[Pioneer logo]
Pioneer
Growth
Shares
Prospectus
Class A and B Shares
April 28, 1995
(revised October 16, 1995)
Pioneer Growth Shares (the "Fund") seeks appreciation of capital through
investments in common stocks, together with preferred stocks, bonds and
debentures which are convertible into common stocks.
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 (Part A of the Registration Statement) provides the
information about the Fund that you should consider before investing. Please
read and retain it for future reference. More information about the Fund is
included in the Statement of Additional Information (Part B of the
Registration Statement), dated April 28, 1995 (revised October 16, 1995),
which is incorporated by reference into this Prospectus. 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.
TABLE OF CONTENTS PAGE
- -------- ---------------------------------------------------- -------
I. EXPENSE INFORMATION 2
II. FINANCIAL HIGHLIGHTS 3
III. INVESTMENT OBJECTIVE, POLICIES AND RISKS 4
IV. MANAGEMENT OF THE FUND 5
V. FUND SHARE ALTERNATIVES 6
VI. SHARE PRICE 7
VII. HOW TO BUY FUND SHARES 7
Class A Shares 7
Class B Shares 8
VIII. HOW TO SELL FUND SHARES 10
IX. HOW TO EXCHANGE FUND SHARES 11
X. DISTRIBUTION PLANS 11
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION 12
XII. SHAREHOLDER SERVICES 12
Account and Confirmation Statements 12
Additional Investments 13
Automatic Investment Plans 13
Financial Reports and Tax Information 13
Distribution Options 13
Directed Dividends 13
Direct Deposit 13
Voluntary Tax Withholding 13
Telephone Transactions and Related Liabilities 13
FactFone(SM) 13
Retirement Plans 14
Telecommunications for the Deaf (TDD) 14
Systematic Withdrawal Plans 14
Reinstatement Privilege (Class A only) 14
XIII. THE FUND 14
XIV. INVESTMENT RESULTS 15
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES 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 estimated annual operating expenses based on
actual expenses of the Class A shares for the fiscal year ended December 31,
1994.
<TABLE>
<CAPTION>
Shareholder Transaction Expenses Class A Class B(+)
<S> <C> <C>
Maximum Initial Sales Charge on Purchases
(as a percentage of offering price) 5.75%(1) None
Maximum Sales Charge on Reinvestment of
Dividends None None
Maximum Deferred Sales Charge None(1) 4.00%
Redemption Fee(2) None None
Exchange Fee None None
Annual Operating Expenses
(as a percentage of average net assets)(3)
Management Fees 0.49% 0.49%
12b-1 Fees 0.25% 1.00%
Other Expenses
(including accounting and transfer agent
fees, custodian fees and printing expenses) 0.72% 0.72%
------- ---------
Total Operating Expenses 1.46% 2.21%
======= =========
</TABLE>
(+) Class B shares are a new class of shares, first offered on April 28, 1995
(1) Purchases of $1,000,000 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 as further described under "How to
Sell Fund Shares."
(2) Separate fees (currently $10 and $20, respectively) apply to domestic and
international bank wire transfers of redemption proceeds.
(3) For Class B shares, operating expenses are based on estimated expenses
that would have been incurred during the previous fiscal year had Class B
shares been outstanding.
Example:
You would pay the following dollar amounts on a $1,000 investment in the
Fund, assuming 5% annual return and redemption at the end of each of the time
periods:
1 Year 3 Years 5 Years 10 Years
Class A Shares $72 $101 $133 $ 223
Class B Shares
- --Assuming complete
redemption at end
of period $62 $ 99 $138 $236*
- --Assuming no
redemption $22 $ 69 $118 $236*
*Class B shares convert to Class A shares eight years after purchase;
therefore, Class A expenses are used after year eight.
The example above assumes reinvestment of all dividends and distributions
and that the percentage amounts listed under "Annual Operating Expenses"
remain the same each year.
The example is designed for information purposes only, and should not be
considered a representation of 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, 12b-1 fees and other
expenses of the Fund, including information regarding the basis upon which
management fees and 12b-1 fees are paid, 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 imposition of a Rule
12b-1 fee may result in long-term shareholders indirectly paying more than
the economic equivalent of the maximum sales charge permitted under the Rules
of Fair Practice of the National Association of Securities Dealers, Inc.
("NASD").
The maximum initial sales charge is reduced on purchases of specified
larger 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 shares of the Fund for shares of other publicly
available Pioneer mutual funds. See "How to Exchange Fund Shares."
2
<PAGE>
II. FINANCIAL HIGHLIGHTS
The following information for the year ended December 31, 1994 has been
derived from financial statements of the Fund which have been audited by
Arthur Andersen LLP, independent public accountants, in connection with their
examination of the Fund's financial statements. Arthur Andersen LLP's report
on the Fund's financial statements as of December 31, 1994 appears in the
Fund's Annual Report which is incorporated by reference into the Statement of
Additional Information. The information for the years from 1985 through 1993
has been derived from financial statements which have been audited by the
Fund's then independent public accountants, Coopers & Lybrand. Class B shares
are a new class of shares; no financial highlights exist for Class B shares.
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 GROWTH SHARES
Selected Data For a Class A Share Outstanding For The Years Presented
<TABLE>
<CAPTION>
For the Year Ended December 31,(+)
--------------------------------------------------
1994 1993 1992 1991
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $12.62 $12.42 $12.27 $7.57
-------- -------- -------- ---------
Income from investment
operations--
Net investment income (loss) $(0.06) $(0.07) $0.00 $0.02
Net realized and unrealized
gain (loss) on investments (0.38) 1.10 0.15 4.70
-------- -------- -------- ---------
Total income (loss) from
investment operations $(0.44) $1.03 $0.15 $4.72
Distribution to shareholders
from--
Net investment income 0.00 0.00 0.00 0.00
Net realized capital gains (3.32) (0.83) 0.00 0.00
Excess distribution of net
investment income and
equalization credits 0.00 0.00 0.00 (0.02)
Paid in capital (0.01) -- -- --
-------- -------- -------- ---------
Net increase (decrease) in net
asset value $(3.77) $0.20 $0.15 $4.70
-------- -------- -------- ---------
Net asset value, end of period $8.85 $12.62 $12.42 $12.27
======== ======== ======== =========
Total return(1) (2.60)% 8.52% 1.22% 62.37%
Ratio of net operating
expenses to average net
assets) 1.46% 1.20% 1.15% 1.22%
Ratio of net investment income
to average net assets (0.53)% (0.60)% 0.00% 0.14%
Portfolio turnover rate 161% 29% 25% 27%
Net assets, end of period
(in thousands) $132,476 $134,546 $120,847 $91,464
Ratios assuming no reduction
of fees or expenses:
Net operating expenses -- 1.21% 1.25% 1.28%
Net investment income (loss) -- (0.615%) 0.10% 0.08%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the Year Ended December 31,(+)
----------------------------------------------------------
1990 1989 1988 1987 1986 1985
---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $8.95 $7.39 $6.27 $7.09 $6.56 $5.41
---- ---- ---- ---- ---- ------
Income from investment
operations--
Net investment income (loss) $0.08 $0.08 $0.06 $0.07 $0.10 $0.10
Net realized and unrealized
gain (loss) on investments (0.83) 2.37 1.37 (0.31) 0.95 1.46
---- ---- ---- ---- ---- ------
Total income (loss) from
investment operations $(0.75) $2.45 $1.43 $(0.24) $1.05 $1.56
Distribution to shareholders
from--
Net investment income (0.08) (0.08) (0.06) (0.07) (0.10) (0.11)
Net realized capital gains (0.55) (0.81) (0.25) (0.51) (0.42) (0.30)
Excess distribution of net
investment income and
equalization credits 0.00 0.00 0.00 0.00 0.00 0.00
Paid in capital -- -- -- -- -- --
---- ---- ---- ---- ---- ------
Net increase (decrease) in net
asset value $(1.38) $1.56 $1.12 $(0.82) $0.53 $1.15
---- ---- ---- ---- ---- ------
Net asset value, end of period $7.57 $8.95 $7.39 $6.27 $7.09 $6.56
==== ==== ==== ==== ==== ======
Total return(1) (8.37%) 33.63% 23.01% (3.44%) 15.83% 28.89%
Ratio of net operating
expenses to average net
assets) 1.29% 1.11% 1.24% 1.11% 1.11% 1.25%
Ratio of net investment income
to average net assets 0.89% 0.91% 0.88% 0.82% 1.28% 1.63%
Portfolio turnover rate 44% 58% 48% 51% 45% 110%
Net assets, end of period
(in thousands) $52,322 $48,904 $39,231 $36,578 $32,953 $22,441
Ratios assuming no reduction
of fees or expenses:
Net operating expenses -- -- -- -- -- --
Net investment income (loss) -- -- -- -- -- --
</TABLE>
(1)Assumes initial investment at net asset value at the beginning of each
year, reinvestment of all dividends and distributions, the complete
redemption of the investment at net asset value at the end of each year,
and no sales charges. Total return would be reduced if sales charges were
taken into account.
(+)Prior to December 1, 1993, Mutual of Omaha Fund Management Company ("FMC")
acted as the investment adviser to the Fund.
3
<PAGE>
III. INVESTMENT OBJECTIVE, POLICIES AND RISKS
The investment objective of the Fund is to obtain appreciation of capital.
The Fund invests in common stocks, together with preferred stocks, bonds and
debentures which are convertible into common stocks. Current income will be
incidental to the Fund's primary objective. In selecting securities for
investment, the investment adviser attempts to identify companies that have
better-than-average earnings growth potential and those industries that stand
to enjoy the greatest benefit from the predicted economic environment. The
Fund seeks to purchase the securities of companies that are thought to be
best situated in those industry groupings. The Fund invests in companies in a
variety of industries in an attempt to reduce its overall exposure to
investment and market risks.
In pursuing its objective, the Fund purchases portfolio securities with
the view of retaining them on a long-term basis. However, in the constant
review of individual securities, the market and general economic conditions,
the Fund may sell any security without regard to the period of time it has
been held. Such sales may cause the Fund's portfolio turnover rate to exceed
100% and may cause it to incur greater brokerage commissions than would
otherwise be the case.
Part or all of the Fund's assets may be temporarily invested in securities
of the U.S. government, its agencies or instrumentalities, commercial paper,
bank certificates of deposit and time deposits, bankers' acceptances, other
fixed income securities and repurchase agreements with banks and
broker-dealers with respect to any of the foregoing instruments. At times,
the investment adviser believes that such investments are desirable due to
present or anticipated market or economic conditions which are affecting or
could affect the values of the Fund's investments, as well as for liquidity
purposes or as a temporary investment pending investment in primary
securities. The Fund may invest in lower rated or unrated securities. These
securities involve greater risks of default and price fluctuations due to
credit, economic, liquidity and market concerns.
Restricted and Illiquid Securities
The Fund may purchase securities that are not registered or are offered in
an exempt non-public offering ("restricted securities") under the Securities
Act of 1933 ("1933 Act"), including securities eligible for resale to
"qualified institutional buyers" in accordance with Rule 144A under the 1933
Act. However, the Fund will not invest more than 15% of its net assets in
illiquid investments, which includes repurchase agreements maturing in more
than seven days, securities that are not readily marketable and restricted
securities, unless the Board of Trustees of the Fund determines, based upon a
continuing review of the trading markets for the specific restricted
security, that such restricted security eligible for resale in accordance
with Rule 144A is liquid. The Board of Trustees of the Fund may adopt
guidelines and delegate to the investment adviser the daily function of
determining and monitoring the liquidity of restricted securities. The Board
of Trustees, however, will retain sufficient oversight and be ultimately
responsible for the determinations. Since it is not possible to predict with
assurance exactly how the market for restricted securities eligible for
resale pursuant to Rule 144A will continue to develop, the Board of Trustees
will carefully monitor 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.
The purchase price and subsequent valuation of restricted securities
normally reflect a discount from the price at which such securities trade
when they are not restricted to the extent that the restriction makes them
less liquid. The amount of the discount from the prevailing market price is
expected to vary depending upon the type of security, the character of the
issuer, the party who will bear the expenses of registering the restricted
securities and prevailing supply and demand conditions.
Foreign Securities
The Fund may invest up to 30% of its assets at the time of investment in
listed and unlisted foreign securities. While such investments are intended
to reduce risk by permitting greater diversification of the Fund's
portfolios, investments in securities of foreign issuers entail certain risks
not associated with investments in domestic issuers. Such risks include
fluctuations in foreign currency exchange rates; possible expropriation or
nationalization of foreign companies; imposition of exchange control
regulations; currency blockage or dividends or interest withheld at the
source; unfavorable price spreads on currency exchanges; higher transaction
costs; less public information about issuers of securities; lack of uniform
auditing, accounting and financial reporting standards; less governmental
regulation of foreign stock exchanges and brokers; less liquidity and greater
volatility of securities of foreign companies; or imposition of foreign
taxes. Therefore, the Fund intends to invest primarily in the companies
organized under the laws of those nations which are considered to have
relatively stable and friendly governments, e.g., major industrialized
nations such as the United Kingdom, France, Canada, Germany and Japan.
Lending of Portfolio Securities
The Fund may seek to increase its income by lending portfolio securities,
provided that the value of the securities loaned would not exceed one-third
of the value of the total assets of the Fund. Under present regulatory
policies, such loans may be made to institutions, such as certain
broker-dealers, and are required to be secured continuously by collateral in
cash, cash equivalents, or U.S. government securities maintained on a current
basis in an amount at least equal to the market value of the securities
loaned. The Fund may experience loss or delay in the recovery of its
securities if the institution with which it has engaged in a portfolio loan
transaction breaches its agreement with the Fund.
4
<PAGE>
When Issued Securities
The Fund may also purchase and sell securities on a "when issued" and
"delayed delivery" basis. These transactions are subject to market
fluctuation; the value at the time of delivery may be more or less than the
purchase price. Since the Fund will rely on the buyer or seller, as the case
may be, to consummate the transaction, failure by the other party to complete
the transaction may result in the Fund missing the opportunity of obtaining a
price or yield considered to be advantageous. No interest accrues to the Fund
prior to delivery. When the Fund is the buyer in such a transaction, however,
it will maintain, in a segregated account with its custodian, cash, U.S.
government securities, or high-grade, liquid debt obligations having an
aggregate value equal to the amount of such purchase commitments until
payment is made. The Fund will make commitments to purchase securities on
such basis only with the intention of actually acquiring these securities,
but the Fund may sell such securities prior to the settlement date if such
sales are considered to be advisable. To the extent the Fund engages in "when
issued" and "delayed delivery" transactions, it will do so for the purpose of
acquiring securities for the Fund's portfolio consistent with the Fund's
investment objective and policies and not for the purpose of investment
leverage.
Repurchase Agreements
A repurchase agreement is an instrument under which the purchaser acquires
ownership of the obligation but the seller agrees, at the time of sale, to
repurchase the obligation at a mutually agreed upon time and price. The
resale price is in excess of the purchase price and reflects an agreed upon
market rate unrelated to the coupon rate on the purchased security. Such
transactions afford an opportunity for the Fund to invest temporarily
available cash. In the event of the insolvency of the seller, or an order to
stay execution of an agreement by a court or regulatory authority, the Fund
could incur costs before being able to sell the underlying obligations and
the Fund's realization of the underlying obligations could be delayed or
limited, which could adversely affect the price the Fund receives for such
obligations. There is also a risk that the seller may fail to repurchase the
underlying obligations in which case the Fund may incur possible disposition
costs and a loss if the proceeds of the sale of such obligations to a third
party are less than the repurchase price. To guard against these
possibilities, the investment adviser, under guidelines established by the
Fund's Board of Trustees, will evaluate the creditworthiness of the seller.
The Fund will enter into repurchase agreements only with those institutions
that the investment adviser believes present minimal credit risks and which
furnish collateral at least equal in value or market price to the amount of
the repurchase obligations. Repurchase agreements maturing in more than seven
days are considered by the Fund to be illiquid.
Risk Factors
Because prices of securities fluctuate from day to day, the value of an
investment in the Fund will vary based upon the Fund's investment
performance. The value of your shares in the Fund may, at any time, be higher
or lower than your original cost. The Fund may invest in debt securities with
varying maturities. In general, the longer the maturity of a security, the
higher the yield and the greater the potential for price fluctuations. A
decline in interest rates generally produces an increase in the value of debt
securities in the Fund's portfolio, while an increase in interest rates
usually reduces the value of these securities.
Additional Restrictions
In addition to the investment objective and policies discussed above, the
Fund's investments are subject to other restrictions which are described in
its Statement of Additional Information. Unless otherwise stated, the Fund's
investment objective and restrictions are considered fundamental and cannot
be changed without shareholder approval. Unless expressly designated as a
fundamental policy, the Fund's investment policies may be changed without
shareholder approval by the Board of Trustees of the Fund.
IV. MANAGEMENT OF THE FUND
The Board of Trustees of the Fund has overall responsibility for
management and supervision of the Fund. There are currently eight Trustees,
six of whom are not "interested persons" of the Fund as defined in the
Investment Company Act of 1940 (the "1940 Act"). The Board meets at least
quarterly. By virtue of the functions performed by Pioneering Management
Corporation ("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 names of and general background information regarding each Trustee and
executive officer of the Fund.
Each domestic equity portfolio managed by PMC, including the Fund, is
overseen by the Domestic Equity Portfolio Management Committee, which
consists of PMC's most senior domestic equity professionals. The committee is
chaired by Mr. David Tripple, PMC's President and Chief Investment Officer
and Executive Vice President of each of the Pioneer mutual funds. Mr. Tripple
joined PMC in 1974 and has had general responsibility for PMC's investment
operations and specific portfolio assignments for over five years.
Mr. Warren J. Isabelle, Director of Research and a Vice President of PMC
and Vice President of the Fund, was responsible for the day-to-day management
of the Fund from December 1, 1993 through February 17, 1995. At
that time, Mr. Isabelle assumed the role of Senior Portfolio Manager and Mr.
Mark S. Waterhouse, Associate Portfolio Manager, assumed primary
responsibility for the day-to-day management of the Fund. Mr. Waterhouse
joined PMC in 1992. Prior to joining PMC, Mr. Waterhouse was an investment
banker with Dillon, Read & Co.
The Fund is managed under a contract with PMC. PMC serves as investment
adviser to the Fund and is responsible for the overall management of the
Fund's business affairs, subject only to the authority of the Fund's Board of
Trustees. PMC is a wholly owned subsidiary of The Pioneer Group, Inc.
("PGI"), a Delaware corporation. Pioneer Funds Distributor, Inc. ("PFD"), an
indirect wholly-owned subsidiary of PGI, is the principal underwriter of the
Fund. Prior to December 1, 1993,
5
<PAGE>
FMC acted as investment adviser and principal underwriter to the Fund.
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.
Under the terms of its contract with the Fund, PMC provides the Fund with
an investment program consistent with its investment objective and policies.
PMC furnishes the Fund with office space, equipment and personnel for
managing the affairs of the Fund. PMC also pays all expenses in connection
with the management of the affairs of the Fund except (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 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 the SEC, state
or blue sky securities agencies and foreign countries, including the
preparation of Prospectuses and Statements of Additional Information for
filing with the SEC; (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 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 shall
pay 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 where 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 investment research or brokerage services or sells
shares of the Fund or other Pioneer mutual funds. See the Statement of
Additional Information for a further description of PMC's brokerage
allocation practices.
As compensation for its management services for the Fund and certain
expenses which PMC incurs, PMC is entitled to a management fee from the Fund
at the annual rates set forth below as a percentage of average daily net
assets:
Net Assets Annual Fee
- ------------------------------------------------------- -------------
For assets up to $250,000,000 .50%
For assets in excess of $250,000,000 to $300,000,000 .48%
Over $300,000,000 .45%
PMC has agreed that until December 1, 1995, its fee shall not exceed the
fee that would have been payable under the prior management contract with
FMC. See the Statement of Additional Information for a discussion of the fee
payable under the prior management agreement.
For the fiscal year ended December 31, 1994, the Fund paid a management
fee to PMC of $619,571.
John F. Cogan, Jr., Chairman and President of the Fund, Chairman of PFD,
President and a Director of PGI and Chairman and a Director of PMC, owned
approximately 15% of the outstanding capital stock of PGI as of March 31,
1995.
V. FUND SHARE ALTERNATIVES
The Fund continuously offers two Classes of shares designated as Class A
and Class B 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 contingent deferred
sales charge ("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 1.00% 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.
Purchasing Class A or Class B 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.
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
6
<PAGE>
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 the applicable sales charge. 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 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 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 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 are 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 at the public offering price 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 for assistance.
The minimum initial investment is $1,000 for Class A and Class B 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 charges 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 shares except that the subsequent minimum investment
amount for Class B 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 indicated 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 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 pre-designated
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 acceptance 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 and Related Liabilities" for additional
information.
Class A Shares
You may buy Class A shares at the public offering price, that is, at the
net asset value per share next computed after receipt of a purchase order,
plus a sales charge as follows:
Sales Charge as a % of
------------------------ Dealer
Allowance
Net as a % of
Offering Amount Offering
Amount of Purchase Price Invested Price
- ------------------------------ ---------- ---------- ------------
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
No sales charge is payable at the time of purchase on investments of
$1,000,000 or more or for 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
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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 FMC and contingent upon the achievement
of certain sales objectives, PFD pays 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.
The schedule of sales charges above is applicable to purchases of Class A
shares of the Fund by (i) an individual, (ii) an 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 (except direct purchases of Pioneer Money Market Trust's Class A
shares), 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. See
the "Letter of Intention" section of the Account Application.
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 a Fund may be sold at
net asset value per share without a sales charge to Optional Retirement
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.
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 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 of its affiliates 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 upon the receipt by PFD of
written notification of eligibility. 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 for Class A shares are available through an
agreement to purchase a specified quantity of Fund shares over a designated
13-month period by completing the "Letter of Intention" section of the
Account Application. Information about the Letter of Intention procedure,
including its terms, is contained in the Statement of Additional 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 the 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 long-
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<PAGE>
est during the six-year period. As a result, you will pay the lowest possible
CDSC.
CDSC as a Percentage
Year Since of Dollar Amount
Purchase Subject to CDSC
- ------------------------- ----------------------
First 4.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter none
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 end
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 ("IRS"), for which
the Fund is applying, or an opinion of counsel that such conversions will not
constitute taxable events for federal tax purposes. There can be no assurance
that such ruling or opinion will be available. 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.
Waiver or Reduction of Contingent Deferred Sales Charge
The CDSC on Class B shares and on any Class A shares subject to a CDSC 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
UGMAs, UTMAs and trust accounts, the waiver applies upon the death of all
beneficial owners) or a total and permanent 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 and on any Class A shares subject to a CDSC 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 Individual Retirement
Account ("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 by Pioneer); (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
pre-authorized through a prior agreement with PFD regarding participant
directed transfers).
The CDSC on Class B shares and on any Class A shares subject to a CDSC may
be waived or reduced for either non-retirement or retirement plan accounts
if: (a) the redemption is made by any state, county, or city, or any
instrumentality, department, authority, or agency thereof, which is
prohibited by applicable laws from paying a CDSC in connection with the
acquisition of shares of any registered investment management company; or (b)
the redemption is made pursuant to each Fund's right to liquidate or
involuntarily redeem shares in a shareholder's account.
Broker-Dealers
An order for either Class of Fund shares received by PFD from 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.
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
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<PAGE>
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:
* If you are selling shares from a retirement account, 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.
* If you are selling shares from a non-retirement account, 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 and accepted less any applicable CDSC. Sale proceeds
generally will be sent to you in cash, normally within seven days after your
order is accepted. The Fund reserves the right to withhold payment of the
sale proceeds 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 situations applies:
* you wish to sell over $50,000 worth of shares,
* your account registration or address has changed within the last 30
days,
* the check is not being mailed to the address on your account (address of
record),
* the check is not being made out to the account owners, or
* the sale proceeds are being transferred to a Pioneer 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, Pioneer will send the proceeds of the
sale to the address of record. Fiduciaries or 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 and accepted by PSC. Good order means that there are no outstanding
claims or requests to hold redemptions on the account, certificates are
endorsed by the record owner(s) exactly as the shares are registered and the
signature(s) are guaranteed by an 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 indicated otherwise on your
Account Application or by writing to the Fund. You may redeem up to $50,000
of your shares by telephone or fax and receive the proceeds by check or 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 by electronic funds
transfer: the proceeds must be sent to your bank address of record which must
have been properly pre-designated 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. The telephone
redemption option is not available to retirement plan accounts. You may
always elect to deliver redemption instructions to PSC by mail. See
"Telephone Transactions and Related Liabilities" 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 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 $1,000,000 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
10
<PAGE>
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 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 indicated otherwise on your Account
Application or by writing to the 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, will be recorded. You are strongly urged to consult
with your financial representative prior to requesting a telephone exchange.
See "Telephone Transactions and Related Liabilities" 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 18th day of the
month.
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
mutual fund account opened through an exchange must have a registration
identical to that on the original account.
Class A or Class B 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 Class B 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 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. To prevent abuse of the exchange privilege to the
detriment of other Fund shareholders, the Fund and PFD reserve the right to
limit the number and/or frequency of exchanges and/or to charge a fee for
exchanges. The exchange privilege may be changed or discontinued and may be
subject to additional limitations, including certain restriction on purchases
by market timer accounts.
X. DISTRIBUTION PLANS
The Fund has adopted a Plan of Distribution for both Class A shares
("Class A Plan") and Class B shares ("Class B Plan") in accordance with Rule
12b-1 under the 1940 Act pursuant to which certain distribution and service
fees are paid.
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
average 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 aver-
11
<PAGE>
age 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
shareholders of the Fund.
The Class B Plan provides that the Fund will pay a distribution fee at the
annual rate of 0.75% of the Fund's average daily net assets attributable to
Class B 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 Class B shares. The
distribution fee is intended to compensate PFD for its distribution services
to the Fund. The service fee is intended to be additional compensation for
personal services and/or account maintenance services with respect to Class B
shares. PFD also receives the proceeds of any CDSC imposed on the redemption
of Class B shares.
Commissions of 4%, equal to 3.75% of the amount invested and a first
year's service fee equal to 0.25% of the amount invested in Class B shares,
are paid to broker-dealers who have selling 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. Dealers will become eligible for additional service fees
with respect to such shares commencing in the 13th month following the
purchase. 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 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 taxes on income and capital gains
distributed to shareholders at least annually.
Under the Code, the Fund will be subject to a nondeductible 4% federal
excise tax on a portion of its undistributed 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, 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; distributions from income and/or
capital gains may also be made at such times as may be necessary to avoid
federal income or excise tax. Dividends from the Fund's net investment
income, net short-term capital gains, and certain net foreign exchange gains
are taxable as ordinary income, and dividends from the Fund's net long-term
capital gains are taxable as long-term capital 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 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.
domestic corporations, if any, may qualify for the corporate
dividends-received deduction for corporate shareholders, subject to minimum
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) from
certain foreign investments, which will reduce its return from those
investments. The Fund will not qualify to pass such taxes through to its
shareholders, who accordingly will neither treat such taxes as additional
income nor be entitled to any foreign tax credits or deductions with respect
to such taxes.
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 a 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 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, 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 different tax treatment that is not described above.
Shareholders should consult their own tax advisers regarding state, local and
other applicable tax laws.
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 Pioneering Services Corporation, P.O.
Box 9014, Boston, Massachusetts 02205-9014. Brown Brothers Harriman & Co.
(the "Custodian") serves as 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
details of transactions are sent to
12
<PAGE>
shareholders as transactions occur, except Automatic Investment Plan
transactions which are confirmed quarterly. The Combined Account Statement,
mailed quarterly, is available to shareholders who have more than one Pioneer
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 which might not be available are
investment or redemption of shares by mail, automatic reinvestment of
dividends and capital gains distributions, withdrawal plans, Letters of
Intention, Rights of Accumulation, telephone exchanges and redemptions, 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 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 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 a monthly or
quarterly investment by means of a pre-authorized draft drawn on a checking
account. Pioneer Investomatic Plan investments are voluntary, and you may
discontinue the Plan at any time without penalty upon 30 days' written notice
to PSC. 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 capital gains
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.
Directed Dividends
You may elect (in writing) to have the dividends paid by one Pioneer fund
account invested in a second Pioneer 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, and there are no fees or charges for
this service. Retirement plan shareholders may only direct dividends to
accounts with identical registrations, i.e., 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.
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 and Related Liabilities
Your account is automatically authorized to have telephone transaction
privileges unless you indicated otherwise on your Account Application or by
writing to the PSC. You may purchase, sell or exchange Fund shares by
telephone. See "Share Price" for more information. For personal assistance,
call 1-800-225-6292 between 8:00 a.m. and 8:00 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, the Fund 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 or 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 is an automated inquiry and telephone transaction system
available to Pioneer shareholders by dialing 1-800-225-4321. FactFone 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
13
<PAGE>
mutual funds. In addition, you may use FactFone to make computer-assisted
telephone purchases, exchanges and redemptions from your Pioneer 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. See "How
to Buy Fund Shares," "How to Exchange Fund Shares," "How to Sell Fund Shares"
and "Telephone Transactions and Related Liabilities." Call PSC for
assistance.
Retirement Plans
You should contact the Retirement Plans Department of PSC at
1-800-622-0176 for information relating to retirement plans for businesses,
age-weighted profit sharing plans, Simplified Employee Pension Plans, IRAs,
and Section 403(b) retirement plans for employees of certain non-profit
organizations and public school systems, all of which are available in
conjunction with investments in the Fund. The Pioneer Mutual Funds Account
Application accompanying this Prospectus should not be used to establish any
of these plans. Separate applications are required.
Telecommunications for the Deaf (TDD)
If you have a hearing disability and your own TDD keyboard equipment, you
can call our TDD number toll-free at 1-800-622-1997, 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 shares accounts are limited to 10% of the
value of the account at the time the plan is implemented. See "Waiver or
Reduction of Contingent Deferred Sales Charge" for more information. Periodic
checks 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. If you direct that withdrawal checks 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 in effect immediately 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
reinvestment occurs. 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
requirements for each fund you enter.
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 request by calling 1-800-225-6292.
XIII. THE FUND
The Fund, an open-end management investment company (commonly referred to
as a mutual fund), was established as a Nebraska corporation on January 16,
1968 and reorganized as a Delaware business trust on June 30, 1994. The Fund
has authorized an unlimited number of shares of beneficial interest. As an
open-end management 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.
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 purpose 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 new
series, into one or more classes. As of the date of this Prospectus, the
Trustees have authorized the issuance of two classes of shares, designated as
Class A and Class B. 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 and Class B
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
14
<PAGE>
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 certificates.
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
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 indexes,
indicators of economic activity or averages of mutual fund results may be
cited or compared with the investment results of the Fund. Rankings or
listings by magazines, newspapers or independent statistical or rating
services, such as Lipper Analytical Services, Inc., may also be referenced.
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 Fund 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.
15
<PAGE>
[Pioneer logo]
Pioneer
Growth
Shares
60 State Street
Boston, Massachusetts 02109
OFFICERS
JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
INVESTMENT ADVISER
PIONEERING MANAGEMENT CORPORATION
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR
1095-2813
(C)Pioneer Funds Distributor, Inc.
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: 1-800-225-6292
SERVICES 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, automated 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
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PIONEER GROWTH SHARES
60 State Street
Boston, Massachusetts 02109
Class A and Class B Shares
April 28, 1995
(revised October 16, 1995)
This Statement of Additional Information (Part B of the
Registration Statement) is not a Prospectus, but should be read in
conjunction with the Prospectus (the "Prospectus") dated April 28, 1995
(revised October 16, 1995) of Pioneer Growth Shares (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.
TABLE OF CONTENTS
Page
1. Investment Objective and Policies............................B-2
2. Investment Restrictions......................................B-4
3. Management of the Fund.......................................B-5
4. Investment Adviser...........................................B-9
5. Underwriting Agreement and Distribution Plans................B-11
6. Shareholder Servicing/Transfer Agent.........................B-13
7. Custodian....................................................B-13
8. Principal Underwriter........................................B-13
9. Independent Public Accountant................................B-14
10. Portfolio Transactions.......................................B-14
11. Dividends and Tax Status.....................................B-15
12. Shares of the Fund...........................................B-18
13. Determination of Net Asset Value.............................B-19
14. Systematic Withdrawal Plan...................................B-20
15. Letter of Intention..........................................B-21
16. Investment Results...........................................B-21
17. General Information..........................................B-24
18. Financial Statements.........................................B-24
Appendix A...................................................B-25
Appendix B...................................................B-26
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.
<PAGE>
1. INVESTMENT OBJECTIVE AND POLICIES
See "Investment Objective and Policies" in the Prospectus for more
information concerning the investment objective and policies of the Fund.
Restricted and Illiquid Securities
In determining the liquidity of Rule 144A securities, the Fund's
officers, under guidelines established by the Fund's Board of Trustees, will
consider: (1) the unregistered nature of a Rule 144A security; and (2) any
relevant factors related to the marketability of the Rule 144A security,
which may include: (a) the frequency of trades and quotes for the security;
(b) the number of dealers willing to purchase or sell the security and the
number of other potential purchasers; (c) the willingness of dealers to
undertake to make a market in the security; and (d) the nature of the
marketplace trades, including the time needed to dispose of the security,
the method of soliciting offers, and the mechanics of transfer.
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 will carefully monitor 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.
Lower Quality Debt Obligations
The Fund may invest up to 5% of its net assets in debt securities
which are rated in the lowest rating categories by Standard & Poor's Ratings
Group ("Standard & Poor's") or by Moody's Investors Service, Inc.
("Moody's") (i.e., ratings of BB or lower by Standard & Poor's or Ba or
lower by Moody's) or, if unrated by such rating organizations, determined to
be of comparable quality by the Fund's investment adviser, Pioneering
Management Corporation ("PMC"). In addition, the Fund may invest in medium
quality debt securities (i.e., securities rated BBB by Standard & Poor's or
Baa by Moodys, or unrated securities determined by the Adviser to be of
comparable quality).
Bonds rated BB or Ba or below or comparable unrated securities are
commonly referred to as "junk bonds" and are considered speculative and may
be questionable as to principal and interest payments. In some cases, such
bonds may be highly speculative, have poor prospects for reaching investment
standing and be in default. As a result, investment in such bonds will
entail greater speculative risks than those associated with investment in
investment grade bonds (i.e., bonds rated BBB or better by Standard & Poor's
or Baa or better by Moody's or, if unrated by such rating organizations,
determined to be of comparable quality by PMC).
The amount of junk bond securities outstanding has proliferated in
conjunction with the increase in merger and acquisition and leveraged buyout
activity. An economic downturn could severely affect the ability of highly
leveraged issuers to service their debt obligations or to repay their
obligations upon maturity. Factors having an adverse impact on the market
value of lower quality securities will have an adverse effect on the Fund's
net asset value to the extent that it invests in such securities. In
addition, the Fund may incur additional expenses to the extent it is
required to seek recovery upon a default in payment of principal or interest
on its portfolio holdings.
B-2
<PAGE>
The secondary market for junk bond securities, which is
concentrated in relatively few market makers, may not be as liquid as the
secondary market for more highly rated securities, a factor which may have
an adverse effect on the Fund's ability to dispose of a particular security
when necessary to meet its liquidity needs. Under adverse market or economic
conditions, the secondary market for junk bond securities could contract
further, independent of any specific adverse changes in the condition of a
particular issuer. As a result, the Fund could find it more difficult to
sell these securities or may be able to sell the securities only at prices
lower than if such securities were widely traded. Prices realized upon the
sale of such lower rated or unrated securities, under these circumstances,
may be less than the prices used in calculating the Fund's net asset value.
Certain proposed and recently enacted federal laws including the
required divestiture by federally insured savings and loan associations of
their investments in junk bonds and proposals designed to limit the use, or
tax and other advantages, of junk bond securities could adversely affect the
Fund's net asset value and investment practices. Such proposals could also
adversely affect the secondary market for junk bond securities, the
financial condition of issuers of these securities and the value of
outstanding junk bond securities. The form of such proposed legislation and
the possibility of such legislation being passed are uncertain.
Since investors generally perceive that there are greater risks
associated with the medium to lower quality debt securities of the type in
which the Fund may invest a portion of its assets, the yields and prices of
such securities may tend to fluctuate more than those for higher rated
securities. In the lower quality segments of the debt securities market,
changes in perceptions of issuers' creditworthiness tend to occur more
frequently and in a more pronounced manner than do changes in higher quality
segments of the debt securities market, resulting in greater yield and price
volatility.
Medium to lower rated and comparable unrated debt securities tend
to offer higher yields than higher rated securities with the same maturities
because the historical financial condition of the issuers of such securities
may not have been as strong as that of other issuers. Since medium to lower
rated securities generally involve greater risks of loss of income and
principal than higher rated securities, investors should consider carefully
the relative risks associated with investment in securities which carry
medium to lower ratings and in comparable unrated securities. In addition to
the risk of default, there are the related costs of recovery on defaulted
issues. PMC will attempt to reduce these risks through portfolio
diversification and by analysis of each issuer and its ability to make
timely payments of income and principal, as well as broad economic trends
and corporate developments.
The prices of all debt securities generally fluctuate in response
to the general level of interest rates. Another factor which causes
fluctuations in the prices of debt securities is the supply and demand for
similarly rated securities. Fluctuations in the prices of portfolio
securities subsequent to their acquisition will not affect any cash income
from such securities but will be reflected in the Fund's net asset value.
Portfolio Turnover Rate
The Fund will limit portfolio turnover to the extent practicable
and consistent with its investment objective and policies. In any event, the
Fund does not consider the rate of portfolio turnover a limiting factor
where management considers changes necessary and as the Fund may deem it
advisable to take advantage of short-term trends by purchases and sales of
securities. The Fund's investment policy from time to time may result in the
portfolio turnover being higher than that of investment companies with
B-3
<PAGE>
investment objectives different from that of the Fund. A higher portfolio
turnover rate may result in correspondingly higher transaction costs.
2. INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions. The Fund considers the
investment objective, the investment policy under the caption "Restricted
and Illiquid Securities", and the following restrictions as fundamental
policies which cannot be changed without approval by a "majority" of the
Fund's outstanding voting securities (as defined in Section 2(a)(42) of the
Investment Company Act of 1940, as amended (the "1940 Act")) which means:
(a) 67% or more of the voting securities present at a special or annual
meeting if the holders of more than 50% of the outstanding voting securities
of the Fund are present or represented by proxy; or (b) more than 50% of the
outstanding voting securities of the Fund, whichever is less. All other
investment policies are considered non-fundamental and may be changed by
approval of the Trustees without the vote of shareholders.
The Fund may not:
1. Concentrate the investment of its assets in any one industry or group of
industries and therefore will not invest more than 25% of its assets in any
one industry;
2. Purchase securities on margin, but it may obtain such short-term credits
as may be necessary for the clearance of purchases and sales of securities;
3. Make short sales of securities unless at the time of such sale it owns or
has the right to acquire as a result of the ownership of convertible or
exchangeable securities, and without the payment of further consideration,
an equal amount of such securities which it will retain so long as it is in
a short position. At no time will more than 10% of the value of the Fund's
assets be committed to short sales;
4. Make loans of its assets, except that the Fund may purchase a portion of
an issue of bonds or other obligations of types commonly distributed
publicly to financial institutions, may purchase repurchase agreements in
accordance with its investment objective, policies and restrictions, and may
make both short-term (nine months or less) and long-term loans of its
portfolio securities to the extent of 40% of the value of the Fund's total
assets computed at the time of making such loans;
5. Borrow money except for temporary or emergency purposes in an amount up
to 5% of the value of the Fund's assets;
6. Act as a securities underwriter or invest in real estate, commodities or
commodity contracts;
7. Participate on a joint or joint-and-several basis in any securities
trading account;
8. Purchase any security (other than obligations of the U.S. Government, its
agencies or instrumentalities), if as a result: (a) more than 25% of the
value of the Fund's total assets would then be invested in securities of any
single issuer, or (b) as to 75% of the value of the Fund's total assets: (i)
more than 5% of the value of the Fund's total assets would then be invested
in securities of any single issuer, or (ii) the Fund would own more than 10%
of the voting securities of any single issuer;
B-4
<PAGE>
9. Purchase securities of any company with a record of less than three years
continuous operation (including that of predecessors) if such purchase would
cause the Fund's investments in such companies taken at cost to exceed 5% of
the value of the Fund's assets, except holding companies or companies formed
by merger, where the operating companies have had at least three years of
continuous operation;
10. Purchase or retain the securities of any issuer if the officers and
trustees of the Fund or of its Investment Adviser who own individually or
beneficially more than 1/2 of 1% of the securities of such issuer together
own more than 5% of the securities of such issuer;
11. Purchase the securities of any other investment company, except that it
may make such a purchase as part of a merger, consolidation or acquisition
of assets; or
12. Enter into transactions with officers, trustees or other affiliated
persons of the Fund or its Investment Adviser or Underwriter, or any
organization affiliated with such persons, except securities transactions on
an agency basis at standard commission rates, as limited by the provisions
of the Investment Company Act of 1940, as amended (the "1940 Act").
Non-Fundamental Investment Restrictions. In addition to the
foregoing restrictions, the Fund may not purchase warrants of any issuer,
if, as a result of such purchases, more than 2% of the value of the Fund's
total assets would be invested in warrants which are not listed on the New
York Stock Exchange or the American Stock Exchange or more than 5% of the
value of the total assets of the Fund would be invested in warrants
generally, whether or not so listed. For these purposes, warrants are to be
valued at the lesser of cost or market, but warrants acquired by the Fund in
units with or attached to debt securities shall be deemed to be without
value.
The Fund will not invest in puts, calls, straddles, spreads or any
combination thereof, nor will it invest in oil, gas or other mineral
exploration or development programs or leases or purchase or sell real
estate, including real estate limited partnerships. It is not the policy of
the Fund to invest in any company for the purpose of acquiring or exercising
management or control of such company. In view of the risks of loss inherent
in investing in equity securities, there is no assurance that the investment
objective of the Fund will be achieved or that shareholders will be
protected from incurring any losses on their investments.
If a percentage restriction on investment or utilization of assets
set forth in any of the above is adhered to at the time an investment is
made, a later change in percentage resulting from changing values or a
change in the rating of a portfolio security will not be considered a
violation of policy.
3. MANAGEMENT OF THE FUND
The 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.*, President and Director of The Pioneer Group,
Chairman of the Board, Inc. ("PGI"); Chairman and Director of
President and Trustee Pioneering Management Corporation ("PMC");
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Chairman of the Board and Chief Executive
Officer of Pioneer Winthrop Advisers ("PWA")
(since 1993); Chairman of the Board of Pioneer
Funds Distributor, Inc. ("PFD"); Director of
Pioneering Services Corporation ("PSC") and
Pioneer Capital Corporation ("PCC"); President
and Director of Pioneer Plans Corporation
("PPC"); Chairman of the Board and Director of
Teberebie Goldfields Limited; Chairman and
President of the Pioneer mutual funds and
Chairman and Partner, Hale and Dorr (counsel
to the Fund).
RICHARD H. EGDAHL, M.D., Professor of Management, Boston University
Trustee School of Management; Professor of Public
Boston University Health Health, Boston University School of Public
Policy Institute Health; Professor of Surgery, Boston
53 Bay State Road University School of Medicine and Boston
Boston, Massachusetts University Health Policy Institute; Director,
Boston University Medical Center; Executive
Vice President and Vice Chairman of the Board,
University Hospital; Academic Vice President
for Health Affairs, Boston University;
Director, Essex Investment Management Company,
Inc. (investment adviser), Health Payment
Review, Inc. (health care containment software
firm), Mediplex Group, Inc. (nursing care
facilities firm), Peer Review Analysis, Inc.
(health care utilization management firm);
Springer-Verlag New York, Inc. (publisher);
Honorary Director, Franciscan Children's
Hospital and Trustee of all the Pioneer mutual
funds.
MARGARET B.W. GRAHAM, Manager of Research Operations,
Trustee Xerox Palo Alto Research Center
The Keep (since September 1991); Professor of
Post Office Box 110 Operations Management and Management
Little Deer Isle, Maine of Technology, Boston University School of
Management ("BUSM"); Associate Dean, BUSM,
1988 to 1990; previously, Associate Professor,
Department of Operations Management, BUSM and
Trustee of all the Pioneer mutual funds,
except Pioneer Variable Contracts Trust.
JOHN W. KENDRICK, Professor Emeritus of Economics, George
Trustee Washington University; Adjunct Scholar,
6363 Waterway Drive American Enterprise Institute and Trustee
Falls Church, Virginia of all the Pioneer mutual funds, except
Pioneer Variable Contracts Trust.
MARGUERITE A. PIRET, President, Newbury, Piret & Company,
Trustee Inc. (a merchant banking firm); and Trustee
One Boston Place, of all the Pioneer mutual funds.
Suite 2635
Boston, Massachusetts
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DAVID D. TRIPPLE*, Executive Vice President and Director of
Trustee and Executive PGI; Director of PFD, Pioneer Investment Corp.
Vice President ("PIC"), Pioneer International Corp.
("PIntl"), PCC and Pioneer SBIC Corporation;
President, Chief Investment Officer and a
Director of PMC and Trustee of all the Pioneer
mutual funds.
STEPHEN K. WEST Partner, Sullivan & Cromwell (a law
Trustee firm) and Trustee of all the Pioneer mutual
125 Broad Street funds.
New York, New York
JOHN WINTHROP, President, John Winthrop & Co., Inc.
Trustee (a private investment firm); Director of NUI
One North Adgers Wharf Corp., Alliance Capital Reserves, Alliance
Charleston, GovernmentSouth Carolina Reserves and Alliance
Tax Exempt Reserves and Trustee of all the
Pioneer mutual funds, except Pioneer Variable
Contracts Trust.
WARREN J. ISABELLE Vice President, PMC.
Vice President
WILLIAM H. KEOUGH, Senior Vice President, Chief Treasurer of
Treasurer Financial Officer and PGI; Treasurer
of PFD, PMC, PSC, PCC and Pioneer SBIC
Corporation; Treasurer and Director of PPC and
Treasurer of all the Pioneer mutual funds.
JOSEPH P. BARRI, Secretary of PGI, PMC, PPC, PIC and PCC; Clerk
Secretary of PFD and PSC; Partner, Hale and Dorr
(counsel to the Fund) and Secretary of all the
Pioneer mutual funds.
ERIC W. RECKARD Manager of Fund Accounting and Compliance for
Assistant Treasurer PMC (since 1994); Manager of
Auditing and Business Analysis for PGI (until
May, 1994) and Assistant Treasurer of all the
Pioneer mutual funds.
ROBERT P. NAULT General Counsel of PGI (since 1995); formerly
Assistant Secretary of Haleand Dorr (counsel to the Fund) where he
most recently served as a junior partner and
Assistant Secretary of all the Pioneer mutual
funds.
The Fund's Declaration of Trust provides that the holders of
two-thirds of its outstanding shares may vote to remove a Trustee of the
Fund at any special meeting of shareholders. The business address of all
officers is 60 State Street, Boston, Massachusetts 02109.
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All of the outstanding capital stock of PMC and PSC is owned by
PGI, a Delaware corporation. All of the outstanding capital stock of PFD is
indirectly owned by PGI. The table below lists all the Pioneer funds,
including the Fund, currently offered to the public and the investment
adviser and principal underwriter for each fund.
Investment Principal
Fund Name Adviser Underwriter
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Three PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer International Growth Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer India Fund * PFD
Pioneer Bond Fund PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer Income Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer California Double Tax-Free Fund PMC PFD
Pioneer New York Triple Tax-Free Fund PMC PFD
Pioneer Massachusetts Double Tax-Free Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer U.S. Government Money Fund PMC PFD
Pioneer Tax-Free Money Fund PMC PFD
Pioneer Interest Shares, Inc. PMC **
Pioneer Variable Contracts Trust PMC ***
-----------
* ITI Pioneer AMC Ltd. manages the Fund's investments in India, and PMC
manages all of the Fund's other investments
** This fund is a closed-end fund.
*** This is a series of seven separate portfolios designed to provide
investment vehicles for the variable annuity and variable life insurance
contracts of various insurance companies or for certain qualified
pension plans.
PMC, the Fund's investment adviser, also manages the investments
of certain institutional private accounts. Messrs. Cogan, Tripple, Keough
and Barri, officers and/or Trustees of the Fund, are also officers and/or
directors of PFD, PMC, PSC and PGI. As of March 31, 1995, to the knowledge
of the Fund, no officer or Trustee of the Fund owned 5% or more of the
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issued and outstanding shares of PGI, except Mr. Cogan who then owned
approximately 15% of such shares. As of March 31, 1995 the officers and
Trustees held in aggregate less than 1% of the outstanding shares of the
Fund. As of March 31, 1995, John A Sturgeon as Trustee for the Mutual of
Omaha 401(k) Long-Term Savings Plan owned 8.82% of the Fund's shares
(approximately 1,361,442 shares).
Compensation of Officers and Trustees. The Fund pays no salaries
or compensation to any of its officers. The Fund pays an annual fee of
$1,000, plus $100 per meeting attended, to each Trustee who is not
affiliated with PMC, PFD or PSC. Fees paid to affiliated Trustees are
reimbursed to the Fund by PMC. The Fund pays the Chairman of the Audit
Committee an annual fee of $250 and pays each member of the Audit Committee
an annual fee of $200. All Trustees are reimbursed for expenses incurred in
attending Trustee and committee meetings. The Fund also pays an annual
trustees' fee of $500 plus expenses to each Trustee affiliated with PMC, PSC
or PFD. Any such fees and expenses paid to affiliates or interested persons
of PMC, PFD or PSC 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 for the fiscal year ended
December 31, 1994:
Pension or Total
Retirement Compensation
Aggregate Benefits from Fund and
Compensation Accrued as Pioneer
From Part of Family
Name of Trustee the Fund Trust's Expense of Funds
John F. Cogan, Jr. $ 500 $0 $11,750
David D. Tripple 500 0 11,750
Richard H. Egdahl, M.D. 3,000 0 55,650
Margaret B. W. Graham 3,000 0 55,650
John W. Kendrick 3,000 0 55,650
Marguerite A. Piret 3,300 0 66,650
Stephen K. West 3,200 0 63,650
John Winthrop 3,200 0 63,650
4. INVESTMENT ADVISER
As stated in the Prospectus, PMC, 60 State Street, Boston,
Massachusetts, serves as the Fund's investment adviser. PMC became the
Fund's investment adviser on December 1, 1993. Prior to that date, Mutual of
Omaha Fund Management Company ("FMC") served 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 Trustees
or a majority of its outstanding voting securities and the giving of 60
days' written notice.
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<PAGE>
As compensation for its management services and expenses incurred,
PMC is entitled to a management fee at the following rates per annum of the
Fund's average daily net assets. The fee is computed and accrued daily and
paid monthly.
Net Assets......................................................Annual Rate
---------- -----------
For assets up to $250,000,000......................................0.50%
For assets in excess of $250,000,000 to $300,000,000...............0.48%
Over $300,000,000..................................................0.45%
PMC has agreed that until December 1, 1995, its fee shall not
exceed the fee that would have been payable under the previous management
contact with FMC, without giving effect to any expense limitation. Under the
previous management contract with FMC, which was terminated on December 1,
1993, the Fund paid FMC a management fee at an annual rate equal to the
following percentages of the Fund's average daily net assets:
Net Assets......................................................Annual Rate
---------- -----------
For assets up to and including $100,000,000........................50%
For assets over $100,000,000 but not over $200,000,0000............48%
For assets over $200,000,000 but not over $300,000,000.............46%
For assets over $300,000,000 but not over $400,000,000.............44%
For assets over $400,000,000 but not over $500,000,000.............42%
For assets over $500,000,000 ......................................40%
In addition, PMC has agreed that if in any fiscal year the
aggregate expenses of the Fund exceed the expense limitation established by
any state having jurisdiction over the Fund, PMC will reduce its management
fee to the extent required by state law. The most restrictive state expense
limit currently applicable to the Fund provides that the Fund's expenses in
any fiscal year may not exceed 2.5% of the first $30 million of average
daily net assets, 2.0% of the next $70 million of such assets and 1.5% of
such assets in excess of $100 million.
The Fund paid $495,381 in management fees to FMC for the fiscal
year ended December 31, 1992, and $579,249 for the period January 1 to
November 30, 1993. The Fund paid $55,956 in management fees to PMC for the
period December 1 through December 31, 1993. The Fund paid $619,571 in
management fees to PMC for the fiscal year ended December 31, 1994.
Under the previous management contract with FMC, FMC agreed to
reimburse the Fund quarterly for all expenses (excluding interest, brokerage
commissions, taxes and extraordinary expenses) incurred in each year by the
Fund in excess of 1.50% of the first $30,000,000 of the Fund's average daily
net assets plus 1.00% of any additional net assets, up to an amount not
exceeding its management fees for the period for which reimbursements, if
any, were made.
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<PAGE>
5. UNDERWRITING AGREEMENT AND DISTRIBUTION PLANS
The Fund entered into an Underwriting Agreement with PFD. Prior to
that date, FMC served as the Fund's principal underwriter. The Underwriting
Agreement will continue from year to year if annually approved by the
Trustees. The Underwriting Agreement provides that PFD will bear certain
distribution expenses not borne by the Fund.
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 and state securities law. 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 Class A shares (the "Class A Plan") and a
plan of distribution with respect to Class B shares (the "Class B Plan")
(together, the "Plans").
Class A Plan
Pursuant to the Class A Plan, the Fund may reimburse PFD for its
expenditures in financing any activity primarily intended to result in the
sale of Fund shares. Certain categories of such expenditures have been
approved by the Board of Trustees and are set forth in the Prospectus under
the caption "Distribution Plans." The expenses of the Fund pursuant to the
Class A Plan are accrued on a fiscal year basis and may not exceed, with
respect to the Class A shares, the annual rate of 0.25% of the Fund's
average daily net assets attributable to Class A shares.
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 daily 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 in consideration for personal services and/or account maintenance
services rendered by the dealer with respect to Class B shares. PFD will
advance to dealers the first-year 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.
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<PAGE>
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 expenses,
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
contingent deferred sales charges ("CDSCs") attributable to Class B shares.
(See "Distributions Plans" in the Prospectus.)
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 Fund affected thereby, and material amendments to 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 have no direct or indirect financial interest in the operations of the
Plan, or by a vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of the respective Class of the Fund. Each Plan
will automatically terminate in the event of its assignment (as defined in
the 1940 Act). In the Trustees' quarterly review of the Plans, they will
consider a Plan's continued appropriateness and the level of compensation it
provides.
During the fiscal year ended December 31, 1994, the Fund incurred
total distribution fees pursuant to the Fund's Class A Plan of $313,145.
Distribution fees were paid by the Fund to PFD in reimbursement of expenses
related to servicing of shareholder accounts and to compensate dealers and
sales personnel. No payments were made during the year ended December 31,
1994 by the Fund with respect to Class B Shares.
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<PAGE>
6. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with PSC, 60 State Street, Boston,
Massachusetts, to act as shareholder servicing agent and transfer agent for
the Fund. This contract terminates if assigned and may be terminated without
penalty by either party by vote of its Board of Trustees or a majority of
its outstanding voting securities and the giving of ninety days' written
notice.
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 shares of the Fund; (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 $22.00 per Class A shareholder and
Class B shareholder account from the Fund as compensation for the services
described above. This 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.
7. CUSTODIAN
Brown Brothers Harriman & Co. (the "Custodian"), 40 Water Street,
Boston, Massachusetts 02109, is the custodian of the Fund's assets. The
Custodian's responsibilities include safekeeping and controlling the Fund's
cash and securities, handling the receipt and delivery of securities, and
collecting interest and dividends on the Fund's investments. The Custodian
also provides fund accounting, bookkeeping and pricing assistance to the
Fund.
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, deposit cash in the Custodian and deal
with the Custodian 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.
8. PRINCIPAL UNDERWRITER
PFD, 60 State Street, Boston, Massachusetts, serves as the
principal underwriter for the Fund in connection with the continuous
offering of the Class A and Class B shares of each Fund. Under the Fund's
previous underwriting agreement with FMC, FMC received $1,316,884 in
aggregate underwriting commission for the fiscal year ended December 31,
1992, and $836,000 for the period from January 1, 1993 through November 30,
1993, of which $174,258 and $106,542, respectively, was retained by FMC.
Under the Fund's current Underwriting Agreement with PFD, PFD received
$60,000 for the period December 1 through December 31, 1993, of which $7,872
was retained, and $626,814 for the fiscal year ended December 31, 1994, of
which $78,601 was retained.
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 (other than municipal debt securities issued by state political
subdivisions or their agencies or instrumentalities) provided (i) the
securities meet the investment objectives and policies of the fund; (ii) the
securities are acquired by the Fund for investment and not for resale; (iii)
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<PAGE>
the securities are not restricted as to transfer either by law or liquidity
of market; and (iv) the securities have a value which is readily
ascertainable (and not established only by evaluation procedures) as
evidenced by a listing on the American Stock Exchange or the New York Stock
Exchange or the Nasdaq National Market.
9. INDEPENDENT PUBLIC ACCOUNTANT
Effective January 1, 1994, Arthur Andersen LLP (formerly Arthur
Andersen & Co.), One International Place, Boston, MA 02110 was selected as
the independent public accountant for the Fund. Previously, Coopers &
Lybrand had served as independent public accountant to the Fund. Arthur
Andersen's election as independent public accountant was approved, at a
meeting called for the purpose of voting on such approval, by the vote of a
majority of those Trustees on the Board of Trustees who are not interested
persons of the Fund.
10. 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
Fund's management contract. In selecting brokers or dealers, PMC will
consider various relevant factors, including, but not limited to, the size
and type of the transaction; the nature and character of the markets for 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.
PMC may select broker-dealers which provide brokerage and/or
research services to the Fund and/or other investment companies managed by
PMC or who sell shares of the Pioneer mutual funds. In addition, if PMC
determines in good faith that the amount of commissions charged by a
broker-dealer is reasonable in relation to the value of the brokerage and
research services provided by such broker-dealer, the Fund may pay
commissions to such broker-dealer 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; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and performance
of accounts; 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 it is anticipated that many transactions on behalf of the
Fund and other investment companies 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.
The research received from broker-dealers may be useful to PMC in
rendering investment management services to the Fund as well as other
investment companies managed by PMC, although not all 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 PMC
clients 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.
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<PAGE>
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.
The Board of Trustees periodically reviews PMC's performance of
its responsibilities in connection with the placement of portfolio
transactions on behalf of the Fund.
In addition to the Fund, PMC acts as investment adviser or
subadviser to the other Pioneer mutual funds, Pioneer Interest Shares, Inc.
and certain private accounts with investment objectives similar to that of
the Fund. Securities frequently meet the investment objective of the Fund,
such other funds and such private accounts. In such cases, the decision to
recommend a purchase to 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 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 more than
one of the Fund, another Pioneer mutual fund, Pioneer Interest Shares, Inc.
or a private account managed by PMC may not be able to acquire as large a
position in such security as it desires, 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 fund or
account, the resulting participation in volume transactions could produce
better executions for the Fund or the account. In the event 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.
The Fund paid brokerage or underwriting commissions of
approximately $44,909, $131,000 and $343,317, respectively, for the fiscal
years ended December 31, 1992, 1993 and 1994.
11. DIVIDENDS AND TAX STATUS
The Fund's policy is to pay dividends from net investment income
at least once a year and distributions of net realized capital gains, if
any, once a year. Additional distributions may be made for the purpose of
avoiding liability for federal income or excise tax.
It is the Fund's policy to meet the requirements of Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code"), for
qualification as a regulated investment company. These requirements relate
to the sources of its income, the diversification of its assets, and the
timing of its distributions 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 receives, the Fund will be relieved of the
necessity of paying federal income tax.
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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 in additional shares.
Dividends from net long-term capital gain in excess of net short-term
capital loss, 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. The federal income tax status of all distributions will be
reported to shareholders annually.
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, 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.
If the Fund acquires stock in certain non-U.S. corporations that
receive at least 75% of their annual gross income from passive sources (such
as interest, dividends, rents, royalties or capital gain) 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. Certain elections may, if available,
ameliorate these adverse tax consequences, but any such election would
require the Fund to recognize taxable income or gain without the concurrent
receipt of cash. The Fund may limit and/or manage its holdings in passive
foreign investment companies to minimize its tax liability or maximize its
return from these investments.
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The Fund may invest in debt obligations that are in the lower
rating categories or are unrated. Investments in debt obligations that are
at risk of default present special tax issues for the Fund. Tax rules are
not entirely clear about issues such as when the Fund may cease to accrue
interest, original issue discount, or market discount, when and to what
extent deductions may be taken for bad debts or worthless securities, how
payments received on obligations in default should be allocated between
principal and income, and whether exchanges of debt obligations in a workout
context are taxable. These and other issues will be addressed by the Fund,
in the event it invests in such securities, in order to ensure that it
distributes sufficient income to preserve its status as a regulated
investment company and to avoid becoming subject to federal income or excise
tax.
If the Fund invests in certain PIKs, zero coupon securities, or,
in general, any other securities with original issue discount (or with
market discount if the Fund elects to include market discount in income
currently), the Fund must accrue income on such investments prior to the
receipt of the corresponding cash payments. However, the Fund must
distribute, at least annually, all or substantially all of its net income,
including such accrued income, to shareholders to qualify as a regulated
investment company under the Code and avoid Federal income and excise taxes.
Therefore, the Fund may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash, or may have to leverage
itself by borrowing the cash, to satisfy distribution requirements.
At the time of an investor's purchase of Fund shares, a portion of
the purchase price is often attributable to realized or unrealized
appreciation in the Fund's portfolio or undistributed taxable income of the
Fund. Consequently, subsequent distributions 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 in reality represent a
return of a portion of the investment.
Any loss realized upon the redemption 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 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 certain redemptions may be disallowed
under "wash sale" rules in the event of other investments in the Fund within
a period of 61 days beginning 30 days before and ending 30 days after a
redemption or other sale of shares.
For federal income tax purposes, the Fund is permitted to carry
forward a net capital loss in any year to offset capital gains, if any,
during the eight years following the year of the loss. To the extent
subsequent 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 available to
corporations, dividends received by the Fund, if any, from U.S. domestic
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) in an
unleveraged position and distributed and designated by the Fund may be
treated as qualifying dividends. Any corporate shareholder should consult
its tax adviser 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. Corporate shareholders must
meet the minimum holding period requirement stated above (46 or 91 days),
taking into account any holding-period reductions from certain hedging or
other transactions that diminish risk of loss, with respect to their Fund
shares in order to qualify for the deduction and, if they borrow to acquire
Fund shares, 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 with respect to its investments in those countries. Tax
conventions between certain countries and the U.S. may reduce or eliminate
such taxes. The Fund will not satisfy the requirements for passing through
to shareholders their pro rata shares of foreign taxes paid by the Fund,
with the result that its shareholders will not include such taxes in their
gross incomes and will not be entitled to a tax deduction or credit for such
taxes on their own tax returns.
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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.
Federal law requires that the Fund withhold 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 W-9 Forms, that the Social Security 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.
Provided that the Fund qualifies as a regulated investment company
under the Code, it will not be required to pay any Massachusetts income,
corporate excise or franchise taxes, and, subject to compliance with certain
income-source requirements under Delaware law, it should also not be
required to pay Delaware corporation income tax.
The description above relates only to U.S. federal income tax
consequences for shareholders who are U.S. persons, i.e., U.S. citizens or
residents and U.S. domestic corporations, partnerships, trusts or estates,
and who are subject to U.S. federal income tax. The description does not
address the special tax rules applicable to certain classes of investors,
such as banks, insurance companies, or tax-exempt entities. Investors other
than U.S. persons may be subject to different U.S. tax treatment, including
a possible 30% U.S. withholding tax (or 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 is on file, to 31% backup
withholding on certain other payments from the Fund. Shareholders should
consult their own tax advisors on these matters and on state, local and
other applicable tax laws.
12. SHARES OF THE FUND
General
The Fund is an open-end investment company established as a
Nebraska corporation in 1968 and reorganized as a Delaware business trust in
June 1994. Prior to December 1, 1993, the Fund was called Mutual of Omaha
Growth Fund, Inc. and prior to June 30, 1994, the Fund was called Pioneer
Growth Shares, Inc. Reference to the Fund includes both the Delaware
business trust and the Nebraska corporation. The Board of Trustees, as of
the date of this Statement of Additional Information, has authorized the
issuance of two classes of shares: Class A and Class B.
Unless otherwise required by the 1940 Act or the Agreement and
Declaration of Trust (the "Declaration of Trust"), the Fund has no intention
of holding annual meetings of shareholders. Shareholders may remove a
Trustee by the affirmative vote of at least two-thirds of the Fund's
outstanding shares and the Trustees shall promptly call a meeting for such
purpose when requested to do so in writing by the record holders of not less
than 10% of the outstanding shares of the Trust. Shareholders may, under
certain circumstances communicate with other shareholders in connection with
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requesting a special meeting of shareholders. However, at any time that less
than a majority of the Trustees holding office were elected by the
shareholders, the Trustees will call a special meeting of shareholders for
the purpose of electing Trustees.
The Declaration of Trust permits the issuance of series of shares
in addition to the Fund which would represent interests in separate
portfolios of investments. No series would be entitled to share in the asset
of any other series or be liable for the expenses or liabilities of any
other series.
In addition to the requirements under Delaware law, the
Declaration of Trust provides that shareholders 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 to 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.
Shareholder and Trustee Liability
The Fund is organized as a Delaware business trust, and, under
Delaware law, the shareholders of such a trust are not generally subject to
liability for the debts or obligations of the trust. Similarly, Delaware law
provides that the Fund will not be liable for the debts or obligations of
any other series of the trust. However, no similar statutory or other
authority limiting business trust shareholder liability exists in many other
states. As a result, to the extent that a Delaware business trust or a
shareholder is subject to the jurisdiction of courts in such other states,
the courts may not apply Delaware law and may thereby subject the Delaware
business trust shareholders to liability. To guard against this risk, the
Declaration of Trust contains an express disclaimer of shareholder liability
for acts or obligations of the Fund. Notice of such disclaimer will normally
be given in each agreement, obligation or instrument entered into or
executed by the Fund or a Trustee. The Declaration of Trust provides for
indemnification by the Fund for any loss suffered by a shareholder as a
result of an obligation of the Fund. The Declaration of Trust also 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. The Trustees believe that, in view of the above, the
risk of personal liability of shareholders is remote.
The Declaration of Trust further provides that the Trustees will
not be liable for errors of judgment or mistakes of fact or law, but nothing
in the Declaration of Trust protects a Trustee against any liability to
which he or she would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved in
the conduct of his or her office.
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 on the New York Stock Exchange
(the "Exchange") (currently 4:00 p.m., Eastern Time) on each day the
Exchange is open for business. 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, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
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<PAGE>
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 that the current net asset value
per share might be materially affected by changes in the value of its
portfolio securities. On any day in which no purchase orders for the shares
of the Fund become effective and no shares are tendered for redemption, the
Fund's net asset value per share may not be determined.
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
it by the number of outstanding shares of the class. For purposes of
determining net asset value, expenses of the classes of the Fund are accrued
daily and taken into account.
In determining the value of the assets of the Fund for the purpose
of obtaining the net asset value, securities listed or traded on a national
or foreign securities exchange shall be valued at their last sales price on
the day of valuation or, if there are no sales on that day, at the latest
bid quotation. Equity securities traded over-the-counter for which the last
sales price on the day of valuation is available shall be valued at that
price. All other over-the-counter equity securities for which reliable
quotations are readily available shall be valued at their latest bid
quotation. Convertible securities traded over-the-counter for which reliable
quotations are readily available shall be valued on the basis of valuations
furnished by pricing services which utilize electronic data processing
techniques to determine the valuations for normal institutional-size trading
units of such securities. Securities not valued by the pricing service for
which reliable quotations are readily available, shall be valued at market
values furnished by recognized dealers in such securities. Short-term
obligations with remaining maturities of 60 days or less shall be valued at
amortized cost. Securities and other assets for which reliable quotations
are not readily available, shall be valued at their fair value as determined
in good faith under consistently applied guidelines established by and under
the general supervision of the Board of Trustees of the Fund, although the
actual calculations may be made by persons acting pursuant to the direction
of the Board.
The Fund's maximum offering price per Class A share is determined
by adding the maximum sales charge to the net asset value per Class A share.
Class B shares are offered at net asset value without the imposition of an
initial sales charge.
14. SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan ("SWP"), which is available for
Class A Shares only, is designed to provide a convenient method of receiving
fixed payments at regular intervals from Class A 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 checks of $50 or more will be sent to the
applicant, or any person designated by him, monthly or quarterly. A
designation of a third party to receive checks requires an acceptable
signature guarantee. The CDSC on any shares subject to a CDSC (see "How to
Buy Fund Shares" in the Prospectus) may be waived or reduced for
non-retirement accounts if the redemption is made in connection with a SWP
(limited in any year to 10% of the value of the account at the time the
withdrawal plan is established).
Any income dividends or capital gains distributions on shares
under the SWP will be credited to the Plan account on the payment date in
full and fractional shares at the net asset value per share in effect on the
record date.
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SWP payments are made from the proceeds of the redemption of
shares deposited under the SWP in a SWP account. Redemptions are taxable
transactions to shareholders. 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. 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 Plan
have been redeemed.
15. LETTER OF INTENTION
Purchases in a Fund of $50,000 or over of Class A Shares
(excluding any reinvestments of dividends and capital gains distributions)
made within a 13-month period pursuant to a Letter of Intention provided by
PFD will qualify for a reduced sales charge. Such reduced sales charge will
be the charge that would be applicable to the purchase of all Class A Shares
purchased during such 13-month period pursuant to a Letter of Intention had
such shares been purchased all at once. See "How to Buy Fund Shares" in the
Prospectus. For example, a person who signs a Letter of Intention providing
for a total investment in Fund Class A Shares of $50,000 over a 13-month
period would be charged at the 4.50% sales charge rate with respect to all
purchases during that period. Should the amount actually purchased during
the 13-month period be more or less than that indicated in the Letter, an
adjustment in the sales charge will be made. A purchase not made pursuant to
a Letter of Intention may be included thereafter if the Letter is filed
within 90 days of such purchase. Any shareholder may also obtain the reduced
sales charge by including the value (at current offering price) of all the
Class A Shares of record he holds in the Fund and in all other Pioneer
mutual funds, except direct purchases of the Class A shares of Pioneer Money
Market Trust, as of the date of the Letter of Intention as a credit toward
determining the applicable scale of sales charge for the Class A Shares to
be purchased under the Letter of Intention.
The Letter of Intention authorizes PSC to escrow Class A Shares
having a purchase price equal to 5% of the stated investment specified in
the Letter of Intention. A Letter of Intention is not a binding obligation
upon the investor to purchase, or the Fund to sell, the full amount
indicated and the investor should carefully read the provisions of the
Letter of Intention set forth in the Account Application before signing.
16. INVESTMENT RESULTS
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 rankings prepared by Lipper
Analytical Services, Inc., a widely recognized independent service which
monitors mutual fund performance; the Standard & Poor's 500 Stock Index
("S&P 500"), an index of unmanaged groups of common stock; the Dow Jones
Industrial Average, a recognized unmanaged index of common stocks of 30
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industrial companies listed on the New York Stock Exchange; or The Frank
Russell Indexes ("Russell 1000," "2000," "2500," "3000,") or the Wilshire
Total Market Value Index ("Wilshire 5000"), two recognized unmanaged indexes
of broad based common stocks.
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,
Consumers Digest, Consumer Reports, Financial World, Forbes, Fortune,
Investors Business Daily, Kiplinger's Personal Finance Magazine, Money
Magazine, 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 Markets, CDA/Wiesenberger, Donoghue's Mutual Fund
Almanac, Investment Company Data, Inc., Johnson's Charts, Kanon Bloch Carre
and Co., Lipper Analytical Services, Inc., Micropal, Inc., Morningstar,
Inc., Schabacker Investment Management and Towers Data Systems, Inc.
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.
Standardized Average Annual Total Return Quotations
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 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.
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The Fund's average annual total return quotations for each of its
classes as that information may appear in the Fund's Prospectus or in
advertising are calculated by standard methods prescribed by the Securities
and Exchange Commission (the "SEC").
Average annual total return quotations for Class A and Class B
Shares are computed by finding the average annual compounded rates of return
that would cause a hypothetical investment in the 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 the CDSC for Class B shares at the end of
the period.
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical
$1000 initial payment made at the beginning of
the designated period (or fractional portion
thereof)
For purposes of the above computation, it is assumed 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%. The one-, five-, ten-year and life-of-Fund
average annual total returns for the Class A shares of the Fund as of
December 31, 1994 were -8.20%, 8.44%; 13.52% and 7.62%.
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 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 Fund's mean account size.
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 funds; and
o dividends and capital gains distributions on all Pioneer mutual
funds.
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Yields are calculated in accordance with SEC mandated standard
formulas.
In addition, by using a personal identification number ("PIN "),
shareholders may enter purchases, exchanges and redemptions, access their
account balance 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 figures for all bond funds 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 and Class B Shares (except for
Pioneer money market funds, which seek 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. GENERAL INFORMATION
The Fund is registered with the SEC as a diversified open-end
management investment company. Such registration does not involve supervision by
the SEC of the management or policies of the Fund. For further information with
respect to the Fund and the securities offered hereby, reference is made to the
registration statement filed with the SEC, including all exhibits thereto.
Annual and semiannual reports of the Fund are mailed to each shareholder.
18. FINANCIAL STATEMENTS
The audited financial statements and related report of Arthur
Andersen LLP contained in the Fund's 1994 Annual Report are attached hereto. A
copy of the Annual Report which is incorporated by reference herein may be
obtained without charge by calling Shareholder Services at 1-800-225-6292 or by
written request to the Fund at 60 State Street, Boston, Massachusetts 02109.
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APPENDIX A
Other Pioneer Information
The Pioneer family of mutual funds was established in 1928 with the
creation of Pioneer Fund. Pioneer is one of the oldest, most respected and
successful money managers in the United States.
As of December 31, 1994, PMC employed a professional investment staff
of 46, with a combined average of 14 years' experience in the financial services
industry.
At December 31, 1994, there were 591,192 non-retirement shareholder
accounts and 337,577 retirement shareholder accounts in the Pioneer's funds.
Total assets for all Pioneer Funds at December 31, 1994 were $10,038,000,000
representing 928,769 shareholder accounts.
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S&P 500 *
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P Composite Index
includes 500 of the largest stocks (in terms of stock market value) in the
United States; prior to March 1957 it consisted of 90 of the largest stocks.
DOW JONES INDUSTRIAL AVERAGE *
This is a total return index based on the performance of 30 blue chip stocks.
SMALL CAPITALIZATION STOCKS *
This index is a market value weighted index of the ninth and tenth deciles of
the New York Stock Exchange (NYSE), plus stocks listed on the American Stock
Exchange (AMEX) and over-the-counter (OTC) with the same or less capitalization
as the upper bound of the NYSE ninth decile.
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 Index 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."
LONG-TERM MUNICIPAL BOND PORTFOLIO *
For 1926-1984, returns are calculated form yields on 20-year prime issues from
Solomon Brothers' Analytical Record of Yields and Yields Spreads, assuming
coupon equals previous year-end yield and a 20-year maturity. For 1985-present,
returns are calculated using Moody's Bond Record, using the December average
municipal yield as the beginning-of-following year coupon (average of Aaa, Aa,
A, Baa grades).
LONG-TERM CORPORATE BONDS *
For 1969-1991, corporate bond total returns are represented by the Salomon
Brothers Long-Term High-Grade Corporate Bond Index. Since 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. 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.
Over 1926-1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946-1968, Ibbotson
and Sinquefield backdated the Salomon Brothers' index, using Salomon Brothers'
monthly yield data with a methodology similar to that used by Salomon for
1969-1991. Capital appreciation returns were calculated from yields assuming (at
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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 1926-1945, the Standard and Poor's monthly High-Grade Corporate Composite
yield data were used, assuming a 4 percent 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 Randolph W. Westerfield, 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.
LONG-TERM GOVERNMENT BOND TOTAL RETURN *
The total returns on long-term government bonds from 1977 to 1991 are
constructed with data from The Wall Street Journal. Over 1926-1976, 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. Total returns
for 1977-1991 are calculated as the change in the flat price or and-interest
price.
INTERMEDIATE-TERM GOVERNMENT BONDS TOTAL RETURN *
Total returns of the intermediate-term government bonds for 1977-1991 are
calculated from The Wall Street Journal prices, using the change in flat price.
Returns from 1934-1986 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 5 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 1934-1942, almost all bonds
with maturities near 5 years were partially or full 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 1926-1933, there are few bonds suitable for construction of a series
with a 5-year maturity. For this period, five year bond yield estimates are
used.
U.S. (30 DAY) TREASURY BILL TOTAL RETURNS *
For the U.S. Treasury bill index, data from The Wall Street Journal are used for
1977-1991; the CRSP U.S. 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.
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 1963-1987 and The Wall Street Journal for the years 1988-1994.
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6 MONTH CD **
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
MSCI
Morgan Stanley Capital International Indices, developed by the Capital
International S.A., are based on share prices of some 1470 companies listed on
the stock exchanges around the world.
Countries in the MSCI EAFE Portfolio *are: Australia; Austria; Belgium; Denmark;
Finland; France; Germany; Hong Kong; Italy; Japan; Netherlands; N. Zealand;
Norway; Singapore/Malaysia; Spain; Sweden; Switzerland; United Kingdom.
Countries in the MSCI EUROPE 14 Portfolio *** are: Austria, Belgium, Denmark,
Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Spain, Sweden,
Switzerland, United Kingdom
Countries in the MSCI WORLD Portfolio *** are: Australia; Austria; Belgium;
Canada; Denmark; Finland; France; Germany; Hong Kong; Italy; Japan; Netherlands;
N. Zealand; Norway; Singapore/Malaysia; Spain; Sweden; Switzerland; United
Kingdom; United States.
INTERNATIONAL FINANCE CORPORATION COMPOSITE *
An index representing the performance of a composite of Latin America
(Argentina, Brazil, Chile, Columbia, Mexico, Peru, Venezuela), East Asia (China,
Korea, Philippines, Taiwan), South Asia (India, Indonesia, Malaysia, Pakistan,
Sri Lanka, Thailand), Europe/Mideast/Africa (Greece, Hungary, Jordan, Nigeria,
Poland, Portugal, Turkey, Zimbabwe).
Sources: * Ibbotson Associates
** Towers Data Systems
*** Lipper Analytical Services
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