of Trustees,
although the actual computations may be made by persons acting pursuant to the
direction of the Board of Trustees. The maximum offering price per Class A share
is the net asset value per Class A share, plus the maximum sales charge. Class B
and Class C shares are offered at net asset value without the imposition of an
initial sales charge.
14. SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan ("SWP") is designed to provide a
convenient method of receiving fixed payments at regular intervals from shares
of the Fund deposited by the applicant under the SWP. The applicant must deposit
or purchase for deposit with PSC shares of the Fund having a total value of not
less than $10,000. Periodic payments of $50 or more will be deposited monthly or
quarterly directly into a bank account designated by the applicant or will be
sent to the applicant, or any person designated by the applicant. See "Waiver or
Reduction of Contingent Deferred Sales Charge" in the Prospectus. Designation of
a third party to receive payments subsequent to opening an account must be
accompanied by a signature guarantee. Class B accounts must meet the minimum
initial investment
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requirement prior to establishing a SWP. Withdrawals from Class B and Class
C share accounts are limited to 10% of the value of the account at the time the
SWP is implemented.
Any income dividends or capital gains distributions on shares under the
SWP will be credited to the SWP account on the payment date in full and
fractional shares at the net asset value per share in effect on the record date.
SWP payments are made from the proceeds of the redemption of shares
deposited under the SWP in a SWP account. To the extent that such redemptions
for periodic withdrawals exceed dividend income reinvested in the SWP account,
such redemptions will reduce and may ultimately exhaust the number of shares
deposited in the SWP account. Redemptions are taxable transactions to
shareholders. In addition, the amounts received by a shareholder cannot be
considered as an actual yield or income on his or her investment because part of
such payments may be a return of his or her investment.
The SWP may be terminated at any time (1) by written notice to PSC or
from PSC to the shareholder; (2) upon receipt by PSC of appropriate evidence of
the shareholder's death; or (3) when all shares under the SWP have been
redeemed.
15. LETTER OF INTENT (CLASS A SHARES ONLY)
A Letter of Intent ("LOI") may be established by completing the LOI
section of the Account Application. When you sign the Account Application, you
agree to irrevocably appoint PSC your attorney-in-fact to surrender for
redemption any or all shares held in escrow with full power of substitution. An
LOI is not a binding obligation upon the investor to purchase, or the Fund to
sell, the full amount indicated.
If the total purchases, less redemptions, exceed the amount specified
under the LOI and are in an amount which would qualify for a further quantity
discount, all transactions will be recomputed on the expiration date of the LOI
to effect the lower sales charge. Any difference in the sales charge resulting
from such recomputation will be either delivered to you in cash or invested in
additional shares at the lower sales charge. The dealer, by signing the Account
Application, agrees to return to PFD, as part of such retroactive adjustment,
the excess of the commission previously reallowed or paid to the dealer over
that which is applicable to the actual amount of the total purchases under the
LOI.
If the total purchases, less redemptions, are less than the amount
specified under the LOI, you must remit to PFD any difference between the sales
charge on the amount actually purchased and the amount originally specified in
the LOI section of the Account Application. When the difference is paid, the
shares held in escrow will be deposited to your account. If you do not pay the
difference in sales charge within 20 days after written request from PFD or your
dealer, PSC, after receiving instructions from PFD, will redeem the appropriate
number of shares held in escrow to realize the difference and release any
excess. See "How to Buy Fund Shares - Letter of Intent" in the Prospectus for
more information.
16. INVESTMENT RESULTS
One of the primary methods used to measure the performance of a class
of the Fund is "total return." Total return will normally represent the
percentage change in value of an account, or of a hypothetical investment in a
class of the Fund, over any period up to the lifetime of that class of the Fund.
Total return calculations will usually assume the reinvestment of all dividends
and capital gains distributions and will be expressed as a percentage increase
or decrease from an initial value for the entire
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period or for one or more specified periods within the entire period. Total
return percentages for periods of less than one year will usually be annualized;
total return percentages for periods longer than one year will usually be
accompanied by total return percentages for each year within the period and/or
by the average annual compounded total return for the period. The income and
capital components of a given return may be separated and portrayed in a variety
of ways in order to illustrate their relative significance. Performance may also
be portrayed in terms of cash or investment values, without percentages. Past
performance cannot guarantee any particular future result.
The Fund's average annual total return quotations for each class of its
shares as that information may appear in the Prospectus, this Statement of
Additional Information or in advertising are calculated by standard methods
prescribed by the SEC.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS
Average annual total return quotations for each class of shares are
computed by finding the average annual compounded rates of return that would
cause a hypothetical investment in that class made on the first day of a
designated period (assuming all dividends and distributions are reinvested) to
equal the ending redeemable value of such hypothetical investment on the last
day of the designated period in accordance with the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000, less the maximum
sales load of $57.50 for Class A shares or the deduction of
any CDSC for Class B or Class C shares at the end of the
period
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000 initial
payment made at the beginning of the designated period (or
fractional portion thereof)
For purposes of the above computation, it is assumed that the maximum
sales charge of 5.75% was deducted from the initial investment and that all
dividends and distributions made by the Fund are reinvested at net asset value
during the designated period. The average annual total return quotation is
determined to the nearest 1/100 of 1%.
In determining the average annual total return (calculated as provided
above), recurring fees, if any, that are charged to all shareholder accounts of
a particular class of shares are taken into consideration. For any account fees
that vary with the size of the account, the account fee used for purposes of the
above computation is assumed to be the fee that would be charged to the class'
mean account size.
The average annual total return for each class of shares of the Fund as
of March 31, 1998 are as follows:
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Average Annual Total Return (%)
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION*
------ ------- -------- ---------------
Class A Shares 14.36 N/A N/A 18.52
Class B Shares 16.25 N/A N/A 19.64
Class C Shares 20.16 N/A N/A 22.33
- ----------------
*Inception was October 31, 1996. PMC temporarily agreed to reduce its management
fee and made other arrangements to limit certain other expenses of the Fund. Had
PMC not made such an arrangement, the total returns for the periods would have
been lower.
OTHER QUOTATIONS, COMPARISONS, AND GENERAL INFORMATION
From time to time, in advertisements, in sales literature, or in
reports to shareholders, the past performance of the Fund may be illustrated
and/or compared with that of other mutual funds with similar investment
objectives, and to stock or other relevant indices. For example, total return of
the Fund's classes may be compared to averages or rankings prepared by LIPPER
ANALYTICAL SERVICES, INC., a widely recognized independent service which
monitors mutual fund performance; the MORGAN STANLEY CAPITAL INTERNATIONAL
("MSCI") EAFE INDEX, an unmanaged index of international stock markets, MSCI USA
INDEX, an unmanaged index of U.S. stock markets, or other appropriate MSCI
indices; the S&P 500, an unmanaged index of common stocks; or the DOW JONES
INDUSTRIAL AVERAGE, a recognized unmanaged index of common stocks of 30
industrial companies listed on the Exchange.
In addition, the performance of the classes of the Fund may be compared
to alternative investment or savings vehicles and/or to indexes or indicators of
economic activity, e.g., inflation or interest rates. Performance rankings and
listings reported in newspapers or national business and financial publications,
such as BARRON'S, BUSINESS WEEK, CONSUMER'S DIGEST, CONSUMER REPORTS, FINANCIAL
WORLD, FORBES, FORTUNE, INVESTORS BUSINESS DAILY, KIPLINGER'S PERSONAL FINANCE
MAGAZINE, MONEY MAGAZINE, THE NEW YORK TIMES, SMART MONEY, USA TODAY, U.S. NEWS
AND WORLD REPORT, THE WALL STREET JOURNAL and WORTH may also be cited (if the
Fund is listed in any such publication) or used for comparison, as well as
performance listings and rankings from various other sources including BLOOMBERG
FINANCIAL SYSTEMS, CDA/WIESENBERGER INVESTMENT COMPANIES SERVICE, DONOGHUE'S
MUTUAL FUND ALMANAC, INVESTMENT COMPANY DATA, INC., JOHNSON'S CHARTS, KANON
BLOCH CARRE & CO., MICROPAL, INC., MORNINGSTAR, INC., SCHABACKER INVESTMENT
MANAGEMENT and TOWERS DATA SYSTEMS.
In addition, from time to time, quotations from articles from financial
publications, such as those listed above, may be used in advertisements, in
sales literature or in reports to shareholders of the Fund.
The Fund may also present, from time to time, historical information
depicting the value of a hypothetical account in one or more classes of the Fund
since the Fund's inception.
In presenting investment results, the Fund may also include references
to certain financial planning concepts, including (a) an investor's need to
evaluate his financial assets and obligations to determine how much to invest;
(b) his need to analyze the objectives of various investments to determine where
to invest; and (c) his need to analyze his time frame for future capital needs
to determine how long to invest. The investor controls these three factors, all
of which affect the use of investments in building assets.
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AUTOMATED INFORMATION LINE
FactFoneSM, Pioneer's 24-hour automated information line, allows
shareholders to dial toll-free 1-800-225-4321 and hear recorded fund
information, including:
o net asset value prices for all Pioneer mutual funds;
o annualized 30-day yields on Pioneer's fixed income funds;
o annualized 7-day yields and 7-day effective (compound) yields
for Pioneer's money market fund; and
o dividends and capital gains distributions on all Pioneer
mutual funds.
Yields are calculated in accordance with standard formulas mandated by the SEC.
In addition, by using a personal identification number ("PIN"),
shareholders may enter purchases, exchanges and redemptions, access their
account balances and last three transactions and may order a duplicate
statement. See "FactFoneSM" in the Prospectus for more information.
All performance numbers communicated through FactFoneSM represent past
performance and include the maximum applicable sales charge. A shareholder's
actual yield and total return will vary with changing market conditions. The
value of Class A, Class B and Class C shares (except for Pioneer Cash Reserves
Fund, which seeks to maintain a stable $1.00 share price) will also vary, and
such shares may be worth more or less at redemption than their original cost.
17. FINANCIAL STATEMENTS
The Fund's Annual Report, filed with the SEC on June 1, 1998 (Accession
No. 0001019290-98-000004), is incorporated by reference into this Statement of
Additional Information. The financial statements in the Fund's Annual Report,
including the financial highlights, for the period ended March 31, 1998,
included or incorporated by reference into the Prospectus and this Statement of
Additional Information, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect to the financial
statements, and are included in reliance upon the authority of Arthur Andersen
LLP as experts in accounting and auditing in giving their report.
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APPENDIX A
DESCRIPTION OF SHORT-TERM DEBT AND CORPORATE BOND RATINGS1
MOODY'S INVESTORS SERVICE ("MOODY'S") SHORT-TERM PRIME RATING SYSTEM - TAXABLE
DEBT AND DEPOSITS GLOBALLY
Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually senior debt obligations. These obligations have an original maturity
not exceeding one year, unless explicitly noted.
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:
PRIME-1: Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
Leading market positions in well-established industries. High rates of
return on funds employed.
Conservative capitalization structure with moderate reliance on debt
and ample asset protection. Broad margins in earnings coverage of fixed
financial charges and high internal cash generation. Well-established
access to a range of financial markets and assured sources of alternate
liquidity.
PRIME-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
PRIME-3: Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating
categories.
Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating on
a bank's ability to repay senior obligations extends only to branches located in
countries which carry a Moody's Sovereign Rating for Bank
__________________
1 The ratings indicated herein are believed to be the most recent ratings
available at the date of this Statement of Additional Information for the
securities listed. Ratings are generally given to securities at the time of
issuance. While the rating agencies may from time to time revise such ratings,
they undertake no obligation to do so, and the ratings indicated do not
necessarily represent ratings which will be given to these securities on the
date of the Fund's fiscal year-end.
32
<PAGE>
Deposits. Such branch obligations are rated at the lower of the bank's
rating or Moody's Sovereign Rating for Bank Deposits for the country in which
the branch is located.
When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings do
not incorporate an opinion as to whether payment of the obligation will be
affected by actions of the government controlling the currency of denomination.
In addition, risks associated with bilateral conflicts between an investor's
home country and either the issuer's home country or the country where an
issuer's branch is located are not incorporated into Moody's short-term debt
ratings.
If an issuer represents to Moody's that its short-term debt obligations are
supported by the credit of another entity or entities, then the name or names of
such supporting entity or entities are listed within the parenthesis beneath the
name of the issuer, or there is a footnote referring the reader to another page
for the name or names of the supporting entity or entities. In assigning ratings
to such issuers, Moody's evaluates the financial strength of the affiliated
corporations, commercial banks, insurance companies, foreign governments or
other entities, but only as one factor in the total rating assessment.
MOODY'S CORPORATE BOND RATINGS
AAA: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA: Bonds which are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
33
<PAGE>
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA: Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
NOTE: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicated that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicated
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.
STANDARD & POOR'S RATINGS GROUP ("STANDARD & POOR'S") SHORT-TERM ISSUE CREDIT
RATINGS
A-1: A short-term obligation rated A-1 is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity to
meet its financial commitment on these obligations is extremely strong.
A-2: A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.
A-3: A short-term obligation rated A-3 exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
B: A short-term obligation rated B is regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
C: A short-term obligation rated C is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.
D: A short-term obligation rated D is in payment default. The D rating category
is used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
34
<PAGE>
STANDARD & POOR'S CORPORATE BOND RATINGS
AAA: An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA: An obligation rated AA differs from the highest-rated obligations only
in a small degree. The obligor's capacity to meet its financial commitment on
the obligation is very strong.
A: An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB: An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
Obligations rated BB, B, CCC, CC, and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and C
the highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.
BB: An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to the
obligor's capacity to meet its financial commitment on the obligation.
B: An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.
CCC: An obligation rated CCC is currently vulnerable to nonpayment and is
dependent upon favorable business, financial and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial or economic conditions, the obligor is not likely to
have the capacity to meet its financial commitment on the obligation.
CC: An obligation rated CC is currently highly vulnerable to nonpayment.
C: The C rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.
D: An obligation rated D is in payment default. The D rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments are jeopardized.
35
<PAGE>
PLUS (+) OR MINUS (-): The rating from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within the major categories.
R: This symbol is attached to the ratings of instruments with significant
noncredit risks. It highlights risks to principal or volatility of expected
returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk, such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.
36
<PAGE>
APPENDIX B
PIONEER WORLD EQUITY FUND
CLASS A SHARES
<TABLE>
<CAPTION>
NET ASSET INITIAL NET
INITIAL OFFERING SALES CHARGE SHARES VALUE ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
<S> <C> <C> <C> <C> <C> <C>
10/31/96 $10,000 $15.92 5.75% 628.141 $15.00 $9,425
</TABLE>
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
<TABLE>
<CAPTION>
FROM INVESTMENT FROM CAPITAL FROM DIVIDENDS TOTAL
DATE GAINS REINVESTED REINVESTED VALUE
<S> <C> <C> <C> <C>
12/31/96 $10,158 $14 $2 $10,174
3/31/97 $10,471 $15 $2 $10,488
3/31/98 $12,581 $144 $3 $12,728
</TABLE>
37
<PAGE>
PIONEER WORLD EQUITY FUND
CLASS B SHARES
<TABLE>
<CAPTION>
NET ASSET INITIAL NET
INITIAL OFFERING SALES CHARGE SHARES VALUE ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
<S> <C> <C> <C> <C> <C> <C>
10/31/96 $10,000 $15.00 0.00% 666.667 $15.00 $10,000
</TABLE>
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
<TABLE>
<CAPTION>
CONTINGENT
DEFERRED SALES
DATE FROM INVESTMENT FROM CAPITAL FROM DIVIDENDS CHARGE IF TOTAL CDSC
---- --------------- ------------ --------------- ---------- -----
GAINS REINVESTED REINVESTED REDEEMED VALUE PERCENTAGE
---------------- ----------- -------- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
12/31/96 $10,747 $0 $0 $400 $10,347 4.00%
--
3/31/97 $11,053 $0 $0 $400 $10,653 4.00%
3/31/98 $13,167 $133 $0 $400 $12,900 4.00%
</TABLE>
38
<PAGE>
PIONEER WORLD EQUITY FUND
CLASS C SHARES
<TABLE>
<CAPTION>
NET ASSET INITIAL NET
INITIAL OFFERING SALES CHARGE SHARES VALUE ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
<S> <C> <C> <C> <C> <C> <C>
12/31/96 $10,000 $15.00 0.00% 666.667 $15.00 $10,000
</TABLE>
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
<TABLE>
<CAPTION>
CONTINGENT
DEFERRED SALES
DATE FROM INVESTMENT FROM CAPITAL FROM DIVIDENDS CHARGE IF TOTAL CDSC
---- --------------- ------------ --------------- ---------- -----
GAINS REINVESTED REINVESTED REDEEMED VALUE PERCENTAGE
---------------- ----------- -------- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
12/31/96 $10,773 $0 $0 $100 $10,673 1.00%
3/31/97 $11,080 $0 $0 $100 $10,980 1.00%
3/31/98 $13,180 $133 $0 $0 $13,313 0.00%
</TABLE>
39
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
The following securities indices are well known, unmanaged measures of market
performance. Advertisements and sales literature for the Fund may refer to these
indices or may present comparisons between the performance of the Fund and one
or more of the indices. Other indices may also be used, if appropriate. The
indices are not available for direct investment. The data presented are not
meant to be indicative of the performance of the Fund, do not reflect past
performance and do not guarantee future results.
S&P 500
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P 500 includes 500 of
the largest stocks (in terms of stock market value) in the U.S.
DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of stocks of 30 blue chip
companies widely held by individuals and institutional investors. The 30 stocks
represent about a fifth of the $8 trillion-plus market value of all U.S. stocks
and about a fourth of the value of stocks listed on the New York Stock Exchange
(NYSE).
U.S. SMALL STOCK INDEX
This index is a market value weighted index of the ninth and tenth deciles of
the NYSE, plus stocks listed on the American Stock Exchange and over the counter
with the same or less capitalization as the upper bound of the NYSE ninth
decile.
U.S. INFLATION
THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S. Department of Labor, Bureau of Labor Statistics, Washington, DC.
S&P/BARRA INDEXES
The S&P/BARRA GROWTH AND VALUE INDEXES are constructed by dividing the stocks in
the S&P 500 according to price-to-book ratios. The GROWTH INDEX contains stocks
with higher price-to-book ratios, and the VALUE INDEX contains stocks with lower
price-to-book ratios. Both indexes are market capitalization weighted.
MERRILL LYNCH MICRO-CAP INDEX
The MERRILL LYNCH MICRO-CAP INDEX represents the performance of 2,036 stocks
ranging in market capitalization from $50 million to $220 million. Index returns
are calculated monthly.
40
<PAGE>
LONG-TERM U.S. GOVERNMENT BONDS
The total returns on long-term government bonds after 1977 are constructed with
data from The Wall Street Journal and are calculated as the change in the flat
price or and-interest price. From 1926 to 1976, data are obtained from the
government bond file at the Center for Research in Security Prices (CRSP),
Graduate School of Business, University of Chicago. Each year, a one-bond
portfolio with a term of approximately 20 years and a reasonably current coupon
was used and whose returns did not reflect potential tax benefits, impaired
negotiability or special redemption or call privileges. Where callable bonds had
to be used, the term of the bond was assumed to be a simple average of the
maturity and first call dates minus the current date. The bond was "held" for
the calendar year and returns were computed.
INTERMEDIATE-TERM U.S. GOVERNMENT BONDS
Total returns of intermediate-term government bonds after 1987 are calculated
from The Wall Street Journal prices, using the change in flat price. Returns
from 1934 to 1986 are obtained from the CRSP government bond file.
Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than five years, and this bond is
"held" for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934 to 1942, almost all bonds
with maturities near five years were partially or fully tax-exempt and were
selected using the rules described above. Personal tax rates were generally low
in that period, so that yields on tax-exempt bonds were similar to yields on
taxable bonds. From 1926 to 1933, there are few bonds suitable for construction
of a series with a five-year maturity. For this period, five-year bond yield
estimates are used.
MSCI
MSCI's international indices are based on the share prices of approximately
1,700 companies listed on stock exchanges in the 22 countries that make up the
MSCI World Index. MSCI's emerging market indices are comprised of approximately
1000 stocks from 26 countries.
Countries in the MSCI EAFE INDEX are: Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia,
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland and
United Kingdom.
Countries in the MSCI EMERGING MARKETS FREE INDEX are: Argentina, Brazil, Chile,
China Free, Czech Republic, Colombia, Greece, Hungary, India, Indonesia Free,
Israel, Jordan, Korea (at 50%), Malaysia Free, Mexico Free, Pakistan, Peru,
Philippines Free, Poland, Portugal, South Africa, Sri Lanka, Taiwan (at 50%),
Thailand Free, Turkey and Venezuela.
6-MONTH CDS
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
LONG-TERM U.S. CORPORATE BONDS
Since 1969, corporate bond total returns are represented by the Salomon Brothers
Long-Term High-Grade Corporate Bond Index. As most large corporate bond
transactions take place over the counter, a major dealer is the natural source
of these data. The index includes nearly all Aaa- and Aa-rated bonds with at
least 10 years to maturity. If a bond is downgraded during a particular month,
its return for the month is included in the index before removing the bond from
future portfolios.
41
<PAGE>
From 1926 to 1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946 to 1968,
Ibbotson and Sinquefield backdated the Salomon Brothers' index, using Salomon
Brothers' monthly yield data with a methodology similar to that used by Salomon
Brothers for 1969 to 1995. Capital appreciation returns were calculated from
yields assuming (at the beginning of each monthly holding period) a 20-year
maturity, a bond price equal to par, and a coupon equal to the
beginning-of-period yield. For the period 1926 to 1945, Standard & Poor's
monthly high-grade corporate composite yield data were used, assuming a 4%
coupon and a 20-year maturity. The conventional present-value formula for bond
price for the beginning and end-of-month prices was used. (This formula is
presented in Ross, Stephen A., and Westerfield, Randolph W., Corporate Finance,
Times Mirror/Mosby, St. Louis, 1990, p. 97 ["Level-Coupon Bonds"].) The monthly
income return was assumed to be one-twelfth the coupon.
U.S. (30-DAY) TREASURY BILLS
For the U.S. TREASURY BILL INDEX, data from The Wall Street Journal are used
after 1977; the CRSP government bond file is the source until 1976. Each month a
one-bill portfolio containing the shortest-term bill having not less than one
month to maturity is constructed. (The bill's original term to maturity is not
relevant.) To measure holding period returns for the one-bill portfolio, the
bill is priced as of the last trading day of the previous month-end and as of
the last trading day of the current month.
NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT TRUSTS ("NAREIT") EQUITY REIT
INDEX
All of the data are based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMEX and NASDAQ. The data are
market-value-weighted. Prior to 1987 REITs were added to the index the January
following their listing. Since 1987 newly formed or listed REITs are added to
the total shares outstanding figure in the month that the shares are issued.
Only common shares issued by the REIT are included in the index. The total
return calculation is based upon the weighting at the beginning of the period.
Only those REITs listed for the entire period are used in the total return
calculation. Dividends are included in the month based upon their payment date.
There is no smoothing of income. Liquidating dividends, whether full or partial,
are treated as income.
RUSSELL U.S. EQUITY INDEXES
The RUSSELL 3000(R) INDEX (the "Russell 3000") is comprised of the 3,000 largest
U.S. companies as determined by market capitalization representing approximately
98% of the U.S. equity market. The average market capitalization is
approximately $2.8 billion. The RUSSELL 2500TM INDEX measures performance of the
2,500 smallest companies in the Russell 3000. The average market capitalization
is approximately $733.4 million, and the largest company in the index has an
approximate market capitalization of $2.9 billion. The RUSSELL 2000(R) INDEX
measures performance of the 2,000 smallest stocks in the Russell 3000; the
largest company in the index has a market capitalization of approximately $1.1
billion. The RUSSELL 1000(R) INDEX (the "Russell 1000") measures the performance
of the 1,000 largest companies in the Russell 3000. The average market
capitalization is approximately $7.6 billion. The smallest company in the index
has an approximate market capitalization of $1.1 billion. The RUSSELL MIDCAPTM
Index measures performance of the 800 smallest companies in the Russell 1000.
The largest company in the index has an approximate market capitalization of
$8.0 billion.
The Russell indexes are reconstituted annually as of July 1, based on May 31
market capitalization rankings.
42
<PAGE>
WILSHIRE REAL ESTATE SECURITIES INDEX
The WILSHIRE REAL ESTATE SECURITIES INDEX is a market capitalization weighted
index of 120 publicly traded real estate securities, such as REITs, real estate
operating companies ("REOCs") and partnerships.
The index contains performance data on five major categories of property:
office, retail, industrial, apartment and miscellaneous. The companies in the
index are 91.66% equity and hybrid REITs and 8.33% REOCs.
STANDARD & POOR'S MIDCAP 400 INDEX
The S&P 400 is a market-capitalization-weighted index. The performance data for
the index were calculated by taking the stocks presently in the index and
tracking them backwards in time as long as there were prices reported. No
attempt was made to determine what stocks "might have been" in the S&P 400 five
or ten years ago had it existed. Dividends are reinvested on a monthly basis
prior to June 30, 1991, and are reinvested daily thereafter.
LIPPER BALANCED FUNDS INDEX
This index represents equally weighted performance, adjusted for capital gains
distributions and income dividends, of approximately 30 of the largest funds
with a primary objective of conserving principal by maintaining at all times a
balanced portfolio of stocks and bonds. Typically, the stock/bond ratio ranges
around 60%/40%.
BANK SAVINGS ACCOUNT
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963 to 1987; and The Wall Street Journal thereafter.
Sources: Ibbotson Associates, Towers Data Systems, Lipper Analytical Services,
Inc., Merrill Lynch and PGI
43
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
DOW S&P/ S&P/
S&P JONES U.S. SMALL BARRA BARRA MERRILL LYNCH
500 INDUSTRIAL STOCK U.S. 500 500 MICRO-CAP
AVERAGE INDEX INFLATION GROWTH VALUE INDEX
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 11.62 N/A 0.28 -1.49 N/A N/A N/A
Dec 1927 37.49 N/A 22.10 -2.08 N/A N/A N/A
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A N/A
Dec 1931 -43.34 -49.02 -49.75 -9.52 N/A N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A N/A
Dec 1933 53.99 73.72 142.87 0.51 N/A N/A N/A
Dec 1934 -1.44 8.08 24.22 2.03 N/A N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A N/A
Dec 1942 20.34 14.13 44.51 9.29 N/A N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A N/A
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
DOW S&P/ S&P/
S&P JONES U.S. SMALL BARRA 500 BARRA MERRILL LYNCH
500 INDUSTRIAL STOCK U.S. GROWTH 500 MICRO-CAP
AVERAGE INDEX INFLATION VALUE INDEX
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A N/A
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38 N/A
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93 N/A
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57 N/A
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16 27.76
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16 43.18
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59 32.32
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02 9.18
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04 33.62
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89 42.44
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52 -14.97
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68 22.89
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67 3.45
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68 -13.84
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67 22.76
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13 8.06
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85 -29.55
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56 57.44
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53 36.62
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60 31.32
Dec 1994 1.31 5.06 3.11 2.67 3.13 -0.64 1.81
Dec 1995 37.43 36.84 34.46 2.54 38.13 36.99 30.70
Dec 1996 23.07 28.84 17.62 3.32 23.96 21.99 13.88
Dec 1997 33.36 24.88 22.78 1.92 36.52 29.98 24.61
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
LONG- INTERMEDIATE- MSCI LONG-
TERM TERM U.S. EAFE 6- TERM U.S. U.S.
U.S. GOV'T GOVERNMENT (Net of MONTH CORPORATE T-BILL
BONDS BONDS Taxes) CDS BONDS (30-Day)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A
Dec 1926 7.77 5.38 N/A N/A 7.37 3.27
Dec 1927 8.93 4.52 N/A N/A 7.44 3.12
Dec 1928 0.10 0.92 N/A N/A 2.84 3.56
Dec 1929 3.42 6.01 N/A N/A 3.27 4.75
Dec 1930 4.66 6.72 N/A N/A 7.98 2.41
Dec 1931 -5.31 -2.32 N/A N/A -1.85 1.07
Dec 1932 16.84 8.81 N/A N/A 10.82 0.96
Dec 1933 -0.07 1.83 N/A N/A 10.38 0.30
Dec 1934 10.03 9.00 N/A N/A 13.84 0.16
Dec 1935 4.98 7.01 N/A N/A 9.61 0.17
Dec 1936 7.52 3.06 N/A N/A 6.74 0.18
Dec 1937 0.23 1.56 N/A N/A 2.75 0.31
Dec 1938 5.53 6.23 N/A N/A 6.13 -0.02
Dec 1939 5.94 4.52 N/A N/A 3.97 0.02
Dec 1940 6.09 2.96 N/A N/A 3.39 0.00
Dec 1941 0.93 0.50 N/A N/A 2.73 0.06
Dec 1942 3.22 1.94 N/A N/A 2.60 0.27
Dec 1943 2.08 2.81 N/A N/A 2.83 0.35
Dec 1944 2.81 1.80 N/A N/A 4.73 0.33
Dec 1945 10.73 2.22 N/A N/A 4.08 0.33
Dec 1946 -0.10 1.00 N/A N/A 1.72 0.35
Dec 1947 -2.62 0.91 N/A N/A -2.34 0.50
Dec 1948 3.40 1.85 N/A N/A 4.14 0.81
Dec 1949 6.45 2.32 N/A N/A 3.31 1.10
Dec 1950 0.06 0.70 N/A N/A 2.12 1.20
Dec 1951 -3.93 0.36 N/A N/A -2.69 1.49
Dec 1952 1.16 1.63 N/A N/A 3.52 1.66
Dec 1953 3.64 3.23 N/A N/A 3.41 1.82
Dec 1954 7.19 2.68 N/A N/A 5.39 0.86
Dec 1955 -1.29 -0.65 N/A N/A 0.48 1.57
Dec 1956 -5.59 -0.42 N/A N/A -6.81 2.46
Dec 1957 7.46 7.84 N/A N/A 8.71 3.14
Dec 1958 -6.09 -1.29 N/A N/A -2.22 1.54
Dec 1959 -2.26 -0.39 N/A N/A -0.97 2.95
Dec 1960 13.78 11.76 N/A N/A 9.07 2.66
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
LONG- INTERMEDIATE- MSCI LONG-
TERM TERM U.S. EAFE 6- TERM U.S. U.S.
U.S. GOV'T GOVERNMENT (Net of MONTH CORPORATE T-BILL
BONDS BONDS Taxes) CDS BONDS (30-Day)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dec 1961 0.97 1.85 N/A N/A 4.82 2.13
Dec 1962 6.89 5.56 N/A N/A 7.95 2.73
Dec 1963 1.21 1.64 N/A N/A 2.19 3.12
Dec 1964 3.51 4.04 N/A 4.17 4.77 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 3.93
Dec 1966 3.65 4.69 N/A 5.76 0.20 4.76
Dec 1967 -9.18 1.01 N/A 5.47 -4.95 4.21
Dec 1968 -0.26 4.54 N/A 6.45 2.57 5.21
Dec 1969 -5.07 -0.74 N/A 8.70 -8.09 6.58
Dec 1970 12.11 16.86 -11.66 7.06 18.37 6.52
Dec 1971 13.23 8.72 29.59 5.36 11.01 4.39
Dec 1972 5.69 5.16 36.35 5.39 7.26 3.84
Dec 1973 -1.11 4.61 -14.92 8.60 1.14 6.93
Dec 1974 4.35 5.69 -23.16 10.20 -3.06 8.00
Dec 1975 9.20 7.83 35.39 6.51 14.64 5.80
Dec 1976 16.75 12.87 2.54 5.22 18.65 5.08
Dec 1977 -0.69 1.41 18.06 6.11 1.71 5.12
Dec 1978 -1.18 3.49 32.62 10.21 -0.07 7.18
Dec 1979 -1.23 4.09 4.75 11.90 -4.18 10.38
Dec 1980 -3.95 3.91 22.58 12.33 -2.76 11.24
Dec 1981 1.86 9.45 -2.28 15.50 -1.24 14.71
Dec 1982 40.36 29.10 -1.86 12.18 42.56 10.54
Dec 1983 0.65 7.41 23.69 9.65 6.26 8.80
Dec 1984 15.48 14.02 7.38 10.65 16.86 9.85
Dec 1985 30.97 20.33 56.16 7.82 30.09 7.72
Dec 1986 24.53 15.14 69.44 6.30 19.85 6.16
Dec 1987 -2.71 2.90 24.63 6.59 -0.27 5.47
Dec 1988 9.67 6.10 28.27 8.15 10.70 6.35
Dec 1989 18.11 13.29 10.54 8.27 16.23 8.37
Dec 1990 6.18 9.73 -23.45 7.85 6.78 7.81
Dec 1991 19.30 15.46 12.13 4.95 19.89 5.60
Dec 1992 8.05 7.19 -12.17 3.27 9.39 3.51
Dec 1993 18.24 11.24 32.56 2.88 13.19 2.90
Dec 1994 -7.77 -5.14 7.78 5.40 -5.76 3.90
Dec 1995 31.67 16.80 11.21 5.21 27.20 5.60
Dec 1996 -0.93 2.10 6.05 5.21 1.40 5.21
Dec 1997 15.85 8.38 1.78 5.71 12.95 5.26
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
NAREIT LIPPER MSCI
EQUITY RUSSELL WILSHIRE BALANCED EMERGING BANK
REIT 2000 REAL ESTATE S&P FUND MARKETS SAVINGS
INDEX INDEX SECURITIES 400 INDEX FREE INDEX ACCOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 N/A N/A N/A N/A N/A N/A N/A
Dec 1927 N/A N/A N/A N/A N/A N/A N/A
Dec 1928 N/A N/A N/A N/A N/A N/A N/A
Dec 1929 N/A N/A N/A N/A N/A N/A N/A
Dec 1930 N/A N/A N/A N/A N/A N/A 5.30
Dec 1931 N/A N/A N/A N/A N/A N/A 5.10
Dec 1932 N/A N/A N/A N/A N/A N/A 4.10
Dec 1933 N/A N/A N/A N/A N/A N/A 3.40
Dec 1934 N/A N/A N/A N/A N/A N/A 3.50
Dec 1935 N/A N/A N/A N/A N/A N/A 3.10
Dec 1936 N/A N/A N/A N/A N/A N/A 3.20
Dec 1937 N/A N/A N/A N/A N/A N/A 3.50
Dec 1938 N/A N/A N/A N/A N/A N/A 3.50
Dec 1939 N/A N/A N/A N/A N/A N/A 3.40
Dec 1940 N/A N/A N/A N/A N/A N/A 3.30
Dec 1941 N/A N/A N/A N/A N/A N/A 3.10
Dec 1942 N/A N/A N/A N/A N/A N/A 3.00
Dec 1943 N/A N/A N/A N/A N/A N/A 2.90
Dec 1944 N/A N/A N/A N/A N/A N/A 2.80
Dec 1945 N/A N/A N/A N/A N/A N/A 2.50
Dec 1946 N/A N/A N/A N/A N/A N/A 2.20
Dec 1947 N/A N/A N/A N/A N/A N/A 2.30
Dec 1948 N/A N/A N/A N/A N/A N/A 2.30
Dec 1949 N/A N/A N/A N/A N/A N/A 2.40
Dec 1950 N/A N/A N/A N/A N/A N/A 2.50
Dec 1951 N/A N/A N/A N/A N/A N/A 2.60
Dec 1952 N/A N/A N/A N/A N/A N/A 2.70
Dec 1953 N/A N/A N/A N/A N/A N/A 2.80
Dec 1954 N/A N/A N/A N/A N/A N/A 2.90
Dec 1955 N/A N/A N/A N/A N/A N/A 2.90
Dec 1956 N/A N/A N/A N/A N/A N/A 3.00
Dec 1957 N/A N/A N/A N/A N/A N/A 3.30
Dec 1958 N/A N/A N/A N/A N/A N/A 3.38
Dec 1959 N/A N/A N/A N/A N/A N/A 3.53
Dec 1960 N/A N/A N/A N/A 5.77 N/A 3.86
Dec 1961 N/A N/A N/A N/A 20.59 N/A 3.90
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
NAREIT LIPPER MSCI
EQUITY RUSSELL WILSHIRE BALANCED EMERGING BANK
REIT 2000 REAL ESTATE S&P FUND MARKETS SAVINGS
INDEX INDEX SECURITIES 400 INDEX FREE INDEX ACCOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1962 N/A N/A N/A N/A -6.80 N/A 4.08
Dec 1963 N/A N/A N/A N/A 13.10 N/A 4.17
Dec 1964 N/A N/A N/A N/A 12.36 N/A 4.19
Dec 1965 N/A N/A N/A N/A 9.80 N/A 4.23
Dec 1966 N/A N/A N/A N/A -5.86 N/A 4.45
Dec 1967 N/A N/A N/A N/A 15.09 N/A 4.67
Dec 1968 N/A N/A N/A N/A 13.97 N/A 4.68
Dec 1969 N/A N/A N/A N/A -9.01 N/A 4.80
Dec 1970 N/A N/A N/A N/A 5.62 N/A 5.14
Dec 1971 N/A N/A N/A N/A 13.90 N/A 5.30
Dec 1972 8.01 N/A N/A N/A 11.13 N/A 5.37
Dec 1973 -15.52 N/A N/A N/A -12.24 N/A 5.51
Dec 1974 -21.40 N/A N/A N/A -18.71 N/A 5.96
Dec 1975 19.30 N/A N/A N/A 27.10 N/A 6.21
Dec 1976 47.59 N/A N/A N/A 26.03 N/A 6.23
Dec 1977 22.42 N/A N/A N/A -0.72 N/A 6.39
Dec 1978 10.34 N/A 13.04 N/A 4.80 N/A 6.56
Dec 1979 35.86 43.09 70.81 N/A 14.67 N/A 7.29
Dec 1980 24.37 38.58 22.08 N/A 19.70 N/A 8.78
Dec 1981 6.00 2.03 7.18 N/A 1.86 N/A 10.71
Dec 1982 21.60 24.95 24.47 22.68 30.63 N/A 11.19
Dec 1983 30.64 29.13 27.61 26.10 17.44 N/A 9.71
Dec 1984 20.93 -7.30 20.64 1.18 7.46 N/A 9.92
Dec 1985 19.10 31.05 22.20 35.58 29.83 N/A 9.02
Dec 1986 19.16 5.68 20.30 16.21 18.43 N/A 7.84
Dec 1987 -3.64 -8.77 -7.86 -2.03 4.13 N/A 6.92
Dec 1988 13.49 24.89 24.18 20.87 11.18 40.43 7.20
Dec 1989 8.84 16.24 2.37 35.54 19.70 64.96 7.91
Dec 1990 -15.35 -19.51 -33.46 -5.12 0.66 -10.55 7.80
Dec 1991 35.70 46.05 20.03 50.10 25.83 59.91 4.61
Dec 1992 14.59 18.41 7.36 11.91 7.46 11.40 2.89
Dec 1993 19.65 18.91 15.24 13.96 11.95 74.83 2.73
Dec 1994 3.17 -1.82 1.64 -3.57 -2.05 -7.32 4.96
Dec 1995 15.27 28.44 13.65 30.94 24.89 -5.21 5.24
Dec 1996 35.26 16.53 36.87 19.20 13.01 6.03 4.95
Dec 1997 20.29 22.36 19.80 32.26 20.05 -11.59 5.17
</TABLE>
49
<PAGE>
APPENDIX C
OTHER PIONEER INFORMATION
The Pioneer group of mutual funds was established in 1928 with the creation of
Pioneer Fund. Pioneer is one of the oldest and most experienced money managers
in the United States.
As of December 31, 1997, PMC employed a professional investment staff of 58,
with a combined average of 12 years' experience in the financial services
industry.
Total assets of all Pioneer mutual funds at December 31, 1997, were
approximately $19.8 billion representing 1,177,148 shareholder accounts, 791,468
non-retirement accounts and 385,680 retirement accounts.
g:\edgar\sai\current\we798sai.doc
50
<PAGE>
File Nos. 333-09079
811-07733
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
The financial highlights of the Registrant for the
fiscal year ended March 31, 1998 are included in Part
A of the Registration Statement and the financial
statements of the Registrant are incorporated by
reference into Part B of the Registration Statement
from the Registrant's 1998 Annual Report to
Shareholders for the year ended March 31, 1998 (filed
electronically on June 1, 1998; File No. 811 - 07733;
Accession No. 0001019290-98-000004).
(b) Exhibits:
1.1. Agreement and Declaration of Trust 1
1.2. Certificate of Trust 1
1.3. Amendment No. 1 to Declaration of Trust 2
1.4. Certificate of Amendment of the Certificate
of Trust 2
2. By-Laws 1
3. None
4.1. Specimen Class A Share Certificate 2
4.2. Specimen Class B Share Certificate 2
4.3. Specimen Class C Share Certificate 2
5. Form of Management Contract 2
6.1. Form of Underwriting Agreement 2
6.2. Form of Dealer Sales Agreement 2
7. None
8. Form of Custodian Agreement with Brown
Brothers Harriman & Co. 2
9. Form of Investment Company Service Agreement 2
10. Opinion of Counsel 3
11. Consent of Arthur Andersen LLP 4
12. None
13. Share Purchase Agreement 2
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<PAGE>
14. None
15.1. Class A Distribution Plan 2
15.2. Class B Distribution Plan 2
15.3. Class C Distribution Plan 2
16. None
17. Financial Data Schedules 4
18. Multiclass Plan Pursuant to Rule 18f-3 2
19. Powers of Attorney 2
19.1. Power of Attorney for Mary K. Bush 4
- ------------------
1 Previously filed. Incorporated herein by reference from the exhibits filed
in the Registrant's Registration Statement on Form N-1A (the "Registration
Statement") (File No. 333-09079) as filed with the Securities and Exchange
Commission (the "SEC") on July 29, 1996 (Accession No. 0001019290-96-000002).
2 Previously filed. Incorporated herein by reference from the exhibits filed
in Pre-Effective Amendment No. 1 to the Registration Statement as filed with the
SEC on October 10, 1996 (Accession No. 0001019290-96-000007).
3 Previously filed. Incorporated herein by reference from the Registrant's
initial Rule 24f-2 notice as filed with the SEC on May 30, 1997 (Accession No.
0001019290-97-000005).
4 Filed herewith.
Item 25. Persons Controlled by or Under Common Control with Registrant
No person is controlled by the Registrant. A common control relationship
could exist from a management perspective because the Chairman and President of
the Registrant owns approximately 14% of the outstanding shares of The Pioneer
Group, Inc. (PGI), the parent company of the Registrant's investment adviser,
and certain Trustees or officers of the Registrant (i) hold similar positions
with other investment companies advised by PGI and (ii) are directors or
officers of PGI and/or its direct or indirect subsidiaries. The following lists
all U.S. and the principal non-U.S. subsidiaries of PGI and those registered
investment companies with a common or similar Board of Trustees advised by PGI.
OWNED BY PERCENT STATE/COUNTRY OF
COMPANY OF SHARES INCORPORATION
Pioneering Management Corp. (PMC) PGI 100% DE
Pioneer Funds Distributor, Inc. (PFD) PMC 100% MA
Pioneer Explorer, Inc. (PEI) PMC 100% DE
Pioneer Fonds Marketing GmbH (GmbH) PFD 100% Germany
Pioneer Forest, Inc. (PFI) PGI 100% DE
CJSC "Forest-Starma" (Forest-Starma) PFI 95% Russia
Pioneer Metals and Technology, Inc. (PMT) PGI 100% DE
Pioneer Capital Corp. (PCC) PGI 100% DE
Pioneer SBIC Corp. PCC 100% MA
Pioneer Real Estate Advisors, Inc. (PREA) PGI 100% DE
Pioneer Management (Ireland) Ltd. (PMIL) PGI 100% Ireland
Pioneer Plans Corporation (PPC) PGI 100% DE
PIOGlobal Corp. (PIOGlobal) PGI 100% DE
Pioneer Investments Corp. (PIC) PGI 100% MA
Pioneer Goldfields Holdings, Inc. (PGH) PGI 100% DE
Pioneer Goldfields Ltd. (PGL) PGH 100% Guernsey
Teberebie Goldfields Ltd. (TGL) PGL 90% Ghana
Pioneer Omega, Inc. (Omega) PGI 100% DE
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<PAGE>
Pioneer First Russia, Inc. (First Russia) Omega 81.65% DE
Pioneering Services Corp. (PSC) PGI 100% MA
Pioneer International Corp. (PIntl) PGI 100% DE
Pioneer First Polish Investment
Fund JSC, S.A. (First Polish) PIntl 100% Poland
Pioneer Czech Investment Company, A.S.
(Pioneer Czech) PIntl 100% Czech Republic
Registered investment companies that are parties to management contracts with
PMC:
BUSINESS
FUND TRUST
Pioneer International Growth Fund MA
Pioneer World Equity Fund DE
Pioneer Europe Fund MA
Pioneer Emerging Markets Fund DE
Pioneer India Fund DE
Pioneer Capital Growth Fund DE
Pioneer Equity-Income Fund DE
Pioneer Gold Shares DE
Pioneer Mid-Cap Fund DE
Pioneer Growth Shares DE
Pioneer Small Company Fund DE
Pioneer Independence Fund DE
Pioneer Fund DE
Pioneer II DE
Pioneer Real Estate Shares DE
Pioneer Short-Term Income Fund MA
Pioneer America Income Trust MA
Pioneer Bond Fund MA
Pioneer Balanced Fund DE
Pioneer Intermediate Tax-Free Fund MA
Pioneer Tax-Free Income Fund DE
Pioneer Money Market Trust DE
Pioneer Variable Contracts Trust DE
Pioneer Interest Shares DE
Pioneer Micro-Cap Fund DE
The following table lists John F. Cogan, Jr.'s positions with the
investment companies, PGI and principal direct or indirect PGI subsidiaries
referenced above and the Registrant's counsel.
TRUSTEE/
ENTITY CHAIRMAN PRESIDENT DIRECTOR OTHER
Pioneer mutual
funds X X X
PGL X X X
PGI X X X
PPC X X
PIC X X
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<PAGE>
PIntl X X
PMT X X
Omega X X
PIOGlobal X X
First Russia X X
PCC X
PSC X
PMIL X
PEI X
PFI X
PREA X
Forest-Starma X
PMC X X
PFD X X
TGL X X
First Polish Chairman of Supervisory
Board
GmbH Chairman of Supervisory
Board
Pioneer Czech Chairman of Supervisory
Board
Hale and Dorr LLP Partner
Item 26. Number of Holders of Securities
(1)
Title of Class (2)
Shares of Beneficial Interest Number of Record Holders
(without par value) as of June 30, 1998
Class A shares 3,161
Class B shares 1,604
Class C shares 190
Item 27. Indemnification
Except for the Agreement and Declaration of Trust (the "Declaration"),
dated July 26, 1996, as amended October 8, 1996, establishing the Registrant as
a business trust under Delaware law, there is no contract, arrangement or
statute under which any Trustee, officer, underwriter or affiliated person of
the Registrant is insured or indemnified. The Declaration provides that no
Trustee or officer will be indemnified against any liability to which the
Registrant would otherwise be subject by reason of or for willful misfeasance,
bad faith, gross negligence or reckless disregard of such person's duties.
Insofar as indemnification for liability arising under the Securities Act
of 1933, as amended (the "1933 Act"), may be available to Trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
C-4
<PAGE>
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
All of the information required by this item is set forth in the Form
ADV, as amended, of PMC, the Registrant's investment adviser. The following
sections of such Form ADV are incorporated herein by reference:
(a) Items 1 and 2 of Part 2; and
(b) Section 6, Business Background, of each Schedule D.
Item 29. Principal Underwriter
(a) See Item 25 above.
(b) Directors and Officers of PFD:
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
John F. Cogan, Jr. Director and Chairman Chairman of the Board,
President and Trustee
Robert L. Butler Director and President None
David D. Tripple Director Executive Vice President and
Trustee
Steven M. Graziano Senior Vice President None
Stephen W. Long Senior Vice President None
Barry G. Knight Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Elizabeth B. Bennett Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy L. Supovitz Vice President None
Mary Kleeman Vice President None
Steven R. Berke Assistant Vice President None
Steven H. Forss Assistant Vice President None
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<PAGE>
Mary Sue Hoban Assistant Vice President None
Debra A. Levine Assistant Vice President None
Junior Roy McFarland Assistant Vice President None
Marie E. Moynihan Assistant Vice President None
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
The principle business address of each of these individuals is 60 State Street,
Boston, Massachusetts 02109-1820.
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts and records are maintained at the Registrant's office at 60
State Street, Boston, Massachusetts; contact the Treasurer.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) The Registrant hereby undertakes to deliver or cause to be delivered
with the Prospectus, to each person to whom the Prospectus is sent or
given, a copy of the Registrant's report to shareholders furnished
pursuant to and meeting the requirements of Rule 30d-1 under the
Investment Company Act of 1940, as amended, from which the specified
information is incorporated by reference, unless such person currently
holds securities of the Registrant and otherwise has received a copy
of such report, in which case the Registrant shall state in the
Prospectus that it will furnish, without charge, a copy of such report
on request, and the name, address and telephone number of the person
to whom such a request should be directed.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this post-effective amendment no. 2 (the
"Amendment") to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused the Amendment to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Boston and
The Commonwealth of Massachusetts, on the 29th day of July, 1998.
PIONEER WORLD EQUITY FUND
By: /s/ John F. Cogan, Jr.
John F. Cogan, Jr.
Chairman and President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed below by the following persons in the capacities and on the date
indicated:
Signature Title
/s/ John F. Cogan, Jr. Chairman of the Board )
John F. Cogan, Jr. and President )
(Principal Executive )
Officer) )
)
)
/s/ William H. Keough Chief Financial Officer )
William H. Keough and Treasurer (Principal )
Financial and Accounting )
Officer) )
)
)
Trustees: )
)
)
Mary K. Bush* )
Mary K. Bush )
)
)
/s/ John F. Cogan, Jr. )
John F. Cogan, Jr. )
)
)
)
Richard H. Egdahl )
<PAGE>
)
)
Margaret BW Graham* )
Margaret B. W. Graham )
)
)
John W. Kendrick* )
John W. Kendrick )
)
)
Marguerite A. Piret* )
Marguerite A. Piret )
)
)
David D. Tripple* )
David D. Tripple )
)
)
Stephen K. West* )
Stephen K. West )
)
)
John Winthrop* )
John Winthrop )
)
)
*By: /s/ John F. Cogan, Jr. Dated: July 29, 1998)
John F. Cogan, Jr.
Attorney-in-fact
<PAGE>
Exhibit Index
Exhibit
Number Document Title
11. Consent of Arthur Andersen LLP
17. Financial Data Schedules
19.1. Power of Attorney for Mary K. Bush
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated May 1, 1998 for
Pioneer World Equity Fund and to all references to our firm included in or made
a part of Post-Effective Amendment No. 2 and Amendment No. 3 to registration
statement file Nos. 333-9079 and 811-07733, respectively.
ARTHUR ANDERSEN LLP
/s/ Arthur Andersen LLP
Boston, Massachusetts
July 28, 1998
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
ON FORM N-SAR DATED MARCH 31, 1998 FOR PIONEER WORLD EQUITY FUND AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
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<NAME> PIONEER WORLD EQUITY FUND
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<NUMBER> 001
<NAME> PIONEER WORLD EQUITY FUND CLASS A
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<S> <C>
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<PERIOD-END> MAR-31-1998
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<INVESTMENTS-AT-VALUE> 43391637
<RECEIVABLES> 1484523
<ASSETS-OTHER> 3034
<OTHER-ITEMS-ASSETS> 937
<TOTAL-ASSETS> 44880131
<PAYABLE-FOR-SECURITIES> 196595
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 219677
<TOTAL-LIABILITIES> 416272
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38238873
<SHARES-COMMON-STOCK> 1601616
<SHARES-COMMON-PRIOR> 1063183
<ACCUMULATED-NII-CURRENT> (149813)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1046418)
<OVERDISTRIBUTION-GAINS> 0
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<OTHER-INCOME> 0
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<NET-INVESTMENT-INCOME> (101524)
<REALIZED-GAINS-CURRENT> (831043)
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<NET-CHANGE-FROM-OPS> 6189608
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 265943
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1857525
<NUMBER-OF-SHARES-REDEEMED> 1333146
<SHARES-REINVESTED> 14054
<NET-CHANGE-IN-ASSETS> 21070029
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<GROSS-EXPENSE> 1040020
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<PER-SHARE-NAV-BEGIN> 16.67
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> 3.54
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .17
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<PER-SHARE-NAV-END> 20.03
<EXPENSE-RATIO> 1.79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
ON FORM N-SAR DATED MARCH 31, 1998 FOR PIONEER WORLD EQUITY FUND AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0001019290
<NAME> PIONEER WORLD EQUITY FUND
<SERIES>
<NUMBER> 002
<NAME> PIONEER WORLD EQUITY FUND CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
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<OTHER-ITEMS-LIABILITIES> 219677
<TOTAL-LIABILITIES> 416272
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<PAID-IN-CAPITAL-COMMON> 38238873
<SHARES-COMMON-STOCK> 562569
<SHARES-COMMON-PRIOR> 319898
<ACCUMULATED-NII-CURRENT> (149813)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1046418)
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 44463859
<DIVIDEND-INCOME> 542652
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<EXPENSES-NET> 731751
<NET-INVESTMENT-INCOME> (101524)
<REALIZED-GAINS-CURRENT> (831043)
<APPREC-INCREASE-CURRENT> 7122175
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<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 93843
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 495433
<NUMBER-OF-SHARES-REDEEMED> 257947
<SHARES-REINVESTED> 5185
<NET-CHANGE-IN-ASSETS> 21070029
<ACCUMULATED-NII-PRIOR> (2598)
<ACCUMULATED-GAINS-PRIOR> 109019
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 366876
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1040020
<AVERAGE-NET-ASSETS> 9000703
<PER-SHARE-NAV-BEGIN> 16.59
<PER-SHARE-NII> (.14)
<PER-SHARE-GAIN-APPREC> 3.47
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .17
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.75
<EXPENSE-RATIO> 2.68
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
ON FORM N-SAR DATED MARCH 31, 1998 FOR PIONEER WORLD EQUITY FUND AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0001019290
<NAME> PIONEER WORLD EQUITY FUND
<SERIES>
<NUMBER> 003
<NAME> PIONEER WORLD EQUITY FUND CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
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<INVESTMENTS-AT-VALUE> 43391637
<RECEIVABLES> 1484523
<ASSETS-OTHER> 3034
<OTHER-ITEMS-ASSETS> 937
<TOTAL-ASSETS> 44880131
<PAYABLE-FOR-SECURITIES> 196595
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 219677
<TOTAL-LIABILITIES> 416272
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38238873
<SHARES-COMMON-STOCK> 63921
<SHARES-COMMON-PRIOR> 21934
<ACCUMULATED-NII-CURRENT> (149813)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1046418)
<OVERDISTRIBUTION-GAINS> 0
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<DIVIDEND-INCOME> 542652
<INTEREST-INCOME> 87575
<OTHER-INCOME> 0
<EXPENSES-NET> 731751
<NET-INVESTMENT-INCOME> (101524)
<REALIZED-GAINS-CURRENT> (831043)
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<NET-CHANGE-FROM-OPS> 6189608
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 10299
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 48281
<NUMBER-OF-SHARES-REDEEMED> 6798
<SHARES-REINVESTED> 504
<NET-CHANGE-IN-ASSETS> 21070029
<ACCUMULATED-NII-PRIOR> (2598)
<ACCUMULATED-GAINS-PRIOR> 109019
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1040020
<AVERAGE-NET-ASSETS> 905976
<PER-SHARE-NAV-BEGIN> 16.62
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<PER-SHARE-GAIN-APPREC> 3.43
<PER-SHARE-DIVIDEND> 0
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<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.77
<EXPENSE-RATIO> 2.73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
PIONEER EMERGING MARKETS FUND
PIONEER EUROPE FUND
PIONEER GROWTH TRUST
PIONEER INDIA FUND
PIONEER INTERNATIONAL GROWTH FUND
PIONEER WORLD EQUITY FUND
PIONEER GROWTH SHARES
PIONEER MID-CAP FUND
PIONEER SMALL COMPANY FUND
PIONEER MICRO-CAP FUND
PIONEER BALANCED FUND
PIONEER FUND
PIONEER II
PIONEER REAL ESTATE SHARES
PIONEER AMERICA INCOME TRUST
PIONEER BOND FUND
PIONEER SHORT TERM INCOME TRUST
PIONEER INTERMEDIATE TAX-FREE FUND
PIONEER MONEY MARKET TRUST
POWER OF ATTORNEY
Dated October 7, 1997
I, the undersigned Trustee of each of the above-listed registered
investment companies (each a "Fund"), each a Delaware or a Massachusetts
business trust, do hereby constitute and appoint John F. Cogan, Jr., David D.
Tripple, and Joseph P. Barri, and each of them acting singly, to be my true,
sufficient and lawful attorneys, with full power to each of them, and each of
them acting singly, to sign for me, in my name and in my capacity as trustee,
any and all amendments to the Registration Statement on Form N-1A to be filed by
each Fund under the Investment Company Act of 1940, as amended (the "1940 Act"),
and under the Securities Act of 1933, as amended (the "1933 Act"), with respect
to the offering of its shares of beneficial interest and any and all other
documents and papers relating thereto, and generally to do all such things in my
name and on my behalf in my capacity as trustee to enable each Fund to comply
with the 1940 Act and the 1933 Act, and all requirements of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by said attorneys or each of them to any and all amendments to
said Registration Statement.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument as
of the date first written above.
/s/ Mary K. Bush
Mary K. Bush, Trustee
