File Nos. 2-79140
811-3564
As Filed with The Securities and Exchange Commission December 1, 1995
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /_X__/
Pre-Effective Amendment No. ___ /____/
Post-Effective Amendment No. 20 /_X__/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 / X /
Amendment No. 20 /_X _/
(Check appropriate box or boxes)
PIONEER THREE
(Exact name of registrant as specified in charter)
60 State Street, Boston, Massachusetts 02109
(Address of principal executive office) Zip Code
Registrant's Telephone Number, including Area Code: (617) 742-7825
Joseph P. Barri, Hale and Dorr, 60 State Street, Boston, MA 02109
(Name and address of agent for service)
It is proposed that this filing will become effective:
_X_ on February 1, 1996 pursuant to paragraph (a) of Rule 485
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) of the Investment Company Act
of 1940. Registrant filed a Rule 24f-2 Notice for its fiscal year ending
September 30, 1995 on November 29, 1995.
<PAGE>
PIONEER THREE
Cross-Reference Sheet Showing Location in Prospectus and Statement
of Additional Information of Information Required by Items of
the Registration Form
Location in Prospectus
or Statement of
Form N-1A Item Number and Caption Additional Information
1. Cover Page............................ Prospectus - Cover Page
2. Synopsis.............................. Prospectus - Expense
Information
3. Condensed Financial Information....... Prospectus - Financial
Highlights
4. General Description of Registrant..... Prospectus - Investment
Objectives and Policies;
Management of the Fund;
Information About Fund Shares
5. Management of the Fund................ Prospectus - Management of the
Fund
6. Capital Stock and Other Securities.... Prospectus - Investment
Objectives and Policies;
Information About Fund Shares
7. Purchase of Securities Being Offered.. Prospectus - Information About
Fund Shares; Distribution Plan;
Shareholder Services
8. Redemption or Repurchase.............. Prospectus - Information About
Fund Shares; Shareholder
Services
9. Pending Legal Proceedings............. Not Applicable
10. Cover Page............................ Statement of Additional
Information - Cover Page
11. Table of Contents..................... Statement of Additional
Information - Cover Page
<PAGE>
Location in Prospectus
or Statement of
Form N-1A Item Number and Caption Additional Information
12. General Information and History....... Statement of Additional
Information - Cover Page;
Description of Shares
13. Investment Objectives and Policies.... Statement of Additional
Information - Investment
Policies and Restrictions
14. Management of the Fund................ Statement of Additional
Information - Management of the
Fund; Investment Adviser
15. Control Persons and Principal Holders
of Securities....................... Statement of Additional
Information - Management of the
Fund
16. Investment Advisory and Other
Services............................ Statement of Additional
Information - Management of the
Fund; Investment Adviser;
Shareholder Servicing/Transfer
Agent; Custodians; Independent
Accountant
17. Brokerage Allocation and Other
Practices........................... Statement of Additional
Information - Portfolio
Transactions
18. Capital Stock and Other Securities.... Statement of Additional
Information - Description of
Shares; Certain Liabilities
19. Purchase, Redemption and Pricing of
Securities Being Offered............ Statement of Additional
Information - Determination of
Net Asset Value; Letter of
Intention; Systematic
Withdrawal Plan
<PAGE>
Location in Prospectus
or Statement of
Form N-1A Item Number and Caption Additional Information
20. Tax Status............................ Statement of Additional
Information - Tax Status
21. Underwriters.......................... Statement of Additional
Information - Principal
Underwriter; Distribution Plan
22. Calculation of Performance Data....... Statement of Additional
Information - Investment
Results
23. Financial Statements.................. Statement of Additional
Information - Cover Page
<PAGE>
Pioneer Mid-Cap
Fund
Class A, Class B and Class C Shares
Prospectus
February 1, 1996
Pioneer Mid-Cap Fund (the "Fund") seeks capital growth by investing in a
diversified portfolio of securities consisting primarily of common stocks. Any
current income generated from these securities is incidental to the investment
objective of the Fund.
In order to achieve its investment objective, the Fund will invest at least 65%
of its total assets in common stocks and common stock equivalents (such as
convertible bonds and preferred stock) of companies with a market capitalization
of less than $5 billion ("Mid-Cap Companies"). The Fund may invest a portion of
its assets in foreign securities. See "Investment Objective and Policies" in
this Prospectus. There is, of course, no assurance that the Fund will achieve
its investment objective.
FUND RETURNS AND SHARE PRICES FLUCTUATE AND THE VALUE OF YOUR ACCOUNT UPON
REDEMPTION MAY BE MORE OR LESS THAN YOUR PURCHASE PRICE. SHARES IN THE FUND ARE
NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER
DEPOSITORY INSTITUTION, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY. INVESTMENTS IN THE SECURITIES OF MID-CAP COMPANIES MAY OFFER GREATER
CAPITAL APPRECIATION POTENTIAL THAN INVESTMENTS IN LARGE-CAPITALIZATION COMPANY
SECURITIES, BUT MAY BE SUBJECT TO GREATER SHORT-TERM PRICE FLUCTUATIONS. THE
FUND IS INTENDED FOR INVESTORS WHO CAN ACCEPT THE RISKS ASSOCIATED WITH ITS
INVESTMENTS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. SEE "INVESTMENT
OBJECTIVES AND POLICIES" FOR A DISCUSSION OF THESE RISKS.
This Prospectus (Part A of the Registration Statement) provides information
about the Fund that you should know before investing. Please read and retain it
for your future reference. More information about the Fund is included in Part
B, the Statement of Additional Information, also dated February 1, 1996, which
is incorporated into this Prospectus by reference. A copy of the Statement of
Additional Information may be obtained free of charge by calling Shareowner
Services at 1-800-225-6292 or by written request to the Fund at 60 State Street,
Boston, Massachusetts 02109. Additional information about the Fund has been
filed with the Securities and Exchange Commission (the "SEC") and is available
upon request and without charge.
<PAGE>
TABLE OF CONTENTS PAGE
- -------------------------------------------------------------------------------
I. EXPENSE INFORMATION .........................................
II. FINANCIAL HIGHLIGHTS ........................................
III. INVESTMENT OBJECTIVE AND POLICIES ...........................
Risk Factors .............................................
IV. MANAGEMENT OF THE FUND ......................................
V. FUND SHARE ALTERNATIVES .....................................
VI. SHARE PRICE .................................................
VII. HOW TO BUY FUND SHARES ......................................
Class A Shares ...........................................
Class B Shares............................................
Class C Shares............................................
VIII. HOW TO SELL FUND SHARES .....................................
IX. HOW TO EXCHANGE FUND SHARES .................................
X. DISTRIBUTION PLANS ..........................................
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION .......................
XII. SHAREOWNER SERVICES .........................................
Account and Confirmation Statements ......................
Additional Investments ...................................
Automatic Investment Plans ...............................
Financial Reports and Tax Information ....................
Distribution Options .....................................
Directed Dividends .......................................
Direct Deposit ...........................................
Voluntary Tax Withholding ................................
Telephone Transactions and Related Liabilities ...........
FactFoneSM................................................
Retirement Plans .........................................
Telecommunications Device for the Deaf (TDD) .............
Systematic Withdrawal Plans ..............................
Reinstatement Privilege (Class A Only) ...................
XIII. THE FUND ....................................................
XIV. INVESTMENT RESULTS ..........................................
APPENDIX--CERTAIN INVESTMENT PRACTICES ......................
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
[End of Cover Page]
<PAGE>
I. EXPENSE INFORMATION
The table is designed to help you understand the charges and expenses that you,
as a shareholder, will bear directly or indirectly when you invest in the Fund.
The information in the table is an estimate based on actual expenses for Class A
shares for the year ended September 30, 1995. No Class B or C shares were
outstanding during such period. Management fees for each Class have been
restated to reflect the maximum, basic and minimum fees payable to Pioneering
Management Corporation ("PMC") under the most recently approved management
contract. See "Management of the Fund." Actual management fees and total
operating expenses with respect to Class A shares for the fiscal year ended
September 30, 1995 were .46% and .85%, respectively under a management contract
previously in effect.
<TABLE>
<CAPTION>
Shareowner Transaction Expenses: Class A Class B+ Class C+
<S> <C> <C> <C>
Maximum Initial Sales Charge on
Purchases (as a percentage of offering price) 5.75%1 None None
Maximum Sales Charge on Reinvestment
of Dividends None None None
Maximum Deferred Sales Charge None1 4.00% 1.00%
(as a percentage of original purchase
price or redemption proceeds, as applicable)
Redemption Fee2 None None None
Exchange Fee None None None
Annual Fund Operating Expenses
(As a Percentage of Average Net Assets):
</TABLE>
<TABLE>
<CAPTION>
Management Fee3
Basic Maximum Minimum
Class A
<S> <C> <C> <C>
Management Fee .625 .825 .425
12b-1 Fees .18 .18 .18
Other Expenses (including .21 .21 .21
accounting and transfer agent
fees, custodian fees and
printing expenses)
Total Operating Expenses 1.02 1.22 .82
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<PAGE>
Class B
Management Fee .625 .825 .425
12b-1 Fees 1.00 1.00 1.00
Other Expenses (including .21 .21 .21
accounting and transfer agent
fees, custodian fees and
printing expenses)
Total Operating Expenses 1.84 2.04 1.64
Class C
Management Fee .625 .825 .425
12b-1 Fees 1.00 1.00 1.00
Other Expenses (including
accounting and transfer agent
fees, custodian fees and
printing expenses) .21 .21 .21
--- ---- ---
Total Operating Expenses 1.84 2.04 1.64
<FN>
+ Class B and Class C shares will first be offered on January 31, 1996.
(1) Purchases of $1,000,000 or more and purchases by participants in certain
group plans are not subject to an initial sales charge but may be subject to a
contingent deferred sales charge as further described under "How to Sell Fund
Shares."
(2) Separate fees (currently $10 and $20, respectively) apply to domestic and
international wire transfers of redemption proceeds.
(3) The management fee paid to Pioneering Management Corporation ("PMC")
consists of a basic fee of 0.625 of daily net assets and a performance
adjustment. The actual rate paid to PMC may be higher or lower than the basic
fee. See "Management of the Fund" for additional information about the fee
calculation.
</FN>
</TABLE>
EXAMPLE:
You would pay the following fees and expenses on a $1,000 investment, assuming a
5% annual return and redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
CLASS A SHARES
Management Fee
Basic $ 10 $ 30 $ 52 $ 116
Maximum $ 11 $ 35 $ 61 $ 135
Minimum $ 8 $ 24 $ 42 $ 94
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<PAGE>
CLASS B SHARES*
- --Assuming complete
redemption at end
of period
Management Fee
Basic $ 59 $ 88 $ 119 $ 215
Maximum $ 61 $ 94 $ 130 $ 237
Minimum $ 57 $ 82 $ 109 $ 193
- --Assuming no
redemption
Management Fee
Basic $ 19 $ 58 $ 99 $ 215
Maximum $ 21 $ 64 $ 110 $ 237
Minimum $ 17 $ 52 $ 89 $ 193
CLASS C SHARES
- --Assuming complete
redemption at end
of period
Management Fee
Basic $ 29 $ 58 $ 99 $ 215
Maximum $ 31 $ 64 $ 110 $ 237
Minimum $ 27 $ 52 $ 89 $ 193
- --Assuming no
redemption
Management Fee
Basic $ 19 $ 58 $ 99 $ 215
Maximum $ 21 $ 64 $ 110 $ 237
Minimum $ 17 $ 52 $ 89 $ 193
<FN>
* Class B shares convert to Class A shares eight years after purchase.
</FN>
</TABLE>
The example above assumes the reinvestment of all dividends and distributions
and that the percentage amounts listed under "Annual Operating Expenses" remain
the same each year.
THE EXAMPLE IS DESIGNED FOR INFORMATION PURPOSES ONLY, AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF FUTURE EXPENSES OR RETURN. ACTUAL FUND EXPENSES
AND RETURN WILL VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN THOSE
SHOWN.
For further information regarding management fees, 12b-1 fees and other expenses
of the Fund, including information regarding the basis upon which management
fees and 12b-1 fees are paid, see "Management of the Fund," "Distribution Plans"
and "How To Buy Fund Shares" in this Prospectus and "Management of the Fund" and
"Underwriting Agreement and Distribution Plans" in the Statement of Additional
Information. The Fund's imposition of a Rule 12b-1 fee may result in long-term
shareholders paying more than the economic equivalent of the maximum sales
-5-
<PAGE>
charge permitted under Rules of Fair Practice of the National Association of
Securities Dealers, Inc.
("NASD").
The maximum initial sales charge is reduced on purchases of specified larger
amounts of Class A shares and the value of shares owned in other Pioneer mutual
funds is taken into account in determining the applicable initial sales charge.
See "How to Buy Fund Shares." No sales charge is applied to exchanges of shares
of the Fund for shares of other publicly available Pioneer mutual funds. See
"How to Exchange Shares."
II. FINANCIAL HIGHLIGHTS
The following information has been derived from 1995 appears in the Fund's
Annual Report which is financial statements which have been audited by Arthur
incorporated by reference in the Statement of Andersen LLP, independent public
accounts, in Additional Information. The Annual Report includes connection with
their examination of the Fund's more information about the Fund's (CLASS A ONLY)
financial statements. Arthur Andersen LLP's report on performance and is
available free of charge by calling the Fund's financial statements as of
September 30, Shareholder Services at 1-800-225-6292.
<TABLE>
<CAPTION>
For the Year Ended September 30,
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 19.92 $ 21.12 $ 18.03 $ 16.16 $ 12.96 $ 17.80 $ 15.09 $ 18.52 $ 16.01 $ 13.98
Income from investment
operations--
Net investment income $ 0.24 $ 0.24 $ 0.28 $ 0.33 $ 0.41 $ 0.41 $ 0.42 $ 0.30 $ 0.28 $ 0.34
Net realized and
unrealized gain (loss)
on investments 2.70 0.32 3.72 2.04 3.94 (3.56) 3.33 (1.91) 3.76 2.41
Total income (loss)
from investment
operations $ 2.94 $ 0.56 $ 4.00 $ 2.37 $ 4.35 $(3.15) $ 3.75 $(1.61) $ 4.04 $ 2.75
Distribution to
shareholders from--
Net investment income (0.23) (0.25) (0.29) (0.35) (0.41) (0.46) (0.36) (0.41) (0.36) (0.36)
Net realized capital
gains 1.15 (1.51) (0.62) (0.15) (0.74) (1.23) (0.68) (1.41) (1.17) (0.36)
Net increase (decrease)
in net asset value $ 1.56 $ (1.20) $ 3.09 $ 1.87 $ 3.20 $ (4.84) $ 2.71 $ (3.43) $ 2.51 $ 2.03
Net asset value, end of
period $ 21.48 $ 19.92 $ 21.12 $ 18.03 $ 16.16 $ 12.96 $ 17.80 $ 15.09 $18.52 $ 16.01
Total return* 16.24 2.62% 22.82% 15.05% 35.80% (19.39%) 26.32% (6.00%) 27.50% 20.40%
-6-
<PAGE>
Ratio of net operating
expenses to average net
assets 0.85** 0.86% 0.84% 0.85% 0.74% 0.71% 0.72% 0.76% 0.68% 0.71%
Ratio of net investment
income to average net
assets 1.18** 1.19% 1.43% 1.85% 2.72% 2.58% 2.56% 2.15% 1.74% 2.41%
Portfolio turnover rate 19% 15% 18% 12% 5% 14% 16% 12% 23% 24%
Net assets end of period
(in thousands) $1,082,154 $1,017,233 $1,019,059 $779,631 $692,344 $562,343 $752,135 $616,953 $734,300 $543,173
<FN>
* Assumes initial investment at net asset value at the beginning of each
year, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each year and no sales charges.
Total return would be reduced if sales charges were taken into account.
** Ratios include expenses paid through certain expense offset arrangements.
Exclusion of such offset arrangements had no impact on these ratios.
</FN>
</TABLE>
III. INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to seek capital growth by investing in a
diversified portfolio of securities consisting primarily of common stocks.
The Fund is managed in accordance with the value philosophy of PMC. This
approach consists of developing a diversified portfolio of securities consistent
with the Fund's investment objective and selected primarily on the basis of
PMC's judgment that the securities have an underlying value, or potential value,
which exceeds their current prices. The analysis and quantification of the
economic worth, or basic value, of individual companies reflects PMC's
assessment of a company's assets and the company's prospects for earnings growth
over the next 11/2-to-3 years. PMC relies primarily on the knowledge, experience
and judgment of its own research staff, but also receives and uses information
from a variety of outside sources, including brokerage firms, electronic data
bases, specialized research firms and technical journals.
Under normal circumstances, at least 65% of the Fund's total assets are invested
in common stocks of companies with a market capitalization of less than $5
billion determined at the time the security is purchased. The Fund's investments
in common stock include common stock equivalents, that is, securities with
common stock characteristics such as convertible bonds and preferred stocks.
While mid-cap company securities may offer a greater capital appreciation
potential than investments in large-cap company securities, they may also
present greater risks. Mid-cap company securities tend to be more sensitive to
changes in earnings expectations and have lower trading volumes than large-cap
company securities and, as a result, they may experience more abrupt and erratic
price movements.
A convertible security is a long-term debt obligation of the issuer convertible
at a stated exchange rate into common stock of the issuer. Convertible
securities rank senior to common stocks in an issuer's capital structure and are
consequently of higher quality and entail less risk than the issuer's common
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<PAGE>
stock. As with all debt securities, the market values of convertible securities
tend to increase when interest rates decline and, conversely, tend to decline
when interest rates increase. The Fund may invest in investment grade debt
securities, that is, securities rated "BBB" or higher by Standard & Poor's
Ratings Group or the equivalent rating of other ranking agencies. If the rating
of a security falls below investment grade, management will consider whatever
action is appropriate consistent with the Fund's investment objectives and
policies. See the Statement of Additional Information for a discussion of rating
categories.
While there is no requirement to do so, the Fund intends to limit investments in
foreign securities to no more than 10% of its assets and to limit investments in
readily tradable securities of real estate investment trusts ("REITS") to no
more than 5% of assets. REITs are pooled investment vehicles which invest
primarily in income producing real estate or real estate related loans or
interests. Investing in REITs involves risks similar to those associated with
investing in mid-cap companies. Any current income produced by a security is not
a significant factor in the selection of investments. The Fund's portfolio may
include a number of securities which are owned by other equity mutual funds
managed by PMC. See "Investment Policies and Restrictions" in the Statement of
Additional Information for more information.
The Fund's fundamental investment objective and the fundamental investment
restrictions set forth in the Statement of Additional Information may not be
changed without shareowner approval. Certain other investment policies,
strategies and restrictions on investment are noted throughout the Prospectus
and are set forth in the Statement of Additional Information. These
non-fundamental investment policies, strategies and restrictions may be changed
at any time by a vote of the Board of Trustees.
It is the policy of the Fund not to engage in trading for short-term profits.
Nevertheless, changes in the portfolio will be made promptly when determined to
be advisable by reason of developments not foreseen at the time of the initial
investment decision, and usually without reference to the length of time a
security has been held. Accordingly, portfolio turnover rate is not considered a
limiting factor in the execution of investment decisions.
The Fund intends to be substantially fully invested at all times. If suitable
investments are not immediately available, the Fund may hold a portion of its
investments in cash and cash-equivalents. For temporary defensive purposes,
however, the Fund may invest up to 100% of its assets in short-term investments.
The Fund will assume a defensive posture only when political and economic
factors affect common stock markets to such an extent that PMC believes there to
be extraordinary risks in being substantially invested in common stocks. A
short-term investment is considered to be an investment with a maturity of one
year or less from the date of issuance. Short-term investments will not normally
represent more than 10% of the Fund's assets.
-8-
<PAGE>
The Fund may enter into repurchase agreements, not to exceed seven days, with
broker-dealers and any member bank of the Federal Reserve System. The Board of
Trustees of the Fund will review and monitor the creditworthiness of any
institution which enters into a repurchase agreement with the Fund. Such
repurchase agreements will be fully collateralized with United States ("U.S.")
Treasury and/or agency obligations with a market value of not less than 100% of
the obligations, valued daily. Collateral will be held by the Fund's custodian
in a segregated, safekeeping account for the benefit of the Fund. Repurchase
agreements afford the Fund an opportunity to earn income on temporarily
available cash at low risk. In the event that a repurchase agreement is not
fulfilled, the Fund could suffer a loss to the extent that the value of the
collateral falls below the repurchase price.
FOREIGN INVESTMENTS AND ASSOCIATED RISK FACTORS
The Fund may invest in securities issued by companies located in foreign
countries. Investing in securities of foreign companies involves certain
considerations and risks which are not typically associated with investing in
securities of domestic companies. Foreign companies are not subject to uniform
accounting, auditing and financial standards and requirements comparable to
those applicable to U.S. companies. There may also be less publicly available
information about foreign companies compared to reports and ratings published
about U.S. companies. In addition, foreign securities markets have substantially
less volume than domestic markets and securities of some foreign companies are
less liquid and more volatile than securities of comparable U.S. companies.
There may also be less government supervision and regulation of foreign
securities exchanges, brokers and listed companies than exists in the United
States. Dividends or interest paid by foreign issuers may be subject to
withholding and other foreign taxes which will decrease the net return on such
investments as compared to dividends or interest paid to the Fund by domestic
companies. Finally, there may be the possibility of expropriations, confiscatory
taxation, political, economic or social instability or diplomatic developments
which could adversely affect assets of the Fund held in foreign countries.
The value of foreign securities may also be adversely affected by fluctuations
in the relative rates of exchange between the currencies of different nations
and by exchange control regulations. For example, the value of a foreign
security held by the Fund as measured in U.S. dollars will decrease if the
foreign currency in which the security is denominated declines in value against
the U.S. dollar. In such event, this will cause an overall decline in the Fund's
net asset value and may also reduce net investment income and capital gains, if
any, to be distributed in U.S. dollars to shareholders of the Fund.
IV. MANAGEMENT OF THE FUND
The Board of Trustees of the Fund has overall responsibility for management and
supervision of the Fund. There are currently eight Trustees, six of whom are not
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<PAGE>
"interested persons" of the Fund as defined in the Investment Company Act of
1940, as amended (the "1940 Act"). The Board meets at least quarterly. By virtue
of the functions performed by PMC as investment adviser, the Fund requires no
employees other than its executive officers, all of whom receive their
compensation from PMC or other sources. The Statement of Additional Information
contains the names and general business and professional background of each
Trustee and executive officer of the Fund.
Investment advisory services are provided to the Fund by PMC pursuant to a
management contract between PMC and the Fund. 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 a
wholly-owned subsidiary of The Pioneer Group, Inc. ("PGI"), a publicly-traded
Delaware corporation. Pioneer Funds Distributor, Inc. ("PFD"), an indirect
subsidiary of PGI, is the principal underwriter of the Fund.
Each domestic equity portfolio managed by PMC, including this Fund, is overseen
by an Equity Committee, which consists of PMC's most senior equity
professionals, and a Portfolio Management Committee, which consists of PMC's
domestic equity portfolio managers. Both committees are chaired by Mr. David
Tripple, PMC's President and Chief Investment Officer and Executive Vice
President of each of the Funds. Mr. Tripple Joined PMC in 1974 and has had
general responsibility for PMC's investment operations and specific portfolio
assignments for over five years. Day-to-day management of the Fund's investments
has been the responsibility of Robert W. Benson since December 1986. Mr. Benson
is Vice President of the Fund and Senior Vice President of PMC. Mr. Benson
joined PMC in 1974.
In addition to the Fund, PMC also manages and serves as the investment adviser
for other mutual funds and is an investment adviser to certain other
institutional accounts. PMC's and PFD's executive offices are located at 60
State Street, Boston, Massachusetts 02109.
Under the terms of its contract with the Fund, PMC assists in the management of
the Fund and is authorized in its discretion to buy and sell securities for the
account of the Fund. PMC pays all the expenses, including executive salaries and
the rental of certain office space, related to its services for the Fund, with
the exception of the following which are to be paid by the Fund: (a) 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; (b) the charges and expenses of auditors; (c) the charges
and expenses of any custodian, transfer agent, plan agent, dividend disbursing
agent and registrar appointed by the Fund; (d) issue and transfer taxes,
chargeable to the Fund in connection with securities transactions to which the
Fund is a party; (e) 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; (f) fees and expenses
involved in registering and maintaining registrations of the Fund and/or its
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<PAGE>
shares with the SEC, individual states or blue sky securities agencies,
territories and foreign countries, including the preparation of Prospectuses and
Statements of Additional Information for filing with the SEC; (g) 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; (h) charges and expenses of legal
counsel to the Fund and the Trustees; (i) distribution fees paid by the Fund in
accordance with Rule 12b-1 promulgated by the SEC pursuant to the 1940 Act; (j)
compensation of those Trustees of the Fund who are not affiliated with or
interested persons of PMC, the Fund (other than as Trustees), PGI or PFD; (k)
the cost of preparing and printing share certificates; and (l) interest on
borrowed money, if any. In addition to the expenses described above, the Fund
shall pay all brokers' and underwriting commissions chargeable to the Fund in
connection with securities transactions to which the Fund is a party.
Orders for the Fund's portfolio securities transactions are placed by PMC, which
strives to obtain the best price and execution for each transaction. In
circumstances in which two or more broker-dealers are in a position to offer
comparable prices and execution, consideration may be given to whether the
broker-dealer provides investment research or brokerage services or sells shares
of any Pioneer mutual fund. See the Statement of Additional Information for a
further description of PMC's brokerage allocation practices.
MANAGEMENT FEE
As compensation for its management services and certain expenses which PMC
incurs on behalf of the Fund, the Fund pays PMC a management fee that is
comprised of two components. The first component is a basic fee equal to 0.625%
per annum of the Fund's average daily net assets (the "Basic Fee"). The second
component is a performance fee adjustment.
COMPUTING THE PERFORMANCE FEE ADJUSTMENT.
The Basic Fee is subject to an upward or downward adjustment, depending on
whether, and to what extent, the investment performance of the Fund for the
performance period exceeds, or is exceeded by, the record of the Standard and
Poors Mid-Cap 400 Index of mid-capitalization stocks (the "Index") over the same
period. The performance period consists of the current month and the prior 35
months ("performance period"). Each percentage point of difference (up to a
maximum of +/-10) is multiplied by a performance adjustment rate of 0.02%. This,
the maximum annualized adjustment rate is +/- 0.20%. This performance comparison
is made at the end of each month. One twelfth (1/12) of this rate is then
applied to the fund's average net assets for the entire performance period,
giving a dollar amount that will be added to (or subtracted from) the Basic Fee.
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The Fund's performance is calculated based on its net asset value per share. For
purposes of calculating the performance adjustment, any dividends or capital
gains distributions paid by the Fund are treated as if reinvested in Fund shares
at the net asset value per share as of the record date for payment. The record
for the Index is based on change in value and is adjusted for any cash
distributions from the companies whose securities whose securities comprise the
S&P 400.
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 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.
Phase-In Of Performance Fee Arrangements.
The Fund's current management contract with PMC became effective February 1,
1996. Under the terms of the contract, for the period beginning February 1 and
ending June 30, 1996, the Fund would pay PMC fees at the following annual rates,
which are the same as those under the contract previously in effect: 0.50% on
average net assets up to $250 million, 0.48% on the next $50 million in net
assets and 0.45% on net assets exceeding $300 million. For the period beginning
July 1 and ending December 31, 1996, the Basic Fee will take effect but a
performance adjustment will only be made if this will result in a lowering of
the basic fee. For periods after January 1, 1997, the performance adjustment
will be made as described above.
The performance period initially used for calculating any performance adjustment
to the Basic Fee will begin on February 1, 1996 and will increase by each
succeeding month until a total of 36 months has been reached. Thereafter, the
performance period will consist of the current month and the prior 35 months as
described above.
The basic fee is computed daily, the performance fee adjustment is calculated
once per month and the entire management fee is normally paid monthly.
John F. Cogan, Jr., Chairman and President of the Fund, Chairman of PFD,
President and a Director of PGI and Chairman and a Director of PMC, owned
approximately 15% of the outstanding capital stock of PGI as of the date of this
Prospectus.
V. FUND SHARE ALTERNATIVES
The Fund continuously offers three Classes of shares designated as Class A,
Class B and Class C shares, as described more fully in "How to Buy Fund Shares."
If you do not specify in your instructions to the Fund which Class of shares you
wish to purchase, exchange or redeem, the Fund will assume that your
instructions apply to Class A shares.
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CLASS A SHARES. If you invest less than $1 million in Class A shares, you
will pay an initial sales charge. Certain purchases may qualify for reduced
initial sales charges. If you invest $1 million or more in Class A shares, no
sales charge will be imposed at the time of purchase, however, shares redeemed
within 12 months of purchase may be subject to a contingent deferred sales
charge ("CDSC"). Class A shares are subject to distribution and service fees at
a combined annual rate of up to 0.25% of the Fund's average daily net assets
attributable to Class A shares.
CLASS B SHARES. If you plan to invest up to $250,000, Class B shares are
available to you. Class B shares are sold without an initial sales charge, but
are subject to a CDSC of up to 4% if redeemed within six years. Class B shares
are subject to distribution and service fees at a combined annual rate of 1.00%
of the Fund's average daily net assets attributable to Class B shares. Your
entire investment in Class B shares is available to work for you from the time
you make your investment, but the higher distribution fee paid by Class B shares
will cause your Class B shares (until conversion) to have a higher expense ratio
and to pay lower dividends, to the extent dividends are paid, than Class A
shares. Class B shares will automatically convert to Class A shares, based on
relative net asset value, eight years after the initial purchase.
CLASS C SHARES. Class C shares are sold without an initial sales charge, but
are subject to a 1% CDSC if they are redeemed within the first year after
purchase. Class C shares are subject to distribution and service fees at a
combined annual rate of up to 1.00% of the Fund's average daily net assets
attributable to Class C shares. Your entire investment in Class C shares is
available to work for you from the time you make your investment, but the higher
distribution fee paid by Class C shares will cause your Class C shares to have a
higher expense ratio and to pay lower dividends, to the extent dividends are
paid, than Class A shares. Class C shares have no conversion feature.
SELECTING A CLASS OF SHARES. The decision as to which Class to purchase
depends on the amount you invest, the intended length of the investment and your
personal situation. If you are making an investment that qualifies for reduced
sales charges, you might consider Class A shares. If you prefer not to pay an
initial sales charge on an investment of $250,000 or less and you plan to hold
the investment for at least six years, you might consider Class B shares. If you
prefer not to pay an initial sales charge and you plan to hold your investment
for one to eight years, you may prefer Class C shares.
Investment dealers or their representatives may receive different
compensation depending on which Class of shares they sell. Shares may be
exchanged only for shares of the same Class of another Pioneer mutual fund and
shares acquired in the exchange will continue to be subject to any CDSC
applicable to the shares of the Fund originally purchased. Shares sold outside
the U.S. to persons who are not U.S. citizens may be subject to different sales
charges, CDSC's and dealer compensation arrangements in accordance with local
laws and business practices.
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VI. SHARE PRICE
Shares of the Fund are sold at the public offering price, which is the net asset
value per share plus the applicable sales charge. Net asset value per share of a
Class of the Fund is determined by dividing the value of its assets, less
liabilities attributable to that Class, by the number of shares of that Class
outstanding. The net asset value is computed once daily, on each day the
Exchange is open, as of the close of regular trading on the Exchange.
Securities are valued at the last sale price on the principal exchange or market
where they are traded. Securities which have not traded on the date of valuation
or securities for which sales prices are not generally reported are valued at
the mean between the current bid and asked prices. Securities quoted in foreign
currencies are converted to U.S. dollars utilizing foreign exchange rates
employed by the Fund's independent pricing services. Generally, trading in
foreign securities is substantially completed each day at various times prior to
the close of the Exchange. The values of such securities used in computing the
net asset value of the Fund's shares are determined as of such times. Foreign
currency exchange rates are also generally determined prior to the close of the
Exchange. Occasionally, events which affect the values of such securities and
such exchange rates may occur between the times at which they are determined and
the close of the Exchange and will therefore not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of such
securities occur during such period, then these securities are valued at their
fair value as determined in good faith by the Trustees. All assets of the Fund
for which there is no other readily available valuation method are valued at
their fair value as determined in good faith by the Trustees.
VII. HOW TO BUY FUND SHARES
YOU MAY BUY FUND SHARES AT THE PUBLIC OFFERING PRICE FROM ANY SECURITIES
BROKER-DEALER HAVING A SALES AGREEMENT WITH PFD. IF YOU DO NOT HAVE A SECURITIES
BROKER-DEALER, PLEASE CALL 1-800-225-6292 FOR ASSISTANCE.
The minimum initial investment is $1,000 for Class A, B and C shares, except
as specified below. The minimum initial investment is $50 for Class A accounts
being established to utilize monthly bank drafts, government allotments, payroll
deduction and other similar automatic investment plans. Separate minimum
investment requirements apply to retirement plans and to telephone and wire
orders placed by broker-dealers; and no sales charge or minimum investment
requirements apply to the reinvestment of dividends or capital gains
distributions. The minimum subsequent investment is $50 for Class A shares and
$500 for Class B and C shares except that the subsequent minimum investment
amount for Class B and C share accounts may be as little as $50 if an automatic
investment plan (see "Automatic Investment Plans") is established.
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TELEPHONE PURCHASES. Your account is automatically authorized to have the
telephone purchase privilege unless you indicated otherwise on your Account
Application or by writing to Pioneering Services Corporation ("PSC"). The
telephone purchase option may be used to purchase additional shares for an
existing fund account; it may not be used to establish a new account. Proper
account identification will be required for each telephone purchase. A maximum
of $25,000 per account may be purchased by telephone each day. The telephone
purchase privilege is available to IRA accounts but may not be available to
other types of retirement plan accounts. Call PSC for more information.
YOU ARE STRONGLY URGED TO CONSULT WITH YOUR FINANCIAL REPRESENTATIVE PRIOR TO
REQUESTING A TELEPHONE PURCHASE. To purchase shares by telephone, you must
establish your bank account of record by completing the appropriate section of
your Account Application or an Account Options Form. PSC will electronically
debit the amount of each purchase from this predesignated bank account.
Telephone purchases may not be made for 30 days after the establishment of your
bank of record or any change to your bank information.
Telephone purchases will be priced at the net asset value plus any applicable
sales charge next determined after PSC's acceptance of a telephone purchase
instruction and receipt of good funds (usually three days after the purchase
instruction). You may always elect to deliver purchases to PSC by mail. See
"Telephone Transactions and Related Liabilities" for additional information.
CLASS A SHARES
You may buy Class A shares at the public offering price, that is, the net
asset value per share next computed after receipt of a purchase order, plus a
sales charge as follows:
SALES CHARGE AS A % OF
DEALER
NET ALLOWANCE
OFFERING AMOUNT AS A % OF
AMOUNT OF PURCHASE PRICE INVESTED PRICE
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.50 4.71 4.00
$100,000 but less than $250,000 3.50 3.63 3.00
$250,000 but less than $500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.75
$1 million or more -0- -0- See Below
No sales charge is payable at the time of purchase on investments of $1 million
or more, or for investments by certain group plans ("Group Plans"), but for such
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investments a contingent deferred sales charge ("CDSC") of 1.00% is imposed in
the event of a redemption of Class A shares within 12 months of purchase. See
"Redemptions and Repurchases" below. PFD may, in its discretion, pay a
commission to broker-dealers who initiate and are responsible for such purchases
as follows: 1.00% on the first $5 million invested; 0.50% on the next $45
million invested; and 0.25% on the excess over $50 million invested. These
commissions shall not be payable if the purchaser is affiliated with the
broker-dealer or if the purchase represents the reinvestment of a redemption
made during the previous 12 calendar months. Broker-dealers who receive a
commission in connection with Class A share purchases at net asset value by
401(a) or 401(k) retirement plans with 1,000 or more eligible participants or
with at least $10 million in plan assets will be required to return any
commissions paid or a pro rata portion thereof if the retirement plan redeems
its shares within 12 months of purchase. See also "How to Sell Fund Shares." In
connection with PGI's acquisition of Mutual of Omaha Fund Management Company and
contingent upon the achievement of certain sales objectives, PFD may pay pays to
Mutual of Omaha Investor Services, Inc. 50% of PFD's retention of any sales
commission on sales of the Fund's shares through such dealer.
The schedule of sales charges above is applicable to purchases of Class A
shares of the Fund by (i) an individual, (ii) an individual and his or her
spouse and children under the age of 21 and (iii) a trustee or other fiduciary
of a trust estate or fiduciary account or related trusts or accounts including
pension, profit-sharing and other employee benefit trusts qualified under
Section 401 or 408 of the Internal Revenue Code of 1986, as amended (the
"Code"), although more than one beneficiary is involved. The sales charges
applicable to a current purchase of Class A shares of the Fund by a person
listed above is determined by adding the value of shares to be purchased to the
aggregate value (at the then current offering price) of shares of any of the
other Pioneer mutual funds previously purchased and then owned , provided PFD is
notified by such person or his or her broker-dealer each time a purchase is made
which would qualify. Pioneer mutual funds include all mutual funds for which PFD
serves as principal underwriter. See the "Letter of Intention" section of the
Account Application.
QUALIFYING FOR A REDUCED SALES CHARGE. Class A shares of the Fund may be sold
at a reduced or eliminated sales charge to certain group plans ("Group Plans")
under which a sponsoring organization makes recommendations to, permits group
solicitation of, or otherwise facilitates purchases by, its employees, members
or participants. Class A shares of the Fund may be sold at net asset value per
share without a sales charge to state-sponsored Optional Retirement Program
participants if (i) the employer has authorized a limited number of investment
company providers for the Program, (ii) all authorized investment company
providers offer their shares to Program participants at net asset value, (iii)
the employer has agreed in writing to actively promote the authorized investment
providers to Program participants and (iv) the Program provides for a matching
contribution for each participant contribution. Information about such
arrangements is available from PFD.
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Class A shares of the Fund may also be sold at net asset value per share
without a sales charge to: (a) current or former Trustees and officers of the
Fund and partners and employees of its legal counsel; (b) current or former
directors, officers, employees or sales representatives of PGI, its
subsidiaries; (c) current or former directors, officers, employees or sales
representatives of any subadviser or predecessor investment adviser to any
investment company for which PMC serves as an investment adviser, and the
subsidiaries or affiliates of such persons; (d) current or former officers,
partners, employees or registered representatives of broker-dealers which have
entered into sales agreements with PFD; (e) members of the immediate families of
any of the persons above; (f) any trust, custodian, pension, profit-sharing or
other benefit plan of the foregoing persons; (g) insurance company separate
accounts; (h) certain "wrap accounts" for the benefit of clients of financial
planners adhering to standards established by PFD; (i) other funds and accounts
for which PMC or any of its affiliates serves as investment adviser or manager;
and (j) certain unit investment trusts. Shares so purchased are purchased for
investment purposes and may not be resold except through redemption or
repurchase by or on behalf of the Fund. The availability of this privilege is
conditioned on the receipt by PFD of written notification of eligibility. Class
A shares of the Fund may also be sold at net asset value without a sales charge
in connection with certain reorganization, liquidation or acquisition
transactions involving other investment companies or personal holding companies.
Reduced sales charges for Class A shares are available through an agreement
to purchase a specified quantity of Fund shares over a designated thirteen-month
period by completing the "Letter of Intention" section of the Account
Application. Information about the "Letter of Intention" procedure, including
its terms, is contained on the back of the Account Application as well as in the
Statement of Additional Information. Investors who are clients of a
broker-dealer with a current sales agreement with PFD may purchase Class A
shares of the Fund at net asset value, without a sales charge, to the extent
that the purchase price is paid out of proceeds from one or more redemptions by
the investor of shares of certain other mutual funds. In order for a purchase to
qualify for this privilege, the investor must document to the broker-dealer that
the redemption occurred within 60 days immediately preceding the purchase of
Class A shares; that the client paid a sales charge on the original purchase of
the shares redeemed; and that the mutual fund whose shares were redeemed also
offers net asset value purchases to redeeming shareholders of any of the Pioneer
mutual funds. Further details may be obtained from PFD.
CLASS B SHARES
You may buy Class B shares at net asset value without the imposition of an
initial sales charge; however, Class B shares redeemed within six years of
purchase will be subject to a CDSC at the rates shown in the table below. The
charge will be assessed on the amount equal to the lesser of the current market
value or the original purchase cost of the shares being redeemed. No CDSC will
be imposed on increases in account value above the initial purchase price,
including shares derived from the reinvestment of dividends or capital gains
distributions.
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The amount of the CDSC, if any, will vary depending on the number of years
from the time of purchase until the time of redemption of Class B shares. For
the purpose of determining the number of years from the time of any purchase,
all payments during a quarter will be aggregated and deemed to have been made on
the first day of that quarter. In processing redemptions of Class B shares, the
Fund will first redeem shares not subject to any CDSC, and then shares held
longest during the six-year period. As a result, you will pay the lowest
possible CDSC.
YEAR SINCE CDSC AS A PERCENTAGE OF DOLLAR
PURCHASE AMOUNT SUBJECT TO CDSC
- -------- ----------------------
First 4.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter none
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class B shares, including the payment of
compensation to broker-dealers.
Class B shares will automatically convert into Class A shares at the end of
the calendar quarter that is eight years after the purchase date, except as
noted below. Class B shares acquired by exchange from Class B shares of another
Pioneer fund will convert into Class A shares based on the date of the initial
purchase and the applicable CDSC. Class B shares acquired through reinvestment
of distributions will convert into Class A shares based on the date of the
initial purchase to which such shares relate. For this purpose, Class B shares
acquired through reinvestment of distributions will be attributed to particular
purchases of Class B shares in accordance with such procedures as the Trustees
may determine from time to time. The conversion of Class B shares to Class A
shares is subject to the continuing availability of a ruling from the Internal
Revenue Service ("IRS") that such conversions will not constitute taxable events
for federal tax purposes. The conversion of Class B shares to Class A shares
will not occur if such ruling is not available and, therefore, Class B shares
would continue to be subject to higher expenses than Class A shares for an
indeterminate period.
CLASS C SHARES
You may buy Class C shares at net asset value without the imposition of an
initial sales charge; however, Class C shares redeemed within one year of
purchase will be subject to a CDSC of 1.00%. The charge will be assessed on the
amount equal to the lesser of the current market value or the original purchase
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cost of the shares being redeemed. No CDSC will be imposed on increases in
account value above the initial purchase price, including shares derived from
the reinvestment of dividends or capital gains distributions. Class C shares do
not convert to any other Class of Fund shares.
For the purpose of determining the time of any purchase, all payments during
a quarter will be aggregated and deemed to have been made on the first day of
that quarter. In processing redemptions of Class C shares, the Fund will first
redeem shares not subject to any CDSC, and then shares held for the shortest
period of time during the one-year period. As a result, you will pay the lowest
possible CDSC.
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class C shares, including the payment of
compensation to broker-dealers.
WAIVER OR REDUCTION OF CONTINGENT DEFERRED SALES CHARGE. The CDSC on Class B
shares and on any Class A shares subject to a CDSC may be waived or reduced for
non-retirement accounts if: (a) the redemption results from the death of all
registered owners of an account (in the case of UGMAs, UTMAs and trust accounts,
waiver applies upon the death of all beneficial owners) or a total and permanent
disability (as defined in Section 72 of the Code) of all registered owners
occurring after the purchase of the shares being redeemed or (b) the redemption
is made in connection with limited automatic redemptions as set forth in
"Systematic Withdrawal Plans" (limited in any year to 10% of the value of the
account in the Fund at the time the withdrawal plan is established).
The CDSC on Class B shares and on any Class A shares subject to a CDSC may be
waived or reduced for retirement plan accounts if: (a) the redemption results
from the death or a total and permanent disability (as defined in Section 72 of
the Code) occurring after the purchase of the shares being redeemed of a
shareowner or participant in an employer-sponsored retirement plan; (b) the
distribution is to a participant in an Individual Retirement Account ("IRA"),
403(b) or employer-sponsored retirement plan, is part of a series of
substantially equal payments made over the life expectancy of the participant or
the joint life expectancy of the participant and his or her beneficiary or as
scheduled periodic payments to a participant (limited in any year to 10% of the
value of the participant's account at the time the distribution amount is
established; a required minimum distribution due to the participant's attainment
of age 70-1/2 may exceed the 10% limit only if the distribution amount is based
on plan assets held by Pioneer); (c) the distribution is from a 401(a) or 401(k)
retirement plan and is a return of excess employee deferrals or employee
contributions or a qualifying hardship distribution as defined by the Code or
results from a termination of employment (limited with respect to a termination
to 10% per year of the value of the plan's assets in the Fund as of the later of
the prior December 31 or the date the account was established unless the plan's
assets are being rolled over to or reinvested in the same class of shares of a
Pioneer mutual fund subject to the CDSC of the shares originally held); (d) the
distribution is from an IRA, 403(b) or employer-sponsored retirement plan and is
to be rolled over to or reinvested in the same class of shares in a Pioneer
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mutual fund and which will be subject to the applicable CDSC upon redemption;
(e) the distribution is in the form of a loan to a participant in a plan which
permits loans (each repayment of the loan will constitute a new sale which will
be subject to the applicable CDSC upon redemption); or (f) the distribution is
from a qualified defined contribution plan and represents a participant's
directed transfer (provided that this privilege has been pre-authorized through
a prior agreement with PFD regarding participant directed transfers).
The CDSC on Class C shares may be waived or reduced for either non-retirement
or retirement plan accounts if: (a) the redemption results from the death or a
total and permanent disability (as defined in Section 72 of the Code) occurring
after the purchase of the shares being redeemed of a shareowner or participant
in an employer-sponsored retirement plan. The CDSC on Class C shares may be
waived or reduced for retirement plan accounts if the distribution is to a
participant in an Individual Retirement Account ("IRA") or employer-sponsored
retirement plan and is (a) part of a series of substantially equal payments made
over the life expectancy of the participant or the joint life expectancy of the
participant and his or her beneficiary; (b) in the form of scheduled periodic
payments to a participant; (c) a return of excess employee deferrals; (d) a
qualifying hardship distribution as defined by the Code; (e) from a termination
of employment; (f) the distribution is in the form of a loan to a participant in
a plan which permits loans; or (g) from a qualified defined contribution plan
and represents a participant's directed transfer (provided that this privilege
has been pre-authorized through a prior agreement with PFD regarding participant
directed transfers).
The CDSC on Class B and Class C shares and on any Class A shares subject to a
CDSC may be waived or reduced for either non-retirement or retirement plan
accounts if: (a) the redemption is made by any state, county, or city, or any
instrumentality, department, authority, or agency thereof, which is prohibited
by applicable laws from paying a CDSC in connection with the acquisition of
shares of any registered investment management company; or (b) the redemption is
made pursuant to the Fund's right to liquidate or involuntarily redeem shares in
a shareowner's account.
BROKER-DEALERS. An order for any Class of Fund shares received by PFD from a
broker-dealer prior to the close of regular trading on the Exchange is confirmed
at the price appropriate for that Class as determined at the close of regular
trading on the Exchange on the day the order is received, provided the order is
received prior to PFD's close of business (usually, 5:30 p.m. Eastern Time). It
is the responsibility of broker-dealers to transmit orders so that they will be
received by PFD prior to its close of business.
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GENERAL. The Fund reserves the right in its sole discretion to withdraw all
or any part of the offering of shares when, in the judgment of the Fund's
management, such withdrawal is in the best interest of the Fund. An order to
purchase shares is not binding on, and may be rejected by, PFD until it has been
confirmed in writing by PFD and payment has been received.
VIII. HOW TO SELL FUND SHARES
You can arrange to sell (redeem) Fund shares on any day the Exchange is open by
selling either some or all of your shares to the Fund.
You may sell your shares either through your broker-dealer or directly to the
Fund. Please note the following:
o If you are selling shares from a retirement account, you must make your
request in writing (except for exchanges to other Pioneer mutual funds
which can be requested by phone or in writing). Call 1-800-622-0176 for
more information.
o If you are selling shares from a non-retirement account, you may use any of
the methods described below.
Your shares will be sold at the share price next calculated after your order is
received and accepted less any applicable CDSC. Sale proceeds generally will be
sent to you in cash, normally within seven days after your order is accepted.
The Fund reserves the right to withhold payment of the sale proceeds until
checks received by the Fund in payment for the shares being sold have cleared,
which may take up to 15 calendar days from the purchase date.
IN WRITING. You may sell your shares by delivering a written request, signed by
all registered owners, in good order to PSC, however, you must use a written
request, including a signature guarantee, to sell your shares if any of the
following situations applies:
o you wish to sell over $50,000 worth of shares,
o your account registration or address has changed within the last 30 days
o the check is not being mailed to the address on your account (address of
record),
o the check is not being made out to the account owners, or the
o sale proceeds are being transferred to a Pioneer account with a different
registration.
Your request should include your name, the Fund's name, your Fund account
number, the Class of shares to be redeemed, the dollar amount or number of
shares to be redeemed, and any other applicable requirements as described below.
Unless instructed otherwise, Pioneer will send the proceeds of the sale to the
address of record. Fiduciaries or corporations are required to submit additional
documents. For more information, contact PSC at 1-800-225-6292.
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Written requests will not be processed until they are received in good order and
accepted by PSC. Good order means that there are no outstanding claims or
requests to hold redemptions on the account, certificates are endorsed by the
record owner(s) exactly as the shares are registered and, if required, the
signature(s) are guaranteed by an eligible guarantor. You should be able to
obtain a signature guarantee from a bank, broker, dealer, credit union (if
authorized under state law), securities exchange or association, clearing agency
or savings association. A notary public cannot provide a signature guarantee.
Signature guarantees are not accepted by facsimile ("fax"). For additional
information about the necessary documentation for redemption by mail, please
contact PSC at 1-800-225-6292.
BY TELEPHONE OR BY FAX. Your account is automatically authorized to have the
telephone redemption privilege unless you indicated otherwise on your Account
Application or by writing to PSC. Proper account identification will be required
for each telephone redemption. The telephone redemption option is not available
to retirement plan accounts. A maximum of $50,000 may be redeemed by telephone
or fax and the proceeds may be received by check or by bank wire or electronic
funds transfer. To receive the proceeds by check: the check must be made payable
exactly as the account is registered and the check must be sent to the address
of record which must not have changed in the last 30 days. To receive the
proceeds by bank wire or by electronic funds transfer: the proceeds must be sent
to the bank address of record which must have been properly pre-designated
either on your Account Application or on an Account Options Form and which must
not have changed in the last 30 days. To redeem by fax, send your redemption
request to 1-800-225-4240. You may always elect to deliver redemption
instructions to PSC by mail. See "Telephone Transactions and Related
Liabilities" below. Telephone and fax redemptions will be priced as described
above. YOU ARE STRONGLY URGED TO CONSULT WITH YOUR FINANCIAL REPRESENTATIVE
PRIOR TO REQUESTING A TELEPHONE REDEMPTION.
SELLING SHARES THROUGH YOUR BROKER-DEALER. The Fund has authorized PFD to act as
its agent in the repurchase of shares of the Fund from qualified broker-dealers
and reserves the right to terminate this procedure at any time. Your
broker-dealer must receive your request before the close of business on the
Exchange and transmit it to PFD before PFD's close of business to receive that
day's redemption price. Your broker-dealer is responsible for providing all
necessary documentation to PFD and may charge you for its services.
SMALL ACCOUNTS. The minimum account value is $500. If you hold shares of the
Fund in an account with a net asset value of less than the minimum required
amount due to redemptions or exchanges, the Fund may redeem the shares held in
this account at net asset value if you have not increased the net asset value of
the account to at least the minimum required amount within six months of notice
by the Fund to you of the Fund's intention to redeem the shares.
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CDSC ON CLASS A SHARES. Purchases of Class A shares of $1,000,000 or more, or by
participants in a Group Plan which were not subject to an initial sales charge,
may be subject to a CDSC upon redemption. A CDSC is payable to PFD on these
investments in the event of a share redemption within 12 months following the
share purchase, at the rate of 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividend and capital gain distributions) or
the total cost of such shares. Shares subject to the CDSC which are exchanged
into another Pioneer fund will continue to be subject to the CDSC until the
original 12-month period expires. However, no CDSC is payable with respect to
purchases of Class A shares by 401(a) or 401(k) retirement plans with 1,000 or
more eligible participants or with at least $10 million in plan assets.
GENERAL. Redemptions may be suspended or payment postponed during any period in
which any of the following conditions exist: the Exchange is closed or trading
on the Exchange is restricted; an emergency exists as a result of which disposal
by the Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund to fairly determine the value of the net
assets of its portfolio; or the SEC, by order, so permits.
Redemptions and repurchases are taxable transactions to shareholders. The net
asset value per share received upon redemption or repurchase may be more or less
than the cost of shares to an investor, depending on the market value of the
portfolio at the time of redemption or repurchase.
IX. HOW TO EXCHANGE FUND SHARES
WRITTEN EXCHANGES. You may exchange your shares by sending a letter of
instruction to PSC. Your letter should include your name, the name of the Fund
out of which you wish to exchange and the name of the Fund into which you wish
to exchange, your fund account number(s), the Class of shares to be exchanged
and the dollar amount or number of shares to be exchanged. Written exchange
requests must be signed by all record owner(s) exactly as the shares are
registered.
TELEPHONE EXCHANGES. Your account is automatically authorized to have the
telephone exchange privilege unless you indicated otherwise on your Account
Application or by writing to PSC. Proper account identification will be required
for each telephone exchange. Telephone exchanges may not exceed $500,000 per
account per day. Each voice-requested or FactFoneSM telephone exchange request
will be recorded. You are strongly urged to consult with your financial
representative prior to requesting a telephone exchange. See "Telephone
Transactions and Related Liabilities" below.
AUTOMATIC EXCHANGES. You may automatically exchange shares from one Pioneer
account for shares of the same Class in another Pioneer account on a monthly or
quarterly basis. The accounts must have identical registrations and the
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originating account must have a minimum balance of $5,000. The exchange will be
effective on the 18th day of the month.
GENERAL. Exchanges must be at least $1,000. You may exchange your investment
from one Class of Fund shares at net asset value, without a sales charge, for
shares of the same Class of any other Pioneer mutual fund. Not all Pioneer
mutual funds offer more than one Class of shares. A new Pioneer account opened
through an exchange must have a registration identical to that on the original
account.
Class A or Class B shares which would normally be subject to a CDSC upon
redemption will not be charged the applicable CDSC at the time of an exchange.
Shares acquired in an exchange will be subject to the CDSC of the shares
originally held. For purposes of determining the amount of any applicable CDSC,
the length of time you have owned Class B shares acquired by exchange will be
measured from the date you acquired the original shares and will not be affected
by any subsequent exchange.
Exchange requests received by PSC before 4:00 p.m. Eastern Time will be
effective on that day if the requirements above have been met, otherwise, they
will be effective on the next business day. PSC will process exchanges only
after receiving an exchange request in good order. There are currently no fees
or sales charges imposed at the time of an exchange. An exchange of shares may
be made only in states where legally permitted. For federal and (generally)
state income tax purposes, an exchange is considered to be a sale of the shares
of the Fund exchanged and a purchase of shares in another Pioneer mutual fund.
Therefore, an exchange could result in a gain or loss on the shares sold,
depending on the tax basis of these shares and the timing of the transaction,
and special tax rules may apply.
You should consider the differences in objectives and policies of the Pioneer
mutual funds, as described in each fund's current prospectus, before making any
exchange. For the protection of the Fund's performance and shareholders, the
Fund and PFD reserve the right to refuse any exchange request or restrict, at
any time without notice, the number and/or frequency of exchanges to prevent
abuses of the exchange privilege. Such abuses may arise from frequent trading in
response to short-term market fluctuations, a pattern of trading by an
individual or group that appears to be an attempt to "time the market," or any
other exchange request which, in the view of management, will have a detrimental
effect on the Fund's portfolio management strategy or its operations. In
addition, the Fund and PFD reserve the right to charge a fee for exchanges or to
modify, limit, suspend or discontinue the exchange privilege with notice to
shareholders as required by law.
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X. DISTRIBUTION PLANS
The Fund has adopted a Plan of Distribution for each Class of shares (the
"Class A Plan," "Class B Plan," and "Class C Plan") in accordance with Rule
12b-1 under the 1940 Act pursuant to which certain distribution fees are paid to
PFD.
Pursuant to the Class A Plan, the Fund reimburses PFD for its actual
expenditures to finance any activity primarily intended to result in the sale of
Class A shares or to provide services to holders of Class A shares, provided the
categories of expenses for which reimbursement is made are approved by the
Fund's Board of Trustees. As of the date of this Prospectus, the Board of
Trustees has approved the following categories of expenses for Class A shares of
the Fund: (i) a service fee to be paid to qualified broker-dealers in an amount
not to exceed 0.25% per annum of the Fund's daily net assets attributable to
Class A shares; (ii) reimbursement to PFD for its expenditures for broker-dealer
commissions and employee compensation on certain sales of the Fund's Class A
shares with no initial sales charge (See "How to Buy Fund Shares"); and (iii)
reimbursement to PFD for expenses incurred in providing services to Class A
shareholders and supporting broker-dealers and other organizations (such as
banks and trust companies) in their efforts to provide such services. Banks are
currently prohibited under the Glass-Steagall Act from providing certain
underwriting or distribution services. If a bank was prohibited from acting in
any capacity or providing any of the described services, management would
consider what action, if any, would be appropriate.
Expenditures of the Fund pursuant to the Class A Plan are accrued daily and
may not exceed 0.25% of the Fund's average daily net assets attributable to
Class A shares. Distribution expenses of PFD are expected to substantially
exceed the distribution fees paid by the Fund in a given year. The Class A Plan
may not be amended to increase materially the annual percentage limitation of
average net assets which may be spent for the services described therein without
approval of the shareholders of the Fund.
Both the Class B Plan and the Class C Plan provide that the Fund will
compensate PFD by paying a distribution fee at the annual rate of 0.75% of the
Fund's average daily net assets attributable to the applicable Class of shares
and a service fee at the annual rate of 0.25% of the Fund's average daily net
assets attributable to that Class of shares. The distribution fee is intended to
compensate PFD for its Class B and Class C distribution services to the Fund.
The service fee is intended to be additional compensation for personal services
and/or account maintenance services with respect to Class B or Class C shares.
PFD also receives the proceeds of any CDSC imposed on the redemption of Class B
or Class C shares.
Commissions of 4% of the amount invested in Class B shares, equal to 3.75% of
the amount invested and a first year's service fee equal to 0.25% of the amount
invested, are paid to broker-dealers who have selling agreements with PFD. PFD
may advance to dealers the first year service fee at a rate up to 0.25% of the
purchase price of such shares and, as compensation therefore, PFD may retain the
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service fee paid by the Fund with respect to such shares for the first year
after purchase. Commencing in the 13th month following the purchase of Class B
shares, dealers will become eligible for additional annual service fees of up to
0.25% of the purchase price with respect to such shares.
Commissions of up to 1% of the amount invested in Class C shares, consisting
of 0.75% of the amount invested and a first year's service fee of 0.25% of the
amount invested, are paid to broker-dealers who have selling agreements with
PFD. PFD may advance to dealers the first year service fee at a rate up to 0.25%
of the purchase price of such shares and, as compensation therefore, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Commencing in the 13th month following the purchase
of Class C shares, dealers will become eligible for additional annual
distribution fees and services fees of up to 0.75% and 0.25%, respectively, of
the purchase price with respect to such shares.
Dealers may from time to time be required to meet certain criteria in order
to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan or the Class C Plan for which there
is no dealer of record or for which qualification standards have not been met as
partial consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareowner accounts.
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION
The Fund has elected to be treated, has qualified and intends to qualify each
year as a "regulated investment company" under Subchapter M of the Code, so that
it will not pay federal income taxes on income and capital gains distributed to
shareholders at least annually. Under the Code, the Fund will be subject to a
nondeductible 4% federal excise tax on a portion of its undistributed income and
capital gains if it fails to meet certain distribution requirements with respect
to each calendar year. The Fund intends to make distributions in a timely manner
and accordingly does not expect to be subject to the excise tax.
The Fund's policy is to pay to shareholders dividends from net investment
income, if any, twice each year during the months of June and December and to
make distributions from net long-term capital gains, if any, in December.
Distributions from net short-term capital gains, if any, may be paid with such
dividends; distributions from income and/or capital gains may also be made at
such times as may be necessary to avoid federal income or excise tax. Dividends
from the Fund's net investment income, net short-term capital gains, and certain
net foreign exchange gains are taxable as ordinary income, and dividends from
the Fund's net long-term capital gains are taxable as long-term capital gains.
Unless shareholders specify otherwise, all distributions will be automatically
reinvested in additional full and fractional shares of the Fund. For federal
income tax purposes, all dividends are taxable as described above whether a
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shareowner takes them in cash or reinvests them in additional shares of the
Fund. Information as to the federal tax status of dividends and distributions
will be provided annually. For further information on the distribution options
available to shareholders, see "Distribution Options" and "Directed Dividends"
below.
Distributions by the Fund of the dividend income it receives from U.S. domestic
corporations, if any, may qualify for the corporate dividends-received deduction
for corporate shareholders, subject to minimum holding-period requirements and
debt-financing restrictions under the Code.
The Fund anticipates that it will be subject to foreign withholding taxes or
other foreign taxes on income (possibly including capital gains) on certain
foreign investments, which will reduce the yield on those investments. The Fund
does not expect to qualify to pass such taxes and any associated tax deductions
or credits through to its shareholders.
Dividends and other distributions and the proceeds of redemptions, exchanges or
repurchases of Fund shares paid to individuals and other non-exempt payees will
be subject to a 31% backup withholding of federal income tax if the Fund is not
provided with the shareowner's correct taxpayer identification number and
certification that the number is correct and the shareowner is not subject to
backup withholding or if the Fund receives notice from the IRS or a broker that
such withholding applies. Please refer to the Account Application for additional
information.
The description above relates only to U.S. federal income tax consequences for
shareholders who are U.S. persons, i.e., U.S. citizens or residents or U.S.
corporations, partnerships, trusts or estates and who are subject to U.S.
federal income tax. Non-U.S. shareholders and tax-exempt shareholders are
subject to different tax treatment that is not described above. Shareholders
should consult their own tax advisers regarding state, local and other
applicable tax laws.
XII. SHAREOWNER SERVICES
PSC is the shareowner services and transfer agent for shares of the Fund. PSC, a
Massachusetts corporation, is a wholly-owned subsidiary of PGI. PSC's offices
are located at 60 State Street, Boston, Massachusetts 02109, and inquiries to
PSC should be mailed to Pioneering Services Corporation, P.O. Box 9014, Boston,
Massachusetts 02205-9014. Brown Brothers Harriman & Co. (the "Custodian") serves
as custodian of the Fund's portfolio securities and other assets. The principal
business address of the mutual fund division of the Custodian is 40 Water
Street, Boston, Massachusetts 02109.
ACCOUNT AND CONFIRMATION STATEMENTS
PSC maintains an account for each shareowner and all transactions of the
shareowner are recorded in this account. Confirmation statements showing details
of transactions are sent to shareholders as transactions occur, except Automatic
Investment Plan transactions which are confirmed quarterly. The Combined Account
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Statement, mailed quarterly, is available to shareholders who have more than one
Pioneer account.
Shareholders whose shares are held in the name of an investment broker-dealer or
other party will not normally have an account with the Fund and might not be
able to utilize some of the services available to shareholders of record.
Examples of services which might not be available are investment or redemption
of shares by mail, automatic reinvestment of dividends and capital gains
distributions, withdrawal plans, Letters of Intention, Rights of Accumulation,
telephone exchanges and redemptions, and newsletters.
ADDITIONAL INVESTMENTS
You may add to your account by sending a check (minimum of $50 for Class A
shares and $500 for Class B and C shares) to PSC (account number and Class of
shares should be clearly indicated). The bottom portion of a confirmation
statement may be used as a remittance slip to make additional investments.
Additions to your account, whether by check or through a Pioneer Investomatic
Plan, are invested in full and fractional shares of the Fund at the applicable
offering price in effect as of the close of the Exchange on the day of receipt.
AUTOMATIC INVESTMENT PLANS
You may arrange for regular automatic investments of $50 or more through
government/military allotments, payroll deduction or through a Pioneer
Investomatic Plan. A Pioneer Investomatic Plan provides for a monthly or
quarterly investment by means of a pre-authorized draft drawn on a checking
account. Pioneer Investomatic Plan investments are voluntary, and you may
discontinue the Plan at any time without penalty upon 30 days' written notice to
PSC. PSC acts as agent for the purchaser, the broker-dealer and PFD in
maintaining these plans.
FINANCIAL REPORTS AND TAX INFORMATION
As a shareowner, you will receive financial reports at least semiannually. In
January of each year, the Fund will mail you information about the tax status of
dividends and distributions.
DISTRIBUTION OPTIONS
Dividends and capital gains distributions, if any, will automatically be
invested in additional shares of the Fund, at the applicable net asset value per
share, unless you indicate another option on the Account Application.
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Two other options available are (a) dividends in cash and capital gains
distributions in additional shares; and (b) all dividends and capital gains
distributions in cash. These two options are not available, however, for
retirement plans or for an account with a net asset value of less than $500.
Changes in your distribution options may be made by written request to PSC.
DIRECTED DIVIDENDS
You may elect (in writing) to have the dividends paid by one Pioneer fund
account invested in a second Pioneer fund account. The value of this second
account must be at least $1,000 ($500 for Pioneer Fund or Pioneer II). Invested
dividends may be in any amount, and there are no fees or charges for this
service. Retirement plan shareholders may only direct dividends to accounts with
identical registrations, i.e., PGI IRA Cust for John Smith may only go into
another account registered PGI IRA Cust for John Smith.
DIRECT DEPOSIT
If you have elected to take distributions, whether dividends or dividends and
capital gains, in cash, or have established a Systematic Withdrawal Plan, you
may choose to have those cash payments deposited directly into your savings,
checking or NOW bank account. You may establish this service by completing the
appropriate section on the Account Application when opening a new account or the
Account Options Form for an existing account.
VOLUNTARY TAX WITHHOLDING
You may request (in writing) that PSC withhold 28% of the dividends and capital
gains distributions paid from your account (before any reinvestment) and forward
the amount withheld to the IRS as a credit against your federal income taxes.
This option is not available for retirement plan accounts or for accounts
subject to backup withholding.
TELEPHONE TRANSACTIONS AND RELATED LIABILITIES
Your account is automatically authorized to have telephone transaction
privileges unless you indicate otherwise on your Account Application or by
writing to PSC. You may purchase, sell or exchange Fund shares by telephone. For
personal assistance, call 1-800-225-6292 between 8:00 a.m. and 8:00 p.m. Eastern
time on weekdays. Computer-assisted transactions are available to shareholders
who have pre-recorded certain bank information (see "FactFoneSM"). You are
strongly urged to consult with your financial representative prior to requesting
any telephone transaction. See "Share Price" for more information. To confirm
that each transaction instruction received by telephone is genuine, the Fund
will record each telephone transaction, require the caller to provide the
personal identification number (PIN) for the account and send you a written
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confirmation of each telephone transaction. Different procedures may apply to
accounts that are registered to non-U.S. citizens or that are held in the name
of an institution or in the name of an investment broker-dealer or other
third-party. If reasonable procedures, such as those described above, are not
followed, the Fund may be liable for any loss due to unauthorized or fraudulent
instructions. The Fund may implement other procedures from time to time. In all
other cases, neither the Fund, PSC or PFD will be responsible for the
authenticity of instructions received by telephone; therefore, you bear the risk
of loss for unauthorized or fraudulent telephone transactions.
During times of economic turmoil or market volatility or as a result of severe
weather or a natural disaster, it may be difficult to contact the Fund by
telephone to institute a redemption or exchange. You should communicate with the
Fund in writing if you are unable to reach the Fund by telephone.
FACTFONESM
FactFoneSM is an automated inquiry and telephone transaction system available to
Pioneer shareholders by dialing 1-800-225-4321. FactFoneSM allows you to obtain
current information on your Pioneer accounts and to inquire about the prices and
yields of all publicly available Pioneer mutual funds. In addition, you may use
FactFoneSM to make computer-assisted telephone purchases, exchanges and
redemptions from your Pioneer accounts if you have activated your personal
identification number ("PIN"). Telephone purchases and redemptions require the
establishment of a bank account of record. You are strongly urged to consult
with your financial representative prior to requesting any telephone
transaction. Shareholders whose accounts are registered in the name of a
broker-dealer or other third party may not be able to use FactFoneSM. See "How
to Buy Fund Shares," "How to Exchange Fund Shares," "How to Sell Fund Shares"
and "Telephone Transactions and Related Liabilities." Call PSC for assistance.
RETIREMENT PLANS
You should contact the Retirement Plans Department of PSC at 1-800-622-0176 for
information relating to retirement plans for businesses, age-weighted profit
sharing plans, Simplified Employee Pension Plans, IRAs, and Section 403(b)
retirement plans for employees of certain non-profit organizations and public
school systems, all of which are available in conjunction with investments in
the Fund. The Account Application accompanying this Prospectus should not be
used to establish any of these plans. Separate applications are required.
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TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD)
If you have a hearing disability and you own TDD keyboard equipment, you can
call our TDD number toll-free at 1-800-225-1997, weekdays from 8:30 a.m. to 5:30
p.m. Eastern Time, to contact our telephone representatives with questions about
your account.
SYSTEMATIC WITHDRAWAL PLANS
If your account has a total value of at least $10,000 you may establish a
Systematic Withdrawal Plan ("SWP") providing for fixed payments at regular
intervals. Withdrawals from Class B share accounts are limited to 10% of the
value of the account at the time the plan is implemented. See "Waiver or
Reduction of Contingent Deferred Sales Charge" for more information. Periodic
checks of $50 or more will be sent to you, or any person designated by you,
monthly or quarterly, and your periodic redemptions of shares may be taxable to
you. Payments can be made either by check or electronic transfer to a bank
account designated by you. If you direct that withdrawal checks be paid to
another person after you have opened your account, a signature guarantee must
accompany your instructions. Purchases of Class A shares of the Fund at a time
when you have a SWP in effect may result in the payment of unnecessary sales
charges and may therefore be disadvantageous.
You may obtain additional information by calling PSC at 1-800-225-6292 or by
referring to the Statement of Additional Information.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY)
If you redeem all or part of your Class A shares of the Fund, you may reinvest
all or part of the redemption proceeds without a sales charge in Class A shares
of the Fund if you send a written request to PSC not more than 90 days after
your shares were redeemed. Your redemption proceeds will be reinvested at the
next determined net asset value of the Class A shares of the Fund in effect
immediately after receipt of the written request for reinstatement. You may
realize a gain or loss for federal income tax purposes as a result of the
redemption, and special tax rules may apply if a reinvestment occurs. Subject to
the provisions outlined under "How to Exchange Fund Shares" above, you may also
reinvest in Class A shares of other Pioneer mutual funds; in this case you must
meet the minimum investment requirements for each fund you enter.
The 90-day reinstatement period may be extended by PFD for periods of up to one
year for shareholders living in areas that have experienced a natural disaster,
such as a flood, hurricane, tornado, or earthquake.
The options and services available to shareholders, including the terms of the
Exchange Privilege and the Pioneer Investomatic Plan, may be revised, suspended
or terminated at any time by PFD or by the Fund. You may establish the services
described in this section when you open your account. You may also establish or
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revise many of them on an existing account by completing an Account Options
Form, which you may request by calling 1-800-225-6292.
XII. THE FUND
The Fund is a diversified open-end management investment company (commonly
referred to as a mutual fund) organized as a Delaware business trust on January
31, 1996. Prior to that time the Fund operated as a Massachusetts business
trust, initially reorganized as such on January 31, 1985. The Fund has
authorized an unlimited number of shares of beneficial interest. As an open-end
management investment company, the Fund continuously offers its shares to the
public and under normal conditions must redeem its shares upon the demand of any
shareowner at the then current net asset value per share. See "How to Sell Fund
Shares." The Fund is not required, and does not intend, to hold annual
shareowner meetings although special meetings may be called for the purpose of
electing or removing Trustees, changing fundamental investment restrictions or
approving a management contract.
The Fund reserves the right to create and issue additional series of shares. The
Trustees have the authority, without further shareowner approval, to classify
and reclassify the shares of the Fund, or any additional series of the Fund,
into one or more classes. As of the date of this Prospectus, the Trustees have
authorized the issuance of three classes of shares, designated Class A, Class B
and Class C. The shares of each class represent an interest in the same
portfolio of investments of the Fund. Each class has equal rights as to voting,
redemption, dividends and liquidation, except that each class bears different
distribution and transfer agent fees and may bear other expenses properly
attributable to the particular class. Class A, Class B and Class C shareholders
have exclusive voting rights with respect to the Rule 12b-1 distribution plans
adopted by holders of those shares in connection with the distribution of
shares.
In addition to the requirements under Delaware law, the Declaration of Trust
provides that a shareowner of the Fund may bring a derivative action on behalf
of the Fund only if the following conditions are met: (a) shareholders eligible
to bring such derivative action under Delaware law who hold at least 10% of the
outstanding shares of the Fund, or 10% of the outstanding shares of the series
or class to which such action relates, shall join in the request for the
Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such shareowner request and investigate
the basis of such claim. The Trustees shall be entitled to retain counsel or
other advisers in considering the merits of the request and shall require an
undertaking by the shareholders making such request to reimburse the Fund for
the expense of any such advisers in the event that the Trustees determine not to
bring such action.
When issued and paid for in accordance with the terms of the Prospectus and
Statement of Additional Information, shares of the Fund are fully-paid and
non-assessable. Shares will remain on deposit with the Fund's transfer agent and
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certificates will not normally be issued. The Fund reserves the right to charge
a fee for the issuance of certificates.
XIV. INVESTMENT RESULTS
The average annual total return (for a designated period of time) on an
investment in the Fund may be included in advertisements, and furnished to
existing or prospective shareholders. The average annual total return for each
Class is computed in accordance with the SEC's standardized formula. The
calculation for all Classes assumes the reinvestment of all dividends and
distributions at net asset value and does not reflect the impact of federal or
state income taxes. In addition, for Class A shares the calculation assumes the
deduction of the maximum sales charge of 5.75%; for Class B and Class C shares
the calculation reflects the deduction of any applicable CDSC. The periods
illustrated would normally include one, five and ten years (or since the
commencement of the public offering of the shares of a Class, if shorter)
through the most recent calendar quarter.
One or more additional measures and assumptions, including but not limited to
historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share values;
or any graphic illustration of such data may also be used. These data may cover
any period of the Fund's existence and may or may not include the impact of
sales charges, taxes or other factors.
Other investments or savings vehicles and/or unmanaged market indexes,
indicators of economic activity or averages of mutual fund results may be cited
or compared with the investment results of the Fund. Rankings or listings by
magazines, newspapers or independent statistical or rating services, such as
Lipper Analytical Services, Inc., may also be referenced.
The Fund's investment results will vary from time to time depending on market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. All quoted investment results are historical and should not be
considered representative of what an investment in the Fund may earn in any
future period. For further information about the calculation methods and uses of
the Fund's investment results, see the Statement of Additional Information.
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THE PIONEER FAMILY OF MUTUAL FUNDS
International Growth Funds
Pioneer International Growth Fund
Pioneer Europe Fund
Pioneer Emerging Markets Fund
Pioneer India Fund
Growth Funds
Pioneer Capital Growth Fund
Pioneer Mid-Cap Fund
Pioneer Growth Shares
Pioneer Small Company Fund
Pioneer Gold Shares
Growth and Income Funds
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer II
Pioneer Real Estate Shares
Income Funds
Pioneer Short-Term Income Trust
Pioneer America Income Trust
Pioneer Bond Fund
Pioneer Income Fund
Tax-Free Income Funds
Pioneer Intermediate Tax-Free Fund*
Pioneer Tax-Free Income Fund*
Pioneer New York Triple Tax-Free Fund*
Pioneer Massachusetts Double Tax-Free Fund*
Pioneer California Double Tax-Free Fund*
Money Market Funds
Pioneer U.S. Government Money Fund
Pioneer Cash Reserves Fund
*Not suitable for retirement accounts
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PIONEER MID-CAP
FUND
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
OFFICERS
JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
ROBERT W. BENSON, Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
INVESTMENT ADVISER
PIONEERING MANAGEMENT CORPORATION
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: 1-800-225-6292
SERVICE INFORMATION
If you would like information on the following, please call:
Existing and new accounts, prospectuses,
applications, service forms
and telephone transactions ................................... 1-800-225-6292
FactFone(SM)
Automated fund yields and prices, account
information and computer transactions ....................... 1-800-225-4321
Retirement plans .............................................. 1-800-622-0176
Toll-free fax ................................................. 1-800-225-4240
Telecommunications Device for the Deaf (TDD) ..... 1-800-225-1997
0196-2857
(c)Pioneer Funds Distributor, Inc.
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PIONEER MID-CAP FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
Class A, Class B and Class C Shares
February 1, 1996
This Statement of Additional Information (Part B of the Registration Statement)
is not a Prospectus, but should be read in conjunction with the Prospectus,
dated February 1, 1996. A copy of the Prospectus can be obtained free of charge
by calling Shareholder Services at 1- 800-225-6292 or by written request to
Pioneer Mid-Cap Fund (the "Fund") at 60 State Street, Boston, Massachusetts
02109.
TABLE OF CONTENTS
Page
1. Investment Policies and Restrictions...........................2
2. Management of the Fund.........................................6
3. Investment Adviser.............................................11
4. Underwriting Agreement and Distribution Plans..................14
5. Shareholder Servicing/Transfer Agent...........................16
6. Custodian......................................................17
7. Principal Underwriter..........................................17
8. Independent Public Accountants.................................18
9. Portfolio Transactions.........................................18
10. Tax Status and Dividends.......................................19
11. Description of Shares..........................................23
12. Certain Liabilities............................................24
13. Letter of Intention............................................24
14. Systematic Withdrawal Plan.....................................25
15. Determination of Net Asset Value...............................26
16. Investment Results.............................................27
17. Financial Statements...........................................29
Appendix A.....................................................31
Appendix B.....................................................36
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A
PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED
BY AN EFFECTIVE PROSPECTUS.
<PAGE>
1. INVESTMENT POLICIES AND RESTRICTIONS
The Fund's current prospectus (the "Prospectus") presents the investment
objective and the principal investment policies of the Fund. Additional
investment policies and a further description of some of the policies described
in the Prospectus appear below.
The following policies and restrictions supplement those discussed in the
Prospectus. Whenever an investment policy or restriction states a maximum
percentage of the Fund's assets that may be invested in any security or presents
a policy regarding quality standards, this standard or other restrictions shall
be determined immediately after and as a result of the Fund's investment.
Accordingly, any later increase or decrease resulting from a change in values,
net assets or other circumstances will not be considered in determining whether
the investment complies with the Fund's investment objectives and policies.
Lending of Portfolio Securities
The Fund may lend portfolio securities to member firms of the New York Stock
Exchange, under agreements which would require that the loans be secured
continuously by collateral in cash, cash equivalents or United States ("U.S.")
Treasury Bills maintained on a current basis at an amount at least equal to the
market value of the securities loaned. The Fund would continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities
loaned as well as the benefit of an increase in the market value of the
securities loaned and would also receive compensation based on investment of the
collateral. The Fund would not, however, have the right to vote any securities
having voting rights during the existence of the loan, but would call the loan
in anticipation of an important vote to be taken among holders of the securities
or of the giving or withholding of consent on a material matter affecting the
investment.
As with other extensions of credit there are risks of delay in recovery or even
loss of rights in the collateral should the borrower of the securities fail
financially. The Fund will lend portfolio securities only to firms which have
been approved in advance by the Board of Trustees, which will monitor the
creditworthiness of any such firms. At no time would the value of the securities
loaned exceed 5% of the value of the Fund's total assets.
Forward Foreign Currency Transactions
The Fund may engage in foreign currency transactions. These transactions may be
conducted on a spot, i.e., cash basis, at the spot rate for purchasing or
selling currency prevailing in the foreign exchange market. The Fund also has
authority to deal in forward foreign currency exchange contracts involving
currencies of the different countries in which the Fund will invest as a hedge
against possible variations in the foreign exchange rate between these
currencies and the U.S. dollar. This is accomplished through contractual
agreements to purchase or sell a specified currency at a specified future date
and price set at the time of the contract. The Fund's dealings in forward
foreign currency contracts will be limited to hedging either specific
transactions or portfolio positions. Transaction hedging is the purchase or sale
-2-
<PAGE>
of forward foreign currency contracts with respect to specific receivables or
payables of the Fund, accrued in connection with the purchase and sale of their
portfolio securities denominated in foreign currencies. Portfolio hedging is the
use of forward foreign currency contracts to offset portfolio security positions
denominated or quoted in such foreign currencies. There is no guarantee that the
Fund will be engaged in hedging activities when adverse exchange rate movements
occur. The Fund will not attempt to hedge all of its foreign portfolio
positions, and the Fund will enter into such transactions only to the extent, if
any, deemed appropriate by the investment adviser. The Fund will not enter into
speculative forward foreign currency contracts.
If the Fund enters into a forward contract to purchase foreign currency, the
custodian bank will segregate cash or high grade liquid debt securities in a
separate account in an amount equal to the value of the total assets committed
to the consummation of such forward contract. Those assets will be valued at
market daily and if the value of the assets in the separate account declines,
additional cash or securities will be placed in the accounts so that the value
of the account will equal the amount of the Fund's commitment with respect to
such contracts.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also limit the opportunity
for gain if the value of the hedged currency should rise. Moreover, it may not
be possible for the Fund to hedge against a devaluation that is so generally
anticipated that the Fund is not able to contract to sell the currency at a
price above the devaluation level they anticipate. The cost to the Fund of
engaging in foreign currency transactions varies with such factors as the
currency involved, the size of the contract, the length of the contract period
and the market conditions then prevailing. Since transactions in foreign
currency and forward contracts are usually conducted on a principal basis, no
fees or commissions are involved. The Fund may close out a forward position in a
currency by selling the forward contract or by entering into an offsetting
forward contract.
Real Estate Investment Trusts and Associated Risk Factors
The Fund may invest up to 5% of its assets in shares of REITs. REITs are pooled
investment vehicles which invest primarily 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. Like investment companies such
as the Fund, 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 in addition to those risks
associated with investing in the real estate industry in general. Equity REITs
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<PAGE>
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 are subject to heavy cash
flow dependency, default by borrowers, self-liquidation, and the possibilities
of failing to qualify for the exemption from tax for distributed income under
the Code and failing to maintain their exemptions from the Investment Company
Act of 1940, as amended (the "1940 Act"). REITs whose underlying assets include
long-term health care properties, such as nursing, retirement and assisted
living homes, may be impacted by federal regulations concerning the health care
industry.
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. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investments in such loans will gradually
align themselves to reflect changes in market interest rates, causing the value
of such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
Investing in REITs involves risks similar to those associated with investing in
mid capitalization companies. REITs may have limited financial resources, may
trade less frequently and in a limited volume and may be subject to more abrupt
or erratic price movements than larger company securities. Historically, mid
capitalization stocks, such as REITs, have been more volatile in price than the
larger capitalization stocks included in the Standard & Poor's Index of 500
Common Stocks.
Other Policies and Risks
It is the policy of the Fund not to concentrate its investments in securities of
companies in any particular industry. In the opinion of the staff of the
Securities and Exchange Commission (the "Commission"), investments are deemed to
be concentrated in a particular industry if such investments constitute 25% or
more of the Fund's total assets.
Investment Restrictions
Fundamental Investment Restrictions. The Fund has adopted certain additional
investment restrictions which may not be changed without the affirmative vote of
the holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities. The Fund may not:
(1)......Issue senior securities, except as permitted by the Fund's
borrowing, lending and commodity restrictions, and for purposes of this
restriction, the issuance of shares of beneficial interest in multiple classes
or series, the purchase or sale of options, futures contracts and options on
futures contracts, forward commitments, forward foreign exchange contracts,
repurchase agreements, 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
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<PAGE>
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.
(2)......Borrow money, except from banks as a temporary measure to
facilitate the meeting of redemption requests or for extraordinary or emergency
purposes and except pursuant to reverse repurchase agreements or dollar rolls,
in all cases in amounts not exceeding 33 1/3% of the Fund's total assets
(including the amount borrowed) taken at market value. The Fund will not use
leverage to attempt to increase income. The Fund will not purchase securities
while outstanding borrowings (including reverse repurchase agreements and dollar
rolls) exceed 10% of the Fund's total assets.
(3)......Guarantee the securities of any other company, or , mortgage,
pledge, hypothecate or assign or otherwise encumber as security for indebtedness
its securities or receivables in an amount exceeding the amount of the borrowing
secured thereby.
(4)......Purchase securities of a company if the purchase would result
in the Fund's having more than 5% of the value of its total assets invested in
securities of such company.
(5)......Purchase securities of a company if the purchase would result
in the Fund's owning more than 10% of the outstanding voting securities of such
company.
(6)......Act as an underwriter, except as it may deemed to be on
underwriter in a sale of restricted securities held in its portfolio.
(7)......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.
(8)......Invest in real estate, commodities or commodity contracts,
except that the Fund may invest in real estate investment trusts and 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
(9)......Purchase securities on "margin" or effect " short sales" of
securities.
The Fund does not intend to enter into any reverse repurchase agreement, lend
portfolio securities or invest in securities index put and call warrants, as
described in fundamental investment restrictions (2), (6) and (7) above, during
the coming year.
-5-
<PAGE>
Non-fundamental Investment Restrictions.
It is the policy of the Fund not to concentrate its investments in securities of
companies in any particular industry. In the opinion of the Commission,
investments are concentrated in a particular industry if such investments
aggregate 25% or more of the Fund's total assets. The Fund's policy does not
apply to investments in U.S. Government securities. The Fund has agreed to abide
by the foregoing non-fundamental policy which it will not change without the
affirmative vote of a majority of the Fund's outstanding shares of beneficial
interest.
The following restrictions have been designated as non-fundamental and may be
changed by a vote of the Fund's Board of Trustees without approval of
shareholders.
The Fund may not:
(1) purchase or retain the securities of any company if officers of the
Fund or Trustees of the Fund, or officers and directors of its adviser or
principal underwriter, individually own more than one-half of 1% of the
securities of such company or collectively own more than 5% of the securities of
such company; or
(2) invest in securities of other registered investment companies,
except by purchases in the open market including only customary brokers'
commissions, and except as they may be acquired as part of a merger, a
consolidation or an acquisition of assets; or
(3) purchase (a) securities which at the time of investment are not
readily marketable, (b) securities the disposition of which is restricted under
federal securities laws (excluding restricted securities that have been
determined by the Trustees of the Fund (or the person designated by them to make
such determinations) to be readily marketable) and (c) repurchase agreements
maturing in more than seven days, if, as a result, more than 15% of the Fund's
net assets would be invested in securities described in (a), (b), and (c) above.
In addition, in connection with the offering of its shares in various states,
the Fund has agreed not to: (1) invest in puts, calls, straddles, spreads or any
combination thereof, or in oil, gas or other mineral exploration or development
leases or programs; (2) invest more than 5% of its assets inequity securities of
any issuer which are not readily marketable, i.e., securities for which a bona
fide market does not exist at the time of purchase or subsequent valuation; (3)
pledge its portfolio securities, unless its net assets less pledged securities
continues to amount to at least 90% of the offering price; (4) invest more than
5% of its total assets in warrants, valued at the lower of cost or market, or
more than 2% of its total assets in warrants, so valued, which are not listed on
the New York or American Stock Exchanges; and (5) invest in real estate limited
partnerships.
2. MANAGEMENT OF THE FUND
The Fund's Board of Trustees provides broad supervision over the affairs of the
Fund. The executive officers of the Fund are responsible for the Fund's
operations, which is managed by PMC. The Trustees and executive officers of the
Fund are listed below, together with their principal occupations during the past
five years. An asterisk indicates those Trustees who are "interested persons" of
the Fund within the meaning of the 1940 Act.
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<PAGE>
JOHN F. COGAN, JR.,* President and Director of The Pioneer Group,
Chairman of the Board, Inc. ("PGI");Chairman and a Director of
President and Trustee Pioneering Management Corporation ("PMC"),
Pioneer Funds Distributor, Inc. ("PFD");
Pioneer Goldfields Limited ("PGL"); Director
of Pioneering Services Corporation ("PSC"),
Pioneer Capital Corporation ("PCC") and
Forest-Starma ( a Russian corporation);
President and Director of Pioneer Plans
Corporation ("PPC"), Pioneer Investment Corp.
("PIC"), Pioneer Metals and Technology, Inc.
("PMT"), Pioneer International Corp.
("Pintl"), Luscina, Inc. Pioneer First Russia,
Inc. ("First Russia"), Pioneer Omega, Inc.
("Omega") and Theta Enterprises, Inc.;
Chairman of the Supervisory Board of Pioneer
Fonds Marketing GMbH ("Pioneer GmbH"); Member
of the Supervisory Board of Pioneer First
Polish Trust Fund Joint Stock Company
("PFPT"); Chairman and President of all the
Pioneer Funds and Chairman and Partner, Hale
and Dorr (counsel to the Fund).
RICHARD H. EGDAHL, M.D., Professor of Management, Boston University
Trustee School of Management, since 1988; Professor of
Boston University Public Health, Boston University School of
Health Policy Public Health; Professor of Surgery, Boston
Institute University School of Medicine and Boston
53 Bay State Road University Health Policy Institute; Director,
Boston, Massachusetts Boston University Medical Center; Executive
Vice President and Vice Chairman of the Board,
University Hospital; Academic Vice President
for Health Affairs, Boston University;
Director, Essex Investment Management Company,
Inc. (investment adviser), Health Payment
Review, Inc. (health care containment software
firm), Mediplex Group, Inc. (nursing care
facilities firm), Peer Review Analysis, Inc.
(health care utilization management firm);
Springer-Verlag New York, Inc. (publisher);
Honorary Trustee, Franciscan Children's
Hospital and Trustee of all the Pioneer mutual
funds.
MARGARET B.W. GRAHAM, Founding Director, Winthrop Group, Inc, a
Trustee consulting firm, since 1982: Manager of
The Keep Research Operations, Xerox Palo Alto Research
Post Office Box 110 Center, between 1991 and 1994; Professor of
Little Deer Isle, Maine Operations Management and Management of
Technology, Boston University School of
Management ("BUSM"), between 1988 and 1993;
and Trustee of all the Pioneer mutual funds,
except Pioneer Variable Contracts Trust.
-7-
<PAGE>
JOHN W. KENDRICK, Professor Emeritus and Adjunct Scholar, George
Trustee Washington University; Economic Consultant
6363 Waterway Drive and Director, American Productivity and
Falls Church, Virginia Quality Center; American Enterprise Institute
and Trustee of all the Pioneer mutual funds,
except Pioneer Variable Contracts Trust.
MARGUERITE A. PIRET, President, Newbury, Piret & Company, Inc.
Trustee (a merchant banking firm); Trustee of all the
One Boston Place, Pioneer mutual funds.
Suite 2363
Boston, Massachusetts
DAVID D. TRIPPLE*, Executive Vice President and Director of PGI
Trustee and Executive since 1993; Director of PFD, since 1989;
Vice President Director of PCC, PIC, Pintl, and Corporation;
President (since 1993); Director, President
and, Chief Investment Officer of PMC and
Trustee of all the Pioneer mutual funds.
STEPHEN K. WEST, Partner, Sullivan & Cromwell (a law firm);
Trustee Trustee, The Winthrop Focus Funds (mutual
125 Broad Street funds) and Trustee of all the Pioneer mutual
New York, New York funds.
JOHN WINTHROP, President, John Winthrop & Co., Inc. (a
Trustee private investment firm); Director of NUI
One North Adgers Wharf Corp; Trustee of Alliance Capital Reserves,
Charleston, South Carolina Alliance Government Reserves and Alliance Tax
Exempt Reserves and Trustee of all the Pioneer
mutual funds, except Pioneer Variable
Contracts Trust.
WILLIAM H. KEOUGH, Senior Vice President, Chief Financial Officer
Treasurer and Treasurer of PGI; Treasurer of PFD,
PMC, PSC, PCC, PIC, PIntl, PMT, PGL, and
Pioneer SBIC Corporation; Treasurer and
Director of PPC and Treasurer of all the
Pioneer mutual funds.
JOSEPH P. BARRI, Secretary of PGI, PMC, PPC, PIC, PIntl, PMT,
Secretary and PCC; Clerk of PFD and PSC; Partner, Hale
and Dorr (counsel to the Fund) and Secretary
of all the Pioneer mutual funds.
-8-
<PAGE>
ERIC W. RECKARD, Manager of Fund Accounting and Compliance of
Assistant Treasurer Business Analysis of PGI prior to May 1994 and
Assistant PMC since May, 1994; Manager of
Auditing and Treasurer of all the Pioneer
mutual funds..
ROBERT P. NAULT, General Counsel of PGI since 1995; formerly of
Assistant Hale and Secretary Dorr (counsel to the Fund)
where he most recently served as a junior
partner and Assistant Secretary of all the
Pioneer mutual funds..
ROBERT W. BENSON, Senior President of PMC.
Vice President
Each of the above (except Mr. Benson) is also an officer and/or Trustee or
Director of the Pioneer mutual funds listed below. The Fund's Agreement and
Declaration of Trust (the "Declaration of Trust") provides that the holders of
two-thirds of its outstanding shares may vote to remove a Trustee of the Fund at
any special meeting of shareholders. See "Description of Shares" below. The
business address of all officers is 60 State Street, Boston, Massachusetts
02109.
As of the date of this SAI, all of the outstanding capital stock of PMC and PSC
is owned by PGI, a publicly-owned Delaware corporation, and all of the
outstanding capital stock of PFD is indirectly owned by PGI. The table below
lists all the Pioneer mutual funds currently offered to the public and the
investment adviser and principal underwriter for each fund.
Investment Principal
Fund Name Adviser Underwriter
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Mid-Cap Fund PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Small Company PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer International Growth Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer India Fund PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Short-Term Income Fund PMC PFD
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<PAGE>
Pioneer Income Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer California Double Tax-Free Fund PMC PFD
Pioneer New York Triple Tax-Free Fund PMC PFD
Pioneer Massachusetts Double Tax-Free Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer U.S. Government Money Fund PMC PFD
Pioneer Tax-Free Money Fund PMC PFD
Pioneer Interest Shares, Inc. PMC *
Pioneer Variable Contracts Trust PMC **
- -------------
* This fund is a closed-end fund.
** This is a series of eight separate portfolios designed to provide
investment vehicles for the variable annuity and variable life insurance
contracts of various insurance companies or for certain qualified pension
plans.
To the knowledge of the Fund, no officer or trustee of the Fund owned 5% or more
of the issued and outstanding shares of PGI on the date of this Statement of
Additional Information, except Mr. Cogan who then owned approximately 15% of
such shares.
Compensation of Officers and Trustees
The Fund pays no salaries or compensation to any of its officers. The Fund pays
an annual trustees' fee of $500 plus $120 per meeting attended to each Trustee
who is not affiliated with PMC, PFD or PGI and pays an annual trustees' fee of
$500 plus expenses to each Trustee affiliated with PMC, PFD or PGI. Any such
fees and expenses paid to affiliates or interested persons of PMC, PFD or PGI
are reimbursed to the Fund under its Management Contract.
The following table sets forth certain information with respect to the
compensation of each Trustee of the Fund for the fiscal year ending September
30, 1995:
<TABLE>
<CAPTION>
Pension or
Retirement Total
Benefits Compensation
Compensation Accrued as from Fund and
Aggregate Part of Pioneer Family
Name of Trustee from the Fund* Fund's Expenses of Funds**
<S> <C> <C> <C>
John F. Cogan, Jr. $ 0+ $0 $ 0+
Richard H. Egdahl, M.D. 4,500 0 $55,650
Margaret B.W. Graham 4,500 0 $55,650
John W. Kendrick 4,500 0 $55,650
Marguerite A. Piret 6,063 0 $66,650
David D. Tripple 0+ 0 $ 0+
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Stephen K. West 6,167 0 $63,650
John Winthrop 5,750 0 $63,650
------ - ------
$12,940 0 $413,000
----------------------------------------------------------------------------
<FN>
+ PMC fully reimburses the Fund and the other funds in the Pioneer Family of
Funds for compensation paid to Messrs. Cogan and Tripple.
* As of Fund's fiscal year end.
** Estimated as of December 31, 1995 (calendar year end for all Pioneer mutual
funds).
</FN>
</TABLE>
3. INVESTMENT ADVISER
The Fund has contracted with PMC, 60 State Street, Boston, Massachusetts, to act
as its investment adviser. A description of the services provided to the Fund
under its management contract and the expenses paid by the Fund under the
contract is set forth in the Prospectus under the caption "Management of the
Fund."
The term of the management contract is one year and is renewable annually by the
vote of a majority of the Board of Trustees of the Fund (including a majority of
the Board of Trustees who are not parties to the contract or interested persons
of any such parties). The vote must be cast in person at a meeting called for
the purpose of voting on such renewal. The contract terminates if assigned and
may be terminated without penalty by either party upon sixty days' written
notice by vote of the Board of Directors or Trustees or a majority of the
outstanding voting securities. Pursuant to the management 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 securities on the recommendation of PMC. PMC, however, is not
protected against liability by reason of 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 the respective management
contract.
As compensation for its management services and expenses incurred, and certain
expenses which PMC incurs on behalf of the Fund, the Fund pays PMC a basic fee
of 0.625% of the Fund's average daily net assets (the "Basic Fee"). One twelfth
(1/12) of this annual Basic Fee is applied to the Fund's average net assets for
the current month, giving a dollar amount which is the monthly fee.
Performance Fee Adjustment
The Basic Fee is subject to an upward or downward adjustment, depending on
whether and to what extent, the investment performance of the fund for the
performance period exceeds, or is exceeded by, the record of the Standard and
Poors Mid-Cap 400 Index of mid-capitalization stocks (the "Index") over the same
period. The Index is comprised of 400 domestic stocks chosen for market size,
liquidity and industry group representation. It is a market-value weighted index
and was the first benchmark of midcap stock price movements. The performance
period consists of the current month and the prior 35 months ("performance
period"). Each percentage point of difference (up to a maximum of +/-10) is
multiplied by a performance adjustment rate of 0.02%. The maximum annualized
adjustment rate is
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+/- 0.20%. This performance comparison is made at the end of each month. One
twelfth (1/12) of this rate is then applied to the fund's average net assets for
the entire performance period, giving a dollar amount that is added to (or
subtracted from) the Basic Fee.
The Fund's performance is calculated based on net asset value. For purposes of
calculating the performance adjustment, any dividends or capital gains
distributions paid by the Fund are treated as if reinvested in Fund shares at
the net asset value as of the record date for payment. The record for the Index
is based on change in value and is adjusted for any cash distributions from the
companies whose securities whose securities comprise the Index.
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
First Day End of Period Absolute Percentage
Points
Fund $ 10 $ 13 +$ 3 + 30%
Index 100 123 + 23 + 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
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: One-twelfth of
the Basic Fee of 0.625% would be applied to 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 0.02% producing a rate of
0.14%. One-twelfth of this rate is then applied to 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
dollar amount calculated for the performance period. If the investment
performance of the Fund during the performance period was exceeded by the record
of the Index, the dollar amount of performance adjustment would be deducted from
the Basic Fee.
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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 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.
Phase-In of Performance Adjustment
For the period starting February 1, 1996 and ending June 30, 1996, the
management fee shall be paid at the annual rate of 0.50% of average net assets
up to $250 million, 0.48% of the next %50 million in net assets and 0.45% on the
net assets exceeding $300 million. Based upon the Fund's expected net assets,
this fee schedule is expected to result in an effective fee rate of
approximately 0.46% for such period. Because the performance adjustment operates
on a prospective basis only, neither investment results nor average assets from
periods prior to February 1, 1996 will be considered in the initial
implementation of the performance based fee. Additionally, no performance
adjustment increasing the Basic Fee will be made until a 12 month performance
record, starting in January 1997, has accrued. A performance adjustment that
would have the effect of lowering the Basic Fee will be made after a 6 month
performance record, starting in February 1996, has accrued.
Accordingly, starting with July 1996, the Basic Fee will take effect and will be
adjusted for the relative performance of the Fund and the record of the Index
from February 1, 1996 onward if such adjustment would have the effect of
lowering the Basic Fee. The application of a negative adjustment will continue
through December 31, 1996. Starting with January, 1997, the Basic Fee will be
adjusted to reflect both increases and decreases based upon the Fund's relative
performance relative to the Index from February 1, 1996 onward.
The performance adjustment will be applied against assets over the same period
of performance and thereafter a new month will be added to the period for
purposes of measuring performance and the average assets until the period equals
36 months. After 36 months have elapsed from February 1, 1996, the performance
period will consist of the most recent month plus the previous 35 months.
During its fiscal years ended September 30, 1993, 1994 and 1995, the Fund paid
or owed total management fees to PMC of approximately $4,295,000, $4,801,000 and
$4,701,000 pursuant to a management contract previously in effect under which
fees were paid at the annual rate of 0.50% of the average net assets up to $250
million., 0.48% of the next 50 million in assets and 0.45% on the net assets
exceeding $300 million.
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4. UNDERWRITING AGREEMENT AND DISTRIBUTION PLANS
The Fund entered into an Underwriting Agreement with PFD. The Underwriting
Agreement will continue from year to year if annually approved by the Trustees.
The Underwriting Agreement provides that PFD will bear expenses for the
distribution of the Fund's shares, except for expenses incurred by PFD for which
it is reimbursed by the Fund under the Plan. PFD bears all expenses it incurs in
providing services under the Underwriting Agreement. Such expenses include
compensation to its employees and representatives and to securities dealers for
distribution related services performed for the Fund. PFD also pays certain
expenses in connection with the distribution of the Fund's shares, including the
cost of preparing, printing and distributing advertising or promotional
materials, and the cost of printing and distributing prospectuses and
supplements to prospective shareholders. The Fund bears the cost of registering
its shares under federal and state securities law and the laws of certain
foreign countries. The Fund and PFD have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended. Under the Underwriting Agreement, PFD will use its best efforts in
rendering services to the Fund.
The Fund has adopted a plan of distribution pursuant to Rule 12b-1 under the
1940 Act with respect to its Class A shares (the "Class A Plan"), a plan of
distribution with respect to its Class B shares (the "Class B Plan") and a plan
of distribution with respect to its Class C shares (the "Class C Plan")
(together, the "Plans").
Class A Plan
Pursuant to the Class A Plan the Fund may reimburse PFD for its expenditures in
financing any activity primarily intended to result in the sale of Fund shares.
Certain categories of such expenditures have been approved by the Board of
Trustees and are set forth in the Prospectus. See "Distribution Plans" in each
Prospectus. The expenses of the Fund pursuant to the Class A Plan are accrued on
a fiscal year basis and may not exceed, with respect to Class A shares, the
annual rate of 0.25% of the Fund's average annual net assets attributable to
Class A.
Class B Plan
The Class B Plan provides that the Fund shall pay PFD, as the Fund's distributor
for its Class B shares, a daily distribution fee equal on an annual basis to
0.75% of the Fund's average daily net assets attributable to Class B shares and
will pay PFD a service fee equal to 0.25% of the Fund's average daily net assets
attributable to Class B shares (which PFD will in turn pay to securities dealers
which enter into a sales agreement with PFD at a rate of up to 0.25% of the
Fund's average daily net assets attributable to Class B shares owned by
investors for whom that securities dealer is the holder or dealer of record).
This service fee is intended to be in consideration of personal services and/or
account maintenance services rendered by the dealer with respect to Class B
shares. PFD will advance to dealers the first-year service fee at a rate equal
to 0.25% of the amount invested. As compensation therefor, PFD may retain the
service fee paid by the Fund with respect to such shares for the first year
after purchase. Dealers will become eligible for additional service fees with
respect to such shares commencing in the thirteenth month following purchase.
Dealers may from time to time be required to meet certain other criteria in
order to receive service fees. PFD or its affiliates are entitled to retain all
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service fees payable under the Class B Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class B Plan is to
compensate PFD for its distribution services to the Fund. PFD pays commissions
to dealers as well as expenses of printing prospectuses and reports used for
sales purposes, expenses with respect to the preparation and printing of sales
literature and other distribution-related expenses, including, without
limitation, the cost necessary to provide distribution-related services, or
personnel, travel office expenses and equipment. The Class B Plan also provides
that PFD will receive all contingent deferred sales charges ("CDSCs")
attributable to Class B shares. (See "Distributions Plans" in the Prospectus.)
Class C Plan
The Class C Plan provides that the Fund will pay PFD, as the Fund's distributor
for its Class C shares, a distribution fee accrued daily and paid quarterly,
equal on an annual basis to 0.75% of the Fund's average daily net assets
attributable to Class C shares and will pay PFD a service fee equal to 0.25% of
the Fund's average daily net assets attributable to Class C shares. PFD will in
turn pay to securities dealers which enter into a sales agreement with PFD a
distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the Fund's average daily net assets attributable to Class C
shares owned by investors for whom that securities dealer is the holder or
dealer of record. The service fee is intended to be in consideration of personal
services and/or account maintenance services rendered by the dealer with respect
to Class C shares. PFD will advance to dealers the first-year service fee at a
rate equal to 0.25% of the amount invested. As compensation therefor, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Commencing in the thirteenth month following a
purchase of Class C shares, dealers will become eligible for additional service
fees at a rate of up to 0.25% of the amount invested and additional compensation
at a rate of up to 0.75% of the amount invested with respect to such shares.
Dealers may from time to time be required to meet certain other criteria in
order to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class C Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class C Plan is to
compensate PFD for its distribution services with respect to the Class C shares
of the Fund. PFD pays commissions to dealers as well as expenses of printing
prospectuses and reports used for sales purposes, expenses with respect to the
preparation and printing of sales literature and other distribution-related
expenses, including, without limitation, the cost necessary to provide
distribution-related services, or personnel, travel office expenses and
equipment. The Class C Plan also provides that PFD will receive all CDSCs
attributable to Class C shares. (See "Distributions Plans" in the Prospectus.)
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General
In accordance with the terms of the Plans, PFD provides to the Fund for review
by the Trustees a quarterly written report of the amounts expended under the
respective Plan and the purpose for which such expenditures were made. In the
Trustees' quarterly review of the Plans, they will consider the continued
appropriateness and the level of reimbursement or compensation the Plans
provide.
No interested person of the Fund, nor any Trustee of the Fund who is not an
interested person of the Fund, has any direct or indirect financial interest in
the operation of the Plans except to the extent that PFD and certain of its
employees may be deemed to have such an interest as a result of receiving a
portion of the amounts expended under the Plans by the Fund and except to the
extent certain officers may have an interest in PFD's ultimate parent, PGI.
The Plans were adopted by a majority vote of the Board of Trustees, including
all of the Trustees who are not, and were not at the time they voted, interested
persons of the Fund, as defined in the 1940 Act (none of whom had or have any
direct or indirect financial interest in the operation of the Plans), cast in
person at a meeting called for the purpose of voting on the Plans. In approving
the Plans, the Trustees identified and considered a number of potential benefits
which the Plans may provide. The Board of Trustees believes that there is a
reasonable likelihood that the Plans will benefit each Fund and their current
and future shareholders. Under their terms, the Plans remain in effect from year
to year provided such continuance is approved annually by vote of the Trustees
in the manner described above. The Plans may not be amended to increase
materially the annual percentage limitation of average net assets which may be
spent for the services described therein without approval of the shareholders of
the Fund affected thereby, and material amendments of the Plans must also be
approved by the Trustees in the manner described above. A Plan may be terminated
at any time, without payment of any penalty, by vote of the majority of the
Trustees who are not interested persons of the Fund and have no direct or
indirect financial interest in the operations of the Plan, or by a vote of a
majority of the outstanding voting securities of the respective Class of the
Fund (as defined in the 1940 Act). A Plan will automatically terminate in the
event of its assignment (as defined in the 1940 Act).
During the fiscal year ended September 30, 1995, the Fund incurred distribution
fees pursuant to the Fund's Class A plan of approximately $1,799,000. No Class B
or Class C shares were outstanding during this period. Distribution fees were
paid by the Fund to PFD in reimbursement of expenses related to servicing of
shareholder accounts and to compensating dealers and sales personnel.
5. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with PSC, 60 State Street, Boston, Massachusetts, to act
as shareholder servicing and transfer agent for the Fund. This contract
terminates if assigned and may be terminated without penalty by either party
upon ninety days' written notice by vote of its Board of Directors or Trustees
or a majority of its outstanding voting securities.
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<PAGE>
Under the terms of its contract with the Fund, PSC services shareholder
accounts, and its duties include: (i) processing sales, redemptions and
exchanges of shares of the Fund; (ii)distributing dividends and capital gains
associated with Fund portfolio accounts; and (iii)maintaining account records
and responding to shareholder inquiries.
PSC receives an annual fee of $22.00 for each Class A, Class B and Class C
shareholder account from the Fund as compensation for the services described
above. PSC is also reimbursed by the Fund for its cash out-of-pocket
expenditures. The annual fee is set at an amount determined by vote of a
majority of the Trustees (including a majority of the Trustees who are not
parties to the contract with PSC or interested persons of any such parties) to
be comparable to fees for such services being paid by other investment
companies.
6. CUSTODIAN
Brown Brothers Harriman & Co. (the "Custodian") is the custodian of the Fund's
assets. The Custodian's responsibilities include safekeeping and controlling the
Fund's cash and securities, handling the receipt and delivery of securities, and
collecting interest and dividends on the Fund's investments. The Custodian does
not determine the investment policies of the Fund or decide which securities the
Fund will buy or sell. The Fund may, however, invest in securities, including
repurchase agreements, issued by the Custodian and may deal with the Custodian
as a principal in securities transactions. Portfolio securities may be deposited
into the Federal Reserve-Treasury Department Book Entry System or the Depository
Trust Company.
7. PRINCIPAL UNDERWRITER
PFD serves as the principal underwriter for the Fund in connection with the
continuous offering of the Class A, Class B and Class C shares of the Fund.
During the fiscal years ended September 30, 1993, September 30, 1994 and
September 30, 1995 net underwriting commissions paid to PFD in connection with
the offering of Class A shares of the Fund were, respectively, approximately
$3,535,000, $2,714,000 and $1,409,000. Commissions reallowed to dealers during
the same periods were approximately $3,141,000, $2,359,000 and $1,224,000.
The Fund will not generally issue Fund shares for consideration other than cash.
At the Fund's sole discretion, however, it may issue Fund shares for
consideration other than cash in connection with a bona fide reorganization,
statutory merger, or other acquisition of portfolio securities (other than
municipal debt securities issued by state political subdivisions or their
agencies or instrumentalities) provided (i) the securities meet the investment
objectives and policies of the Fund; (ii) the securities are acquired by the
Fund for investment and not for resale; (iii) the securities are not restricted
as to transfer either by law or liquidity of market; and (iv)the securities have
a value which is readily ascertainable (and not established only by evaluation
procedures) as evidenced by a listing on the American Stock Exchange or the New
York Stock Exchange or the Nasdaq National Market.
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8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, One International Place, Boston, Massachusetts 02110, is
the Fund's independent public accountants, providing audit services, tax return
review, and assistance and consultation with respect to the preparation of
filings with the Commission.
9. PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on behalf
of the Fund by PMC pursuant to authority contained in the Fund's management
contract. In selecting brokers or dealers, PMC will consider various relevant
factors, including, but not limited to, the size and type of the transaction;
the nature and character of the markets for the security to be purchased or
sold; the execution efficiency, settlement capability, and financial condition
of the dealer; the dealer's execution services rendered on a continuing basis;
and the reasonableness of any dealer spreads.
PMC may select broker-dealers which provide brokerage and/or research services
to the Fund and/or other investment companies managed by PMC. In addition, if
PMC determines in good faith that the amount of commissions charged by a
broker-dealer is reasonable in relation to the value of the brokerage and
research services provided by such broker, the Fund may pay commissions to such
broker-dealer in an amount greater than the amount another firm may charge. Such
services may include advice concerning the value of securities; the advisability
of investing in, purchasing or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance and
settlement). PMC maintains a listing of broker-dealers who provide such services
on a regular basis. However, because it is anticipated that many transactions on
behalf of the Fund and other investment companies managed by PMC are placed with
broker-dealers (including broker-dealers on the listing) without regard to the
furnishing of such services, it is not possible to estimate the proportion of
such transactions directed to such dealers solely because such services were
provided.
The research received from broker-dealers may be useful to PMC in rendering
investment management services to the Fund as well as other investment companies
managed by PMC, although not all such research may be useful to the Fund.
Conversely, such information provided by brokers or dealers who have executed
transaction orders on behalf of such other PMC clients may be useful to PMC in
carrying out its obligations to the Fund. The receipt of such research has not
reduced PMC's normal independent research activities; however, it enables PMC to
avoid the additional expenses which might otherwise be incurred if it were to
attempt to develop comparable information through its own staff.
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
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PMC. This policy does not imply a commitment to execute all portfolio
transactions through all broker-dealers that sell shares of the Fund.
The Trustees periodically review PMC's performance of its responsibilities in
connection with the placement of portfolio transactions on behalf of the Fund.
In addition to the Fund, PMC acts as investment adviser to other Pioneer mutual
funds and certain private accounts with investment objectives similar to those
of the Fund. Securities frequently meet the investment objectives of the Fund,
such other funds and such private accounts. In such cases, the decision to
recommend a purchase to one fund or account rather than another is based on a
number of factors. The determining factors in most cases are the amount of
securities of the issuer then outstanding, the value of those securities and the
market for them. Other factors considered in the investment recommendations
include other investments which each fund or account presently has in a
particular industry and the availability of investment funds in each fund or
account.
It is possible that at times identical securities will be held by more than one
fund and/or account. However, positions in the same issue may vary and the
length of time that any fund or account may choose to hold its investment in the
same issue may likewise vary. To the extent that the Fund, another mutual fund
in the Pioneer group or a private account managed by PMC may not be able to
acquire as large a position in such security as it desires, it may have to pay a
higher price for the security. Similarly, the Fund may not be able to obtain as
large an execution of an order to sell or as high a price for any particular
portfolio security if PMC decides to sell on behalf of another account the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one fund or account, the
resulting participation in volume transactions could produce better executions
for the Fund or the account. In the event more than one account purchases or
sells the same security on a given date, the purchases and sales will normally
be made as nearly as practicable on a pro rata basis in proportion to the
amounts desired to be purchased or sold by each.
During the fiscal years ended September 30, 1993, September 30, 1994 and
September 30, 1995 the Fund paid aggregate brokerage and underwriting
commissions of approximately $1,786,000, $494,000 and $857,000 .
10. TAX STATUS AND DIVIDENDS
It is the Fund's policy to meet the requirements of Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), for qualification as a regulated
investment company. These requirements relate to the sources of the Fund's
income, the diversification of its assets, and the timing of its distributions.
If the Fund meets all such requirements and distributes to its shareholders at
least annually all investment company taxable income and net capital gain, if
any, which it receives, the Fund will be relieved of the necessity of paying
federal income tax.
In order to qualify under Subchapter M, the Fund must, among other things,
derive at least 90% of its gross income for each taxable year from dividends,
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interest, payments with respect to securities loans, gains from the sale or
other disposition of stock, securities or foreign currencies, or other income
(including gains from options, futures or forward contracts) derived with
respect to its business of investing in such stock, securities or currencies
(the "90% income test"), limit its gains from the sale of stock, securities and
certain other investments held for less than three months to less than 30% of
its annual gross income (the "30% test") and satisfy certain diversification and
income distribution requirements.
Dividends from investment company taxable income, which includes net investment
income, net short-term capital gain in excess of net long-term capital loss, and
certain net foreign exchange gains are taxable as ordinary income, whether
received in cash or in additional shares. Dividends from net long-term capital
gain in excess of net short-term capital loss, if any, whether received in cash
or additional shares, are taxable to the Fund's shareholders as long-term
capital gains for federal income tax purposes without regard to the length of
time shares of the Fund have been held. The federal income tax status of all
distributions will be reported to shareholders annually.
Any dividend declared by the Fund in October, November or December as of a
record date in such a month and paid during the following January will be
treated for federal income tax purposes as received by shareholders on December
31 of the calendar year in which it is declared.
Foreign exchange gains and losses realized by the Fund in connection with
certain transactions involving foreign currency-denominated debt securities,
certain options and futures contracts relating to foreign currency, forward
foreign currency contracts, foreign currencies, or payables or receivables
denominated in a foreign currency are subject to Section 988 of the Code, which
generally causes such gains and losses to be treated as ordinary income and
losses and may affect the amount, timing and character of distributions to
shareholders. Any such transactions that are not directly related to the Fund's
investment in stock or securities may increase the amount of gain it is deemed
to recognize from the sale of certain investments held for less than 3 months
for purposes of the 30% test, and may under future Treasury regulations produce
income not among the types of "qualifying income" for purposes of the 90% income
test. If the net foreign exchange loss for a year were to exceed the Fund's
investment company taxable income (computed without regard to such loss) the
resulting overall ordinary loss for such year would not be deductible by the
Fund or its shareholders in future years.
If the Fund acquires stock in certain non-U.S. corporations that receive at
least 75% of their annual gross income from passive sources (such as interest,
dividends, rents, royalties or capital gain) or hold at least 50% of their
assets in investments producing such passive income ("passive foreign investment
companies"), the Fund could be subject to Federal income tax and additional
interest charges on "excess distributions" received from such companies or gain
from the sale of stock in such companies, even if all income or gain actually
received by the Fund is timely distributed to its shareholders. The Fund would
not be able to pass through to its shareholders any credit or deduction for such
a tax. Certain elections may, if available, ameliorate these adverse tax
consequences but any such election would require the Fund to recognize taxable
income or gain without the concurrent receipt of cash. The Fund may limit and/or
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manage its holdings in passive foreign investment companies to minimize its tax
liability or maximize its return from these investments.
At the time of an investor's purchase of Fund shares, a portion of the purchase
price is often attributable to realized or unrealized appreciation in the Fund's
portfolio or undistributed taxable income of the Fund. Consequently, subsequent
distributions from such appreciation or income may be taxable to such investor
even if the net asset value of the investor's shares is, as a result of the
distributions, reduced below the investor's cost for such shares and the
distributions in reality represent a return of a portion of the investment.
Any loss realized upon the redemption of shares with a tax holding period of six
months or less will be treated as a long-term capital loss to the extent of any
amounts treated as distributions of long-term capital gain with respect to such
shares.
In addition, if Class A shares redeemed or exchanged have been held for less
than 91 days, (1)in the case of a reinvestment at net asset value, the sales
charge paid on such shares is not included in their tax basis under the Code and
(2)in the case of an exchange, all or a portion of the sales charge paid on such
shares is not included in their tax basis under the Code, to the extent a sales
charge that would otherwise apply to the shares received is educed pursuant to
the exchange privilege. In either case, the portion of the sales charge not
included in the tax basis of the shares redeemed or surrendered in an exchange
is included in the tax basis of the shares acquired in the reinvestment or
exchange. Losses on certain redemptions may be disallowed under "wash sale"
rules in the event of other investments in the same Fund within a period of 61
days beginning 30 days before and ending 30 days after a redemption or other
sale of shares.
For federal income tax purposes, the Fund is permitted to carry forward a net
capital loss in any year to offset net capital gains, if any, during the eight
years following the year of the loss. To the extent subsequent net capital gains
are offset by such losses, they would not result in federal income tax liability
to such Fund and are not expected to be distributed as such to shareholders.
Options written or purchased and futures contracts entered into by the Fund on
certain securities, securities indices and foreign currencies, as well as
certain foreign currency forward contracts, may cause the Fund to recognize
gains or losses from marking-to-market at the end of its taxable year even
though such options may not have lapsed, been closed out, or exercised or such
futures or forward contracts may not have been closed out or disposed of and may
affect the characterization as long-term or short-term of some capital gains and
losses realized by the Fund. Certain options, futures and forward contracts on
foreign currency may be subject to Section 988, described above, and accordingly
produce ordinary income or loss. Losses on certain options, futures or forward
contracts and/or offsetting positions (portfolio securities or other positions
with respect to which the Fund's risk of loss is substantially diminished by one
or more options, futures or forward contracts) may also be deferred under the
tax straddle rules of the Code, which may also affect the characterization of
capital gains or losses from straddle positions and certain successor positions
as long-term or short-term. The tax rules applicable to options, futures,
forward contracts and straddles may affect the amount, timing and character of
the Fund's income and loss and hence of its distributions to shareholders.
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Certain tax elections may be available that would enable the Fund to ameliorate
some adverse effects of the tax rules described in this paragraph.
For purposes of the 70% dividends-received deduction available to corporations,
dividends received by the Fund, if any, from U.S. domestic corporations in
respect of any share of stock with a tax holding period of at least 46 days (91
days in the case of certain preferred stock) held in an unleveraged position and
distributed and designated by the Fund may be treated as qualifying dividends.
Any corporate shareholder should consult its tax adviser regarding the
possibility that its tax basis in its shares may be reduced, for federal income
tax purposes, by reason of "extraordinary dividends" received with respect to
the shares. Corporate shareholders must meet the minimum holding period
requirement stated above (46 or 91 days), taking into account any holding-period
reductions from certain hedging or other transactions that diminish risk of
loss, with respect to their Fund shares in order to qualify for the deduction
and, if they borrow to acquire Fund shares, may be denied a portion of the
dividends-received deduction. The entire qualifying dividend, including the
otherwise deductible amount, will be included in determining the excess (if any)
of a corporation's adjusted current earnings over its alternative minimum
taxable income, which may increase a corporation's alternative minimum tax
liability.
The Fund may be subject to withholding and other taxes imposed by foreign
countries with respect to investments in those countries. Tax conventions
between certain countries and the U.S. may reduce or eliminate such taxes. The
Fund does not expect to satisfy the requirements for passing through to
shareholders their pro rata shares of foreign taxes paid by the Fund, with the
result that its shareholders will not include such taxes in their gross incomes
and will not be entitled to a tax deduction or credit for such taxes on their
own tax returns
Different tax treatment, including penalties on certain excess contributions and
deferrals, certain pre-retirement and post-retirement distributions, and certain
prohibited transactions is accorded to accounts maintained as qualified
retirement plans. Shareholders should consult their tax advisers for more
information.
The Fund is not subject to Massachusetts corporation franchise or excise taxes
and, provided that it qualifies as a regulated investment company under the
Code, also will not be required to pay any Massachusetts income tax.
Federal law requires that the Fund withhold (as "backup withholding") 31% of
reportable payments, including dividends, capital gain dividends, and the
proceeds of redemptions (including exchanges) and repurchases, to shareholders
who have not complied with Internal Revenue Service ("IRS") regulations. In
order to avoid this withholding requirement, shareholders must certify on their
Account Applications, or on separate W-9 Forms, that their Social Security or
other Taxpayer Identification Number is correct and that they are not currently
subject to backup withholding, or that they are exempt from backup withholding.
The Fund may nevertheless be required to withhold if it receives notice from the
IRS or a broker that the number provided is incorrect or backup withholding is
applicable as a result of previous underreporting of interest or dividend
income.
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The description above relates only to U.S. federal income tax consequences for
shareholders who are U.S. persons, i.e., U.S. citizens or residents and U.S.
domestic corporations, partnerships, trusts or estates, and who are subject to
U.S. federal income tax. The description does not address the special tax rules
applicable to particular types of investors, such as banks, insurance companies,
or tax-exempt entities. Shareholders should consult their own tax advisers on
these matters and on state, local and other applicable tax laws. Investors other
than U.S. persons may be subject to different U.S. tax treatment, including a
possible 30% U.S. withholding tax (or withholding tax at a lower treaty rate) on
amounts treated as ordinary dividends from the Fund and, unless an effective IRS
Form W-8 or authorized substitute is on file, to 31% backup withholding on
certain other payments from the Fund.
11. DESCRIPTION OF SHARES
The Fund's Declaration of Trust permits the Board of Trustees to authorize the
issuance of an unlimited number of full and fractional shares of beneficial
interest which may be divided into such separate series as the Trustees may
establish. Currently, the Fund consists of only one series. The Trustees may,
however, establish additional series of shares in the future, and may divide or
combine the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interests in the Fund. The Declaration of
Trust further authorizes the Trustees to classify or reclassify any series of
the shares into one or more classes. Pursuant thereto, the Trustees have
authorized the issuance of three classes of shares of the Fund, designated as
Class A shares, Class B and Class C shares. Each share of a class of the Fund
represents an equal proportionate interest in the assets of the Fund allocable
to that class. Upon liquidation of the Fund, shareholders of each class of the
Fund are entitled to share pro rata in the Fund's net assets allocable to such
class available for distribution to shareholders. The Fund reserves the right to
create and issue additional series or classes of shares, in which case the
shares of each class of a series would participate equally in the earnings,
dividends and assets allocable to that class of the particular series.
Shareholders are entitled to one vote for each share held and may vote in the
election of Trustees and on other matters submitted to a meeting of
shareholders. Although Trustees are not elected annually by the shareholders,
shareholders have, under certain circumstances, the right to remove one or more
Trustees.
The shares of each series of the Fund are entitled to vote separately to approve
investment advisory agreements or changes in investment restrictions, but
shareholders of all series vote together in the election and selection of
Trustees and accountants. Shares of all series of the Fund vote together as a
class on matters that affect all series of the Fund in substantially the same
manner. As to matters affecting a single series or class, shares of such series
or class will vote separately. No amendment adversely affecting the rights of
shareholders may be made to the Fund's Declaration of Trust without the
affirmative vote of a majority of its shares. Shares have no preemptive or
conversion rights. Shares are fully paid and non-assessable by the Fund, except
as stated below.
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12. CERTAIN LIABILITIES
The Fund (previously named Pioneer Three) was previously organized as a
Massachusetts business trust and was reorganized as a Delaware business trust on
January 31, 1996, pursuant to an Agreement and Plan of Reorganization approved
by the shareholders of the Fund. As a Delaware business trust, the Fund's
operations are governed by its Declaration of Trust dated January 31, 1996. A
copy of the fund's Certificate of Trust, also dated January 31, 1996, is on file
with the office of the Secretary of State of Delaware. Generally, Delaware
business trust shareholders are not personally liable for obligations of the
Delaware business trust under Delaware law. The Delaware Business Trust Act (the
"Delaware Act") provides that a shareholder of a Delaware business trust shall
be entitled to the same limitation of liability extended to shareholders of
private for-profit corporations. The Fund's Declaration of Trust expressly
provides that the Fund is organized under the Delaware Act and that the
Declaration of Trust is to be governed by Delaware law. It is nevertheless
possible that a Delaware business trust, such as the fund, might become a party
to an action in another state whose courts refused to apply Delaware law, in
which case the trust's shareholders could become subject to personal liability.
To guard against this risk, the Declaration of Trust (I) contains an express
disclaimer of shareholder liability for acts or obligations of the Fund and
provides that notice of such disclaimer may be given in each agreement,
obligation or instrument entered into or executed by the Fund or its Trustees,
(ii) provides for the indemnification out of Fund property of any shareholders
held personally liable for any obligations of the Fund or any series of the Fund
and (iii) provides that the Fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the Fund and
satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss beyond his or her investment because of shareholder liability is
limited to circumstances in which all of the following factors are present: (1)
a court refused to apply Delaware law; (2) the liability arose under tort law
or, if not, no contractual limitation of liability was in effect; and (3) the
Fund itself would be unable to meet its obligations. In light of Delaware law,
the nature of the Fund's business and the nature of its assets, the risk of
personal liability to a Fund shareholder is remote.
The Declaration of Trust further provides that the Fund shall indemnify each of
its Trustees and officers against liabilities and expenses reasonably incurred
by them, in connection with, or arising out of, any action, suit or proceeding,
threatened against or otherwise involving such Trustee or officer, directly or
indirectly, by reason of being or having been a Trustee or officer of the Fund.
The Declaration of Trust does not authorize the Fund to indemnify any Trustee or
officer against any liability to which he or she would otherwise be subject by
reason of or for willful misfeasance, bad faith, gross negligence or reckless
disregard of such person's duties.
13. LETTER OF INTENTION
Purchases in the Class A shares of the Fund of $50,000 or more (excluding any
reinvestments of dividends and capital gains distributions) made within a
13-month period pursuant to a Letter of Intention provided by PFD will qualify
-24-
<PAGE>
for a reduced sales charge. Such reduced sales charge will be the charge that
would be applicable to the purchase of all Class A shares purchased during such
13-month period pursuant to a Letter of Intention had such shares been purchased
all at once. See "How to Buy Fund Shares" in each Prospectus. For example, a
person who signs a Letter of Intention providing for a total investment in Class
A shares of $50,000 over a 13-month period would be charged at the 4.50% sales
charge rate with respect to all purchases during that period. Should the amount
actually purchased during the 13-month period be more or less than that
indicated in the Letter, an adjustment in the sales charge will be made. A
purchase not made pursuant to a Letter of Intention may be included thereafter
if the Letter is filed within 90 days of such purchase. Any shareholder may also
obtain the reduced sales charge by including the value (at current offering
price) of all the shares of record he holds in the Fund and in all other Pioneer
mutual funds as of the date of the Letter of Intention as a credit toward
determining the applicable scale of sales charge for the Class A shares to be
purchased under the Letter of Intention.
The Letter of Intention authorizes PSC to escrow Class A shares having a
purchase price equal to 5% of the stated investment specified in the Letter of
Intention. A Letter of Intention is not a binding obligation upon the investor
to purchase, or the Fund to sell, the full amount indicated and the investor
should carefully read the provisions of the Letter of Intention set forth in the
Account Application before signing.
14. SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan ("SWP") is designed to provide a convenient
method of receiving fixed payments at regular intervals from Class A shares of
the Fund deposited by the applicant under this SWP. The applicant must deposit
or purchase for deposit with PSC shares of the Fund having a total value of not
less than $10,000. Periodic checks of $50 or more will be deposited monthly or
quarterly directly into a bank account designated by the applicant or will be
sent by check to the applicant, or any person designated by him monthly or
quarterly. Withdrawals from Class B share accounts are limited to 10% of the
value of the account at the time the SWP is implemented.
Any income dividends or capital gains distributions on shares under the SWP will
be credited to the Plan account on the payment date in full and fractional
shares at the net asset value per share in effect on the record date.
SWP payments are made from the proceeds of the redemption of shares deposited
under the SWP in a SWP account. To the extent that such redemptions for periodic
withdrawals exceed dividend income reinvested in the SWP account, such
redemptions will reduce and may ultimately exhaust the number of shares
deposited in the Plan account. Redemptions are taxable transactions to
shareholders. In addition, the amounts received by a shareholder cannot be
considered as yield or income on his or her investment because part of such
payments may be a return of his or her investment.
-25-
<PAGE>
The SWP may be terminated at any time (1)by written notice to PSC or from PSC to
the shareholder; (2)upon receipt by PSC of appropriate evidence of the
shareholder's death; or (3)when all shares under the Plan have been redeemed.
15. DETERMINATION OF NET ASSET VALUE
The net asset value per share of each class of the Fund is determined as of the
close of regular trading on the New York Stock Exchange (the "Exchange")
(currently 4:00 p.m., Eastern Time) on each day on which the Exchange is open
for trading. As of the date of this Statement of Additional Information, the
Exchange is open for trading every weekday except for the following holidays:
New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. The net asset value per share of
each class of the Fund is also determined on any other day in which the level of
trading in its portfolio securities is sufficiently high that the current net
asset value per share might be materially affected by changes in the value of
its portfolio securities. The Fund is not required to determine its net asset
value per share on any day in which no purchase orders for the shares of the
Fund become effective and no shares are tendered for redemption.
The net asset value per share of each class of the Fund is computed by taking
the value of all of the Fund's assets attributable to a class, less the Fund's
liabilities attributable to a class, and dividing it by the number of
outstanding shares of the class. For purposes of determining net asset value,
expenses of the classes of the Fund are accrued daily.
Securities that have not traded on the date of valuation or securities for which
sales prices are not generally reported are valued at the mean between the last
bid and asked prices. Securities for which no market quotations are readily
available (excluding those whose trading has been suspended) will be valued at
fair value as determined in good faith by the Board of Trustees, although the
actual computations may be made by persons acting pursuant to the direction of
the Board of Trustees.
The Fund's maximum offering price per Class A share is determined by adding the
maximum sales charge to the net asset value per Class A share. Class B and Class
C shares are offered at net asset value without the imposition of an initial
sales charge.
-26-
<PAGE>
16. INVESTMENT RESULTS
Quotations, Comparisons, and General Information
From time to time, in advertisements, in sales literature, or in reports to
shareholders, the past performance of the Fund may be illustrated and/or
compared with that of other mutual funds with similar investment objectives, and
to stock or other relevant indices. For example, total return of the Fund's
classes may be compared to rankings prepared by Lipper Analytical Services,
Inc., a widely recognized independent service which monitors mutual fund
performance; the Standard & Poors Mid-Cap 400 Index (described above);the
Standard & Poor's 500 Stock Index ("S&P 500"), an index of unmanaged groups of
common stock; the Dow Jones Industrial Average, a recognized unmanaged index of
common stocks of 30 industrial companies listed on the New York Stock Exchange;
or The Frank Russell Indexes ("Russell 1000," "2000," "2500," "3000,") or the
Wilshire Total Market Value Index ("Wilshire 5000"), two recognized unmanaged
indexes of broad based common stocks.
In addition, the performance of the classes of the Fund may be compared to
alternative investment or savings vehicles and/or to indexes or indicators of
economic activity, e.g., inflation or interest rates. Performance rankings and
listings reported in newspapers or national business and financial publications,
such as Barron's, Business Week, Consumers Digest, Consumer Reports, Financial
World, Forbes, Fortune, Investors Business Daily, Kiplinger's Personal Finance
Magazine, Money Magazine, New York Times, Smart Money, USA Today, U.S. News and
World Report, The Wall Street Journal, and Worth may also be cited (if the Fund
is listed in any such publication) or used for comparison, as well as
performance listings and rankings from various other sources including Bloomberg
Financial Markets, CDA/Wiesenberger, Donoghue's Mutual Fund Almanac, Investment
Company Data, Inc., Johnson's Charts, Kanon Bloch Carre and Co., Lipper
Analytical Services, Inc., Micropal, Inc., Morningstar, Inc., Schabacker
Investment Management and Towers Data Systems, Inc.
In addition, from time to time quotations from articles from financial
publications such as those listed above may be used in advertisements in sales
literature, or in reports to shareholders of the Fund.
The Fund may also present, from time to time, historical information depicting
the value of a hypothetical account in one or more classes of the Fund since
such Fund's inception.
In presenting investment results, the Fund may also include references to
certain financial planning concepts, including (a) an investor's need to
evaluate his financial assets and obligations to determine how much to invest;
(b) his need to analyze the objectives of various investments to determine where
to invest; and (c) his need to analyze his time frame for future capital needs
to determine how long to invest. The investor controls these three factors, all
of which affect the use of investments in building assets.
One of the primary methods used to measure the performance of a class of the
Fund is "total return." "Total return" will normally represent the percentage
-27-
<PAGE>
change in value of an account, or of a hypothetical investment in a class of the
Fund, over any period up to the lifetime of that class of the Fund. Total return
calculations will usually assume the reinvestment of all dividends and capital
gains distributions and will be expressed as a percentage increase or decrease
from an initial value, for the entire period or for one or more specified
periods within the entire period. Total return percentages for periods of less
than one year will usually be annualized; total return percentages for periods
longer than one year will usually be accompanied by total return percentages for
each year within the period and/or by the average annual compounded total return
for the period. The income and capital components of a given return may be
separated and portrayed in a variety of ways in order to illustrate their
relative significance. Performance may also be portrayed in terms of cash or
investment values, without percentages. Past performance cannot guarantee any
particular future result.
The Fund's average annual total return quotations for each of its classes as
that information may appear in the Fund's Prospectus, this Statement of
Additional Information or in advertising are calculated by standard methods
prescribed by the Commission.
Standardized Average Annual Total Return Quotations
Average annual total return quotations for Class A, Class B and Class C shares
are computed by finding the average annual compounded rates of return that would
cause a hypothetical investment in the class made on the first day of a
designated period (assuming all dividends and distributions are reinvested) to
equal the ending redeemable value of such hypothetical investment on the last
day of the designated period in accordance with the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000, less
the maximum sales load of $57.50 for Class A
shares or the deduction of the CDSC for Class B
and Class C shares at the end of the period.
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1000
initial payment made at the beginning of the
designated period (or fractional portion thereof)
For purposes of the above computation, it is assumed that all dividends and
distributions made by the Fund are reinvested at net asset value during the
designated period. The average annual total return quotation is determined to
the nearest 1/100 of 1%.
-28-
<PAGE>
In determining the average annual total return (calculated as provided above),
recurring fees, if any, that are charged to all shareholder accounts of a
particular class are taken into consideration. For any account fees that vary
with the size of the account, the account fee used for purposes of the above
computation is assumed to be the fee that would be charged to a class's mean
account size.
Automated Information Line
FactFoneSM, Pioneer's 24-hour automated information line, allows shareholders to
dial toll-free 1-800-225-4321 and hear recorded fund information, including:
o net asset value prices for all Pioneer mutual funds;
o annualized 30-day yields on Pioneer's fixed income funds;
o annualized 7-day yields and 7-day effective (compound) yields for
Pioneer's money market funds; and
o dividends and capital gains distributions on all Pioneer mutual
funds.
Yields are calculated in accordance with Commission mandated standard formulas.
In addition, by using a personal identification number ("PIN"), shareholders may
enter purchases, exchanges and redemptions, access their account balance and
last three transactions and may order a duplicate statement. See "FactFoneSM" in
the Prospectus for more information.
All performance numbers communicated through FactFoneSM represent past
performance, and figures for all quoted bond funds include the maximum
applicable sales charge. A shareholder's actual yield and total return will vary
with changing market conditions. The value of Class A, Class B and Class C
shares (except for Pioneer money market funds, which seek a stable $1.00 share
price) will also vary, and such shares may be worth more or less at redemption
than their original cost.
17. FINANCIAL STATEMENTS
The Fund's financial statements for the fiscal year ended September 30, 1995 and
the Report of Independent Public Accountants included in this Statement of
Additional Information have been included in reliance upon the report of Arthur
Andersen, LLP, independent public accountants, as experts in accounting and
auditing. The report of Independent Accountants and financial statements
included in the Fund's Annual Report for the fiscal year ended September 30,
1995, filed electronically on November 29, 1995, are incorporated by reference
into this Statement of Additional Information. The financial highlights table in
the Prospectus and the financial statements incorporated by reference into the
Prospectus and Statement of Additional Information have been so included and
-29-
<PAGE>
incorporated in reliance upon the report of Arthur Andersen, LLP, independent
public accountants, given on their authority as experts in accounting and
auditing.
-30-
<PAGE>
APPENDIX A
Description of Bond Ratings1
Moody's Investor's Service, Inc.2
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat bigger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
- ---------------------------------------------
1 The ratings indicated herein are believed to be the most recent ratings
available at the date of this Prospectus for the securities listed. Ratings are
generally given to securities at the time of issuance. While the rating agencies
may from time to time revise such ratings, they undertake no obligation to do
so, and the ratings indicated do not necessarily represent ratings which will be
given to these securities on the date of the Fund's fiscal year-end.
2 Rates bonds of issuers which have $600,000 or more of debt, except bonds of
educational institutions, projects under construction, enterprises without
established earnings records and situations where current financial data is
unavailable.
-31-
<PAGE>
Standard & Poor's Ratings Group 3
AAA: Bonds rated AAA are highest grade obligations. This rating indicates an
extremely strong capacity to pay principal and interest.
AA: Bonds rated AA also qualify as high-quality obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
A: Bonds rated A have a strong capacity to pay principal and interest, although
they are more susceptible to the adverse effects of changes in circumstances and
economic conditions.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
- -------------------------------------------------
3 Rates all governmental bodies having $1,000,000 or more of debt outstanding,
unless adequate information is not available.
-32-
<PAGE>
S&P Mid-Cap 400
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P Mid-Cap 400 includes
400 domestic stocks chosen for market size, liquidity and industry group
representation. It is a market weighted average and was the first benchmark of
mid-cap stock price movements.
S&P 500
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P Composite Index
includes 500 of the largest stocks (in terms of stock market value) in the
United States; prior to March 1957 it consisted of 90 of the largest stocks.
DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of 30 blue chip stocks.
SMALL CAPITALIZATION STOCKS
This index is a market value weighted index of the ninth and tenth deciles of
the New York Stock Exchange (NYSE), plus stocks listed on the American Stock
Exchange (AMEX) and over-the-counter (OTC) with the same or less capitalization
as the upper bound of the NYSE ninth decile.
INFLATION
The Consumer Price Index for All Urban Consumers (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S. Department of Labor, Bureau of Labor Statistics, Washington, DC.
S&P/BARRA INDEXES
"The S&P/BARRA Growth and Value Indexes are constructed by dividing the stocks
in the S&P 500 Index according to price-to-book ratios. The Growth Index
contains stocks with higher price-to-book ratios, and the Value Index contains
stocks with lower price-to-book ratios. Both indexes are market capitalization
weighted."
Source: Ibbotson Associates
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<PAGE>
NEED TO REVIEW THIS INFORMATION AS APPLICABLE TO MID-CAP FUND
<TABLE>
<CAPTION>
Dow Jones U.S. Small S&P/BARRA S&P/BARRA
S&P500 Ind'l Avg Stock Index U.S. Inflation Growth Value
%TR %TR %TR %TR %TR %TR
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A
Dec 1931 -43.34 -49.03 -49.75 -9.52 N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A
Dec 1933 53.99 73.71 142.87 0.51 N/A N/A
Dec 1934 -1.44 8.07 24.22 2.03 N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A
Dec 1942 20.34 14.12 44.51 9.29 N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A
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<PAGE>
Dow Jones U.S. Small S&P/BARRA S&P/BARRA
S&P500 Ind'l Avg Stock Index U.S. Inflation Growth Value
%TR %TR %TR %TR %TR %TR
- ----------------------------------------------------------------------------------------------------------------------------
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60
Dec 1994 1.31 5.06 3.11 2.78 3.13 -0.64
</TABLE>
Source: Ibbotson Associates
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<PAGE>
APPENDIX B
OTHER PIONEER INFORMATION
The Pioneer family of mutual funds was established in 1928 with the creation of
Pioneer Fund. Pioneer is one of the oldest, most respected and successful money
managers in the United States.
As of December 31, 1994, PMC employed a professional investment staff of 46,
with a combined average of 14 years' experience in the financial services
industry.
At December 31, 1994, there were 591,192 non-retirement shareholder accounts and
337,577 retirement shareholder accounts in Pioneer's funds. Total assets for all
Pioneer funds as of December 31, 1994 were $10,038,000,000 representing a total
of 928,769 shareholder accounts.
FORM N-1A
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
The financial statements of the Registrant have been
incorporated by reference into Parts A (in part) and B from
the 1995 Annual Report to Shareholders dated September 30,
1995.
(b) Exhibits:
1. Declaration of Trust*
2. By-Laws*
3. None
4. Specimen Stock Certificate*
5. Management Contract
6.1 Underwriting Agreement
6.2 Form of Dealer Sales Agreement*
7. None
8. Form of Custodian Agreement with Brown Brothers Harriman
& Co.*
9.1 Investment Company Service Agreement*
9.2 Plan of Reorganization
10. Legal Opinion of Hale and Dorr*
11. Consent of Arthur Andersen LLP
12. None
13. Form of Stock Purchase Agreement*
14. None
15. Distribution Plan*
16. Description of Average Annual Total Return*
18. Powers of Attorney
- ------------------------
* Previously filed. Incorporated by reference from the exhibits filed with
the Registration Statement (File No. 2-79140), as amended, of the
Registrant. Parts A and B of this Registration Statement describe certain
changes from Registrant's current Registration Statement proposed to take
effect on February 1, 1996 following approval by shareholders of the
Registrant at a meeting scheduled to be held on January 23, 1996. These
changes include the reorganization of Registrant as a Delaware business
trust and the adoption of a new management contract and Rule 12b-1 plans
for two additional classes of shares. If the proposed changes are approved
by shareholders, Exhibits relating to the same will be filed by an
additional Post-Effective Amendment under Rule 485(b) which will become
simultaneously effective with this Post-Effective Amendment No. 20.
Item 25. Persons Controlled By or Under
Common Control With Registrant
The Pioneer Group, Inc., a publicly-traded Delaware corporation
("PGI"), owns 100% of the outstanding capital stock of Pioneering Management
Corporation, a Delaware corporation ("PMC"), Pioneering Services Corporation
("PSC"), Pioneer Funds Distributor, Inc. ("PFD"), Pioneer Capital Corporation
("PCC"), Pioneer Fonds Marketing GmbH ("GmbH"), Pioneer SBIC Corp. ("SBIC"),
Pioneer Associates, Inc., Pioneer International Corporation, Pioneer Plans
Corporation ("PPC"), Pioneer Goldfields Limited ("PGL"), and Pioneer Investments
Corporation ("PIC"), all Massachusetts corporations. PGI also owns 100% of the
outstanding capital stock of Pioneer Metals and Technology, Inc. ("PMT"), a
Delaware corporation, Pioneer Fonds Marketing GmbH, a German corporation, and
Pioneer First Polish Trust Fund Joint Stock Company ("First Polish"), a Polish
corporation. PGI owns 90% of the outstanding shares of Teberebie Goldfields
Limited ("TGL"). Pioneer Fund, Pioneer Europe Fund, Pioneer II, Pioneer U.S.
Government Trust, Pioneer Bond Fund, Pioneer Intermediate Tax-Free Fund, Pioneer
Growth Trust, Pioneer International Growth Fund, Pioneer Short-Term Income
Trust, Pioneer Tax-Free State Series Trust, and the Registrant (each of the
foregoing are Massachusetts business trusts); Pioneer Real Estate Shares,
Pioneer Interest Shares, Inc. (a Nebraska corporation); and Pioneer Growth
Shares, Pioneer Money Market Trust, Pioneer Income Fund, Pioneer Emerging
Markets Fund, Pioneer India Fund, Pioneer Small Company Fund and Pioneer
Tax-Free Income Fund (each of the foregoing are Delaware business trusts) are
all parties to management contracts with PMC. PCC owns 100% of the outstanding
capital stock of SBIC. SBIC is the sole general partner of Pioneer Ventures
Limited Partnership, a Massachusetts limited partnership. John F. Cogan, Jr.
owns approximately 15% of the outstanding shares of PGI. Mr. Cogan is Chairman
of the Board, President and Trustee of the Registrant and of each of the Pioneer
mutual funds; Director and President of PGI; President and Director of PPC, PIC,
Pioneer International Corporation and PMT; Director of PCC and PSC; Chairman of
the Board and Director of PMC, PFD and TGL; Chairman, President and Director of
PGL; Chairman of the Supervisory Board of GmbH; Chairman and Member of
Supervisory Board of First Polish and Chairman and Partner, Hale and Dorr.
Item 26. Number of Holders of Securities
At October 31, 1995, there were approximately 63,273 holders of the
Registrant's shares.,
Item 27. Indemnification
Except for the Declaration of Trust dated January 8, 1985, establishing
the Registrant as a Trust under Massachusetts law, there is no contract,
arrangement or statute under which any director, officer, underwriter or
affiliated person of the Registrant is insured or indemnified. The Declaration
of Trust provides that no Trustee or officer will be indemnified against any
liability to which the Registrant would otherwise be subject by reason of or for
willful misfeasance, bad faith, gross negligence or reckless disregard of such
person's duties.
Item 28. Business and Other Connections of Investment Adviser
All of the information required by this item is set forth in the Form
ADV, as amended, of Pioneering Management Corporation. The following sections of
such Form ADV are incorporated herein by reference:
(a) Items 1 and 2 of Part 2;
(b) Section IV, Business Background, of each Schedule D.
Item 29. Principal Underwriter
(a) See Item 25 above.
(b) Directors and Officers of PFD:
<PAGE>
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
John F. Cogan, Jr. Director and Chairman Chairman of the Board,
President and Trustee
Robert L. Butler Director and President None
David D. Tripple Director Executive Vice
President and Trustee
Steven M. Graziano Senior None
Vice President
Stephen W. Long Senior None
Vice President
John W. Drachman Vice President None
Barry G. Knight Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Elizabeth B. Rice Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy L. Supovitz Vice President None
Steven R. Berke Assistant None
Vice President
Mary Sue Hoban Assistant None
Vice President
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
<PAGE>
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts and records are maintained at the Registrant's office at
60 State Street, Boston, Massachusetts; contact the Treasurer.
Item 31. Management Services
The Registrant is not a party to any management-related service
contract, except as described in the Prospectus and Statement of Additional
Information.
Item 32. Undertaking
(a) Not applicable.
(b) Not applicable.
(c) The Registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given, a copy of the Registrant's report to shareholders furnished pursuant to
and meeting the requirements of Rule 30d-1 under the Investment Company Act of
1940, as amended, from which the specified information is incorporated by
reference, unless such person currently holds securities of the Registrant and
otherwise has received a copy of such report, in which case the Registrant shall
state in the Prospectus that it will furnish, without charge, a copy of such
report on request, and the name, address and telephone number of the person to
whom such a request should be directed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment No. 20 to
its Registration Statement pursuant to Rule 485(a) under the Securities Act of
1933 and has duly caused this Post-Effective Amendment No. 20 to such
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston and The Commonwealth of Massachusetts, on
the 1st day of December, 1995.
PIONEER THREE
By:
John F. Cogan, Jr.
Chairman and President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 20 to the Registrant's Registration Statement has
been signed below by the following persons in the capacities and on the date
indicated:
Signature Title
Chairman of the Board )
John F. Cogan, Jr. and President )
(Principal Executive )
Officer) )
)
)
/s/William H. Keough* Chief Financial Officer )
William H. Keough and Treasurer (Principal )
Financial and Accounting )
Officer) )
Trustees:
)
)
John F. Cogan, Jr. )
)
)
/s/Richard H. Egdahl, M.D.* )
Richard H. Egdahl, M.D. )
)
)
/s/Margaret B. W. Graham* )
Margaret B. W. Graham )
)
)
/s/John W. Kendrick* )
John W. Kendrick )
)
)
/s/Marguerite A. Piret* )
Marguerite A. Piret )
)
)
/s/David D. Tripple* )
David D. Tripple )
)
)
/s/Stephen K. West* )
Stephen K. West )
)
)
/s/John Winthrop* )
John Winthrop )
- ------------
*By: Dated: December 1, 1995
-----------------------------
John F. Cogan, Jr.
Attorney-in-fact
<PAGE>
Exhibit Index
Exhibit
Number Document Title
5. Management Contract
6.1 Underwriting Agreement
9.2 Plan of Reorganization
11. Consent of Arthur Andersen LLP
18. Powers of Attorney
MANAGEMENT CONTRACT
THIS AGREEMENT dated this 1st day of February, 1996 between Pioneer Mid-Cap
Fund (formerly Pioneer Three), a Delaware business trust (the "Trust"), and
Pioneering Management Corporation, a Delaware corporation (the "Manager").
W I T N E S S E T H
WHEREAS, the Trust is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Registration Statement") for the
purpose of registering its shares for public offering under the Securities Act
of 1933, as amended (the "1933 Act"),
WHEREAS, the parties hereto deem it mutually advantageous that the Manager
should be engaged, subject to the supervision of the Trust's Board of Trustees
and officers, to manage the Trust.
NOW, THEREFORE, in consideration of the mutual covenants and benefits set
forth herein, the Trust and the Manager do hereby agree as follows:
1. (a) The Manager will regularly provide the Trust with investment
research, advice and supervision and will furnish continuously an investment
program for the Trust, consistent with the investment objectives and policies of
the Trust. The Manager will determine from time to time what securities shall be
purchased for the Trust, what securities shall be held or sold by the Trust and
what portion of the Trust's assets shall be held uninvested as cash, subject
always to the provisions of the Trust's Certificate of Trust, Agreement and
Declaration of Trust, By-Laws and its registration statements under the 1940 Act
and under the 1933 Act covering the Trust's shares, as filed with the Securities
and Exchange Commission, and to the investment objectives, policies and
restrictions of the Trust, as each of the same shall be from time to time in
effect, and subject, further, to such policies and instructions as the Board of
Trustees of the Trust may from time to time establish. To carry out such
determinations, the Manager will exercise full discretion and act for the Trust
in the same manner and with the same force and effect as the Trust itself might
or could do with respect to purchases, sales or other transactions, as well as
with respect to all other things necessary or incidental to the furtherance or
conduct of such purchases, sales or other transactions.
(b) The Manager will, to the extent reasonably required in the conduct of
the business of the Trust and upon the Trust's request, furnish to the Trust
research, statistical and advisory reports upon the industries, businesses,
corporations or securities as to which such requests shall be made, whether or
not the Trust shall at the time have any investment in such industries,
businesses, corporations or securities. The Manager will use its best efforts in
the preparation of such reports and will endeavor to
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<PAGE>
consult the persons and sources believed by it to have information available
with respect to such industries, businesses, corporations or entities.
(c) The Manager will maintain all books and records with respect to the
Trust's securities transactions required by sub paragraphs (b)(5), (6), (9) and
(10) and paragraph (f) of Rule 31a-1 under the 1940 Act (other than those
records being maintained by the custodian or transfer agent appointed by the
Trust) and preserve such records for the periods prescribed therefor by Rule
31a-2 under the 1940 Act. The Manager will also provide to the Board of Trustees
such periodic and special reports as the Board may reasonably request.
2. (a) Except as otherwise provided herein, the Manager, at its own
expense, shall furnish to the Trust office space in the offices of the Manager
or in such other place as may be agreed upon from time to time, and all
necessary office facilities, equipment and personnel for managing the Trust's
affairs and investments, and shall arrange, if desired by the Trust, for members
of the Manager's organization to serve as officers or agents of the Trust.
(b) The Manager shall pay directly or reimburse the Trust for: (i) the
compensation (if any) of the Trustees who are affiliated with, or "interested
persons" (as defined in the 1940 Act) of, the Manager and all officers of the
Trust as such; and (ii) all expenses not hereinafter specifically assumed by the
Trust where such expenses are incurred by the Manager or by the Trust in
connection with the management of the affairs of, and the investment and
reinvestment of the assets of, the Trust.
(c) The Trust shall assume and shall pay: (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 the Manager, 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 Trust with respect to the Trust; (iv) issue and
transfer taxes chargeable to the Trust in connection with securities
transactions to which the Trust 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 Trust to federal, state or other governmental
agencies; (vi) fees and expenses involved in registering and maintaining
registrations of the Trust and/or its shares with the Commission, state or blue
sky securities agencies and foreign countries, including the preparation of
Prospectuses and Statements of Additional Information for filing with the
Commission; (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 Trust and the Trustees; (ix) any distribution
fees paid by the Trust in accordance with Rule 12b-1 promulgated by the
Commission pursuant to the 1940 Act; (x) compensation of those Trustees of the
Trust who are not affiliated with or interested persons of the Manager, the
Trust (other than as Trustees), The Pioneer Group, Inc. or Pioneer Funds
Distributor, Inc.; (xi) the cost of preparing and printing share certificates;
and (xii) interest on borrowed money, if any.
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<PAGE>
(d) In addition to the expenses described in Section 2(c) above, the Trust
shall pay all brokers' and underwriting commissions chargeable to the Trust in
connection with securities transactions to which the Trust is a party.
3. (a) The Trust shall pay to the Manager, as compensation for the
Manager's services and expenses assumed hereunder, a fee as set forth below.
Management fees payable hereunder shall be computed daily and paid monthly in
arrears.
(i) For the period beginning on the date this Contract becomes effective
and ending on June 30, 1996, the fee shall be paid at the annual rate of 0.50%
of the Trust'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 (the "Carryover Fee").
(ii) For periods after June 30, 1996, the fee payable hereunder shall be
composed of the Basic Fee (defined below) and a Performance Adjustment (defined
below) to the Basic Fee based upon the investment performance of the Trust in
relation to the Standard & Poors Mid-Cap 400 Index (the "Index").
(iii) The Basic Fee is payable at an annual rate of 0.625% of the Trust's
average daily net assets.
(iv) The Performance Adjustment consists of an adjustment to the monthly
Basic Fee to be made by applying a performance adjustment rate to the average
net assets of the Trust over the performance period. The resulting dollar figure
will be added to or subtracted from the Basic Fee depending on whether the Trust
experienced better or worse performance than the Index.
The Performance Adjustment rate is 0.02% per annum for each percentage
point rounded to the nearer point (the higher point if exactly one-half point)
that the Trust's investment performance for the period was better or worse than
the record of the index as then constituted. The maximum performance adjustment
is 0.20% per annum.
The performance period will commence on February 1, 1996. During the first
five months thereafter there will be no Performance Adjustment and the Carryover
Fee will be in effect. Starting with July, 1996 and ending with December, 1997
(the "Transition Period"), the Performance Adjustment will take effect only if
this would have the effect of lowering the Basic Fee. Starting with January,
1997, the Performance Fee will take effect for purposes of both increasing and
lowering the Basic Fee.
Starting with July, 1996, a new month will be added to the performance
period each month until the performance period equals 36 months. Thereafter, the
performance period will consist of the current month plus the preceding 35
months.
The Trust's investment performance will be measured by comparing the (i)
opening net asset value of one share of the Trust on the first business day of
the performance period with (ii) the closing net asset value of the one share of
the Trust as of the last business day of such period. In computing the
investment performance of the Trust and the investment record of the Index,
distributions of realized capital gains, the value of capital gains taxes per
share paid or payable on undistributed realized long-term
A-5
<PAGE>
capital gains accumulated to the end of such period and dividends paid out of
investment income on the part of the Trust, and all cash distributions of the
companies whose stock comprise the Index, will be treated as reinvested in
accordance with Rule 205-1 or any other applicable rule under the Investment
Advisers Act of 1940, as the same from time to time may be amended.
The computation of the performance adjustment will not be cumulative.
Except during the Transition Period, a positive fee adjustment will apply even
though the performance of the Trust over some period of time shorter than the
performance period has been behind that of the Index, and, conversely, a
negative fee adjustment will apply for the month even though the performance of
the Trust over some period of time shorter than the performance period has been
ahead of that of the Index.
(v) One-twelfth of the annual Performance Adjustment rate shall be applied
to the average of the net assets of the Trust (computed in the manner set forth
in the Declaration of Trust of the Trust adjusted as provided above, if
applicable) determined as of the close of business on each business day through
out the performance period. The resulting dollar amount is added to or deducted
from the Basic Fee.
(vi) In the event of termination of this Agreement, the Carryover Fee or
Basic Fee then in effect shall be computed on the basis of the period ending on
the last business day on which this Agreement is in effect subject to a pro rata
adjustment based on the number of days elapsed in the current month as a
percentage of the total number of days in such month. The amount of any
Performance Adjustment to the Basic Fee will be computed on the basis of and
applied to net assets averaged over the 36 month period ending on the last
business day on which this Agreement is in effect, provided that if this
Agreement has been in effect less than 36 months, the computation will be made
on the basis of the period of time during which it has been in effect.
(b) If the operating expenses of the Trust in any year exceed the limits
set by state securities laws or regulations in states in which shares of the
Trust are sold, the amount payable to the Manager under subsection (a) above
will be reduced (but not below $0), and the Manager shall make other
arrangements concerning expenses but, in each instance, only as and to the
extent required by such laws or regulations. If amounts have already been
advanced to the Manager under this Agreement, the Manager will return such
amounts to the Trust to the extent required by the preceding sentence.
(c) In addition to the foregoing, the Manager may from time to time agree
not to impose all or a portion of its fee otherwise payable hereunder (in
advance of the time such fee or a portion thereof would otherwise accrue) and/or
undertake to pay or reimburse the Trust for all or a portion of its expenses not
otherwise required to be borne or reimbursed by the Manager. Any such fee
reduction or undertaking may be discontinued or modified by the Manager at any
time.
4. It is understood that the Manager may employ one or more sub-investment
advisers (each a "Subadviser") to provide investment advisory services to the
Trust by entering into a written agreement with each such Subadviser; provided,
that any such agreement first shall be approved by the vote of a majority of the
Trustees, including a
A-6
<PAGE>
majority of the Trustees who are not "interested persons" (as defined in the
1940 Act) of the Trust, the Manager or any such Subadviser, at a meeting of
Trustees called for the purpose of voting on such approval and by the
affirmative vote of a "majority of the outstanding voting securities" (as
defined in the 1940 Act) of the Trust. The authority given to the Manager in
Sections 1 through 6 hereof may be delegated by it under any such agreement;
PROVIDED, that any Subadviser shall be subject to the same restrictions and
limitations on investments and brokerage discretion as the Manager. The Trust
agrees that the Manager shall not be accountable to the Trust or the Trust's
shareholders for any loss or other liability relating to specific investments
directed by any Subadviser, even though the Manager retains the right to reverse
any such investment, because, in the event a Subadviser is retained, the Trust
and the Manager will rely almost exclusively on the expertise of such Subadviser
for the selection and monitoring of specific investments.
5. The Manager 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 the
Manager, whether or not such recommendation shall have been based upon its own
investigation and research or upon investigation and research made by any other
individual, firm or corporation, but nothing contained herein will be construed
to protect the Manager against any liability to the Trust or its shareholders by
reason of 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.
6. (a) Nothing in this Agreement will in any way limit or restrict the
Manager or any of its officers, Trustees, or employees from buying, selling or
trading in any securities for its or their own accounts or other accounts. The
Manager may act as an investment advisor to any other person, firm or
corporation, and may perform management and any other services for any other
person, association, corporation, firm or other entity pursuant to any contract
or otherwise, and take any action or do any thing in connection therewith or
related thereto; and no such performance of management or other services or
taking of any such action or doing of any such thing shall be in any manner
restricted or otherwise affected by any aspect of any relationship of the
Manager to or with the Trust or deemed to violate or give rise to any duty or
obligation of the Manager to the Trust except as otherwise imposed by law. The
Trust recognizes that the Manager, in effecting transactions for its various
accounts, may not always be able to take or liquidate investment positions in
the same security at the same time and at the same price.
(b) In connection with purchases or sales of securities for the account of
the Trust, neither the Manager nor any of its Trustees, officers or employees
will act as a principal or agent or receive any commission except as permitted
by the 1940 Act. The Manager shall arrange for the placing of all orders for the
purchase and sale of securities for the Trust's account with brokers or dealers
selected by the Manager. In the selection of such brokers or dealers and the
placing of such orders, the Manager is directed at all times to seek for the
Trust the most favorable execution and net price available except as
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<PAGE>
described herein. It is also understood that it is desirable for the Trust that
the Manager have access to supplemental investment and market research and
security and economic analyses provided by brokers who may execute brokerage
transactions at a higher cost to the Trust than may result when allocating
brokerage to other brokers on the basis of seeking the most favorable price and
efficient execution. Therefore, the Manager is authorized to place orders for
the purchase and sale of securities for the Trust with such brokers, subject to
review by the Trust's Trustees from time to time with respect to the extent and
continuation of this practice. It is understood that the services provided by
such brokers may be useful to the Manager in connection with its or its
affiliates' services to other clients.
(c) On occasions when the Manager deems the purchase or sale of a security
to be in the best interest of the Trust as well as other clients, the Manager,
to the extent permitted by applicable laws and regulations, may aggregate the
securities to be sold or purchased in order to obtain the best execution and
lower brokerage commissions, if any. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the transaction, will
be made by the Manager in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Trust and to such clients.
7. This Agreement shall become effective on the date hereof and shall
remain in force until May 31, 1997 and from year to year thereafter, but only so
long as its continuance is approved annually by a vote of the Trustees of the
Trust voting in person, including a majority of its Trustees who are not parties
to this Agreement or "interested persons" (as defined in the 1940 Act) of any
such parties, at a meeting of Trustees called for the purpose of voting on such
approval or by a vote of a "majority of the outstanding voting securities" (as
defined in the 1940 Act) of the Trust, subject to the right of the Trust and the
Manager to terminate this contract as provided in Section 8 hereof.
8. Either party hereto may, without penalty, terminate this Agreement by
vote of its Board of Trustees or Directors, as the case may be, or by vote of a
"majority of its outstanding voting securities" (as defined in the 1940 Act) and
the giving of 60 days' written notice to the other party.
9. This Agreement shall automatically terminate in the event of its
assignment. For purposes of this Agreement, the term "assignment" shall have the
meaning given it by Section 2(a)(4) of the 1940 Act.
10. The Trust agrees that in the event that neither the Manager nor any of
its affiliates acts as an investment adviser to the Trust, the name of the Trust
will be changed to one that does not contain the name "Pioneer" or otherwise
suggest an affiliation with the Manager.
11. The Manager is an independent contractor and not an employee of the
Trust for any purpose. If any occasion should arise in which the Manager gives
any advice to its clients concerning the shares of the Trust, the Manager will
act solely as investment counsel for such clients and not in any way on behalf
of the Trust or any series thereof.
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<PAGE>
12. This Agreement states the entire agreement of the parties hereto, and
is intended to be the complete and exclusive statement of the terms hereof. It
may not be added to or changed orally, and may not be modified or rescinded
except by a writing signed by the parties hereto and in accordance with the 1940
Act, when applicable.
13. This Agreement and all performance hereunder shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts.
14. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms or provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction.
15. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers and their seal to be hereto affixed
as of the day and year first above written.
ATTEST: PIONEER MID-CAP FUND
By:
- --------------------------------- -----------------------------------
Joseph P. Barri John F. Cogan, Jr.
Secretary Chairman and President
ATTEST: PIONEERING MANAGEMENT CORPORATION
By:
- --------------------------------- -----------------------------------
Joseph P. Barri David D. Tripple
Secretary President
-36-
UNDERWRITING AGREEMENT
THIS UNDERWRITING AGREEMENT, dated as of this 8th day of August, 1991
by and between Pioneer Three ("Pioneer") and Pioneer Funds Distributor, Inc.
(the "Underwriter").
W I T N E S S E T H
WHEREAS, Pioneer, a Massachusetts business trust, is registered as an
open-end, diversified, management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), and has filed a registration
statement (the "Registration Statement") with the Securities and Exchange
Commission (the "Commission") for the purpose of registering shares of
beneficial interest for public offering under the Securities Act of 1933, as
amended;
WHEREAS, the Underwriter, a corporation organized under the laws of the
Commonwealth of Massachusetts in 1989, engages in the purchase and sale of
securities both as a broker and dealer and is registered as a broker-dealer with
the Commission and is a member in good standing of the National Association of
Securities Dealers, Inc. (the "NASD");
WHEREAS, the parties hereto deem it mutually advantageous that the
Underwriter should act as Principal Underwriter, as defined in the 1940 Act, for
the sale to the public of the shares of beneficial interest of the securities
portfolio of each series of Pioneer which the Trustees may establish from time
to time (individually, a "Portfolio" and collectively, the "Portfolios"); and
WHEREAS, the parties hereto have executed an Underwriting Agreement
dated January 30, 1990, and wish by this Agreement to amend and supersede in its
entirety such prior Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and benefits
set forth herein, Pioneer and the Underwriter do hereby agree as follows:
l. Pioneer does hereby grant to the Underwriter the right and option to
purchase shares of beneficial interest of a Portfolio of Pioneer (the "Shares")
for sale to investors either directly or indirectly through other
broker-dealers. The Underwriter is not required to purchase any specified number
of Shares, but will purchase from Pioneer only a sufficient number of Shares as
may be necessary to fill unconditional orders received from time to time by the
Underwriter from investors and dealers.
<PAGE>
2. The Underwriter shall offer Shares to the public at an offering
price based upon the net asset value of the Shares, to be calculated as
described in the Registration Statement, including the Prospectus, filed with
the Commission and in effect at the time of the offering, plus sales charges as
approved by the Underwriter and the Trustees of Pioneer and as further outlined
in Pioneer's Prospectus. The offering price shall be subject to any provisions
set forth in the Prospectus from time to time with respect thereto, including,
without limitation, rights of accumulation, letters of intention,
exchangeability of shares, reinstatement privileges, net asset value purchases
by certain persons and reinvestments of dividends and capital gain
distributions.
3. In the case of all Shares sold to investors through other
broker-dealers, a portion of applicable sales charges will be reallowed to such
broker-dealers who are members of the NASD or, in the case of certain sales by
banks or certain sales to foreign nationals, to brokers or dealers exempt from
registration with the Commission. The concession reallowed to broker-dealers
shall be set forth in a written sales agreement and shall be generally the same
for broker-dealers providing comparable levels of sales and service.
4. This Agreement may be terminated by either party upon sixty days'
written notice.
5. This Agreement shall terminate on any anniversary hereof if its
terms and renewal have not been approved by a majority vote of the Trustees of
Pioneer voting in person, including a majority of its Trustees who are not
"interested persons" of the Trust and who have no direct or indirect financial
interest in the operation of the Underwriting Agreement (the "Qualified
Trustees"), at a meeting of Trustees called for the purpose of voting on such
approval. This Agreement may also be terminated at any time, without payment of
any penalty, by Pioneer on sixty days' written notice to the Underwriter, or by
the Underwriter upon similar notice to Pioneer. This Agreement may also be
terminated by a party upon five (5) days written notice to the other party in
the event that the Commission has issued an order or obtained an injunction or
other court order suspending effectiveness of the Registration Statement
covering these shares of Pioneer. Finally, this Agreement may also be terminated
by Pioneer upon five (5) days written notice to the Underwriter provided either
of the following events has occurred: (i) the NASD has expelled the Underwriter
or suspended its membership in that organization; or (ii) the qualification,
registration, license or right of the Underwriter to sell shares in a particular
state has been suspended or cancelled in a state in which sales of the shares of
Pioneer during the most recent l2 month period exceeded 10% of all shares of
Pioneer sold by the Underwriter during such period.
-2-
<PAGE>
6. The compensation for the services of the Underwriter as a principal
underwriter under this Agreement shall be (i) that part of the sales charge
which is retained by the Underwriter after allowance of discounts to
broker-dealers as set forth in the Registration Statement, including the
Prospectus, filed with the Commission and in effect at the time of the offering,
as amended, and (ii) those amounts payable to the Underwriter as reimbursement
of expenses pursuant to any distribution plan for Pioneer which may be in
effect. Nothing contained herein shall relieve Pioneer of any obligation under
its management contract or any other contract with any affiliate of the
Underwriter.
7. The parties to this Agreement acknowledge and agree that all
liabilities arising hereunder, whether direct or indirect, of any nature
whatsoever, including without limitation, liabilities arising in connection with
any agreement of Pioneer of its Trustees as set forth herein to indemnify any
party to this Agreement or any other person, if any, shall be satisfied out of
the assets of Pioneer and that no Trustee, officer or holder of shares of
beneficial interest of Pioneer shall be personally liable for any of the
foregoing liabilities. Pioneer's Declaration of Trust, as amended from time to
time, is on file in the Office of Secretary of State of The Commonwealth of
Massachusetts. The Declaration of Trust describes in detail the respective
responsibilities and limitations on liability of the Trustees, officers, and
holders of shares of beneficial interest.
8. This Agreement shall automatically terminate in the event of its
assignment (as that term is defined in the 1940 Act).
9. In the event of any dispute between the parties, this Agreement
shall be construed according to the laws of The Commonwealth of Massachusetts.
10. This Agreement is intended to amend and supersede in its entirety
the existing Underwriting Agreement between the parties dated January 30, 1990.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers and their seals to be hereto
affixed as of day and year first above written.
ATTEST: PIONEER THREE
/s/Joseph P. Barri By:/s/John F. Cogan, Jr.
Secretary President
ATTEST: PIONEER FUNDS DISTRIBUTOR, INC.
/s/Joseph P. Barri By:/s/John F. Cogan, Jr.
Clerk President
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is made as of the 31st day of
January, 1996, by and between Pioneer Three, a Massachusetts business trust (the
"Current Fund"), and Pioneer Mid-Cap Fund, a business trust duly formed under
the laws of the State of Delaware (the "Successor Trust").
This Agreement is intended to be and is adopted as a plan of reorganization
within the meaning of Section 368 (a)(1) of the U.S. Internal Revenue Code of
1986, as amended (the "Code"), and is intended to effect the reorganization (a
"reorganization") of the Current Fund, as a new separate series of the Successor
Trust. The reorganization will involve the transfer of all of the assets of the
Current Fund to the sole series of the Successor Trust (the "Successor Fund")
solely in exchange for (1) assumption by the Successor Fund of all liabilities
of the Current Fund and (2) the issuance of shares of beneficial interest (the
"Successor Shares") by the Successor Trust on behalf of the Successor Fund to
the Current Fund, followed by the pro rata distribution on the Closing Date (as
defined below) of the Successor Shares to the holders of shares of beneficial
interest of the Current Fund (the "Current Fund Shareholders") in exchange for
their shares of the Current Fund in liquidation and termination of the Current
Fund, all upon the terms and conditions hereinafter set forth in this Agreement.
In consideration of the premises and of the covenants and agreements
hereinafter set forth the parties hereto covenant and agree as follows.
1. TRANSFER OF ASSETS OF THE CURRENT FUND IN EXCHANGE FOR ASSUMPTION OF
LIABILITIES AND ISSUANCE OF SUCCESSOR SHARES OF THE SUCCESSOR TRUST;
TERMINATION OF THE CURRENT FUND
1.1 Subject to the terms and conditions set forth herein and on the basis
of the representations and warranties contained herein, the Current Fund agrees
to transfer all of the assets of the Current Fund as set forth in paragraph 1.2
and assign and transfer all of its liabilities to the Successor Fund of the
Successor Trust which has been established solely for the purpose of acquiring
all of the assets and assuming all of the liabilities of the Current Fund. The
Successor Trust has not issued any Shares or commenced operations. The Successor
Trust on behalf of the Successor Fund agrees that in exchange for all of the
assets of the Current Fund (1) the Successor Fund shall assume all of the
liabilities of the Current Fund, whether contingent or otherwise, then existing,
and further (2) the Successor Trust shall deliver to the Current Fund the number
of full and fractional Successor Shares equal to the value of the assets of the
Current Fund transferred to the Successor Fund, minus the liabilities of the
Current Fund assumed by the Successor Fund (the "Net Assets"), as described in
paragraph 3.1 on the Closing Date provided for in paragraph 3.1. Such
transactions shall take place at the Closing provided for in paragraph 3.1.
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1.2 The assets of the Current Fund to be acquired by the Successor Fund
shall include, without limitation, all cash, cash equivalents, securities,
receivables (including interest and dividends receivable), any claims or rights
of action or rights to register shares under applicable securities laws, any
books or records of the Current Fund
and other property owned by the Current Fund and any deferred or prepaid
expenses
shown as assets on the books of the Current Fund on the Closing Date provided
for in paragraph 3.1.
1.3 Immediately upon delivery to the Current Fund of Successor Shares, any
duly authorized officer of the Current Fund shall cause the Current Fund, as the
then sole shareholder of the Successor Fund, to (i) elect as Trustees of the
Successor Trust the persons who currently serve as Trustees of the Current Fund;
(ii) ratify the selection of the independent accountants; (iii) approve an
investment advisory agreement for the Successor Fund in the form currently
approved by the shareholders of the Current Fund; (iv) approve a Rule 12b-1 plan
in the form currently in place with respect to the Current Fund; and (v) adopt,
on behalf of the Successor Fund, the investment objectives, investment policies
and investment restrictions of the Current Fund.
1.4 As provided in paragraph 3.4, on the Closing Date the Current Fund
will distribute in liquidation the Successor Shares pro rata in proportion to
the Current Fund's respective shares of beneficial interest in the Current Fund
("Current Fund Shares") to Current Fund Shareholders of record determined as of
the close of business on the Closing Date, in exchange for the Current Fund
Shares. Such distribution will be accomplished by the transfer of the Successor
Shares then credited to the account of the Current Fund on the share records of
the Successor Trust to open accounts on those records in the names of the
Current Fund Shareholders and representing the respective pro rata number of the
Successor Shares received from the Successor Trust on behalf of the Successor
Fund due the Current Fund Shareholders. The Successor Trust shall not issue
certificates representing Successor Shares in connection with such distribution.
Fractional Successor Shares shall be rounded to the third place after the
decimal point.
1.5 As soon as practicable after the distribution of the Successor Shares
as set forth in Section 1.4, the Current Fund shall be terminated and any such
further actions shall be taken in connection therewith as are required by
applicable law.
1.6 Ownership of the Successor Shares of each Successor Fund Shareholder
shall be maintained separately on the books of Pioneering Services Corporation
as the Successor Trust's shareholder services and transfer agent.
1.7 Any transfer taxes payable upon issuance of Successor Shares in a name
other than the registered holder of the Current Fund Shares on the books of the
Current Fund as of that time shall be paid by the person to whom such Successor
Shares are to be distributed as a condition of such transfer.
2. VALUATION
2.1 The value of the Current Fund's Net Assets to be acquired by the
Successor Trust on behalf of the Successor Fund hereunder shall be the net asset
value computed
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as of the valuation time provided in the Current Fund's prospectus on the
Closing Date using the valuation procedures set forth in the Current Fund's
current prospectus or statement of additional information.
2.2 The value of full and fractional Successor Shares to be issued in
exchange for the Current Fund's Net Assets shall be equal to the value of the
Net Assets of the Current Fund on the Closing Date, and the number of such
Successor Shares shall equal the number of full and fractional Current Fund
Shares of the Current Fund on the Closing Date.
2.3 All computations of value shall be made by Brown Brothers Harriman &
Co. as custodian for the Current Fund and the Successor Trust.
3. CLOSING AND CLOSING DATE
3.1 The transfer of the Current Fund's assets in exchange for the
assumption by the Successor Fund of the Current Fund's liabilities and the
issuance of Successor Shares to the Current Fund, as described above, together
with related acts necessary to consummate such acts (the "Closing"), shall occur
at the offices of Hale and Dorr at 60 State Street, Boston, Massachusetts 02109
on January 31, 1996 ("Closing Date"), or at such other place or date on or prior
to March 31, 1996 as the parties may agree in writing. All acts taking place at
the Closing shall be deemed to take place simultaneously as of the last daily
determination of the net asset value of any Current Fund or at such other time
and/or place as the parties may agree.
3.2 In the event that on the Closing Date (a) the New York Stock Exchange
is closed to trading or trading thereon is restricted or (b) trading or
reporting of trading on said Exchange or in any market in which portfolio
securities of any Current Fund are traded is disrupted so that accurate
appraisal of the value of the total net assets of the Current Fund is
impracticable, the Closing shall be postponed until the first business day upon
which trading shall have been fully resumed and reporting shall have been
restored.
3.3 The Current Fund shall deliver at the Closing a certificate or
separate certificates of an authorized officer stating that it has notified the
Custodian, as custodian for the Current Fund, of the Current Fund's
reorganization as the Successor Fund.
3.4 Pioneering Services Corporation, as shareholder services and transfer
agent for the Current Fund, shall deliver at the Closing a certificate as to the
conversion on its books and records of the Current Fund Shareholder account to
an account as a holder of Successor Shares. The Successor Trust shall issue and
deliver to the Current Fund a confirmation evidencing the Successor Shares to be
credited on the Closing Date or provide evidence satisfactory to the Current
Fund that such Successor Shares have been credited to the Current Fund's account
on the books of the Successor Trust. At the Closing each party shall deliver to
the other such bills of sale, checks, assignments, stock certificates, receipts
or other documents as such other party or its counsel may reasonably request.
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<PAGE>
3.5 Portfolio securities that are not held in book-entry form in the name
of the Custodian as record holder for the Current Fund shall be presented by the
Current Fund to the Custodian for examination no later than five business days
preceding the Closing Date. Portfolio securities which are not held in
book-entry form shall be delivered by the Current Fund to the Custodian for the
account of the Successor Fund on the Closing Date, duly endorsed in proper form
for transfer, in such condition as to constitute good delivery thereof in
accordance with the custom of brokers, and shall be accompanied by all necessary
federal and state stock transfer stamps or a check for the appropriate purchase
price thereof. Portfolio securities held of record by the Custodian in
book-entry form on behalf of the Current Fund shall be delivered to the
Successor Fund by the Custodian by recording the transfer of beneficial
ownership thereof on its records. The cash delivered shall be in the form of
currency or by the Custodian crediting the Successor Fund' account maintained
with the Custodian with immediately available funds.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Current Fund represents and warrants as follows:
4.1.A. The Current Fund is a business trust duly organized, validly
existing and in good standing under the laws of The Commonwealth of
Massachusetts and has the power to own all of its properties and assets
and, subject to approval by the shareholders of the Current Fund, to
perform its obligations under this Agreement. The Current Fund is not
required to qualify to do business in any jurisdiction in which it is not
so qualified or where failure to qualify would not subject it to any
material liability or disability. The Current Fund has all necessary
federal, state and local authorizations to own all of its properties and
assets and to carry on its business as now being conducted;
4.1.B. The Current Fund is a registered investment company classified
as a management company of the open-end type and its registration with the
Securities and Exchange Commission (the "Commission") as an investment
company under the Investment Company Act of 1940, as amended (the "1940
Act"), is in full force and effect;
4.1.C. The Current Fund is not, and the execution, delivery and
performance of this Agreement will not result, in violation of any
provision of its Declaration of Trust or By-laws, or any agreement,
indenture, instrument, contract, lease or other undertaking to which the
Current Fund is a party or by which the Current Fund is bound;
4.1.D. The Current Fund has no material contracts or other
commitments (other than this Agreement or agreements on behalf of a Current
Fund for the purchase of securities entered into in the ordinary course of
business and consistent with its obligations under this Agreement) that
will not be terminated without liability to the Current Fund on or prior to
the Closing Date;
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<PAGE>
4.1.E. No material litigation or administrative proceeding or
investigation of or before any court or governmental body presently is
pending or threatened against the Current Fund or any of its properties or
assets. The Current Fund knows of no facts that might form the basis for
the institution of such proceedings and the Current Fund is not a party to,
or subject to, the provisions of any order, decree or judgment of any court
or governmental body that materially and adversely affects its business or
its ability to consummate the transactions herein contemplated;
4.1.F. At the date hereof and at the Closing Date, all federal, state
and other tax returns and reports, including information returns and payee
statements, of the Current Fund required by law to have been filed or
furnished by such dates shall have been filed or furnished and all federal,
state and other taxes, interest and penalties shall have been paid so far
as due or provision shall have been made for the payment thereof and no
such return is currently under audit and no assessment has been asserted
with respect to any of such returns or reports;
4.1.G. The Current Fund has elected to be treated as a regulated
investment company under Subchapter M of the Code, has qualified as such
for each taxable year since its inception, and will qualify as such as of
the Closing Date;
4.1.H. The authorized capital of the Current Fund consists of an
unlimited number of shares of beneficial interest. All issued and
outstanding shares of beneficial interest of the Current Fund are, and at
the Closing Date will be, duly and validly issued and outstanding, fully
paid and nonassessable. The Current Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any of its
shares of beneficial interest, nor is there outstanding any security
convertible into any of its shares of beneficial interest;
4.1.I. The information to be furnished by the Current Fund for use in
applications for orders, registration statements, proxy materials and other
documents which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete and shall comply in all
material respects with federal securities and other laws and regulations
thereunder applicable thereto;
4.1.J. All of the issued and outstanding Current Fund Shares will at
the time of the Closing be held by the persons and in the amounts as
certified in accordance with the provisions of paragraph 3.4;
4.1.K. At the Closing Date, the Current Fund will have good and
marketable title to the assets to be transferred to the Successor Fund
pursuant to paragraph 1.1, and full right, power and authority to sell,
assign, transfer and deliver such assets hereunder, and upon delivery and
in payment for such assets, the Successor Fund will acquire good and
marketable title thereto subject to no restrictions on the full transfer
thereof, including such restrictions as might arise under the Securities
Act of 1933, as amended;
4.1.L. The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action
on the part of
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the Current Fund and this Agreement constitutes a valid and binding
obligation of the Current Fund enforceable in accordance with its terms,
subject to the approval of the Current Fund's Shareholders; and
4.1.M. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Current Fund
of the transactions contemplated herein, except such as shall have been
obtained prior to the Closing Date.
4.2 The Successor Trust represents and warrants as follows:
4.2.A. The Successor Trust is a business trust duly organized,
validly existing and in good standing under the laws of the State of
Delaware and has the power to own all of its properties and assets and to
perform its obligations under this Agreement; the Successor Trust is not
required to qualify to do business in any jurisdiction in which it is not
so qualified or where failure to qualify would not subject it to any
material liability or disability; the Successor Trust has all necessary
federal, state and local authorizations to own all of its properties and
assets and to carry on its business as now being conducted; that as of the
date hereof and as of the Closing Date, the Successor Fund is the only
series of the Successor Trust; and the Successor Fund is a duly established
and designated series of the Successor Trust;
4.2.B. The Successor Trust is not, and the execution, delivery and
performance of this Agreement will not result, in violation of any
provision of the Declaration of Trust or By-laws of the Successor Trust or
any agreement, indenture, instrument, contract, lease or other undertaking
to which the Successor Trust is a party or by which the Successor Trust is
bound;
4.2.C. No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or threatened against the Successor Trust or any of its properties
or assets. The Successor Trust knows of no facts that might form the basis
for the institution of such proceedings, and the Successor Trust is not a
party to, or subject to, the provisions of any order, decree or judgment of
any court or governmental body that materially and adversely affects its
business or its ability to consummate the transactions herein contemplated;
4.2.D. The Successor Trust will cause the Successor Fund to qualify
as a regulated investment company under subchapter M of the Code for the
taxable year in which the Closing occurs and to continue to qualify as such
for each taxable year;
4.2.E. Prior to the Closing Date, there shall be no issued and
outstanding Successor Shares or any other securities of the Successor
Trust; Successor Shares issued in connection with the transactions
contemplated herein will be duly and validly issued and outstanding and
fully paid and non-assessable;
4.2.F. The execution, delivery and performance of this Agreement has
been duly authorized by all necessary action on the part of the Successor
Trust, and this
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<PAGE>
Agreement constitutes a valid and binding obligation of the Successor Trust
enforceable against the Successor Trust in accordance with its terms;
4.2.G. The information to be furnished by the Successor Trust for use
in applications for orders, registration statements, proxy materials and
other documents which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete and shall comply in all
material respects with Federal securities and other laws and regulations
applicable thereto; and
4.2.H. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Successor
Trust of the transactions contemplated herein, except such as shall have
been obtained prior to the Closing Date.
5. COVENANTS OF THE CURRENT FUND AND THE SUCCESSOR TRUST
5.1 The Current Fund covenants that the Successor Shares are not being
acquired for the purpose of making any distribution thereof, other than in
accordance with the terms of this Agreement.
5.2 The Current Fund covenants that it will assist the Successor Trust in
obtaining such information as the Successor Trust reasonably requests concerning
the beneficial ownership of Current Fund Shares.
5.3 The Current Fund will, from time to time, as and when requested by the
Successor Trust execute and deliver, or cause to be executed and delivered, all
such assignments and other instruments, and will take or cause to be taken such
further action, as the Successor Trust may deem necessary or desirable in order
to vest in, and confirm to, the Successor Fund, title to, and possession of, all
the assets of the Current Fund to be sold, assigned, transferred and delivered
hereunder and otherwise to carry out the intent and purpose of this Agreement.
5.4 The Successor Trust will, from time to time, as and when requested by
the Current Fund, execute and deliver or cause to be executed and delivered all
such assignments and other instruments, and will take or cause to be taken such
further action, as the Current Fund may deem necessary or desirable in order to
vest in, and confirm to, the Current Fund, on behalf of the Current Funds, title
to, and possession of, the Successor Shares issued, sold, assigned, transferred
and delivered hereunder and otherwise to carry out the intent and purpose of
this Agreement.
5.5 The Successor Trust shall use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act and such
state securities laws as it may deem appropriate in order to operate after the
Closing Date.
5.6 Subject to the provisions of this Agreement, the Successor Trust and
the Current Fund each will take, or cause to be taken, all action and will do or
cause to be done all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
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5.7 As promptly as practicable, but in any event within 60 days after the
Closing Date, the Current Fund shall furnish to the Successor Trust, in such
form as is reasonably satisfactory to the Successor Trust, a statement of the
earnings and profits of the Current Fund for federal income tax purposes, and of
any capital loss carryovers and other items that will be carried over to the
Successor Fund as a result of Section 381 of the Code, and which statement will
be certified by the President or Treasurer of the Current Fund.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CURRENT FUND
The obligations of the Current Fund to consummate the transactions provided
for herein shall be subject to the performance by the Successor Trust of all the
obligations to be performed by the Successor Trust hereunder on or before the
Closing Date and, in addition thereto, to the following further conditions:
6.1 All representations and warranties of the Successor Trust contained in
this Agreement shall be true and correct in all material respects as of the date
hereof except as they may be affected by the transactions contemplated by this
Agreement, as of the Closing Date, with the same force and effect as if made on
and as of the Closing Date; and
6.2 The Successor Trust shall have delivered on the Closing Date to the
Current Fund a certificate executed in the Successor Trust's name by its
President or Vice President, in form and substance satisfactory to the Current
Fund, dated as of the Closing Date, to the effect that the representations and
warranties of the Successor Trust made in this Agreement are true and correct at
and as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as the Current Fund
shall reasonably request.
Each of the foregoing conditions precedent may be waived by the Current
Fund.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SUCCESSOR TRUST
The obligations of the Successor Trust to consummate the transactions
provided for herein shall be subject to the performance by the Current Fund of
all the obligations to be performed by the Current Fund hereunder on or before
the Closing Date and, in addition thereto, to the following further conditions:
7.1 All representations and warranties of the Current Fund contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date, with the same force and effect as if
made on and as of the Closing Date;
7.2 The Current Fund shall have delivered to the Successor Trust on the
Closing Date a statement of the Current Fund's assets and liabilities, prepared
in accordance with generally accepted accounting principles consistently
applied, together with a certificate of the Treasurer or Assistant Treasurer of
the Current Fund as to its portfolio securities
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and the Current Fund's federal income tax basis and holding period for each such
portfolio security as of the Closing Date; and
7.3 The Current Fund shall have delivered to the Successor Trust on the
Closing Date a certificate executed in the Current Fund's name by its President
or Vice President, in form and substance satisfactory to the Successor Trust,
dated as of the Closing Date, to the effect that the representations and
warranties of the Current Fund made in this Agreement are true and correct at
and as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as the Successor
Trust shall reasonably request.
Each of the foregoing conditions precedent may be waived by the Successor
Trust.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CURRENT FUND AND THE
SUCCESSOR TRUST
The obligations of the Current Fund and the Successor Trust are each
subject to the further conditions that on or before the Closing Date:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the Current Fund's Shareholders in
accordance with applicable law;
8.2 On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with,
the transactions contemplated hereby;
8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state securities authorities) deemed necessary by the
Successor Trust or the Current Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of the
Successor Trust or the Current Fund, provided that either party hereto may for
itself waive any of such conditions;
8.4 The President of the Successor Trust shall have delivered a
certificate to the Current Fund on the Closing Date certifying that the
Successor Trust has taken all necessary action so that it shall be a registered
open-end investment company under the 1940 Act; and
8.5 The Current Fund and the Successor Trust shall have received on or
before the Closing Date an opinion of Hale and Dorr satisfactory to the Current
Fund and the Successor Trust, substantially to the effect that, with respect to
the Current Fund, for federal income tax purposes:
8.5.A. The acquisition of all of the assets of a Current Fund by the
Successor Fund solely in exchange for the issuance of Successor Shares to
the Current Fund and the assumption by the Successor Fund of all of the
liabilities of the Current
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Fund, followed by the distribution in liquidation by the Current Fund of
such Successor Shares to the Current Fund Shareholders in exchange for
their Current Fund Shares and the termination of the Current Fund, will
constitute a reorganization within the meaning of Section 368(a)(1) of the
Code, and the Current Fund and the Successor Fund will each be "a party to
a reorganization" within the meaning of Section 368(b) of the Code;
8.5.B. No gain or loss will be recognized by the Current Fund upon
(i) the transfer of all of its assets to the Successor Fund solely in
exchange for the issuance of Successor Shares to the Current Fund and the
assumption by the Successor Fund of the Current Fund's liabilities and (ii)
the distribution by the Current Fund of the Successor Shares to the Current
Fund Shareholders;
8.5.C. No gain or loss will be recognized by any Successor Fund upon
its receipt of all of the Current Fund's assets solely in exchange for the
issuance of the Successor Shares to the Current Fund and the assumption by
the Successor Fund of all of the liabilities of the Current Fund;
8.5.D. The tax basis of the assets acquired by a Successor Fund from
the Current Fund will be the same as the tax basis of those assets in the
Current Fund's hands immediately before the transfer;
8.5.E. The tax holding period of the assets of the Current Fund in
the hands of the Successor Fund will include the Current Fund's tax holding
period for those assets;
8.5.F. The Current Fund's Shareholders will not recognize gain or
loss upon the exchange of all of their Current Fund Shares solely for
Successor Shares as part of the transaction;
8.5.G. The tax basis of the Successor Shares received by Current Fund
Shareholders in the transaction will be, for each shareholder, the same as
the tax basis of the Current Fund Shares surrendered in exchange therefor;
and
8.5.H. The tax holding period of the Successor Shares received by
Current Fund Shareholders will include, for each such Shareholder, the tax
holding period for the Current Fund Shares surrendered in exchange
therefor, provided that the Current Fund Shares were held as capital assets
on the date of the exchange.
The Current Fund and Successor Trust each agree to make and provide
representations with respect to the Current Fund and the Successor Fund which
are reasonably necessary to enable Hale and Dorr to deliver an opinion
substantially as set forth in this paragraph 8.5, which opinion may address such
other federal income tax consequences, if any, as Hale and Dorr believes to be
material to the transaction.
Each of the foregoing conditions precedent to the obligations of a party,
except for the receipt of the opinion of Hale and Dorr set forth in paragraph
8.5, may be waived by that party.
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9. BROKERAGE FEES AND EXPENSES
9.1 The Successor Trust and the Current Fund each represent and warrant to
the other that there are no broker's or finder's fees payable in connection with
the transactions contemplated hereby.
9.2 The Current Fund and the Successor Fund shall each be liable for its
own expenses incurred in connection with entering into and carrying out the
provisions of this Agreement whether or not the transactions contemplated hereby
are consummated; if the transactions are consummated, such expenses of the
Current Fund will be assumed by the Successor Fund as part of the transactions.
10. ENTIRE AGREEMENT
The Successor Trust and the Current Fund agree that neither party has made
any representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties. The
representations, warranties and covenants contained herein or in any document
delivered pursuant hereto or in connection herewith shall survive the
consummation of the transactions contemplated hereunder.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Successor Trust and the Current Fund. In addition, either the Successor Trust or
the Current Fund may at its option terminate this Agreement at or prior to the
Closing Date because:
11.1.A. There exists a material breach by the other party of any
representations, warranties or agreements contained herein to be performed
at or prior to the Closing Date; or
11.1.B. A condition herein expressed to be precedent to the
obligations of the terminating party has not been met and it reasonably
appears that it will not or cannot be met.
11.2 In the event of any such termination, there shall be no liability for
damages on the part of the Successor Trust or the Current Fund, or their
respective trustees, directors or officers, to the other party or its trustees,
directors or officers.
12. AMENDMENT
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the parties; provided, however, that
following the approval of this Agreement by the Current Funds' Shareholders, no
such amendment may have the effect of changing the provisions for determining
the number of Successor Shares to be paid to the Current Fund Shareholders under
this Agreement to the detriment of the Current Fund Shareholders without their
further approval.
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13. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
13.1 The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts.
13.4 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation other than the parties hereto and their respective
successors and assigns any rights or remedies under or by reason of this
Agreement.
13.5 All persons dealing with the Successor Trust must look solely to the
property of the Successor Trust for the enforcement of any claims against the
Successor Trust as neither the Trustees, officers, agents nor shareholders of
the Successor Trust assume any personal liability for obligations entered into
on behalf of the Successor Trust. No other series of the of the Successor Trust
hereafter established shall be responsible for any obligations assumed by the
Successor Trust on behalf of the Successor Fund under this Agreement.
13.6 A copy of the Agreement and Declaration of Trust of the Current Fund
is on file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Current Fund as trustees and not individually and that the
obligations of this instrument are not binding upon any of the trustees,
officers, or shareholders of the Current Fund individually, but are binding only
upon the assets and property of the Current Fund.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Current Fund or the
Successor Trust, each at 60 State Street, Boston, Massachusetts 02109,
Attention: Secretary.
B-12
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its duly authorized officer.
PIONEER THREE
By:
-------------------------------
Its:
------------------------------
Title
PIONEER MID-CAP FUND,
a Delaware business trust,
on behalf of
Pioneer Mid-Cap Fund
By:
-------------------------------
Its:
------------------------------
Title
B-13
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated October 27, 1995, included in Pioneer Mid-Cap Fund's (formerly
Pioneer Three) 1995 annual report (and to all references to our firm) included
in or made a part of Post-Effective Amendment No. 20 and Amendment No. 20 to
Registration Statement File Nos. 2-79140 and 811-3564, respectively.
/s/ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 28, 1995
POWER OF ATTORNEY
I, the undersigned trustee of Pioneer Bond Fund, Pioneer Europe Fund,
Pioneer Fund, Pioneer Growth Trust, Pioneer International Growth Fund, Pioneer
Money Market Trust, Pioneer Municipal Bond Fund, Pioneer Short-Term Income
Trust, Pioneer Tax-Free State Series Trust, Pioneer II, Pioneer Three and
Pioneer U.S. Government Trust (collectively, the "Funds"), all Massachusetts
business trusts, do hereby constitute and appoint John F. Cogan, Jr., Joseph P.
Barri and William H. Keough, and each of them acting singly, to be my true,
sufficient and lawful attorneys, with full power to each of them, and each of
them acting singly, to sign for me, in my name and in the capacity indicated
below, any and all amendments to the Registration Statements on Forms N-1A to be
filed by the Funds under the Investment Company Act of 1940, as amended, and
under the Securities Act of 1933, as amended, with respect to the offering of
the Funds' shares of beneficial interest, no par value, and any and all other
documents and papers relating thereto, and generally to do all such things in my
name and on my behalf in the capacity indicated to enable the Funds to comply
with the Investment Company Act of 1940, as amended, and the Securities Act of
1933, as amended, and all requirements of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
said attorneys or each of them to any and all amendments to said Registration
Statements.
IN WITNESS WHEREOF, I have hereunder set my hand on the date set
opposite my signature.
Dated: September 24, 1993 /s/Stephen K. West
Stephen K. West
Trustee
<PAGE>
POWER OF ATTORNEY
We, the undersigned trustees of Pioneer Money Market Trust, Pioneer
Bond Fund, Pioneer U.S. Government Trust, Pioneer Fund, Pioneer II, Pioneer
Three, Pioneer Europe Fund, Pioneer Growth Trust, Pioneer Municipal Bond Fund
and Pioneer Short-Term Income Trust (collectively, the "Funds"), all
Massachusetts business trusts, do hereby severally constitute and appoint John
F. Cogan, Jr., Joseph P. Barri and William H. Keough, and each of them acting
singly, to be our true, sufficient and lawful attorneys, with full power to each
of them, and each of them acting singly, to sign for each of us, in the name of
each of us and in the capacities indicated below, any and all amendments to the
Registration Statements on Forms N-1A to be filed by the Funds under the
Investment Company Act of 1940, as amended, and under the Securities Act of
1933, as amended, with respect to the offering of the Funds' shares of
beneficial interest, no par value, and any and all other documents and papers
relating thereto, and generally to do all such things in the name of each of us
and on behalf of each of us in the capacities indicated to enable the Funds to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended, and all requirements of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming the signature of each of
us as it may be signed by said attorneys or each of them to any and all
amendments to said Registration Statements.
IN WITNESS WHEREOF, we have hereunder set our hands on the dates set
opposite our respective signatures.
Dated: February 5, 1993 /s/Richard H. Egdahl, M.D.
--------------------------
Richard H. Egdahl, M.D.
Trustee
Dated: February 5, 1993 /s/Margaret B. W. Graham
------------------------
Margaret B. W. Graham
Trustee
<PAGE>
POWER OF ATTORNEY
I, William H. Keough, the Treasurer and Principal Accounting and
Financial Officer of Pioneer Fund, Pioneer II, Pioneer Three, Pioneer Bond Fund,
Pioneer Municipal Bond Fund, Pioneer U.S. Government Trust and Pioneer Money
Market Trust (collectively, the "Funds"), hereby constitute and apoint Joseph P.
Barri my true and lawful attorney with full power to him to sign for me and in
my name and in the capacities listed above the Registration Statements on Form
N-1A for each of the Funds and any and all post-effective amendments to said
Registration Statements, including the post-effective amendment filed herewith,
and generally to do all such things in my name and on my behalf in my capacity
as an officer of the Funds to enable the Funds to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements of the Securities and Exchange Commission.
Witness my hand on the date set forth below.
Date January 24, 1990 /s/ William H. Keough
- ---------------------------------- ---------------------
William H. Keough
Subscribed and sworn to
before me this 24th day of
January, 1990.
Notary Public
My commission expires: August 3, 1990
