File No. 2-28274
File No. 811-01604
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for Use
of the Commission
Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Pioneer Growth Shares
-----------------------------------------------
(Name of Registrant as Specified in Its Charter
Pioneer Growth Shares
----------------------------------------------
(Name of Person(s) Filing Proxy Statement)
<PAGE>
Pioneer Growth Shares
60 State Street
Boston, MA 02109
February 1998
Dear Fellow Shareowner,
I am writing to let you know that a special meeting will be held April 21, 1998
for shareowners of Pioneer Growth Shares (the Fund) to vote on a number of
important proposals. As a shareowner in the Fund, you have the opportunity to
voice your opinion on these matters.
This package contains information about the proposals, along with a yellow proxy
card for you to vote by mail. Please take a moment to read the enclosed
materials and cast your vote using the proxy card.
Your prompt vote will help save money. If a majority of shareowners have not
voted prior to the meeting, we must try to obtain their votes with additional
mailings or phone solicitation. Both of these are costly processes.
(callout in margin) VOTING YOUR SHARES BY MAIL IS QUICK AND EASY. EVERYTHING YOU
NEED IS ENCLOSED.
Each of the proposals has been reviewed by the Fund's Board of Trustees, whose
primary role is to protect your interests as a shareowner. In the Trustees'
opinion, the proposals are fair and reasonable.
The Trustees recommend that you vote FOR each proposal.
(callout in margin) THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR EACH
PROPOSAL.
HERE IS WHAT A FOR VOTE MEANS FOR EACH OF THE PROPOSALS.
PROPOSAL 1:
APPROVE A NEW MANAGEMENT CONTRACT WITH PIONEERING MANAGEMENT CORPORATION (PMC),
including a performance-based management fee. Depending upon the Fund's
investment performance, relative to a selected securities index, the fee paid by
the Fund may be lower or higher than the proposed basic fee. The proposed basic
fee is higher than the management fee currently paid by the Fund to PMC.
PROPOSAL 2:
ELECT NINE TRUSTEES TO THE BOARD. The Trustees supervise the Fund's activities
and review contractual arrangements with companies that provide services to the
Fund. All of the nominees currently serve as Trustees.
PROPOSALS 3(A) THROUGH 3(J):
MODERNIZE CERTAIN INVESTMENT RESTRICTIONS to conform to current standards in the
mutual fund industry. The Trustees believe the proposed changes are appropriate
and necessary to provide future flexibility in the Fund's investment operations.
For details on each of the proposed changes, we encourage you to review the
enclosed Proxy Statement.
PROPOSAL 4:
RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP as the Fund's independent public
accountants for the fiscal year ending December 31, 1998.
<PAGE>
Cast your vote by completing and signing the proxy card. Please mail your
completed and signed proxy as quickly as possible, using the postage-paid
envelope provided.
(callout in margin) PLEASE VOTE! YOUR VOTE IS EXTREMELY IMPORTANT, NO MATTER HOW
MANY SHARES YOU OWN.
Please feel free to call Pioneer at 1-800-225-6292 if you have any questions
about the proposals or the process for voting your shares. Thank you for your
prompt response.
Sincerely,
John F. Cogan, Jr.
Chairman and President
1097-4517
<PAGE>
PIONEER GROWTH SHARES
60 State Street
Boston, Massachusetts 02109
1-800-225-6292
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, APRIL 21, 1998
A Special Meeting of Shareholders of Pioneer Growth Shares, a Delaware
business trust (the "Fund"), will be held at the offices of Hale and Dorr LLP,
60 State Street, 26th Floor, Boston, Massachusetts 02109, at 2:00 p.m., Boston
time, on Tuesday, April 21, 1998, to consider and act upon the following
proposals:
1. To approve a new Management Contract between the Fund and Pioneering
Management Corporation, the Fund's investment adviser ("PMC"),
increasing the rate at which management fees are payable to PMC;
2. To elect the nine (9) Trustees named in the attached Proxy Statement to
serve on the Board of Trustees until their successors have been duly
elected and qualified;
3. To approve amendments to the Fund's fundamental investment policies, as
described in the proxy statement;
4. To ratify the selection of Arthur Andersen LLP as the Fund's
independent public accountants for the fiscal year ending December 31,
1998; and
5. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Shareholders of record as of the close of business on
February 20, 1998, are entitled to vote at the meeting or any adjournments
thereof. The Proxy Statement and proxy card are being mailed to shareholders on
or about March 2, 1998.
By Order Of The Board of Trustees
Joseph P. Barri, Secretary
Boston, Massachusetts
March 2, 1998
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE AND
RETURN THE ENCLOSED PROXY CARD. YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE
MEETING.
<PAGE>
PIONEER GROWTH SHARES
60 State Street
Boston, Massachusetts 02109
1-800-225-6292
SPECIAL MEETING OF SHAREHOLDERS
APRIL 21, 1998
PROXY STATEMENT
This Proxy Statement is furnished to shareholders of Pioneer Growth
Shares, a Delaware business trust (the "Fund"), in connection with the
solicitation of proxies by the Board of Trustees for use at the Special Meeting
of Shareholders of the Fund, to be held at the offices of Hale and Dorr LLP, 60
State Street, 26th Floor, Boston, Massachusetts 02109, at 2:00 p.m., Boston
time, on Tuesday, April 21, 1998, and at any adjournments thereof (the
"Meeting"). This Proxy Statement and enclosed proxy are being mailed to
shareholders on or about March 2, 1998. The Fund's Annual Report for its fiscal
period ended December 31, 1997, has previously been mailed to shareholders.
Additional copies of these reports may be obtained free of charge by writing to
the Fund at its executive offices, 60 State Street, Boston, Massachusetts 02109
or by calling 1-800-225-6292.
Shareholders of record as of the close of business on February 20,
1998, (the "Record Date") are entitled to vote on all business of the Meeting or
any adjournments thereof. As of the Record Date, there were [ ] outstanding
shares of beneficial interest of the Fund. To the knowledge of the management of
the Fund, no person beneficially owned more than 5% of the outstanding shares of
the Fund as of the December 31, 1997, except that Tommie D. Thompson TTEE For
Mutual of Omaha 401K Long-Term Savings Plan, Mutual of Omaha Plaza, PL-Benefits
Dept/Tim Bormann, Omaha, NW 68175-0001, owned 2,949,836.434 (6.24%) shares.
PROPOSAL 1
APPROVAL OF NEW MANAGEMENT CONTRACT
Summary
Pioneering Management Corporation ("PMC") has served as the Fund's
investment adviser since December 1, 1993. PMC serves as the investment adviser
for the Pioneer family of mutual funds and for certain other institutional
accounts. PMC, a registered investment adviser under the Investment Advisers Act
of 1940, as amended, is a wholly owned subsidiary of The Pioneer Group, Inc.
("PGI"), a Delaware corporation with publicly traded shares. PGI is located at
60 State Street, Boston, Massachusetts 02109.
At the meeting held on January 8, 1998, the Trustees, including all of
the Trustees who are not "interested persons" of the Fund or PMC, unanimously
approved and voted to recommend that the shareholders of the Fund approve a
proposal to terminate the Fund's existing Management Contract between PMC and
the Fund (the "Existing Contract") and to adopt a new Management Contract (the
"Proposed Contract"). The Existing Contract and the Proposed Contract are also
each referred to below as a "Contract." Under the Proposed Contract, there will
be an increase in the basic rate of management fees paid by the Fund to PMC. As
described more fully below, depending upon the Fund's investment performance
relative to a selected securities index, this basic fee will be increased or
decreased. In all cases, the fee ultimately paid by the Fund will be higher than
that paid under the Existing Contract.
Terms of Existing and Proposed Management Contracts
Except for the different fee rates, effective dates and renewal dates,
the terms of the Existing and Proposed Contracts are substantially identical.
Pursuant to the terms of each Contract, 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 Board of Trustees. PMC is
authorized to buy and sell securities for the account of the Fund and to
designate brokers to carry out such transactions. PMC may not make any purchase
the cost of which exceeds funds currently available for the Fund and may not
make any purchase which would violate any fundamental policy or restriction in
the Fund's Prospectus or Statement of Additional Information as in effect from
time to time.
Under each Contract, PMC pays all expenses, including executive
salaries and the rental of office space, related to its services for the Fund
with the exception of the following which are paid by the Fund: (i) charges and
expenses for fund accounting, pricing and appraisal services and related
overhead, including, to the extent such services are performed by personnel of
PMC or its affiliates, office space and facilities and personnel compensation,
training and benefits, (ii) the charges and expenses of auditors, (iii) the
charges and expenses of any custodian, transfer agent, plan agent, dividend
disbursing agent and registrar appointed by the Fund with respect to 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 of its shares with the U.S. Securities
and Exchange Commission (the "Commission"), state securities agencies and
foreign jurisdictions, including the preparation of prospectuses and statements
of additional information for filing with such regulatory agencies, (vii) all
expenses of shareholders' and Trustees' meetings and of preparing, printing and
distributing prospectuses, notices, proxy statements and all reports to
shareholders and to governmental agencies, (viii) charges and expenses of legal
counsel to the Fund and the Trustees, (ix) if applicable, distribution fees paid
by the Fund pursuant to a Plan of Distribution in accordance with Rule 12b-1
promulgated by the Commisson pursuant to the Investment Company Act of 1940, as
amended (the "1940 Act"), (x) compensation of those Trustees of the Fund who are
not affiliated with or interested persons of PMC, the Fund (other than as
Trustees), PGI, or Pioneer Funds Distributor, Inc., the Fund's principle
underwriter ("PFD"), (xi) the cost of preparing and printing share certificates,
and (xii) interest on borrowed money, if any. The Fund will pay all brokers' and
underwriting commissions chargeable to the Fund in connection with securities
transactions to which the Fund is a party.
The Existing Contract was approved by the shareholders of the Fund on
November 23, 1993, in connection with the acquisition of the Fund from another
mutual fund group. The Existing Contract was approved by the Fund's Board and
its renewal was most recently approved by the Board at a meeting held in April,
1997. Each Contract is renewable annually by the vote of a majority of the
Fund's Board, including a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) of the Fund, PMC or PFD, cast in person at
a meeting called for the purpose of voting on such renewal. Each Contract
terminates if assigned (as defined in the 1940 Act) and may be terminated
without penalty by either party by vote of its Board or a majority of the Fund's
outstanding voting securities and upon 60 days' written notice.
As compensation for its management services and certain expenses which
PMC incurs on behalf of the Fund, the Fund pays PMC an annual management fee
under the Existing Contract equal to 0.50% of the Fund's average daily net
assets up to $250 million, 0.48% of the next $50 million, and 0.45% of the
excess over $300 million. This fee is computed daily and paid monthly.
Proposed Management Contract
The terms of the Proposed Contract differ materially from those of the
Existing Contract in respect of the management fees payable to PMC and in
certain other respects described below.
Basic Fee Increase
As compensation for its management services and certain expenses which
PMC incurs on behalf of the Fund, the Fund would pay PMC an annual management
fee under the Proposed Contract (the "Basic Fee") equal to 0.70% of the Fund's
average daily net assets up to $1 billion, 0.675% of the next $4 billion, 0.65%
of the next $5 billion and 0.575% of the excess over $10 billion. The Basic Fee
would be computed daily and paid monthly.
The Basic Fee represents an increase in the management fee rate payable
to PMC over the rates under the Existing Contract. The Board determined that the
Basic Fee is fair and reasonable, both apart from and together with the
application of the performance fee adjustment described below. That adjustment
provides for increases or decreases in the Basic Fee, based upon the Fund's
performance.
The effective date of the Proposed Contract is expected to be May 1,
1998, (the "Effective Date"). Accordingly, the Basic Fee will take effect on the
Effective Date if the Proposed Contract is adopted at the Meeting.
Performance Fee Adjustment
The Board of Trustees is proposing the implementation of a performance
adjustment which will either increase or decrease the monthly Basic Fee paid by
the Fund to PMC based on the performance of the Fund as compared to the
investment record (the "record") of a securities index determined by the
Trustees to be appropriate over the same period. The Trustees initially have
designated the Lipper Growth Funds Index (the "Index") for this purpose. The
Index is an equally-weighted performance index adjusted for income dividends and
capital gains distributions comprised of the 30 largest funds listed by Lipper
Analytical Services, Inc. as having an investment objective of growth.
From time to time, the Trustees may determine that another securities
index is a more appropriate benchmark than the Index for purposes of evaluating
the performance of the Fund. In such event, a successor index may be substituted
for the Index in prospectively calculating the performance based adjustment to
the Basic Fee. However, the calculation of the performance adjustment for any
portion of the performance period prior to the adoption of the successor index
would still be based upon the Fund's performance compared to the Index.
It is not possible to predict the effect of the performance adjustment
on the overall compensation to PMC in the future since it will depend on the
performance of the Fund relative to the record of the Index.
The Board determined that it would be appropriate to increase PMC's
compensation when the Fund's performance exceeds that of an objective index and,
conversely, to reduce PMC's compensation when the Fund's performance is poorer
than the record of that index. The Index was deemed appropriate for this
comparison because it is broad-based and because the Index is composed of funds
with similar investment objectives and policies to those of the Fund. The Board
believes that a performance adjustment is appropriate for the Fund and that
providing incentives to PMC based on its performance benefits shareholders.
The Board is proposing that there be a performance adjustment which
would increase or decrease the Basic Fee based on the performance of the Class A
Shares of the Fund calculated at net asset value. The Basic Fee would be subject
to upward or downward adjustment depending on whether, and to what extent, the
investment performance of the Class A Shares of the Fund for the relevant
performance period exceeds, or is exceeded by, the record of the Index over the
same period. This performance comparison would be made at the end of each month.
Each percentage point of difference (up to a maximum difference of +/- 0.10
percentage points) would be multiplied by a performance adjustment rate of
0.01%. The maximum adjustment rate is therefore +/- 0.10%. An appropriate
percentage of this rate (based upon the number of days in the current month)
would then be multiplied by the average daily net assets of the Fund over the
entire performance period, giving the dollar amount which will be added to (or
subtracted from) the Basic Fee. The monthly performance adjustment will be
further adjusted to the extent necessary to insure that the total annual
adjustment to the Basic Fee does not exceed +/- 0.10% of average daily net
assets for that year.
Implementation of Performance Adjustment. The Board is proposing that
the performance adjustment be implemented on a date occurring twelve months
after the Effective Date. Thus, during the initial twelve-month period, the
Basic Fee would remain unadjusted. During the following twenty-four months, Fund
performance would be measured over an increasing period covering the current
month and the prior months dating back to the Effective Date (the "performance
period"). Beginning in the thirty-sixth month, the duration of the Fund's
performance period would become fixed. Thereafter, Fund performance would be
measured over a rolling thirty-six-month period covering the current month and
the prior thirty-five months.
Application of Performance Adjustment. The application of the
performance adjustment is illustrated by the following hypothetical example,
assuming that the net asset value of the Fund and the level of the Index were
$10 and 100, respectively, on the first day of the performance period.
Investment Performance* Cumulative Change
---------------------------- ----------------------------
Fund Index
First Day $10 100
End of Period $13 123
Absolute Change +$ 3 +23
Percentage Change +30% +23%
* Reflects performance at net asset value. Any dividends or capital gains
distributions paid by the Fund are treated as if reinvested in shares of the
Fund at net asset value as of the payment date and any dividends paid on the
securities which comprise the Index are treated as if reinvested on the
ex-dividend date.
The difference in relative performance for the performance period is +7
percentage points. Accordingly, the annualized management fee rate for the last
month of the performance period would be calculated as follows: an appropriate
percentage of the Basic Fee rate (based upon the number of days in the month) of
0.70% (assuming Fund assets of up to $1 billion) would be multiplied by the
Fund's average daily net assets for the month resulting in a dollar amount. The
+7 percentage point difference is multiplied by the performance adjustment rate
of 0.01% producing a rate of 0.07%. An appropriate percentage of this rate
(based upon the number of days in the month) is then multiplied by the average
daily net assets of the Fund over the performance period resulting in a dollar
amount which is added to the dollar amount of the Basic Fee. The management fee
paid is the Basic Fee adjusted by the dollar amount of the performance
adjustment calculated for the performance period. If the investment performance
of the Index during the performance period exceeded the performance record of
the Fund, the dollar amount of the performance adjustment would be deducted from
the Basic Fee.
Because the adjustment to the Basic Fee is based on the comparative
performance of the Fund and the record of the Index, the controlling factor is
not whether Fund performance is up or down, but whether it is up or down more or
less than the record of the Index. Moreover, the comparative investment
performance of the Fund is based solely on the relevant performance period
without regard to the cumulative performance over a longer or shorter period of
time.
The Basic Fee will take effect on the Effective Date if the Proposed
Contract is adopted at the Meeting. Accordingly, (1) from May 1, 1998 through
April 30, 1999 the Fund will pay management fees at a rate equal to the Basic
Fee; (2) from May 1, 1999 through April 30, 2001, the Fund will pay management
fees at a rate equal to the Basic Fee plus or minus the amount of the
performance adjustment based upon the current month and the preceding months
dating back to the Effective Date; and (3) beginning on May 1, 2001, the Fund
will pay management fees at a rate equal to the Basic Fee plus or minus the
amount of the performance adjustment based upon the current month and the
preceding thirty-five months. Because the performance adjustment will be
calculated no earlier than twelve months after the Effective Date and because
the performance adjustment will not reflect the Fund's performance prior to the
Effective Date, the effect of the initial performance adjustment (and all
subsequent adjustments) is unknown and cannot reasonably be estimated at the
time of this proposal.
Effect of the New Management Fee Structure
Under the Existing Contract, the Fund paid management fees at an
effective annual rate of 0.48% based on average daily net assets of $503,702,153
for the twelve months ended December 31, 1997. Under the Proposed Contract, at
this asset level, assuming implementation of the performance adjustment, the
Fund would pay a maximum annual fee of 0.80% and a minimum annual fee of 0.60%
based upon the Fund's performance relative to the Index as described above.
Set forth below is a chart showing the dollar amount of management fees
paid during the Fund's fiscal year ended December 31, 1997 under the Existing
Contract and the amount of fees that would have been paid under the Proposed
Contract at the maximum, Basic and minimum fee rates. The chart also shows the
percentage differences between the amounts that would have been paid under the
Proposed Contract and the amount actually paid under the Existing Contract. Also
set forth below is a comparative fee table showing the amount of fees and
expenses paid by the Fund under the Existing Contract as a percentage of average
net assets and the amount of fees and expenses shareholders would have paid if
the maximum, Basic and minimum fees under the Proposed Contract had been in
effect. The figures shown for the Basic Fee represent the amounts that actually
would have been paid had the Proposed Contract been in effect.
DOLLAR AMOUNT OF MANAGEMENT FEES PAID
(fiscal year ended December 31, 1997)
Proposed Contract
Existing
Contract Maximum Basic Minimum
Amount of Fees Paid or that
Would Have Been Paid
$2,401,013 $4,029,617 $3,525,915 $3,022,213
Percentage Difference from
Amount Paid under Existing
Contract N/A +67.83% +46.85% +25.87%
COMPARATIVE FEE TABLES
(fiscal year ended December 31, 1997)
Annual Fund Operating Expenses
(as a percentage of average net assets)
Class A Shares
Proposed Contract
Existing
Fee Maximum Basic Minimum
Management Fee 0.48 0.80 0.70 0.60
12b-1 Fees 0.25 0.25 0.25 0.25
Other Expenses 0.24 0.24 0.24 0.24
Total Fund Operating Expenses 0.97 1.29 1.19 1.09
Class B Shares
Proposed Contract
Existing
Fee Maximum Basic Minimum
Management Fee 0.48 0.80 0.70 0.60
12b-1 Fees 1.00 1.00 1.00 1.00
Other Expenses 0.24 0.24 0.24 0.24
Total Fund Operating Expenses 1.72 2.04 1.94 1.84
Class C Shares
Proposed Contract
Existing
Fee Maximum Basic Minimum
Management Fee 0.48 0.80 0.70 0.60
12b-1 Fees 1.00 1.00 1.00 1.00
Other Expenses 0.15 0.15 0.15 0.15
Total Fund Operating Expenses 1.63 1.95 1.85 1.75
Examples
The following examples illustrate the expenses on a $1,000 investment
under the existing and proposed maximum, Basic and minimum fees stated above,
assuming a 5% annual return and constant expenses, with or without redemption at
the end of each time period:
Class A Shares
1 year 3 years 5 years 10 years
------ ------- ------- --------
Existing Fee $67 $87 $108 $170
Proposed Fee:
Maximum $70 $96 $124 $204
Basic $69 $93 $119 $194
Minimum $68 $90 $114 $183
Class B Shares
(assuming complete redemption at end of period)
1 year 3 years 5 years 10 years
------ ------- ------- --------
Existing Fee $57 $84 $113 $183*
Proposed Fee:
Maximum $61 $94 $130 $218
Basic $60 $91 $125 $207
Minimum $59 $88 $120 $196
Class B Shares
(assuming no redemption)
1 year 3 years 5 years 10 years
------ ------- ------- --------
Existing Fee $17 $54 $93 $183*
Proposed Fee:
Maximum $21 $64 $110 $218
Basic $20 $61 $105 $207
Minimum $19 $58 $100 $196
Class C Shares**
(assuming complete redemption at end of period)
1 year 3 years 5 years 10 years
------ ------- ------- --------
Existing Fee $27 $51 $89 $193
Proposed Fee:
Maximum $30 $61 $105 $227
Basic $29 $58 $100 $217
Minimum $28 $55 $95 $206
Class C Shares
(assuming no redemption)
1 year 3 years 5 years 10 years
------ ------- ------- --------
Existing Fee $17 $51 $89 $193
Proposed Fee:
Maximum $20 $61 $105 $227
Basic $19 $58 $100 $217
Minimum $18 $55 $95 $206
- ---------------
*Class B shares convert to Class A shares eight years after purchase; therefore,
Class A expenses are used after year eight. **Class C shares redeemed during the
first year after purchase are subject to a 1% contingent deferred sales charge.
The purpose of these examples and tables is to assist shareholders in
understanding the various costs and expenses of investing in shares of the Fund.
The examples above should not be considered representations of past or future
expenses of the Fund. Actual expenses may be higher or lower than those shown
above.
Other Provisions under the Existing and Proposed Contracts
Standard of Care. Under each Contract, PMC "will not be liable for any
error of judgment or mistake of law or for any loss sustained by reason of the
adoption of any investment policy or the purchase, sale or retention of any
security on the recommendation of [PMC] . . . ." PMC, however, shall not be
protected against liability by reason of its ". . . willful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement."
PMC's Authority. Each Contract provides that PMC shall have full
discretion to act for the Fund in connection with purchase and sale transactions
subject only to the Declaration of Trust, Bylaws, currently effective
registrations under the 1940 Act and the Securities Act of 1933, as amended (the
"1933 Act"), investment objective, policies and restrictions of the Fund in
effect from time to time, and specific policies and instructions established
from time to time by the Trustees.
Portfolio Trading. Each Contract expressly permits PMC to engage in
such activity. For a more detailed description of the Fund's current portfolio
brokerage practices, see the Appendix.
Expense Limitation. Each Contract provides that if the operating
expenses of the Fund exceed the limits established by state "blue sky"
administrators, PMC's fee will be reduced (but not below $0) to the extent
required by such limits. No such limits are currently in force. Each Contract
also provides that PMC may from time to time agree not to impose all or a
portion of its fee or otherwise take action to reduce expenses of the Fund. Any
such fee limitation or expense reduction is voluntary and may be discontinued or
modified by PMC at any time.
Other Provisions. Each Contract includes provisions that provide that:
(i) the law of The Commonwealth of Massachusetts shall be the governing law of
the Contract; (ii) PMC is an independent contractor and not an employee of the
Fund; (iii) the Contract is the entire agreement between the parties with
respect to the matters described therein; (iv) the Contract may be executed
using counterpart signature pages; (v) invalid or unenforceable provisions of
the Contract are severable and do not render the entire agreement invalid or
unenforceable; (vi) the Fund may pay for charges and expenses of counsel to the
"non-interested" Trustees as well as counsel to the Fund; and (vii) subject to
obtaining best execution, PMC may consider sales of other Pioneer mutual funds
when selecting brokers and dealers to execute the Fund's securities
transactions.
Miscellaneous
If approved, the Proposed Contract will become effective on May 1, 1998
(or on the date of approval if approved after that date) and will continue in
effect until May 31, 1999, and thereafter will continue from year to year
subject to annual approval by the Board of Trustees in the same manner as the
Existing Contract. The Proposed Contract terminates if assigned (as defined in
the 1940 Act) and may terminate without penalty, upon sixty (60) days' written
notice, by either party, by vote of its Board or by a vote of a majority of the
outstanding voting securities of the Fund. The description of the Existing
Contract and the Proposed Contract set forth above and the other information
with respect to the Proposed Contract are qualified in their entirety by
reference to the form of Proposed Contract.
Additional Information Pertaining to PMC
For additional information concerning the management, ownership
structure, affiliations, brokerage policies and certain other matters pertaining
to PMC, see the Appendix.
Factors Considered by the Trustees
The Trustees determined that the terms of the Proposed Contract are
fair and reasonable and that approval of the Proposed Contract on behalf of the
Fund is in the best interests of the Fund. The Trustees considered a number of
factors in deciding to recommend an increase in the management fee and a
performance fee adjustment. At all times during the Trustees' deliberations,
which occurred during several Audit Committee meetings held over the course of
several months, they were advised by Fund counsel and their own independent
counsel. When the Trustees were presented with the proposed fee arrangements,
they requested and were furnished with substantial information to assist in
their evaluation. In addition, the Trustees commissioned and relied upon
independent studies prepared by Lipper Analytical Securities Corporation
("Lipper Analytical") and Morningstar.
After reviewing the information requested from and provided by PMC and
the reports of Lipper Analytical and Morningstar as described above, the
Trustees concluded that the present fee rate for services provided under the
Existing Contract which has not changed since the inception of the Fund in 1968,
was out of date and inappropriately low under present conditions. The Trustees
also concluded that the current fee does not reflect the existing competitive
situation within the comparable group of growth funds with which it competes. As
a result, and taking into consideration the information reviewed above and
requirements for excellence in investment management and research talent and
technology systems, it was concluded that the current fee schedule over time
would not provide appropriate resources to keep the Fund operating at the level
of service and performance presently provided to shareholders or make it
possible to improve the service and investment performance for the benefit of
shareholders in the future.
The Trustees also considered the addition of the performance aspect of
the fee, its structure and the Index on which it is based. They believed that it
provides an appropriate range of incentives for PMC and joins its interests with
those of the shareholders for good relative investment performance.
The Trustees determined that the Index was appropriate based upon a
number of factors, including the fact that the Index is broad-based and is
composed of funds with similar investment objectives and policies to those of
the Fund. It was anticipated that any divergence between the Fund's performance
and that of the Index could be attributed to PMC's skill in selecting securities
within the parameters established by the Fund's objectives and policies. Because
of the possible future development of an even more appropriate index for
measuring the Fund's performance, the Trustees believed it advisable to reserve
the ability to substitute a successor index for the Index; provided, in such
event, the calculation of the performance adjustment for any portion of the
performance period prior to the adoption of the successor index would still be
based upon the Fund's performance compared to the Index. In addition, because of
the posssible future identification of a more appropriate class of Fund shares
for comparison with the Index, the Trustees believed it advisable to reserve the
ability to substitute the class of Fund shares designated for the performance
comparison with the Index; provided, in such event, the calculation of the
performance adjustment for any portion of the performance period prior to the
designation of a successor class would still be based upon the performance of
the previously designated class of Fund shares.
The time periods to be used in determining any performance adjustment
were also judged to be of appropriate length to ensure proper correlation and to
prevent fee adjustments from being based upon random or insignificant
differences between the Fund and the Index. In this regard, the Trustees
concluded that it would be appropriate for the Basic Fee rate to remain
unadjusted for twelve months before implementation of the performance
adjustment, and that once implemented, the performance adjustment should reflect
only the Fund's performance subsequent to the Effective Date. Moreover, the
Trustees believed that upon reaching the thirty-sixth month, the performance
period would be fully implemented, and that the performance adjustment should
thereafter be based upon a thirty-six-month rolling performance period.
Based upon all of the above considerations, the Trustees determined
that both the Basic Fee and the amount of any performance adjustments would be
equitable and fair to the shareholders of the Fund and that their adoption will
make it more likely that the objectives of continued levels of good service and
investment performance currently and in the future will be achieved.
Trustees' Recommendation
Based on its evaluation of the materials presented and assisted by the
advice of independent counsel, the Trustees who were present at the meeting on
January 8, 1998, including a majority of the Trustees who are not "interested
persons" of the Fund or PMC, unanimously concluded that the Proposed Contract
was fair and reasonable and in the best interests of the Fund's shareholders and
by a vote cast at the meeting, approved and voted to recommend to the
shareholders of the Fund that they approve, the Proposal to terminate the
Existing Contract and to adopt the Proposed Contract.
Required Vote
Adoption of Proposal 1 requires the approval of a majority of the
outstanding voting securities of the Fund, which under the 1940 Act, is defined
to mean the affirmative vote of the lesser of (i) 67% or more of the shares of
the Fund represented at the Meeting, if at least 50% of all outstanding shares
of the Fund are represented at the Meeting, or (ii) 50% or more of the
outstanding shares of the Fund entitled to vote at the Meeting (a "1940 Act
Majority Vote").
If Proposal 1 is not approved by the shareholders of the Fund, the
Existing Contract will continue in effect.
FOR THE REASONS SET FORTH ABOVE, THE TRUSTEES RECOMMEND THAT THE
SHAREHOLDERS OF THE FUND VOTE IN FAVOR OF THE APPROVAL OF THE PROPOSED CONTRACT.
PROPOSAL 2.
ELECTION OF BOARD OF TRUSTEES
The persons named on the accompanying proxy card intend to vote at the
Meeting (unless otherwise directed) FOR the election of the nine (9) nominees
named below as Trustees of the Fund. All of the nominees currently serve as
Trustees.
Each Trustee will be elected to hold office until the next meeting of
shareholders or until his or her successor is elected and qualified. Each
nominee has consented to being named herein and indicated his or her willingness
to serve if elected. If any such nominee should be unable to serve, an event not
now anticipated, the persons named as proxies may vote for such other person as
shall be designated by the Board of Trustees.
The following table sets forth each nominee's position(s) with the
Fund, age, address, principal occupation or employment during the past five
years and directorships, and indicates the year during which he or she first
became a Trustee of the Fund. The table also shows the number of shares of
beneficial interest of the Fund beneficially owned by each nominee, directly or
indirectly, on December 31, 1997.
<TABLE>
<S> <C> <C> <C>
Name, Age, Position(s) with the First Shares of Beneficial
Fund and Address Became a Interest of the Fund
Trustee Beneficially Owned and
Percentage of Total
Shares Outstanding on
December 31, 1997(2)
John F. Cogan, Jr.* President, Chief Executive Officer and a 1993 3,944.936
(71) Director of The Pioneer Group, Inc. ("PGI"); 0.008%
Chairman of the Board Chairman and a Director of Pioneering
President and Trustee Management Corporation ("PMC") and Pioneer
60 State Street Funds Distributor, Inc. ("PFD"); Director of
Boston, MA 02109 Pioneering Services Corporation ("PSC"),
Pioneer Capital Corporation ("PCC"), Pioneer
Real Estate Advisors, Inc. ("PREA"), Pioneer
Forest, Inc., Pioneer Explorer, Inc., Pioneer
Management (Ireland) Ltd. ("PMIL") and Closed
Joint Stock Company "Forest-Starma";
President and Director of Pioneer Metals and
Technology, Inc. ("PMT"), Pioneer
International Corp. ("PIntl"), Pioneer First
Russia, Inc. ("First Russia") and Pioneer
Omega, Inc. ("Omega"); Chairman of the Board
and Director of Pioneer Goldfields Limited
("PGL") and Teberebie Goldfields Limited;
Chairman of the Supervisory Board of Pioneer
Fonds Marketing, GmbH ("Pioneer GmbH"),
Pioneer First Polish Trust Fund Joint Stock
Company, S.A. ("PFPT") and Pioneer Czech
Investment Company, A.S. ("Pioneer Czech");
Chairman, President and Trustee of all of the
Pioneer mutual funds; Director of Pioneer
Global Equity Fund Plc, Pioneer Global Bond
Fund Plc, Pioneer DM Cashfonds Plc, Pioneer
European Equity Fund Plc, Pioneer Central &
Eastern Europe Fund Plc and Pioneer US Real
Estate Fund Plc; and Partner, Hale and Dorr
LLP (counsel to PGI and the Fund).
Mary K. Bush President, Bush & Co., an international 1997 0
(49) financial advisory firm, since 1991;
Trustee Director/Trustee of Mortgage Guaranty
201 Cathedral Ave. NW Insurance Corporation, Novecon Management
Apt. 1016E Company, Hoover Institution, Folger
Washington, DC 20016 Shakespeare Library, March of Dimes, Project
2000, Inc., Small Enterprise Assistance Fund
and Wilberforce University; Advisory Board
member, Washington Mutual Investors Fund, a
registered investment company; U.S. Alternate
Executive Director, International Monetary
Fund (1984-1988); and Managing Director,
Federal Housing Finance Board (1989- 1991).
Trustee of all of the Pioneer mutual funds,
except Pioneer Variable Contracts Trust.
Richard H. Egdahl, M.D. Professor of Management, Boston University 1993 0
(71) School of Management; Professor of Public
Trustee Health, Boston University School of Public
Boston University Health; Professor of Surgery, Boston
Health Policy Institute University School of Medicine; Director,
55 Bay State Road Boston University Health Policy Institute and
Boston, MA 02115 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
facilities firm) and Springer-Verlag New
York, Inc. (publisher); Honorary Trustee,
Franciscan Children's Hospital; and Trustee
of all of the Pioneer mutual funds.
Margaret B.W. Graham Founding Director, The Winthrop Group, Inc. 1993 0
(50) (consulting firm); Manager of Research
Trustee Operations, Xerox Palo Alto Research Center,
The Keep from 1991 to 1994; Professor of Operations
P.O. Box 110 Management and Management of Technology and
Little Deer Isle, ME 04650 Associate Dean, Boston University School of
Management, from 1989 to 1993; and Trustee of
all of the Pioneer mutual funds, except
Pioneer Variable Contracts Trust.
John W. Kendrick Professor Emeritus, George Washington 1993 692.526
(80) University; Director, American Productivity 0.001%
Trustee and Quality Center; Adjunct Scholar, American
636 Waterway Dr., Enterprise Institute; Economic Consultant;
Falls Church, VA 22044 and Trustee of all of the Pioneer mutual
funds, except Pioneer Variable Contracts
Trust.
Marguerite A. Piret President, Newbury, Piret & Company, Inc. 1993 334.264
(49) (merchant banking firm); Trustee of Boston 0.001%
Trustee Medical Center; Member of the Board of
One Boston Place Governors of the Investment Company Institute
Suite 2635 ("ICI"); and Trustee of all of the Pioneer
Boston, MA 02108 mutual funds.
David D. Tripple* Executive Vice President and a Director of 1993 0
(53) PGI; President, Chief Investment Officer and
Executive Vice President and a Director of PMC; Director of PFD, PCC,
Trustee PIntl, First Russia, Omega, Pioneer SBIC
60 State Street Corporation ("Pioneer SBIC"), PMIL, Pioneer
Boston, MA 02109 Global Equity Fund Plc, Pioneer Global Bond
Fund Plc, Pioneer DM Cashfonds Plc, Pioneer
European Equity Fund Plc, Pioneer Central &
Eastern Europe Fund Plc and Pioneer US Real
Estate Fund Plc; and Executive Vice President
and Trustee of all of the Pioneer mutual
funds.
Stephen K. West Partner, Sullivan & Cromwell (law firm); 1993 0
(69) Trustee, The Winthrop Focus Funds (mutual
Trustee funds); and Trustee of all of the Pioneer
125 Broad Street mutual funds.
New York, NY 10004
John Winthrop President, John Winthrop & Co., Inc. (private 1993 1054.333
(61) investment firm); Director of NUI Corp. 0.002%
Trustee (energy sales, services and distribution);
One North Adgers Wharf Trustee of Alliance Capital Reserves,
Charleston, SC 29401 Alliance Government Reserves and Alliance Tax
Exempt Reserves; and Trustee of all of the
Pioneer mutual funds, except Pioneer Variable
Contracts Trust.
</TABLE>
* Messrs. Cogan and Tripple are "interested persons" of the Fund and PMC
within the meaning of Section 2(a)(19) of the 1940 Act.
(1) Each nominee also serves as a trustee for each of the open-end
investment companies (mutual funds) in the Pioneer family of mutual
funds, for Pioneer Interest Shares, a closed-end investment company,
and for each of the ten portfolios of the Pioneer Variable Contracts
Trust (except Messrs. Kendrick and Winthrop and Mmes. Graham and Bush,
who do not serve as Trustees for Pioneer Variable Contracts Trust).
Except for Ms. Bush, each Trustee was elected by the shareholders of
the Fund in 1993. Ms. Bush was elected by the other Trustees in 1997.
(2) As of December 31, 1997, the Trustees and officers of the Fund
beneficially owned, directly or indirectly, in the aggregate less than
1% of the Fund's outstanding shares.
Ms. Piret, Mr. West and Mr. Winthrop serve on the Audit Committee of
the Board of Trustees. The functions of the Audit Committee include recommending
independent auditors to the Trustees, monitoring the independent auditors'
performance, reviewing the results of audits and responding to certain other
matters deemed appropriate by the Trustees. Ms. Graham, Ms. Piret and Mr.
Winthrop also serve on the Nominating Committee of the Board of Trustees. The
primary responsibility of the Nominating Committee is the selection and
nomination of candidates to serve as independent trustees. The Nominating
Committee will also consider nominees recommended by shareholders to serve as
Trustees provided that shareholders submitting such recommendations comply with
all relevant provisions of Rule 14a-8 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
During the fiscal year ended December 31, 1997, the Board of Trustees
held twelve meetings, the Audit Committee held eleven meetings and the
Nominating Committee held one meeting. All of the current Trustees and Committee
Members then serving attended at least 75% of the meetings of the Board of
Trustees or applicable committee, if any, held during the fiscal year ended
December 31, 1997.
Other Executive Officers
In addition to Messrs. Cogan and Tripple, who serve as executive
officers of the Fund, the following table provides information with respect to
the other executive officers of the Fund. Each executive officer is elected by
the Board of Trustees and serves until his successor is chosen and qualified or
until his resignation or removal by the Board. The business address of all
officers of the Fund is 60 State Street, Boston, Massachusetts 02109.
Name, Age and
Position with the Fund Principal Occupations(s)
William H. Keough, 60, Senior Vice President, Chief Financial
Treasurer Officer and Treasurer of PGI; Treasurer
of PFD, PMC, PSC, PCC, Pioneer SBIC,
PIntl, PMT, PGL, First Russia, Omega
and each fund in the Pioneer family of
mutual funds.
Joseph P. Barri, 51, Secretary of PGI, PMC, PCC, PIntl, PMT,
Secretary First Russia, Omega and PCC and each fund
in the Pioneer family of mutual funds;
Clerk of PFD and PSC and Partner, Hale
and Dorr LLP (Counsel to the Fund).
Remuneration of Trustees and Officers
The following table provides information regarding the compensation
paid by the Fund and the other investment companies in the Pioneer family of
mutual funds to the Trustees for their services as indicated below. Compensation
paid by the Fund to Messrs. Cogan and Tripple, interested persons of PMC, is
reimbursed to the Fund by PMC. The Fund pays no salary or other compensation to
its officers.
Total Compensation
from the Fund and
Aggregate Compensation Other Funds in the
from the Pioneer Family of
Fund+ Mutual Funds++
Trustee
John F. Cogan, Jr. $ 500* $ 12,000*
Mary K. Bush** 1,136 30,000
Richard H. Egdahl, M.D. 2,212 62,000
Margaret B.W. Graham 2,212 60,000
John W. Kendrick 2,052 55,800
Marguerite A. Piret 2,726 80,000
David D. Tripple 500* 12,000*
Stephen K. West 2,242 63,800
John Winthrop 2,516 69,000
Totals $16,096 $444,600
* PMC fully reimbursed the Fund and the other funds in the Pioneer
family of mutual funds for compensation paid to Messrs. Cogan and
Tripple.
** Ms. Bush was first elected as a Trustee in June, 1997.
+ For the fiscal year ended December 31, 1997.
++ For the calendar year ended December 31, 1997.
Investment Adviser
PMC, whose executive offices are located at 60 State Street, Boston,
Massachusetts 02109, serves as investment adviser to the Fund. For additional
information concerning the ownership of PMC, see the Appendix.
Required Vote
In accordance with the Fund's Agreement and Declaration of Trust, the
vote of a plurality of all of the shares of the Fund voted at the Meeting is
sufficient to elect the nominees.
PROPOSALS 3(a) THROUGH 3(j)
ELIMINATION, AMENDMENT OR ADDITION OF
VARIOUS INVESTMENT RESTRICTIONS
GENERAL
The Trustees of the Fund recommend that shareholders approve the
elimination, amendment or addition of several of the Fund's investment
restrictions, as described in detail below. All of the current restrictions
proposed to be eliminated or amended are set forth in the Fund's Statement of
Additional Information.
Each Proposal requires the separate approval of the shareholders of the
Fund. Each of these restrictions is a fundamental investment policy that may
only be changed by an affirmative 1940 Act Majority Vote. See "Required Vote"
below.
3(a). AMENDMENT OF FUNDAMENTAL INVESTMENT RESTRICTION REGARDING UNDERWRITING
The Fund's current fundamental investment restriction regarding
underwriting states that the Fund may not:
act as a securities underwriter . . .
If amended as proposed, the restriction would provide that the Fund may
not:
act as an underwriter, except as it may be deemed to be an
underwriter in a sale of restricted securities held in its
portfolio.
The 1940 Act requires that a fund state a formal fundamental policy
regarding underwriting. The amendment is being proposed to clarify that the sale
by the Fund of portfolio securities restricted as to transfer by the federal
securities laws will not be subject to this restriction to the extent such a
sale may be deemed to be underwriting activity. PMC believes it is advantageous
for a fund with investment policies such as the Fund's to have the flexibility
to invest in restricted securities. The proposed amendment would eliminate any
doubt created by the current underwriting restriction as to the Fund's ability
to dispose of any restricted securities it may acquire.
3(b). AMENDMENT OF FUNDAMENTAL INVESTMENT RESTRICTION REGARDING COMMODITIES
The Fund's existing fundamental investment restriction regarding
commodities states that the Fund may not:
invest in real estate, commodities or commodity contracts.
If amended as proposed, the restriction would provide that the Fund may
not:
invest in real estate, commodities or commodity contracts,
except that the Fund may invest in financial futures contracts
and related options and in any other financial instruments
which may be deemed to be commodities or commodity contracts
in which the Fund is not prohibited from investing by the
Commodity Exchange Act and the rules and regulations
thereunder.
The 1940 Act requires that a fund state a formal fundamental investment
policy regarding investment in commodities. Any financial futures contract or
related option is considered to be a commodity. Other types of financial
instruments such as forward commitments and swaps might also be deemed to be
commodities. The amendment is being proposed to enable the Fund to invest in
financial futures contracts and related options for hedging and other purposes
permitted under the rules and regulations of the Commodity Futures Trading
Commission from time to time in effect and to clarify that certain practices in
which the Fund engages (such as forward foreign currency contracts) or might in
the future engage (such as swaps) are not subject to this restriction.
A financial futures contract is a contract to buy or sell units of a
particular securities index or foreign currency at an agreed price on a
specified future date. Depending on the change in value of the index or currency
between the time when a fund enters into and terminates a financial futures
transaction, the fund realizes a gain or loss. Financial futures and options on
financial futures are typically used for hedging purposes and involve certain
risks, including imperfect correlations between movements in the prices of
financial futures and options and movements in the price of the underlying
securities index or currency or the portfolio securities that are the subject of
a hedge, potentially illiquid secondary markets at certain times and inability
of the adviser to correctly predict market or currency movements. The Fund does
not currently intend to engage in financial futures and related options
transactions or any other investment practice not currently described in its
Prospectus in the coming year. In the event that the Trustees decide in the
future it is desirable for the Fund to engage in any such practices, the Fund's
Prospectus will be revised accordingly, including the addition of appropriate
risk disclosure.
Real Estate Investment Trusts ("REITs"). If the proposed change is
approved by shareholders, the Fund will adopt a policy permitting it to invest
up to 25% of its total assets in REITs. The Fund intends to limit its
investments in REITs to 5% of its total assets during the fiscal year ending
December 31, 1998. REITs are pooled investment vehicles which primarily invest
in income producing real estate or real estate related loans or interests. REITs
are generally classified as equity REITs, mortgage REITs or a combination of
equity and mortgage REITs.
Equity REITs invest the majority of their assets directly in real
property and derive income primarily from the collection of rents. Equity REITs
can also realize capital gains by selling properties that have appreciated in
value. Mortgage REITs invest the majority of their assets in real estate
mortgages and derive income from the collection of interest payments. REITs are
not taxed on income distributed to shareholders provided they comply with
several requirements of the Internal Revenue Code of 1986, as amended (the
"Code"). The Fund will indirectly bear its proportionate share of any expenses
paid by REITs in which it invests in addition to the expenses paid by the Fund.
Investing in REITs involves certain unique risks. Equity REITs may be
affected by changes in the value of the underlying property owned by the REITs,
while mortgage REITs may be affected by the quality of any credit extended.
REITs are dependent upon management skills, are not diversified, and are subject
to the risks of financing projects. REITs (especially mortgage REITs) are also
subject to interest rate risks. When interest rates decline, the value of a
REIT's investment in fixed rate obligations can be expected to rise. Conversely,
when interest rates rise, the value of a REIT's investment in fixed rate
obligations can be expected to decline. Historically, REITs have been more
volatile in price than the larger capitalization stocks included in the Standard
& Poor's Index of 500 Common Stocks.
Government National Mortgage Association ("GNMA") Certificates and
Collateralized Mortgage Obligations ("CMOs"). As indicated above, if the
proposed change is approved, the Fund would adopt policies permitting it to
invest a portion of its assets allocated to debt securities in GNMA Certificates
and CMOs. A GNMA Certificate is a mortgage participation certificate, that is,
an interest in pools of residential mortgage loans issued by U.S. Governmental
or private lenders, which may be of varying maturity guaranteed by the
Government National Mortgage Association. Although the payment when due of
interest and principal on GNMA Certificates is backed by the full faith and
credit of the United States, this guarantee does not extend to the market value
of these securities. CMOs are mortgage-backed bonds which may be issued by U.S.
government agencies and instrumentalities as well as private lenders. CMOs are
issued in multiple classes and the principal of and interest on the underlying
mortgage assets may be allocated among the several classes in various ways. Each
class of CMOs, often referred to as a "tranche," is issued at a specific
adjustable or fixed interest rate and must be fully retired no later than its
final distribution date. Because of principal prepayments and foreclosures with
respect to mortgages underlying GNMA Certificates and CMOs, such investments may
be less effective than other types of securities as a means of "locking in"
attractive long-term interest rates. Prepayments generally can be invested only
at lower interest rates.
3(c). ELIMINATION OF FUNDAMENTAL INVESTMENT RESTRICTION REGARDING
"UNSEASONED" ISSUERS
The Fund's existing fundamental investment restriction regarding
securities of "unseasoned" issuers states that the Fund may not:
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.
The 1940 Act does not impose any limitation upon investment in
securities of issuers with a limited operating history. This policy originally
was adopted in accordance with state blue sky requirements that are no longer
applicable. The change is being proposed to permit the Fund to invest in such
securities to the extent that PMC believes that such investment would be
beneficial to the Fund and would not involve undue risk. In general, PMC
believes that it would be advantageous for the Fund to have the flexibility to
invest in recently formed companies. Although the Fund will not formally adopt a
percentage limitation on such investments, it is not expected that PMC will
invest more than 5% of the Fund's total assets in such securities.
3(d). ELIMINATION OF FUNDAMENTAL INVESTMENT RESTRICTION REGARDING AFFILIATES
OF AFFILIATES
The Fund's existing fundamental investment restriction regarding
securities of affiliates of affiliates of the Fund states that the Fund may not:
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.
The 1940 Act does not impose any limitation upon investment in the
securities of affiliates of affiliates. This policy originally was adopted in
accordance with state blue sky requirements that are no longer applicable. The
change is being proposed to give the Fund the flexibility to invest in such
securities to the extent that PMC believes that such investment would be
beneficial to the Fund and would not involve undue risk. In general, PMC
believes that it would be advantageous for the Fund to have the flexibility to
invest in the securities of affiliates of affiliates.
3(e). ELIMINATION OF FUNDAMENTAL INVESTMENT RESTRICTION REGARDING INVESTMENT
COMPANIES
The Fund's existing fundamental investment restriction regarding
investment companies states that the Fund may not:
purchase the securities of any other investment company,
except that it may make such a purchase as a part of a merger,
consolidation or acquisition of assets.
This change is being proposed to provide the Fund with additional
investment flexibility. The change would permit investment in other mutual funds
and other investment vehicles that would be attractive investments for the Fund
but may technically be (or be deemed to be) investment companies (as defined in
the 1940 Act) and therefore prohibited by the Fund's investment restriction.
Even though securities of such issuers may involve the duplication of some fees
and expenses, PMC believes that they can provide attractive investment
opportunities that, except for the restriction stated above, would be consistent
with the Fund's investment objectives and policies. PMC does not currently
expect to significantly invest the Fund's assets in such vehicles but would like
the flexibility to do so to the extent permitted by the 1940 Act, should
appropriate opportunities arise.
3(f). AMENDMENT OF FUNDAMENTAL INVESTMENT RESTRICTION REGARDING LOANS
The Fund's existing fundamental investment restriction regarding making
loans states that the Fund may not:
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 objectives, 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.
If amended as proposed, the restriction would provide that the Fund may
not:
make loans, except by purchase of debt obligations in which
the Fund may invest consistent with its investment policies,
by entering into repurchase agreements or through the lending
of portfolio securities, in each case only to the extent
permitted by the Prospectus and this Statement of Additional
Information.
The 1940 Act requires that a Fund state a fundamental investment policy
regarding making loans. This amendment is being proposed to provide future
flexibility to adjust the Fund's debt security investment, repurchase agreement
and securities lending practices without the need to further revise the
restriction.
3(g). AMENDMENT OF FUNDAMENTAL INVESTMENT RESTRICTION REGARDING BORROWING
The Fund's existing fundamental investment restriction regarding
borrowing states that the Fund may not:
borrow money, except for temporary or emergency purposes in an
amount up to 5% of the value of the Fund's assets.
If amended as proposed, the restriction will provide that the Fund may
not:
borrow money, except from banks as a temporary measure to
facilitate the meeting of redemption requests or for
extraordinary or emergency purposes and except pursuant to
reverse repurchase agreements or dollar rolls, in all cases in
amounts not exceeding 10% of the Fund's total assets
(including the amount borrowed) taken at market value.
The 1940 Act requires that a fund state a fundamental policy regarding
borrowing. The amendment is being proposed (1) to clarify that the Fund may
borrow from banks both for extraordinary or emergency purposes and to meet
redemptions and (2) to give the Fund the future ability to engage in reverse
repurchase agreements and dollar rolls without the need for shareholder
approval. The Fund will not purchase securities while outstanding borrowings
exceed 5% of the Fund's total assets.
Reverse repurchase agreements involve sales by a fund of portfolio
assets concurrently with an agreement by the fund to repurchase the same assets
at a later date at a fixed price. During the reverse repurchase agreement
period, the fund continues to receive principal and interest on these securities
and also has the opportunity to earn a return on the collateral furnished by the
counterparty to secure its obligation to redeliver the securities. Dollar rolls
are transactions in which a fund sells securities for delivery in the current
month and simultaneously contracts to repurchase similar securities on a
specified future date. During the roll period, the fund forgoes principal and
interest paid on the securities. The fund is compensated by the difference
between the current sales price and the forward price for the future purchase
(often referred to as the "drop") as well as by the interest earned on the cash
proceeds of the initial sale.
In regard to the permitted uses of bank borrowings, clarification is
necessary because the current restriction is not explicit with respect to the
Fund's ability to borrow to meet redemptions. In regard to reverse repurchase
agreements and dollar rolls, the Fund does not currently engage or intend to
engage in either of these investment practices in the coming year. However,
because these common practices may be deemed to constitute borrowings, the
Trustees believe it is best to create the flexibility to introduce such
practices at some future time without the need for shareholder approval if this
becomes desirable. In such event, the Prospectus and Statement of Additional
Information would be amended accordingly, including the addition of appropriate
risk disclosure.
3(h). ADDITION OF FUNDAMENTAL INVESTMENT RESTRICTION REGARDING "SENIOR
SECURITIES"
The Trustees propose adopting a fundamental investment restriction
regarding the issuance of "senior securities" such that the Fund may not:
issue senior securities, except as permitted by the Fund's
borrowing, lending and commodity restrictions, and for
purposes of this restriction, the issuance of shares of
beneficial interest in multiple classes or series, the
purchase or sale of options, futures contracts, options on
futures contracts, forward commitments ("when issued" and
"delayed delivery" securities), forward foreign exchange
contracts, repurchase agreements, fully covered reverse
repurchase agreements, dollar rolls, swaps and any other
financial transaction entered into pursuant to the Fund's
investment policies as described in the Prospectus and this
Statement of Additional Information and in accordance with
applicable SEC pronouncements, as well as the pledge, mortgage
or hypothecation of the Fund's assets within the meaning of
the Fund's fundamental investment restriction regarding
pledging, are not deemed to be senior securities.
The 1940 Act requires that a fund state a fundamental policy regarding
the issuance of "senior securities," which are any securities having
preferential rights compared to the Fund's shares of beneficial interest. The
above restriction is being proposed for the purpose of complying with this
technical requirement and to clarify that the issuance of multiple classes or
series of shares by the Fund would be permitted and that the investments
specified therein are not considered to be senior securities.
Except for forward commitments, forward currency exchange contracts and
repurchase agreements in which the Fund already engages, the Fund has no current
intention of engaging in the other listed investment practices in the coming
year. However, the Trustees believe it is appropriate to provide clarification
at this time that such practices (and other unspecified investment practices)
are not covered by the restriction in case it becomes desirable to engage in one
or more of these practices at some future time. In the event that a new practice
is implemented, the Prospectus and Statement of Additional Information will be
revised accordingly, including the addition of appropriate risk disclosure.
3(i). ELIMINATION OF FUNDAMENTAL INVESTMENT RESTRICTION REGARDING JOINT
TRANSACTIONS
The Fund's existing fundamental investment restriction regarding joint
transactions states that the Fund may not:
participate on a joint or joint-and-several basis in any
securities trading account.
Section 17(d) of the 1940 Act and Rule 17d-1 thereunder proscribe an
investment company from engaging in joint transactions in securities unless an
order of exemption is obtained from the Commission. However, there is no
requirement that these statutory and regulatory provisions be stated by a fund
as a fundamental investment policy. To the contrary, it is common industry
practice not to state such a policy. The change is being proposed to conform to
such practice.
In addition, the current restriction does not clearly provide that the
Fund under Rule 17d-1 is permitted to engage in joint transactions subject to
the terms of any exemptive order granted by the Commission. The Fund has not
obtained such an order and does not have any current intention to do so.
However, such orders, permitting funds within a particular complex to engage in
joint repurchase agreements and certain other joint short-term investments, are
common. At times, there may be certain advantages in engaging in such joint
transactions. Accordingly, it is possible that at some future time, the Fund
would seek such an order. The change is also being proposed to eliminate any
ambiguity that the restriction imposes stricter requirements on the Fund in this
regard than provided for in the 1940 Act and the Rules thereunder.
3(j). ELIMINATION OF FUNDAMENTAL INVESTMENT RESTRICTION REGARDING
TRANSACTIONS WITH AFFILIATES
The Fund's existing fundamental investment restriction regarding
transactions with affiliates states that the Fund may not:
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.
Section 17(a) of the 1940 Act generally proscribes transactions between
an investment company and its affiliates unless an order of exemption is
obtained from the Commission. The Rules under Section 17(a) also provide for a
number of exceptions to this requirement if certain conditions are met. There is
no requirement that these statutory and regulatory provisions be stated by a
fund as a fundamental investment policy. To the contrary, it is common industry
practice not to state such a policy. The change is being proposed to conform to
such practice.
In addition, the current restriction does not clearly provide that the
Fund may, pursuant to an exemptive order and/or the provisions of several of the
Rules under Section 17(a), engage in transactions with affiliates beyond the
scope of the restriction. The change is also being proposed to eliminate any
ambiguity that the restriction imposes stricter requirements on the Fund in this
regard than provided for in the 1940 Act and the Rules thereunder.
TRUSTEES' RECOMMENDATIONS
At a meeting of the Trustees held on January 8, 1998, the Trustees
present unanimously approved, and voted to recommend to the shareholders of the
Fund that they approve the proposed elimination or amendment of certain of the
Fund's investment restrictions. In taking such action and making such
recommendations, the Trustees considered the fact that the proposed changes will
provide clarification relating to certain investment restrictions and
flexibility to adjust to changing regulations and markets and new investment
techniques without continually incurring the significant expense involved in
soliciting proxies and holding shareholder meetings. The Trustees believe that
this increased clarity and flexibility will be beneficial to present
shareholders as well as potential investors.
Except as described in this Proxy Statement, approval of the proposed
changes to the investment restrictions will not result in changes in the
Trustees, officers, investment programs and services or any operations that are
described in the Fund's current Prospectus and Statement of Additional
Information.
REQUIRED VOTE
Adoption of each of Proposals 3(a) through 3(j) requires the
affirmative 1940 Act Majority Vote of the Fund.
If all or some of the Proposals are not approved by the shareholders of
the Fund, the Fund will continue to adhere to the current investment
restriction(s) as to which no change has been approved.
FOR THE REASONS SET FORTH ABOVE, THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF
THE FUND VOTE IN FAVOR OF THE APPROVAL OF THE PROPOSALS TO ELIMINATE, AMEND OR
ADD CERTAIN INVESTMENT RESTRICTIONS.
PROPOSAL 4
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP has served as the Fund's independent
public accountant since the Fund's 1994 fiscal year. Audit services during the
fiscal year ended December 31, 1997, consist of examinations of the Fund's
financial statements for this period and reviews of the Fund's filings with the
Commisson.
The Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Fund or PMC, has selected Arthur Andersen LLP as the
Fund's independent public accountants for the fiscal year ending December 31,
1998, subject to shareholder ratification at the Meeting. A representative of
Arthur Andersen LLP is expected to be available at the Meeting to make a
statement if he or she desires to do so and to respond to appropriate questions.
Arthur Andersen LLP has advised the Fund that it has no direct or indirect
financial interest in the Fund.
Required Vote
The ratification of the selection of Arthur Andersen LLP as the Fund's
independent public accountants for the fiscal year ending December 31, 1998,
requires the affirmative vote of a majority of the shares of the Fund, present
in person or by proxy and entitled to vote at the Meeting.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF THE FUND VOTE IN FAVOR
OF THE RATIFICATION OF ARTHUR ANDERSEN LLP AS THE FUND'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998.
OTHER MATTERS
Shareholder Proposals
The Fund is not required to hold annual meetings of shareholders and
does not currently intend to hold such a meeting of shareholders in 1999.
Shares Held in Retirement Plans
PGI, as trustee, is permitted to vote any shares held in retirement
plans and will do so if necessary to obtain a quorum.
Proxies, Quorum and Voting at the Meeting
Any person giving a proxy has the power to revoke it at any time prior
to its exercise by executing a superseding proxy or by submitting a notice of
revocation to the Secretary of the Fund. In addition, although mere attendance
at the Meeting will not revoke a proxy, a shareholder present at the Meeting may
withdraw his or her proxy and vote in person. All properly executed and
unrevoked proxies received in time for the Meeting will be voted in accordance
with the instructions contained in the proxies. If no instruction is given, the
persons named as proxies will vote the shares represented thereby in favor of
the Proposals described above and will use their best judgment in connection
with the transaction of such other business as may properly come before the
Meeting or any adjournment thereof.
A majority of the shares entitled to vote--present in person or
represented by proxy--constitutes a quorum for the transaction of business with
respect to any proposal (unless otherwise noted in the Proxy Statement). In the
event that at the time any session of the Meeting is called to order a quorum is
not present in person or by proxy, the persons named as proxies may vote those
proxies which have been received to adjourn the Meeting to a later date. In the
event that a quorum is present but sufficient votes in favor of any of the
Proposals, including the election of the nominees to the Board of Trustees, have
not been received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies with
respect to such Proposal. Any such adjournment will require the affirmative vote
of more than one half of the shares of the Fund present in person or by proxy at
the session of the Meeting to be adjourned. The persons named as proxies will
vote those proxies which they are entitled to vote in favor of any such Proposal
in favor of such an adjournment and will vote those proxies required to be voted
against any such Proposal against any such adjournment. A shareholder vote may
be taken on one or more of the Proposals in the proxy statement prior to such
adjournment if sufficient votes for its approval have been received and it is
otherwise appropriate. Such vote will be considered final regardless of whether
the Meeting is adjourned to permit additional solicitation with respect to any
other Proposal.
Shares of the Fund represented at the Meeting (including, shares which
abstain or do not vote with respect to one or more of the Proposals) will be
counted for purposes of determining whether a quorum is present at the Meeting.
Abstentions will be treated as shares that are present and entitled to vote for
purposes of determining the number of shares that are present and entitled to
vote with respect to any particular Proposal, but will not be counted as a vote
in favor of such Proposal. Accordingly, an abstention from voting on a Proposal
has the same legal effect as a vote against the Proposal.
Adoption by the shareholders of any of Proposals 1 and 3(a) through (j)
require the affirmative vote of the lesser of (i) 67% or more of the voting
securities of the Fund present at the Meeting, if the holders of more than 50%
of the shares of the Fund are present or represented by proxy at the Meeting, or
(ii) 50% or more of the outstanding shares of the Fund. If a broker or nominee
holding shares in "street name" indicates on the proxy that it does not have
discretionary authority to vote as to any Proposal, those shares will not be
considered as present and entitled to vote as to that Proposal. Accordingly, a
"broker non-vote" has no effect on the voting in determining whether a Proposal
has been adopted pursuant to item (i) above, provided that the holders of more
than 50% of the outstanding shares (excluding the "broker non-votes") of the
Fund are present or represented by proxy. However, with respect to determining
whether a Proposal has been adopted pursuant to item (ii) above, because shares
represented by a "broker non-vote" are considered outstanding shares, a "broker
non-vote" has the same legal effect as a vote against such Proposal.
Other Business
While the Meeting has been called to transact any business that may
properly come before it, the only matters that the Trustees intend to present
are those matters stated in the attached Notice of Special Meeting of
Shareholders. However, if any additional matters properly come before the
Meeting, and on all matters incidental to the conduct of the Meeting, it is the
intention of the persons named in the enclosed proxy to vote the proxy in
accordance with their judgment on such matters unless instructed to the
contrary.
Methods of Solicitation and Expenses
The cost of preparing, assembling and mailing this Proxy Statement and
the attached Notice of Special Meeting of Shareholders and the accompanying
proxy card will be borne by PMC. In addition to soliciting proxies by mail, PMC
may, at PMC's expense, have one or more Fund officers, representatives or
compensated third-party agents, including PMC, PSC and PFD, aid in the
solicitation of proxies by personal interview or telephone and telegraph and may
request brokerage houses and other custodians, nominees and fiduciaries to
forward proxy soliciting material to the beneficial owners of the shares held of
record by such persons.
The Fund may also arrange to have votes recorded by telephone. The
telephone voting procedure is designed to authenticate shareholders' identities,
to allow shareholders to authorize the voting of their shares in accordance with
their instructions and to confirm that their instructions have been properly
recorded. The Fund has been advised by counsel that these procedures are
consistent with the requirements of applicable law. If these procedures were
subject to a successful legal challenge, such votes would not be counted at the
Meeting. The Fund is unaware of any such challenge at this time. Shareholders
would be called at the phone number PSC has in its records for their accounts,
and would be asked for their Social Security number or other identifying
information. The shareholders would then be given an opportunity to authorize
proxies to vote their shares at the Meeting in accordance with their
instructions. To ensure that the shareholders' instructions have been recorded
correctly, they will also receive a confirmation of their instructions in the
mail. A special toll-free number will be available in case the information
contained in the confirmation is incorrect.
Persons holding shares as nominees will be reimbursed by PMC, upon
request, for the reasonable expenses of mailing soliciting materials to the
principals of the accounts.
March 2, 1998
<PAGE>
APPENDIX
Additional Information Pertaining to PMC
Directors. Information regarding the affiliations of Mr. Cogan,
Chairman of PMC, and Mr. Tripple, a Director of PMC, is contained in Proposal 2
of this Proxy Statement. The following table provides information with respect
to the other Director of PMC:
Name, Age and Address Principal Occupation(s)
Robert L. Butler, 55 Executive Vice President and a Director of PGI;
60 State Street President and a Director of PFD; Director of PSC,PIC
Boston, MA 02109 and PIntl.; Vice Chairman of Pioneer GmbH; Director
of Pioneer Global Equity Fund Plc, Pioneer Global
Bond Fund Plc, Pioneer DM Cashfonds Plc, Pioneer
European Equity Fund Plc, Pioneer Central & Eastern
Europe Fund Plc and Pioneer US Real Estate Fund
Plc; and a Member of the Supervisory Board of PFPT
Ownership of PMC. PMC is a wholly-owned subsidiary of PGI. As of
December 31, 1997, Mr. Cogan beneficially owned 3,612,901 shares (14.12%) of the
outstanding common stock of PGI. Mr. Cogan's beneficial holdings included
769,136 shares held in trusts with respect to which Mr. Cogan may be deemed to
be a beneficial owner by reason of his interest as a beneficiary and/or position
as a trustee and shares which Mr. Cogan has the right to acquire under
outstanding options within sixty days of December 31, 1997. At such date, Robert
L. Butler and David D. Tripple, PMC's other directors, each owned beneficially
less than 2% of the outstanding common stock of PGI. As of December 31, 1997,
officers and directors of PMC and Trustees and officers of the Fund beneficially
owned an aggregate of 4,527,749 shares of common stock of PGI, approximately
17.41% of the outstanding common stock of PGI. During PGI's fiscal year ended
December 31, 1997, there were no transactions in PGI common stock by any
officer, Director or Trustee of the Fund, or nominee for election as Director or
Trustee of the Fund, PMC and/or PFD in an amount equal to or exceeding 1% of the
outstanding common stock of PGI.
Services Provided to the Fund by Affiliates of PMC. PSC serves as the
Fund's transfer agent and shareholder servicing agent. Under the terms of its
contract with the Fund, PSC's duties include: (i) processing sales, redemptions
and exchanges of shares of the Fund; (ii) distributing dividends and capital
gains to shareholder accounts; and (iii) maintaining certain account records and
responding to routine shareholder inquires. For the fiscal year ended December
31, 1997, the Fund paid PSC approximately $991,150 in fees for these services.
PFD, an indirect wholly owned subsidiary of PGI, serves as the Fund's
principal underwriter. For the fiscal year ended December 31, 1997, the Fund
paid PFD approximately $1,018,801 in distribution fees pursuant to the Fund's
Class A Distribution Plan, $804,344 in distribution fees pursuant to the Fund's
Class B Distribution Plan and $126,321 in distribution fees pursuant to the
Fund's Class C Distribution Plan. Such fees were paid to PFD in reimbursement of
expenses related to servicing of shareholder accounts and compensating
broker/dealers and sales personnel. For the same period, PFD earned net
underwriting commissions in connection with its offering of shares of the Fund
in the amount of approximately $4,630,191 of which approximately $4,018,610 was
reallowed to dealers.
Similar Funds Managed by PMC. PMC serves as the investment manager to
the following funds with investment objectives similar to the Fund's objective:
<TABLE>
<S> <C>
Annual Management Fee Rate Name of Fund
(Net Assets as of 12/31/97)
0.65% of the first $300 million of average net asset; Pioneer Capital Growth Fund*
0.60% of the next $200 million of average net assets; 2,406,660,959
0.50% of the next $500 million of average net assets;
0.45% of the average net assets exceeding $1 billion
0.625% of average net assets, adjusted by up to plus/minus .20% to reflect Pioneer Mid-Cap Fund
Pioneer Mid-Cap Fund's performance 938,286,204
0.85% of average net assets Pioneer Small Company Fund
509,066,315
1.10% of average net assets Pioneer Micro-Cap Fund
123,952,098
0.65% of average net assets Pioneer Variable Contracts
Trust--Capital Growth Portfolio
105,476,236
0.70% of average net assets Pioneer Variable Contract
Trust--Growth Shares Portfolio
4,646,484
- ------------------------
</TABLE>
* A proposal has been submitted to the shareholders of Pioneer Capital
Growth Fund to change the annual management fee rate so that the rate
will be 0.70% of the Fund's average daily net assets up to $500
million, 0.65% of the next $500 million and 0.625% of the excess over
$1 billion, adjusted by up to +.10% to reflect Pioneer Capital Growth
Fund's performance.
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 Current and Proposed Contracts. In selecting brokers
or dealers, PMC considers factors relating to execution on the best overall
terms available, including, but not limited to, the size and type of the
transaction; the nature and character of the markets of the security to be
purchased or sold; the execution efficiency, settlement capability and financial
condition of the dealer; the dealer's execution services rendered on a
continuing basis; and the reasonableness of any dealer spreads.
PMC may select broker-dealers which provide brokerage and/or research
services to the Fund and/or other investment companies or accounts managed by
PMC. Such research services must be lawful and must provide appropriate
assistance to PMC in the performance of its investment decision making
responsibilities and could 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 analysis 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).
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. In
addition, if PMC determines in good faith that the amount of commissions charged
by a broker is reasonable in relation to the value of the brokerage and research
services provided by such broker, the Fund may pay commissions to such broker in
an amount greater than the amount another firm may charge. This information
might be useful to PMC in providing services to the Fund as well as to other
investment companies or accounts managed by PMC, although not all of such
research may be useful to the Fund. Conversely, such information provided to PMC
by brokers and dealers through whom other clients of PMC effect securities
transactions might be useful to PMC in providing services to the Fund. The
receipt of such research is not expected to reduce PMC's normal independent
research activities; however, it enables PMC to avoid the additional expense
which might otherwise be incurred if it were to attempt to develop comparable
information through its own staff.
<PAGE>
PROXY PROXY
PIONEER GROWTH SHARES
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
To be held April 21, 1998
The undersigned, having received notice of the meeting and management's
proxy statement therefor, and revoking all prior proxies, hereby appoint(s) John
F. Cogan, Jr., David D. Tripple, Robert P. Nault and Joseph P. Barri, and each
of them, attorneys or attorney of the undersigned (with full power of
substitution in them and each of them) for and in the name(s) of the undersigned
to attend the Special Meeting of Shareholders of Pioneer Growth Shares (the
"Fund") to be held on Tuesday, April 21, 1998 at 2:00 p.m. (Boston time) at the
offices of Hale and Dorr LLP, counsel to the Fund, 60 State Street, 26th Floor,
Boston, Massachusetts 02109 (the "Meeting"), and any adjourned session or
sessions thereof, and there to vote and act upon the following matters (as more
fully described in the accompanying Proxy Statement) in respect of all shares of
the Fund which the undersigned will be entitled to vote or act upon, with all
the powers the undersigned would possess if personally present:
(1) To approve a new Management Contract with Pioneering Management Corporation,
the Fund's investment adviser, ("PMC") increasing the rate at which management
fees are payable to PMC:
_ FOR _ AGAINST _ ABSTAIN
(2) To elect Trustees:
The nominees for Trustees are: M.K. Bush, J.F. Cogan, Jr., Dr. R.H.
Edgahl, M.B.W. Graham, J.W. Kendrick, M.A. Piret, D.D. Tripple, S.K.
West and J. Winthrop.
_ FOR electing all the nominees (except as marked above)
To withhold authority to vote for one or more of the nominees, circle
those nominees names above.
_ WITHHOLD authority to vote for all nominees
(3)(a) To approve an amendment to the Fund's fundamental investment restriction
regarding underwriting:
_ FOR _ AGAINST _ ABSTAIN
(3)(b) To approve an amendment to the Fund's fundamental investment restriction
regarding commodities:
_ FOR _ AGAINST _ ABSTAIN
(3)(c) To approve the elimination of the Fund's fundamental investment
restriction regarding "unseasoned" issuers:
_ FOR _ AGAINST _ ABSTAIN
(3)(d) To approve the elimination of the Fund's fundamental investment
restriction regarding affiliates of affiliates:
_ FOR _ AGAINST _ ABSTAIN
(3)(e) To approve the elimination of the Fund's fundamental investment
restriction regarding investment companies:
_ FOR _ AGAINST _ ABSTAIN
(3)(f) To approve an amendment to the Fund's fundamental investment restriction
regarding loans:
_ FOR _ AGAINST _ ABSTAIN
(3)(g) To approve an amendment to the Fund's fundamental investment restriction
regarding borrowing:
_ FOR _ AGAINST _ ABSTAIN
(3)(h) To approve the addition of a new fundamental investment restriction
regarding "senior securities":
_ FOR _ AGAINST _ ABSTAIN
(3)(i) To approve the elimination of the Fund's fundamental investment
restriction regarding joint transactions:
_ FOR _ AGAINST _ ABSTAIN
(3)(j) To approve the elimination of the Fund's fundamental investment
restriction regarding transactions with affiliates:
_ FOR _ AGAINST _ ABSTAIN
(4) To ratify the selection of Arthur Andersen LLP as the Funds' independent
public accountants for the fiscal year ending December 31, 1998:
_ FOR _ AGAINST _ ABSTAIN
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
PROPOSAL(S).
----------------------------
Signature of Shareholder(s)
----------------------------
Signature of Joint
Shareholder(s) (if any)
Dated: ____________, 1998 In signing, please write name(s)
exactly as appearing hereon. When
signing as attorney, executor,
administrator or other fiduciary,
please give your full title as such.
Joint owners should each sign
personally.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE FUND AND
SHOULD BE RETURNED AS SOON AS POSSIBLE IN THE ENVELOPE PROVIDED.
<PAGE>
Pioneer Growth Shares
60 State Street
Boston, MA 02109
URGENT
PLEASE VOTE YOUR SHARES TODAY
Dear Fellow Shareowner,
Not too long ago we sent you a proxy card and materials for Pioneer Growth
Shares (the Fund) explaining the proposals up for a vote at the April 21, 1998
shareowner meeting. WE NEED YOU TO CAST YOUR VOTE!
If you have not already completed and returned the yellow proxy card included in
our earlier package, PLEASE TAKE A MOMENT NOW TO COMPLETE THE ENCLOSED PROXY
CARD AND MAIL IT TO US IN THE POSTAGE-PAID ENVELOPE PROVIDED.
The proposals in the Proxy Statement have been reviewed by the Fund's Board of
Trustees, whose primary role is to protect your interests as a shareowner. In
the Trustees' opinion, the proposals are fair and reasonable. The Trustees
recommend that you vote FOR each proposal. For your easy reference, on the back
of this page is a summary of what a FOR vote would mean for each proposal.
PLEASE VOTE! YOUR VOTE IS EXTREMELY IMPORTANT, NO MATTER HOW MANY SHARES YOU
OWN.
Please feel free to call us at 1-800-225-6292 if you have any questions about
the proposals or the process for voting your shares. Thank you for your prompt
response.
Sincerely,
John F. Cogan, Jr.
Chairman and President
<PAGE>
[back page]
Here is what a FOR vote means for each of the proposals being considered.
PROPOSAL 1:
APPROVE A NEW MANAGEMENT CONTRACT WITH PIONEERING MANAGEMENT CORPORATION (PMC),
including a performance-based management fee. Depending upon the Fund's
investment performance, relative to a selected securities index, the fee paid by
the Fund may be lower or higher than the proposed basic fee. The proposed basic
fee is higher than the management fee currently paid by the Fund to PMC.
PROPOSAL 2:
ELECT NINE TRUSTEES TO THE BOARD. The Trustees supervise the Fund's activities
and review contractual arrangements with companies that provide services to the
Fund. All of the nominees currently serve as Trustees.
PROPOSALS 3(A) THROUGH 3(J):
MODERNIZE CERTAIN INVESTMENT RESTRICTIONS to conform to current standards in the
mutual fund industry. The Trustees believe the proposed changes are appropriate
and necessary to provide future flexibility in the Fund's investment operations.
For details on each of the proposed changes, we encourage you to review the
Proxy Statement.
PROPOSAL 4:
RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP as the Fund's independent public
accountants for the fiscal year ending December 31, 1998.
PLEASE VOTE! YOUR VOTE IS EXTREMELY IMPORTANT, NO MATTER HOW MANY SHARES YOU
OWN.
1097-4518
<PAGE>
Pioneer Growth Shares
60 State Street
Boston, MA 02109
URGENT
PLEASE VOTE YOUR SHARES TODAY
Dear Fellow Shareowner,
TIME IS RUNNING OUT. You have not yet returned the proxy cards we sent for
voting on the proposals for consideration at the April 21, 1998 shareowner
meeting. WE NEED YOU TO CAST YOUR VOTE TODAY!
Voting now will help save money. If a majority of shareowners have not voted
before April 21, we must delay the meeting and begin the proposal and voting
process all over again. This would be extremely costly.
If you have not already completed and returned your proxy card, PLEASE TAKE A
MOMENT NOW TO COMPLETE THE ENCLOSED YELLOW PROXY CARD AND MAIL IT TO US TODAY IN
THE POSTAGE-PAID ENVELOPE PROVIDED.
The proposals in the Proxy Statement have been reviewed by the Fund's Board of
Trustees, whose primary role is to protect your interests as a shareowner. In
the Trustees' opinion, the proposals are fair and reasonable. The Trustees
recommend that you vote FOR each proposal. For your easy reference, on the back
of this page is a summary of what a FOR vote would mean for each proposal.
VOTE TODAY! YOUR VOTE IS EXTREMELY IMPORTANT, NO MATTER HOW MANY SHARES YOU OWN.
Please feel free to call us at 1-800-225-6292 if you have any questions about
the proposals or the process for voting your shares. Thank you for your
immediate response.
Sincerely,
John F. Cogan, Jr.
Chairman and President
<PAGE>
[back page]
Here is what a FOR vote means for each of the proposals being considered.
PROPOSAL 1:
APPROVE A NEW MANAGEMENT CONTRACT WITH PIONEERING MANAGEMENT CORPORATION (PMC),
including a performance-based management fee. Depending upon the Fund's
investment performance, relative to a selected securities index, the fee paid by
the Fund may be lower or higher than the proposed basic fee. The proposed basic
fee is higher than the management fee currently paid by the Fund to PMC.
PROPOSAL 2:
ELECT NINE TRUSTEES TO THE BOARD. The Trustees supervise the Fund's activities
and review contractual arrangements with companies that provide services to the
Fund. All of the nominees currently serve as Trustees.
PROPOSALS 3(A) THROUGH 3(J):
MODERNIZE CERTAIN INVESTMENT RESTRICTIONS to conform to current standards in the
mutual fund industry. The Trustees believe the proposed changes are appropriate
and necessary to provide future flexibility in the Fund's investment operations.
For details on each of the proposed changes, we encourage you to review the
Proxy Statement.
PROPOSAL 4:
RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP as the Fund's independent public
accountants for the fiscal year ending December 31, 1998.
PLEASE VOTE TODAY! YOUR VOTE IS EXTREMELY IMPORTANT, NO MATTER HOW MANY SHARES
YOU OWN.
- ---------
