File Nos. 2-79140
811-07525
As Filed with the Securities and Exchange Commission on January 28, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
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Pre-Effective Amendment No. __ / /
Post-Effective Amendment No. 23 / X /
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 / X /
Amendment No. 23 / X /
(Check appropriate box or boxes)
PIONEER MID-CAP FUND
(formerly Pioneer Three (File No. 811-3564))
(Exact Name of Registrant as Specified in Charter)
60 State Street, Boston, Massachusetts 02109
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 742-7825
Joseph P. Barri, Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
X on January 28, 1998 pursuant to paragraph (b) of Rule 485
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Title of Securities Being Registered: Shares of Beneficial Interest (without
par value)
<PAGE>
PIONEER MID-CAP FUND
Cross-Reference Sheet Showing Location in Prospectus and Statement of
Additional Information of Information
Required by Items of the Registration Form
FORM N-1A ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS OR STATEMENT OF
ADDITIONAL INFORMATION
1. Cover Page Prospectus - Cover Page
2. Synopsis Prospectus - Expense Information
3. Condensed Financial Information Prospectus - Financial Highlights
4. General Description of Registrant Prospectus - Cover Page; Investment
Objective and Policies; Management of
the Fund; Fund Share Alternatives;
Share Price; How to Buy Fund Shares;
How to Sell Fund Shares; How to
Exchange Fund Shares; The Fund
5. Management of the Fund Prospectus - Management of the Fund;
Shareholder Services
5A. Management's Discussion of
Fund Performance Not Applicable
6. Capital Stock and Other Securities Prospectus - Investment Objective and
Policies; Management of the Fund; Fund
Share Alternatives; Share Price; How
to Buy Fund Shares; How to Sell Fund
Shares; How to Exchange Fund Shares;
Dividends, Distributions and Taxation;
The Fund
7. Purchase of Securities
Being Offered Prospectus - Management of the Fund;
Fund Share Alternatives; Share Price;
How to Buy Fund Shares; How to Sell
Fund Shares; How to Exchange Fund
Shares; Distribution Plans;
Shareholder Services
8. Redemption or Repurchase Prospectus - Fund Share Alternatives;
How to Buy Fund Shares; How to Sell
Fund Shares; How to Exchange Fund
Shares; Shareholder Services
9. Pending Legal Proceedings Not Applicable
<PAGE>
10. Cover Page Statement of Additional Information -
Cover Page
11. Table of Contents Statement of Additional Information -
Cover Page
12. General Information and History Statement of Additional Information -
Description of Shares
13. Investment Objectives and Policies Statement of Additional Information -
Investment Policies and Restrictions
14. Management of the Fund Statement of Additional Information -
Management of the Fund
15. Control Persons and Principal
Holders of Securities Statement of Additional Information -
Management of the Fund
16. Investment Advisory and Other
Services Statement of Additional Information -
Management of the Fund; Investment
Adviser; Underwriting Agreement and
Distribution Plans; Shareholder
Servicing/Transfer Agent; Custodian;
Principal Underwriter; Independent
Public Accountants
17. Brokerage Allocation and Other
Practices Statement of Additional Information -
Portfolio Transactions
18. Capital Stock and Other Securities Statement of Additional Information -
Description of Shares
19. Purchase, Redemption and Pricing of
Securities Being Offered Statement of Additional Information -
Letter of Intent; Systematic
Withdrawal Plan; Determination of Net
Asset Value
20. Tax Status Statement of Additional Information -
Tax Status
21. Underwriters Statement of Additional Information -
Underwriting Agreement and
Distribution Plans; Principal
Underwriter
22. Calculation of Performance Data Statement of Additional Information -
Investment Results
23. Financial Statements Financial Statements
<PAGE>
[Pioneer logo]
PIONEER MID-CAP FUND
CLASS A, CLASS B AND CLASS C SHARES
PROSPECTUS
JANUARY 28, 1998
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 seeking 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 considered to be
mid-capitalization companies ("Mid-Cap Companies"). Mid-Cap Companies include
companies with market capitalizations within the range of market
capitalizations reflected in Standard & Poor's MidCap 400 Index (the "Index").
As of December 1997, the market capitalization range of companies comprising
the Index was $213 million to $13.74 billion. The average weighted market
capitalization of the securities held in the Fund's portfolio may range from $1
billion to $5 billion. The Fund may invest a portion of its assets in foreign
securities. See "Investment Objective and Policies" in this Prospectus. There
is 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 OBJECTIVE AND POLICIES" FOR A DISCUSSION OF THESE RISKS.
This Prospectus provides information about the Fund that you should know
before investing. Please read and retain it for your future reference. More
information about the Fund is included in the Statement of Additional
Information, also dated January 28, 1998, as supplemented or revised from time
to time, which is incorporated into this Prospectus by reference.
A copy of the Statement of Additional Information may be obtained free of
charge by calling Shareholder Services at 1-800-225-6292 or by written request
to the Fund at 60 State Street, Boston, Massachusetts 02109. Other information
about the Fund has been filed with the Securities and Exchange Commission (the
"SEC") and is available upon request and without charge by calling
1-800-225-6292 or through the SEC's Internet web site (http://www.sec.gov).
TABLE OF CONTENTS PAGE
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I. EXPENSE INFORMATION ................................. 2
II. FINANCIAL HIGHLIGHTS ................................. 3
III. INVESTMENT OBJECTIVE AND POLICIES ..................... 4
IV. MANAGEMENT OF THE FUND .............................. 5
V. FUND SHARE ALTERNATIVES .............................. 6
VI. SHARE PRICE .......................................... 7
VII. HOW TO BUY FUND SHARES .............................. 7
VIII. HOW TO SELL FUND SHARES .............................. 11
IX. HOW TO EXCHANGE FUND SHARES ........................... 12
X. DISTRIBUTION PLANS .................................... 13
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION ............... 13
XII. SHAREHOLDER SERVICES ................................. 14
Account and Confirmation Statements .................. 14
Additional Investments .............................. 14
Automatic Investment Plans ........................... 14
Financial Reports and Tax Information ............... 14
Distribution Options ................................. 15
Directed Dividends ................................. 15
Direct Deposit ....................................... 15
Voluntary Tax Withholding ........................... 15
Telephone Transactions and Related Liabilities ...... 15
FactFone(SM) ........................................ 15
Retirement Plans .................................... 15
Telecommunications Device for the Deaf (TDD) ......... 15
Systematic Withdrawal Plans ........................ 16
Reinstatement Privilege (Class A Shares Only) ...... 16
XIII. THE FUND ............................................. 16
XIV. INVESTMENT RESULTS .................................... 17
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
I. EXPENSE INFORMATION
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 table reflects annual operating expenses based upon actual expenses
incurred for the fiscal year ended September 30, 1997.
SHAREHOLDER TRANSACTION EXPENSES: CLASS A CLASS B CLASS 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
(as a percentage of purchase price or
redemption proceeds, as applicable) ... None(1) 4.00% 1.00%
Redemption fee(2) ...................... None None None
Exchange fee ........................... None None None
ANNUAL FUND OPERATING EXPENSES (as a
percentage of average net assets):(3)
Management fee(4) ...................... 0.49% 0.49% 0.49%
12b-1 fees .............................. 0.18% 1.00% 1.00%
Other Expenses (including accounting and
transfer agent fees, custodian fees and
printing expenses) ..................... 0.18% 0.47% 0.38%
------- ----- ----
TOTAL OPERATING EXPENSES .................. 0.85% 1.96% 1.87%
======= ===== ====
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(1) Purchases of $1 million or more and purchases by participants in certain
group plans are not subject to an initial sales charge but may be subject to
a contingent deferred sales charge ("CDSC") as further described under "How
to Sell Fund Shares."
(2) Separate fees (currently $10 and $20, respectively) apply to United States
("U.S.") and international wire transfers of redemption proceeds.
(3) Expenses are net of amounts paid in connection with third-party brokerage/
service and certain expense offset arrangements. See "Financial Highlights."
(4) The Fund pays a management fee that may vary from 0.425% to 0.825% based on
its performance. See "Management of the Fund."
EXAMPLE:
You would pay the following expenses on a $1,000 investment, with or
without redemption at the end of each time period, assuming a 5% annual return,
reinvestment of all dividends and distributions and that the percentage amounts
listed under "Annual Operating Expenses" remain the same each year.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ---------
Class A Shares $66 $83 $102 $156
Class B Shares*
- --Assuming complete
redemption at end of period $60 $92 $126 $200
- --Assuming no redemption $20 $62 $106 $200
Class C Shares**
- --Assuming complete
redemption at end of period $29 $59 $101 $219
- --Assuming no redemption $19 $59 $101 $219
- ---------
* Class B shares convert to Class A shares eight years after purchase;
therefore, Class A share expenses are used after year eight.
** Class C shares redeemed during the first year after purchase are subject to
a 1% CDSC.
THE EXAMPLE IS DESIGNED FOR INFORMATION PURPOSES ONLY, AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURN. ACTUAL FUND
EXPENSES AND RETURN WILL VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN
THOSE SHOWN.
For further information regarding management fees, 12b-1 fees and other
expenses of the Fund, see "Management of the Fund," "Distribution Plans" and
"How To Buy Fund Shares" in this Prospectus and "Management of the Fund" and
"Underwriting Agreement and Distribution Plans" in the Statement of Additional
Information. The Fund's payment of a Rule 12b-1 fee may result in long-term
shareholders paying more than the economic equivalent of the maximum sales
charge permitted under the Conduct Rules of the National Association of
Securities Dealers, Inc.
The maximum initial sales charge is reduced on purchases of specified
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."
2
<PAGE>
II. FINANCIAL HIGHLIGHTS
The following information has been audited by Arthur Andersen LLP,
independent public accounts. Arthur Andersen LLP's report on the Fund's
financial statements as of September 30, 1997 appears in the Fund's Annual
Report which is incorporated by reference into the Statement of Additional
Information. The information listed below should be read in conjunction with
those financial statements. The Annual Report includes more information about
the Fund's performance and is available free of charge by calling Shareholder
Services at 1-800-225-6292.
PIONEER MID-CAP FUND
SELECTED DATA FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
------------------------------------------------------------
1997 1996 1995 1994
---------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period ......... $21.12 $21.48 $19.92 $21.12
Increase (decrease) from
investment operations:
Net investment income
(loss) ..................... $(0.08) $0.18 $0.24 $0.24
Net realized and
unrealized gain (loss)
on investments ............ 4.23 1.47 2.70 0.32
Net increase (decrease)
from investment
operations .................. $4.15 $1.65 $2.94 $0.56
Distributions to shareholders:
Net investment income ...... -- (0.30) (0.23) (0.25)
Net realized gain. ......... (1.88) (1.71) (1.15) (1.51)
Net increase (decrease)
in net asset value ......... $2.27 $(0.36) $1.56 $(1.20)
Net asset value, end of
period ..................... $23.39 $21.12 $21.48 $19.92
Total Return* ............... 21.36% 8.61% 16.24% 2.62%
Ratio of net expenses
to average net assets ...... 0.87%+ 0.90%+ 0.85%+ 0.86%
Ratio of net investment
income (loss) to average
net assets .................. (0.37)%+ 0.85%+ 1.18%+ 1.19%
Portfolio turnover rate ...... 63% 75% 19% 15%
Average brokerage
commission per share ......... $0.0575 $0.0527 -- --
Net assets, end of period
(in thousands) ............... $1,048,648 $1,008,177 $1,082,154 $1,017,233
Ratios assuming reduction
for fees paid indirectly:
Net expenses ............... 0.85% 0.88% -- --
Net investment income
(loss) ..................... (0.35)% 0.87% -- --
<CAPTION>
1993 1992 1991 1990 1989 1988
------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ......... $18.03 $16.16 $12.96 $17.80 $15.09 $18.52
Increase (decrease) from
investment operations:
Net investment income
(loss) ..................... $0.28 $0.33 $0.41 $0.41 $0.42 $0.30
Net realized and
unrealized gain (loss)
on investments ............ 3.72 2.04 3.94 (3.56) 3.33 (1.91)
Net increase (decrease)
from investment
operations .................. $4.00 $2.37 $4.35 $(3.15) $3.75 $(1.61)
Distributions to shareholders:
Net investment income ...... (0.29) (0.35) (0.41) (0.46) (0.36) (0.41)
Net realized gain. ......... (0.62) (0.15) (0.74) (1.23) (0.68) (1.41)
Net increase (decrease)
in net asset value ......... $3.09 $1.87 $3.20 $(4.84) $2.71 $(3.43)
Net asset value, end of
period ..................... $21.12 $18.03 $16.16 $12.96 $17.80 $15.09
Total Return* ............... 22.82% 15.05% 35.80% (19.39%) 26.32% (6.00%)
Ratio of net expenses
to average net assets ...... 0.84% 0.85% 0.74% 0.71% 0.72% 0.76%
Ratio of net investment
income (loss) to average
net assets .................. 1.43% 1.85% 2.72% 2.58% 2.56% 2.15%
Portfolio turnover rate ...... 18% 12% 5% 14% 16% 12%
Average brokerage
commission per share ......... -- -- -- -- -- --
Net assets, end of period
(in thousands) ............... $1,019,059 $779,631 $692,344 $562,343 $752,135 $616,953
Ratios assuming reduction
for fees paid indirectly:
Net expenses ............... -- -- -- -- -- --
Net investment income
(loss) ..................... -- -- -- -- -- --
</TABLE>
SELECTED DATA FOR A CLASS B SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FEBRUARY 1, 1996 THROUGH
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
-------------------- -------------------------
<S> <C> <C>
Net asset value, beginning of period .............................. $ 21.02 $ 19.28
Increase (decrease) from investment operations:
Net investment income (loss) .................................... $ (0.22) $ 0.12
Net realized and unrealized gain (loss) on investments ......... 4.06 1.78
Net increase (decrease) from investment operations ............... $ 3.84 $ 1.90
Distributions to shareholders:
Net investment income .......................................... -- (0.16)
Net realized gain ................................................ (1.88) --
Net increase (decrease) in net asset value ........................ $ 1.96 $ 1.74
Net asset value, end of period .................................... $ 22.98 $ 21.02
Total return* ................................................... 19.87% 9.88%
Ratio of net expenses to average net assets ..................... 2.00%+ 1.68%**+
Ratio of net investment income (loss) to average net assets ...... (1.51)%+ (0.26)%**+
Portfolio turnover rate .......................................... 63% 75%
Average brokerage commission per share ........................... $0.0575 $0.0527
Net assets, end of period (in thousands) ........................ $ 5,045 $ 4,939
Ratios assuming reduction for fees paid indirectly:
Net expenses ................................................... 1.96% 1.66%**
Net investment income (loss) .................................... (1.47)% (0.24)%**
</TABLE>
- -----------
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.
3
<PAGE>
SELECTED DATA FOR A CLASS C SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FEBRUARY 1, 1996 THROUGH
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
-------------------- -------------------------
<S> <C> <C>
Net asset value, beginning of period .............................. $ 21.12 $ 19.28
Increase (decrease) from investment operations:
Net investment income (loss) .................................... $ (0.20) $ 0.03
Net realized and unrealized gain (loss) on investments ......... 4.29 1.93
Net increase (decrease) from investment operations ............... $ 4.09 $ 1.96
Distributions to shareholders from:
Net investment income .......................................... -- (0.12)
Net realized gain ................................................ (1.88) --
Net increase (decrease) in net asset value ........................ $ 2.21 $ 1.84
Net asset value, end of period .................................... $ 23.33 $ 21.12
Total return* ................................................... 21.07% 10.18%
Ratio of net expenses to average net assets ..................... 1.91%+ 1.96%**+
Ratio of net investment income (loss) to average net assets ...... (1.43)%+ (0.29)%**+
Portfolio turnover rate .......................................... 63% 75%
Average brokerage commission per share ........................... $0.0575 $0.0527
Net assets, end of period (in thousands) ........................ $ 752 $ 379
Ratios assuming reduction for fees paid indirectly:
Net operating expenses .......................................... 1.87% 1.93%**
Net investment income (loss) .................................... (1.39)% (0.26)%**
</TABLE>
- -----------
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.
- --------------------------------------------------------------------------------
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 Pioneering
Management Corporation ("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 databases, specialized
research firms and technical journals.
Under normal circumstances, at least 65% of the Fund's total assets are
invested in common stocks of Mid-Cap Companies. Mid-Cap Companies include
companies with market capitalizations at the time of investment within the
range of market capitalizations reflected in the Index. As of December 1997,
the market capitalization range of companies comprising the Index was $213
million to $13.74 billion. The average weighted market capitalization of the
securities held in the Fund's portfolio may range from $1 billion to $5
billion. 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 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 rating
agencies. If the rating of a security falls below investment grade, management
will consider whatever action is appropriate consistent with the Fund's
investment objective 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 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 "Portfolio Transactions" 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 shareholder approval. Certain other investment policies,
strategies and restrictions on investment are noted throughout the
4
<PAGE>
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. See
"Financial Highlights" for the Fund's actual turnover rate.
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.
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.
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 U.S. 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 U.S. 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
U.S. Dividends or interest, or in some cases capital gains, from foreign
investments may be subject to withholding or other foreign taxes which will
decrease the net return on such investments as compared to the return on the
Fund's U.S. investments. 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. 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 wholly owned subsidiary of PGI, is the principal underwriter of the
Fund.
John F. Cogan, Jr., Chairman and President of the Fund, President and a
Director of PGI, and Chairman and a Director of PMC and PFD, owned
approximately 14% of the outstanding capital stock of PGI as of the date of
this Prospectus.
Mr. David Tripple, President and Chief Investment Officer of PMC and
Executive Vice President of each Pioneer mutual fund, has general
responsibility for PMC's investment operations and chairs a committee of PMC's
domestic equity managers which reviews PMC's research and portfolio operations,
including those of the Fund. Mr. Tripple joined PMC in 1974.
The Fund is covered by a team of managers and analysts which does research
for and oversees the management of several funds with similar investment
objectives. Members of the team meet regularly to discuss holdings, prospective
investments and portfolio composition.
Day-to-day management of the Fund has been the responsibility of Mr.
Steven C. Carhart, Vice President of PMC, since July 1996. Mr. Carhart joined
PMC in 1996 and has five years of experience in research and ten years of
experience as a portfolio manager.
5
<PAGE>
In addition to the Fund, PMC also manages and serves as the investment
adviser for other mutual funds and is an investment adviser to certain other
institutional accounts. PMC's and PFD's executive offices are located at 60
State Street, Boston, Massachusetts 02109. In an effort to avoid conflicts of
interest with the Fund, the Fund and PMC have adopted a Code of Ethics that is
designed to maintain a high standard of personal conduct by directing that all
personnel defer to the interests of the Fund and its shareholders in making
personal securities transactions.
Under the terms of its contract with the Fund, PMC serves as the Fund's
manager and investment adviser subject to the supervision of the Fund's
Trustees. PMC pays all the ordinary operating expenses, including executive
salaries and the rental of office space relating to its services for the Fund
with the exception of the following which are to be paid by the Fund: (a) taxes
and other governmental charges, if any; (b) interest on borrowed money, if any;
(c) legal fees and expenses; (d) auditing fees; (e) insurance premiums; (f)
dues and fees for membership in trade associations; (g) fees and expenses of
registering and maintaining registrations by the Fund of its shares with
regulatory agencies, individual states, territories and foreign jurisdictions
and of preparing reports to government agencies; (h) fees and expenses of
Trustees not affiliated with or interested persons of PMC; (i) fees and
expenses of the custodian, dividend disbursing agent, transfer agent and
registrar; (j) issue and transfer taxes chargeable to the Fund in connection
with securities transactions to which the Fund is a party; (k) costs of reports
to shareholders, shareholders' meetings and Trustees' meetings; (l) the cost of
certificates representing shares of the Fund; (m) fund accounting, pricing and
appraisal charges and related overhead; and (n) distribution fees in accordance
with Rule 12b-1. The Fund also pays all brokerage commissions and any taxes or
other charges in connection with its portfolio transactions.
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 or other funds for which PMC or any other
affiliate or subsidiary serves as investment adviser or manager. 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 Class A shares of the Fund for the performance
period exceeds, or is exceeded by, the record of the Standard & Poor's MidCap
400 Index of mid-capitalization stocks (the "Index") over the same period. The
relevant performance period consists of the current month and the prior 35
months. Each percentage point of difference (up to a maximum of -10) is
multiplied by a performance adjustment rate of 0.02%. Thus, 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.
The Fund's performance is calculated based on the net asset value per
share of its Class A shares. For purposes of calculating the performance
adjustment, any dividends or capital gains distributions paid by the Fund are
treated as if reinvested in the Fund's Class A 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 comprise the Index.
Because the adjustment to the Basic Fee is based on the comparative
performance of the Class A shares 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 record of the Fund is based solely on the relevant
performance period without regard to the cumulative performance over a longer
or shorter period of time.
The Basic Fee is computed daily, the performance fee adjustment is
calculated once per month and the entire management fee is normally paid
monthly. See "Expense Information" in this Prospectus and "Investment Adviser"
in the Statement of Additional Information.
PHASE-IN OF PERFORMANCE FEE ARRANGEMENTS. The performance fee adjustment
is being phased in over a period of time which began on February 1, 1996 (the
"Effective Date"). The remainder of the phase-in is: (a) as of the date of this
Prospectus, upward or downward adjustments to the Basic Fee are based on a
performance period consisting of the current month and the prior months dating
back to the Effective Date, (b) beginning February 28, 1999, the duration of
the Fund's performance will become fixed and (c) thereafter, the Fund's
performance would be measured over a rolling 36-month period covering the
current month and the prior 35 months (each a "Performance Period"). Thus, the
Fund will pay management fees at a rate equal to the Basic Fee plus or minus
the amount of the performance adjustment for the relevant Performance Period.
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.
6
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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% of
the Fund's average daily net assets attributable to Class B shares. Your entire
investment in Class B shares is available to work for you from the time you
make your investment, but the higher distribution fee paid by Class B shares
will cause your Class B shares (until conversion) to have a higher expense
ratio and to pay lower dividends, to the extent dividends are paid, than Class
A shares. Class B shares will automatically convert to Class A shares, based on
relative net asset value, eight years after the initial purchase.
CLASS C SHARES. Class C shares are sold without an initial sales charge,
but are subject to a 1% CDSC if they are redeemed within the first year after
purchase. Class C shares are subject to distribution and service fees at a
combined annual rate of up to 1% of the Fund's average daily net assets
attributable to Class C shares. Your entire investment in Class C shares is
available to work for you from the time you make your investment, but the
higher distribution fee paid by Class C shares will cause your Class C shares
to have a higher expense ratio and to pay lower dividends, to the extent
dividends are paid, than Class A shares. Class C shares have no conversion
feature.
SELECTING A CLASS OF SHARES. The decision as to which Class to purchase
depends on the amount you invest, the intended length of the investment and
your personal situation. If you are making an investment that qualifies for
reduced sales charges, you might consider Class A shares. If you prefer not to
pay an initial sales charge on an investment of $250,000 or less and you plan
to hold the investment for at least six years, you might consider Class B
shares. If you prefer not to pay an initial sales charge and you plan to hold
your investment for one to eight years, you may prefer Class C shares.
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 Pioneer mutual 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.
VI. SHARE PRICE
Shares of the Fund are sold at the public offering price, which is the net
asset value per share, plus the applicable sales charge. Net asset value per
share of a Class of the Fund is determined by dividing the value of its assets,
less liabilities attributable to that Class, by the number of shares of that
Class outstanding. The net asset value is computed once daily, on each day the
New York Stock Exchange (the "Exchange") is open, as of the close of regular
trading on the Exchange.
Securities are valued at the last sale price on the principal exchange or
market where they are traded. Securities which have not traded on the date of
valuation or securities for which sales prices are not generally reported are
valued at the mean between the current bid and asked prices. Securities quoted
in foreign currencies are converted to U.S. dollars utilizing foreign exchange
rates employed by the Fund's independent pricing services. Generally, trading
in foreign securities is substantially completed each day at various times
prior to the close of the Exchange. The values of such securities used in
computing the net asset value of the Fund's shares are determined as of such
times. Foreign currency exchange rates are also generally determined prior to
the close of the Exchange. Occasionally, events which affect the values of such
securities and such exchange rates may occur between the times at which they
are determined and the close of the Exchange and will therefore not be
reflected in the computation of the Fund's net asset value. If events
materially affecting the value of such securities occur during such period,
then these securities may be valued at their fair value as determined in good
faith by the Trustees. All assets of the Fund for which there is no other
readily available valuation method are valued at their fair value as determined
in good faith by the Trustees.
VII. HOW TO BUY FUND SHARES
YOU MAY BUY FUND SHARES FROM ANY SECURITIES BROKER-DEALER WHICH HAS A
SALES AGREEMENT WITH PFD. IF YOU DO NOT HAVE A SECURITIES BROKER-DEALER, PLEASE
CALL 1-800-225-6292. SHARES WILL BE PURCHASED AT THE PUBLIC OFFERING PRICE,
THAT IS, THE NET ASSET VALUE PER SHARE, PLUS ANY APPLICABLE SALES CHARGE, NEXT
COMPUTED AFTER RECEIPT OF A PURCHASE ORDER, EXCEPT AS SET FORTH BELOW.
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 is established (see "Automatic Investment Plans").
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<PAGE>
TELEPHONE PURCHASES. Your account is automatically authorized to have the
telephone purchase privilege unless you indicate otherwise on your Account
Application or by writing to Pioneering Services Corporation ("PSC"). The
telephone purchase option may be used to purchase additional shares for an
existing Pioneer mutual fund account; it may not be used to establish a new
account. Proper account identification will be required for each telephone
purchase. A maximum of $25,000 per account may be purchased by telephone each
day. The telephone purchase privilege is available to Individual Retirement
Accounts ("IRAs") but may not be available to other types of retirement plan
accounts. Call PSC for more information.
YOU ARE STRONGLY URGED TO CONSULT WITH YOUR FINANCIAL REPRESENTATIVE PRIOR
TO REQUESTING A TELEPHONE PURCHASE. To purchase shares by telephone, you must
establish your bank account of record by completing the appropriate section of
your Account Application or an Account Options Form. PSC will electronically
debit the amount of each purchase from this predesignated bank account.
Telephone purchases may not be made for 30 days after the establishment of your
bank of record or any change to your bank information.
Telephone purchases will be priced at the net asset value plus any
applicable sales charge next determined after PSC's receipt of a telephone
purchase instruction and receipt of good funds (usually three days after the
purchase instruction). You may always elect to deliver purchases to PSC by
mail. See "Telephone Transactions and Related Liabilities" for additional
information.
CLASS A SHARES
You may buy Class A shares at the public offering price, including a sales
charge, as follows:
SALES CHARGE AS A % OF DEALER
----------------------- ALLOWANCE
NET AS A % OF
OFFERING AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
- ----------------------- ---------- ---------- ----------
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than
$100,000 4.50 4.71 4.00
$100,000 but less than
$250,000 3.50 3.63 3.00
$250,000 but less than
$500,000 2.50 2.56 2.00
$500,000 but less than
$1,000,000 2.00 2.04 1.75
$1,000,000 or more -0- -0- see below
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. At the sole discretion of PFD,
holdings of funds domiciled outside the U.S., but which are managed by
affiliates of PMC, may be included for this purpose.
No sales charge is payable at the time of purchase on investments of $1
million or more, or for purchases by participants in certain group plans
(described below) subject to a CDSC of 1% which may be imposed in the event of
a redemption of Class A shares within 12 months of purchase. See "How to Sell
Fund Shares" below. PFD may, in its discretion, pay a commission to
broker-dealers who initiate and are responsible for such purchases as follows:
1% on the first $5 million invested; 0.50% on the next $45 million 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 to Mutual of Omaha Investor Services,
Inc. 50% of PFD's retention of any sales commission on sales of the Fund's
Class A shares through such dealer. From time to time, PFD may elect to reallow
the entire initial sales charge to participating dealers for all Class A sales
with respect to which orders are placed during a particular period. Dealers to
whom substantially the entire sales charge is reallowed may be deemed to be
underwriters under the federal securities laws.
QUALIFYING FOR A REDUCED SALES CHARGE. Class A shares of the Fund may be
sold at a reduced or eliminated sales charge to certain group plans ("Group
Plans") under which a sponsoring organization makes recommendations to, permits
group solicitation of, or otherwise facilitates purchases by, its employees,
members or participants. Class A shares of the Fund may be sold at net asset
value per share without a sales charge to 401(k) retirement plans with 100 or
more participants or at least $500,000 in plan assets. Information about such
arrangements is available from PFD.
Class A shares of the Fund may also be sold at net asset value per share
without a sales charge to: (a) current or former Trustees and officers of the
Fund and partners and employees of its legal counsel; (b) current or former
directors, officers, employees or sales representatives of PGI or its
subsidiaries; (c) current or former directors, officers, employees or sales
representatives of any subadviser or predecessor investment adviser to any
investment company for which PMC serves as an investment adviser, and the
subsidiaries or affiliates of such persons; (d) current or former offic-
8
<PAGE>
ers, 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 be sold at net asset value per share
without a sales charge to Optional Retirement Program (the "Program")
participants if (i) the employer has authorized a limited number of investment
company providers for the Program, (ii) all authorized investment company
providers offer their shares to Program participants at net asset value, (iii)
the employer has agreed in writing to actively promote the authorized
investment providers to Program participants and (iv) the Program provides for
a matching contribution for each participant contribution. Class A shares of
the Fund may also be sold at net asset value without a sales charge in
connection with certain reorganization, liquidation or acquisition transactions
involving other investment companies or personal holding companies.
Reduced sales charges are available for purchases of $50,000 or more of
Class A shares (excluding any reinvestments of dividends and capital gains
distributions) made within a 13-month period pursuant to a Letter of Intent
("LOI") which may be established by completing the Letter of Intent section of
the Account Application. The reduced sales charge will be the charge that would
be applicable to the purchase of the specified amount of Class A shares as if
the shares had all been purchased at the same time. A purchase not made
pursuant to an LOI may be included if the LOI is submitted to PSC within 90
days of such purchase. You may also obtain the reduced sales charge by
including the value (at current offering price) of all your Class A shares in
the Fund and all other Pioneer mutual funds held of record as of the date of
your LOI in the amount used to determine the applicable sales charge for the
Class A shares to be purchased under the LOI. Five percent of your total
intended purchase amount will be held in escrow by PSC, registered in your
name, until the terms of the LOI are fulfilled.
You are not obligated to purchase the amount specified in your LOI. If,
however, the amount actually purchased during the 13-month period is more or
less than that indicated in your LOI, an adjustment in the sales charge will be
made. If a payment to cover actual sales charges is due, it must be paid to PFD
within 20 days after PFD or your dealer sends you a written request otherwise
PFD will direct PSC to liquidate sufficient shares from your escrow account to
cover the amount due. See the Statement of Additional Information for more
information.
Investors who are clients of a broker-dealer with a current sales
agreement with PFD may purchase Class A shares of the Fund at net asset value,
without a sales charge, to the extent that the purchase price is paid out of
proceeds from one or more redemptions by the investor of shares of certain
other mutual funds. In order for a purchase to qualify for this privilege, the
investor must document to the broker-dealer that the redemption occurred within
60 days immediately preceding the purchase of Class A shares; that the client
paid a sales charge on the original purchase of the shares redeemed; and that
the mutual fund whose shares were redeemed also offers net asset value
purchases to redeeming shareholders of any of the Pioneer mutual funds. Further
details may be obtained from PFD.
CLASS B SHARES
You may buy Class B shares at the net asset value per share next computed
after receipt of a purchase order without the imposition of an initial sales
charge; however, Class B shares redeemed within six years of purchase will be
subject to a CDSC at the rates shown in the table below. The charge will be
assessed on the amount equal to the lesser of the current market value or the
original purchase cost of the shares being redeemed. No CDSC will be imposed on
increases in account value above the initial purchase price, including shares
derived from the reinvestment of dividends or capital gains distributions.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of purchase until the time of redemption of Class B shares. For
the purpose of determining the number of years from the time of any purchase,
all payments during a quarter will be aggregated and deemed to have been made
on the first day of that quarter. In processing redemptions of Class B shares,
the Fund will first redeem shares not subject to any CDSC, and then shares held
longest during the six-year period. As a result, you will pay the lowest
possible CDSC.
The CDSC for Class B shares subject to a CDSC upon redemption will be
determined as follows:
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 mutual fund will convert into Class A shares based on the date of the
initial purchase and the applicable CDSC.
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<PAGE>
Class B shares acquired through reinvestment of distributions will convert into
Class A shares based on the date of the initial purchase to which such shares
relate. For this purpose, Class B shares acquired through reinvestment of
distributions will be attributed to particular purchases of Class B shares in
accordance with such procedures as the Trustees may determine from time to
time. The conversion of Class B shares to Class A shares is subject to the
continuing availability of a ruling from the Internal Revenue Service (the
"IRS") that such conversions will not constitute taxable events for federal tax
purposes. There can be no assurance that such ruling will continue to be in
effect at the time any particular conversion would normally occur. 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 per share next computed
after receipt of a purchase order, without the imposition of an initial sales
charge; however, Class C shares redeemed within one year of purchase will be
subject to a CDSC of 1%. The charge will be assessed on the amount equal to the
lesser of the current market value or the original purchase cost of the shares
being redeemed. No CDSC will be imposed on increases in account value above the
initial purchase price, including shares derived from the reinvestment of
dividends or capital gains distributions. Class C shares do not convert to any
other Class of Fund shares.
For the purpose of determining the time of any purchase, all payments
during a quarter will be aggregated and deemed to have been made on the first
day of that quarter. In processing redemptions of Class C shares, the Fund will
first redeem shares not subject to any CDSC, and then shares held for the
shortest period of time during the one-year period. As a result, you will pay
the lowest possible CDSC.
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class C shares, including the payment of
compensation to broker-dealers.
WAIVER OR REDUCTION OF CONTINGENT DEFERRED SALES CHARGE. The CDSC on Class
B shares may be waived or reduced for non-retirement accounts if: (a) the
redemption results from the death of all registered owners of an account (in
the case of an UGMA, an UTMA or a trust account, waiver applies upon the death
of all beneficial owners) or a total and permanent disability (as defined in
Section 72 of the Code) of all registered owners occurring after the purchase
of the shares being redeemed or (b) the redemption is made in connection with
limited automatic redemptions as set forth in "Systematic Withdrawal Plans"
(limited in any year to 10% of the value of the account in the Fund at the time
the withdrawal plan is established).
The CDSC on Class B shares may be waived or reduced for retirement plan
accounts if: (a) the redemption results from the death or a total and permanent
disability (as defined in Section 72 of the Code) occurring after the purchase
of the shares being redeemed of a shareholder or participant in an employer-
sponsored retirement plan; (b) the distribution is to a participant in an IRA,
403(b) or employer-sponsored retirement plan, is part of a series of
substantially equal payments made over the life expectancy of the participant
or the joint life expectancy of the participant and his or her beneficiary or
as scheduled periodic payments to a participant (limited in any year to 10% of
the value of the participant's account at the time the distribution amount is
established; a required minimum distribution due to the participant's
attainment of age 701/2 may exceed the 10% limit only if the distribution
amount is based on plan assets held in Pioneer mutual funds) ; (c) the
distribution is from a 401(a) or 401(k) retirement plan and is a return of
excess employee deferrals or employee contributions or a qualifying hardship
distribution as defined by the Code or results from a termination of employment
(limited with respect to a termination to 10% per year of the value of the
plan's assets in the Fund as of the later of the prior December 31 or the date
the account was established unless the plan's assets are being rolled over to
or reinvested in the same class of shares of a Pioneer mutual fund subject to
the CDSC of the shares originally held); (d) the distribution is from an IRA,
403(b) or employer-sponsored retirement plan and is to be rolled over to or
reinvested in the same class of shares in a Pioneer mutual fund and which will
be subject to the applicable CDSC upon redemption; (e) the distribution is in
the form of a loan to a participant in a plan which permits loans (each
repayment of the loan will constitute a new sale which will be subject to the
applicable CDSC upon redemption); or (f) the distribution is from a qualified
defined contribution plan and represents a participant's directed transfer
(provided that this privilege has been preauthorized through a prior agreement
with PFD regarding participant directed transfers).
The CDSC on Class C shares and on any Class A shares subject to a CDSC may
be waived or reduced as follows: (a) for automatic redemptions as described in
"Systematic Withdrawal Plans" (limited to 10% of the value of the account); (b)
if the redemption results from the death or a total and permanent disability
(as defined in Section 72 of the Code) occurring after the purchase of the
shares being redeemed of a shareowner or participant in an employer-sponsored
retirement plan; (c) if the distribution is part of a series of substantially
equal payments made over the life expectancy of the participant or the joint
life expectancy of the participant and his or her beneficiary; or (d) if the
distribution is to a participant in an employer-sponsored retirement plan and
is (i) a return of excess employee deferrals or contributions, (ii) a
qualifying hardship distribution as defined by the Code, (iii) from a
termination of employment, (iv) in the form of a loan to a participant in a
plan which permits loans, or (v) from a qualified defined contribution plan and
represents a participant's directed transfer (provided that this privilege has
been preauthorized through a prior agreement with PFD regarding participant
directed transfers).
The CDSC on any shares subject to a CDSC may be waived or reduced for
either non-retirement or retirement plan accounts if the redemption is made
pursuant to the Fund's right to liquidate or involuntarily redeem shares in a
shareholder's account. The CDSC on any shares subject to a CDSC
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<PAGE>
will not be applicable if the selling broker-dealer elects, with PFD's
approval, to waive receipt of the commission normally paid at the time of the
sale.
BROKER-DEALERS. An order for any Class of Fund shares received by a
broker-dealer prior to the close of regular trading on the Exchange is
confirmed at the price appropriate for that Class as determined at the close of
regular trading on the Exchange on the day the order is received, provided the
order is received by PFD prior to PFD's close of business (usually, 5:30 p.m.
Eastern time). It is the responsibility of broker-dealers to transmit orders so
that they will be received by PFD prior to its close of business. PFD or its
affiliates may provide additional compensation to certain dealers or such
dealers' affiliates based on certain objective criteria established from time
to time by PFD. All such payments are made out of PFD's or the affiliate's own
assets. These payments will not change the price an investor will pay for
shares or the amount that the Fund will receive from such sale.
GENERAL. The Fund reserves the right in its sole discretion to withdraw
all or any part of the offering of shares when, in the judgment of the Fund's
management, such withdrawal is in the best interest of the Fund. An order to
purchase shares is not binding on, and may be rejected by, PFD until it has
been confirmed in writing by PFD and payment has been received.
VIII. HOW TO SELL FUND SHARES
YOU CAN ARRANGE TO SELL (REDEEM) FUND SHARES ON ANY DAY THE EXCHANGE IS
OPEN BY SELLING EITHER SOME OR ALL OF YOUR SHARES TO THE FUND.
You may sell your shares either through your broker-dealer or directly to
the Fund. Please note the following:
[bullet] If you are selling shares from a retirement account, other than an
IRA, you must make your request in writing (except for exchanges to
other Pioneer mutual funds which can be requested by phone or in
writing). Call 1-800-622-0176 for more information.
[bullet] If you are selling shares from a non-retirement account or an IRA,
you may use any of the methods described below.
Your shares will be sold at the share price next calculated after your
order is received in good order less any applicable CDSC. Sale proceeds
generally will be sent to you by check, bank wire, or electronic funds transfer
normally within seven days after your order is received in good order. The Fund
reserves the right to withhold payment of the sale proceeds until checks
received by the Fund in payment for the shares being sold have cleared, which
may take up to 15 calendar days from the purchase date.
IN WRITING. You may sell your shares by delivering a written request,
signed by all registered owners, in good order to PSC; however, you must use a
written request, including a signature guarantee, to sell your shares if any of
the following applies:
[bullet] you wish to sell over $100,000 worth of shares,
[bullet] your account registration or address has changed within the last 30
days,
[bullet] the check is not being mailed to the address on your account
(address of record),
[bullet] the check is not being made out to the account owners, or
[bullet] the sale proceeds are being transferred to a Pioneer mutual fund
account with a different registration.
Your request should include your name, the Fund's name, your Fund account
number, the Class of shares to be redeemed, the dollar amount or number of
shares to be redeemed, and any other applicable requirements as described
below. Unless instructed otherwise, PSC will send the proceeds of the sale to
the address of record. Fiduciaries and corporations are required to submit
additional documents. For more information, contact PSC at 1-800-225-6292.
Written requests will not be processed until they are received in good
order by PSC. Good order means that there are no outstanding claims or requests
to hold redemptions on the account, and any certificates are endorsed by the
record owner(s) exactly as the shares are registered and the signature(s) are
guaranteed by an eligible guarantor. You should be able to obtain a signature
guarantee from a bank, broker, dealer, credit union (if authorized under state
law), securities exchange or association, clearing agency or savings
association. A notary public cannot provide a signature guarantee. Signature
guarantees are not accepted by facsimile ("fax"). For additional information
about the necessary documentation for redemption by mail, please contact PSC at
1-800-225-6292.
BY TELEPHONE OR BY FAX. Your account is automatically authorized to have
the telephone redemption privilege unless you indicate otherwise on your
Account Application or by writing to PSC. Proper account identification will be
required for each telephone redemption. The telephone redemption option is not
available to retirement plan accounts, except IRAs. A maximum of $100,000 per
account per day may be redeemed by telephone or fax and the proceeds may be
received by check or by bank wire or electronic funds transfer. To receive the
proceeds by check: the check must be made payable exactly as the account is
registered and the check must be sent to the address of record which must not
have changed in the last 30 days. To receive the proceeds by bank wire or by
electronic funds transfer: the proceeds must be sent to the bank wire address
of record which must have been properly predesignated either on your Account
Application or on an Account Options Form and which must not have changed in
the last 30 days. To redeem by fax, send your redemption request to
1-800-225-4240. You may always elect to deliver redemption instructions to PSC
by mail. See "Telephone Transactions 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
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price. Your broker-dealer is responsible for providing all necessary
documentation to PFD and may charge you for its services.
SMALL ACCOUNTS. The minimum account value is $500. If you hold shares of
the Fund in an account with a net asset value of less than the minimum required
amount due to redemptions or exchanges, the Fund may redeem the shares held in
this account at net asset value if you have not increased the net asset value
of the account to at least the minimum required amount within six months of
notice by the Fund to you of the Fund's intention to redeem the shares.
CDSC ON CLASS A SHARES. Purchases of Class A shares of $1 million or more,
or by participants in a Group Plan which were not subject to an initial sales
charge, may be subject to a CDSC upon redemption. A CDSC is payable to PFD on
these investments in the event of a share redemption within 12 months following
the share purchase, at the rate of 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividend and capital gain distributions) or
the total cost of such shares. Shares subject to the CDSC which are exchanged
into another Pioneer mutual fund will continue to be subject to the CDSC until
the original 12-month period expires. However, no CDSC is payable 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
Pioneer mutual fund out of which you wish to exchange and the name of the
Pioneer mutual fund into which you wish to exchange, your fund account
number(s), the Class of shares to be exchanged and the dollar amount or number
of shares to be exchanged. Written exchange requests must be signed by all
record owner(s) exactly as the shares are registered.
TELEPHONE EXCHANGES. Your account is automatically authorized to have the
telephone exchange privilege unless you indicate otherwise on your Account
Application or by writing to PSC. Proper account identification will be
required for each telephone exchange. Telephone exchanges may not exceed
$500,000 per account per day. Each telephone exchange request, whether by voice
or by FactFoneSM, will be recorded. YOU ARE STRONGLY URGED TO CONSULT WITH YOUR
FINANCIAL REPRESENTATIVE PRIOR TO REQUESTING A TELEPHONE EXCHANGE. See
"Telephone Transactions and Related Liabilities" below.
AUTOMATIC EXCHANGES. You may automatically exchange shares from one
Pioneer mutual fund account for shares of the same Class in another Pioneer
mutual fund account on a monthly or quarterly basis. The accounts must have
identical registrations and the originating account must have a minimum balance
of $5,000. The exchange will be effective on the day of the month designated on
your Account Application or Account Options Form.
GENERAL. Exchanges must be at least $1,000. You may exchange your
investment from one Class of Fund shares at net asset value, without a sales
charge, for shares of the same Class of any other Pioneer mutual fund. Not all
Pioneer mutual funds offer more than one Class of shares. A new Pioneer mutual
fund account opened through an exchange must have a registration identical to
that on the original account.
Shares which would normally be subject to a CDSC upon redemption will not
be charged the applicable CDSC at the time of an exchange. Shares acquired in
an exchange will be subject to the CDSC of the shares originally held. For
purposes of determining the amount of any applicable CDSC, the length of time
you have owned shares acquired by exchange will be measured from the date you
acquired the original shares and will not be affected by any subsequent
exchange.
Exchange requests received by PSC before 4:00 p.m. Eastern time will be
effective on that day if the requirements above have been met, otherwise, they
will be effective on the next business day. PSC will process exchanges only
after receiving an exchange request in good order. There are currently no fees
or sales charges imposed at the time of an exchange. An exchange of shares may
be made only in states where legally permitted. For federal and (generally)
state income tax purposes, an exchange is considered to be a sale of the shares
of the Fund exchanged and a purchase of shares in another Pioneer mutual fund.
Therefore, an exchange could result in a gain or loss on the shares sold,
depending on the tax basis of these shares and the timing of the transaction,
and special tax rules may apply.
You should consider the differences in objectives and policies of the
Pioneer mutual funds, as described in each fund's current prospectus, before
making any exchange. For the protection of the Fund's performance and
shareholders, the Fund and PFD reserve the right to refuse any exchange request
or restrict, at any time without notice, the number and/or frequency of
exchanges to prevent abuses of the exchange privilege. Such abuses may arise
from frequent trading in response to short-term market fluctuations, a pattern
of trading by an individual or group that appears to be an attempt to "time the
market," or any other exchange request which, in the view of management, will
have a detrimental effect on the Fund's portfolio management strategy or its
operations. In addition, the Fund and PFD reserve the right to charge a fee for
exchanges or to modify, limit, suspend or
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discontinue the exchange privilege with notice to shareholders as required by
law.
X. DISTRIBUTION PLANS
The Fund has adopted a Plan of Distribution for each Class of shares (the
"Class A Plan," "Class B Plan," and "Class C Plan") in accordance with Rule
12b-1 under the Investment Company Act of 1940, as amended, pursuant to which
certain distribution and service fees are paid to PFD.
Pursuant to the Class A Plan, the Fund reimburses PFD for its actual
expenditures to finance any activity primarily intended to result in the sale
of Class A shares or to provide services to holders of Class A shares, provided
the categories of expenses for which reimbursement is made are approved by the
Fund's Board of Trustees. As of the date of this Prospectus, the Board of
Trustees has approved the following categories of expenses for Class A shares
of the Fund: (i) a service fee to be paid to qualified broker-dealers in an
amount not to exceed 0.25% per annum of the Fund's daily net assets
attributable to Class A shares; (ii) reimbursement to PFD for its expenditures
for broker-dealer commissions and employee compensation on certain sales of the
Fund's Class A shares with no initial sales charge (see "How to Buy Fund
Shares"); and (iii) reimbursement to PFD for expenses incurred in providing
services to Class A shareholders and supporting broker-dealers and other
organizations (such as banks and trust companies) in their efforts to provide
such services. Banks are currently prohibited under the Glass-Steagall Act from
providing certain underwriting or distribution services. If a bank was
prohibited from acting in any capacity or providing any of the described
services, management would consider what action, if any, would be appropriate.
Expenditures of the Fund pursuant to the Class A Plan are accrued daily
and may not exceed 0.25% of the Fund's average daily net assets attributable to
Class A shares. Distribution expenses of PFD are expected to substantially
exceed the distribution fees paid by the Fund in a given year. The Class A Plan
may not be amended to increase materially the annual percentage limitation of
average net assets which may be spent for the services described therein
without approval of the Class A shareholders of the Fund.
Both the Class B Plan and the Class C Plan provide that the Fund will
compensate PFD by paying a distribution fee at the annual rate of 0.75% of the
Fund's average daily net assets attributable to the applicable Class of shares
and 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 sales agreements with PFD.
PFD may advance to dealers the first year service fee at a rate up to 0.25% of
the purchase price of such shares and, as compensation therefore, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Commencing in the 13th month following the purchase
of Class B shares, dealers will become eligible for additional annual service
fees of up to 0.25% of the net asset value of such shares.
Commissions of up to 1% of the amount invested in Class C shares,
consisting of 0.75% of the amount invested and a first year's service fee of
0.25% of the amount invested, are paid to broker-dealers who have sales
agreements with PFD. PFD may advance to dealers the first year service fee at a
rate up to 0.25% of the purchase price of such shares and, as compensation
therefore, PFD may retain the service fee paid by the Fund with respect to such
shares for the first year after purchase. Commencing in the 13th month
following the purchase of Class C shares, dealers will become eligible for
additional annual distribution fees and services fees of up to 0.75% and 0.25%,
respectively, of the net asset value of such shares.
When a broker-dealer sells Class B or Class C shares and elects, with
PFD's approval, to waive its right to receive the commission normally paid at
the time of the sale, PFD may cause all or a portion of the distribution fees
described above to be paid to the broker-dealer.
Dealers may from time to time be required to meet certain criteria in
order to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan or the Class C Plan for which there
is no dealer of record or for which qualification standards have not been met
as partial consideration for personal services and/or account maintenance
services performed by PFD or its affiliates for shareholder accounts.
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION
The Fund has elected to be treated, has qualified and intends to qualify
each year as a "regulated investment company" under Subchapter M of the Code,
so that it will not pay federal income tax on income and capital gains
distributed to shareholders as required under the Code. Under the Code, the
Fund will be subject to a nondeductible 4% federal excise tax on a portion of
its undistributed ordinary income and capital gains if it fails to meet certain
distribution requirements with respect to each calendar year. The Fund intends
to make distributions in a timely manner and accordingly does not expect to be
subject to the excise tax.
The Fund's policy is to pay to shareholders dividends from net investment
income, if any, 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; dividends from income and/or capital gains may also be paid at such
other times as may be necessary for the Fund to avoid federal income or excise
tax. Generally, dividends from the Fund's net investment income, market
discount income, net short-term capital gains, and certain net foreign exchange
gains are taxable under the Code as ordinary income, and dividends from the
Fund's net
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long-term capital gains are taxable as long-term capital gains. The Fund's
distributions of long-term capital gains to individuals or other noncorporate
taxpayers are subject to different maximum tax rates (which will be indicated
in the annual tax information the Fund provides to shareholders), depending
generally upon the sources of, and the Fund's holding periods for the assets
that produce, the gains.
UNLESS SHAREHOLDERS SPECIFY OTHERWISE, ALL DISTRIBUTIONS WILL BE
AUTOMATICALLY REINVESTED IN ADDITIONAL FULL AND FRACTIONAL SHARES OF THE FUND.
FOR FEDERAL INCOME TAX PURPOSES, ALL DIVIDENDS ARE TAXABLE AS DESCRIBED ABOVE
WHETHER A SHAREHOLDER TAKES THEM IN CASH OR REINVESTS THEM IN ADDITIONAL SHARES
OF THE FUND. Information as to the federal tax status of dividends and
distributions will be provided to shareholders annually. For further
information on the distribution options available to shareholders, see
"Distribution Options" and "Directed Dividends" below.
Distributions by the Fund of the dividend income it receives from U.S.
domestic corporations, if any, may qualify for the dividends-received deduction
for corporate shareholders, subject to holding-period requirements and
debt-financing restrictions under the Code.
The Fund may be subject to foreign withholding taxes or other foreign
taxes on income (possibly including, in some cases, capital gains) on certain
of its foreign investments, which will reduce the yield on or return from those
investments. If, as anticipated, the Fund does not qualify to pass such taxes
through to its shareholders, they will neither treat such taxes as additional
income nor be entitled to any associated foreign tax credits or deductions.
Dividends and other distributions and the proceeds of redemptions,
exchanges or repurchases of Fund shares paid to individuals and other
non-exempt payees will be subject to 31% backup withholding of federal income
tax if the Fund is not provided with the shareholder's correct taxpayer
identification number and certification that the number is correct and that the
shareholder is not subject to backup withholding or if the Fund receives notice
from the IRS or a broker that such withholding applies. Please refer to the
Account Application for additional information.
The description above relates only to U.S. federal income tax consequences
for shareholders who are U.S. persons, 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 advisors regarding state, local and other
applicable tax laws, including the effect of recent federal tax legislation, in
their particular circumstances.
XII. SHAREHOLDER SERVICES
PSC is the shareholder services and transfer agent for shares of the Fund.
PSC, a Massachusetts corporation, is a wholly owned subsidiary of PGI. PSC's
offices are located at 60 State Street, Boston, Massachusetts 02109, and
inquiries to PSC should be mailed to Shareholder Services, Pioneering Services
Corporation, P.O. Box 9014, Boston, Massachusetts 02205-9014. Brown Brothers
Harriman & Co. (the "Custodian") serves as custodian of the Fund's portfolio
securities and other assets. The principal business address of the mutual fund
division of the Custodian is 40 Water Street, Boston, Massachusetts 02109.
ACCOUNT AND CONFIRMATION STATEMENTS
PSC maintains an account for each shareholder and all transactions of the
shareholder are recorded in this account. Confirmation statements showing the
details of transactions are sent to shareholders as transactions occur, except
Automatic Investment Plan transactions which are confirmed quarterly. The
Pioneer Combined Account Statement, mailed quarterly, is available to all
shareholders who have more than one Pioneer mutual fund account.
Shareholders whose shares are held in the name of an investment
broker-dealer or other party will not normally have an account with the Fund
and might not be able to utilize some of the services available to shareholders
of record. Examples of services which might not be available are purchases,
exchanges or redemptions of shares by mail or telephone, automatic reinvestment
of dividends and capital gains distributions, withdrawal plans, Letters of
Intent, rights of accumulation and newsletters.
ADDITIONAL INVESTMENTS
You may add to your account by sending a check (minimum of $50 for Class A
shares and $500 for Class B and C shares) to PSC (account number and Class of
shares should be clearly indicated). The bottom portion of a confirmation
statement may be used as a remittance slip to make additional investments.
Additions to your account, whether by check or through a Pioneer
Investomatic Plan, are invested in full and fractional shares of the Fund at
the applicable offering price in effect as of the close of regular trading on
the Exchange on the day of receipt.
AUTOMATIC INVESTMENT PLANS
You may arrange for regular automatic investments of $50 or more through
government/military allotments, payroll deduction or through a Pioneer
Investomatic Plan. A Pioneer Investomatic Plan provides for a monthly or
quarterly investment by means of a preauthorized electronic funds transfer from
your bank account. Pioneer Investomatic Plan investments are voluntary, and you
may discontinue your plan at any time or change your plan elections for the
dollar amount, frequency or investment date by calling PSC at 1-800-225-6292,
or by sending a written request to Pioneering Services Corporation, P.O. Box
9014, Boston, Massachusetts 02205-9014. A change to your bank information must
be made in writing on an Account Options Form. You should allow up to five
business days for PSC to make changes to an established plan. PSC acts as agent
for the purchaser, the broker-dealer and PFD in maintaining these plans.
FINANCIAL REPORTS AND TAX INFORMATION
As a shareholder, you will receive financial reports at least
semiannually. In January of each year, the Fund will mail you information about
the tax status of dividends and distributions.
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DISTRIBUTION OPTIONS
Dividends and capital gains distributions, if any, will automatically be
invested in additional shares of the Fund, at the applicable net asset value
per share, unless you indicate another option on the Account Application.
Two other options available are (a) dividends in cash and capital gains
distributions in additional shares; and (b) all dividends and capital gains
distributions in cash. These two options are not available, however, for
retirement plans or for an account with a net asset value of less than $500.
Changes in your distribution options may be made by written request to PSC.
If you elect to receive either dividends or capital gains or both in cash
and a distribution check issued to you is returned by the U.S. Postal Service
as not deliverable or a distribution check remains uncashed for six months or
more, the amount of the check may be reinvested in your account. Such
additional shares will be purchased at the then current net asset value.
Furthermore, the distribution option on the account will automatically be
changed to the reinvestment option until such time as you request a different
option by writing to PSC.
DIRECTED DIVIDENDS
You may elect (in writing) to have the dividends paid by one Pioneer
mutual fund account invested in a second Pioneer mutual fund account. The value
of this second account must be at least $1,000 ($500 for Pioneer Fund or
Pioneer II). Invested dividends may be in any amount, and there are no fees or
charges for this service. Retirement plan shareholders may only direct
dividends to accounts with identical registrations.
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 9:00 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 "How to Buy Fund Shares," "How to
Sell Fund Shares" and "How to Exchange Fund Shares" for more information. To
confirm that each transaction instruction received by telephone is genuine, PSC
will record each telephone transaction, require the caller to provide the
personal identification number ("PIN") for the account and send you a written
confirmation of each telephone transaction. Different procedures may apply to
accounts that are registered to non-U.S. citizens or that are held in the name
of an institution or in the name of an investment broker-dealer or other third
party. If reasonable procedures, such as those described above, are not
followed, the Fund may be liable for any loss due to unauthorized or fraudulent
instructions. The Fund may implement other procedures from time to time. In all
other cases, neither the Fund, PSC nor PFD will be responsible for the
authenticity of instructions received by telephone; therefore, you bear the
risk of loss for unauthorized or fraudulent telephone transactions.
During times of economic turmoil or market volatility or as a result of
severe weather or a natural disaster, it may be difficult to contact the Fund
by telephone to institute a redemption or exchange. You should communicate with
the Fund in writing if you are unable to reach the Fund by telephone.
FACTFONE(SM)
FactFone(SM) is an automated inquiry and telephone transaction system
available to Pioneer shareholders by dialing 1-800-225-4321. FactFone(SM) allows
you to obtain current information on your Pioneer mutual fund accounts and to
inquire about the prices and yields of all publicly available Pioneer mutual
funds. In addition, you may use FactFone(SM) to make computer-assisted telephone
purchases, exchanges and redemptions from your Pioneer mutual fund accounts if
you have activated your PIN. Telephone purchases and redemptions require the
establishment of a bank account of record. YOU ARE STRONGLY URGED TO CONSULT
WITH YOUR FINANCIAL REPRESENTATIVE PRIOR TO REQUESTING ANY TELEPHONE
TRANSACTION. Shareholders whose accounts are registered in the name of a
broker-dealer or other third party may not be able to use FactFone(SM). See "How
to Buy Fund Shares," "How to 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 tax-deferred retirement plans for
individuals, businesses and tax-exempt organizations. The Account Application
accompanying this Prospectus should not be used to establish any of these
plans. Separate applications are required.
TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD)
If you have a hearing disability and access to TDD keyboard equipment, you
can call our TDD number toll-free at 1-800-225-1997, weekdays from 8:30 a.m. to
5:30 p.m. Eastern time, to contact our telephone representatives with questions
about your account.
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SYSTEMATIC WITHDRAWAL PLANS
If your account has a total value of at least $10,000 you may establish a
Systematic Withdrawal Plan ("SWP") providing for fixed payments at regular
intervals. Withdrawals from Class B and Class C share accounts are limited to
10% of the value of the account at the time the SWP is implemented. See "Waiver
or Reduction of Contingent Deferred Sales Charge" for more information.
Periodic 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 reinstatement occurs. In
addition, if a redemption resulted in a loss and an investment is made in
shares of the Fund within 30 days before or after the redemption, you may not
be able to recognize the loss for federal income tax purposes. Subject to the
provisions outlined under "How to Exchange Fund Shares" above, you may also
reinvest in Class A shares of other Pioneer mutual funds; in this case you must
meet the minimum investment requirements for each fund you enter.
The 90-day reinstatement period may be extended by PFD for periods of up
to one year for shareholders living in areas that have experienced a natural
disaster, such as a flood, hurricane, tornado or earthquake.
---------------------
THE OPTIONS AND SERVICES AVAILABLE TO SHAREHOLDERS, INCLUDING THE TERMS OF
THE EXCHANGE PRIVILEGE AND THE PIONEER INVESTOMATIC PLAN, MAY BE REVISED,
SUSPENDED OR TERMINATED AT ANY TIME BY PFD OR BY THE FUND. YOU MAY ESTABLISH
THE SERVICES DESCRIBED IN THIS SECTION WHEN YOU OPEN YOUR ACCOUNT. YOU MAY ALSO
ESTABLISH OR REVISE MANY OF THEM ON AN EXISTING ACCOUNT BY COMPLETING AN
ACCOUNT OPTIONS FORM, WHICH YOU MAY REQUEST BY CALLING 1-800-225-6292.
XIII. THE FUND
The Fund is a diversified open-end management investment company (commonly
referred to as a mutual fund) re-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 shareholder at the then current net asset value per share. See "How to Sell
Fund Shares." The Fund is not required, and does not intend, to hold annual
shareholder meetings although special meetings may be called for the purpose of
electing or removing Trustees, changing fundamental investment restrictions or
approving a management contract.
The Fund reserves the right to create and issue additional series of
shares. The Trustees have the authority, without further shareholder approval,
to classify and reclassify the shares of the Fund, or any additional series of
the Fund, into one or more classes. As of the date of this Prospectus, the
Trustees have authorized the issuance of three classes of shares, designated
Class A, Class B and Class C. The shares of each class represent an interest in
the same portfolio of investments of the Fund. Each class has equal rights as
to voting, redemption, dividends and liquidation, except that each class bears
different distribution and transfer agent fees and may bear other expenses
properly attributable to the particular class. Class A, Class B and Class C
shareholders have exclusive voting rights with respect to the Rule 12b-1
distribution plans adopted by holders of those shares in connection with the
distribution of shares.
In addition to the requirements under Delaware law, the Declaration of
Trust provides that a shareholder of the Fund may bring a derivative action on
behalf of the Fund only if the following conditions are met: (a) shareholders
eligible to bring such derivative action under Delaware law who hold at least
10% of the outstanding shares of the Fund, or 10% of the outstanding shares of
the series or class to which such action relates, shall join in the request for
the Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such shareholder request and investigate
the basis of such claim. The Trustees shall be entitled to retain counsel or
other advisers in considering the merits of the request and shall require an
undertaking by the shareholders making such request to reimburse the Fund for
the expense of any such advisers in the event that the Trustees determine not
to bring such action.
When issued and paid for in accordance with the terms of the Prospectus
and Statement of Additional Information, shares of the Fund are fully paid and
non-assessable. Shares will remain on deposit with the Fund's transfer agent
and certificates will not normally be issued. The Fund reserves the right to
charge a fee for the issuance of certificates.
16
<PAGE>
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 may also
include securities industry, real estate industry or comparative performance
information in advertising or materials marketing the Fund's shares. Such
performance information may include rankings or listings by magazines,
newspapers or independent statistical or ratings services, such as Lipper
Analytical Services, Inc. or Ibbotson Associates.
The Fund's investment results will 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.
17
<PAGE>
NOTES
18
<PAGE>
THE PIONEER FAMILY OF MUTUAL FUNDS
GROWTH FUNDS
GLOBAL/INTERNATIONAL
Pioneer Emerging Markets Fund
Pioneer Europe Fund
Pioneer Gold Shares
Pioneer India Fund
Pioneer International Growth Fund
Pioneer World Equity Fund
UNITED STATES
Pioneer Capital Growth Fund
Pioneer Growth Shares
Pioneer Micro-Cap Fund*
Pioneer Mid-Cap Fund
Pioneer Small Company Fund
GROWTH AND INCOME FUNDS
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer Real Estate Shares
Pioneer II
INCOME FUNDS
TAXABLE
Pioneer America Income Trust
Pioneer Bond Fund
Pioneer Short-Term Income Trust*
TAX-EXEMPT
Pioneer Intermediate Tax-Free Fund**
Pioneer Tax-Free Income Fund**
MONEY MARKET FUND
Pioneer Cash Reserves Fund
*Offers Class A and B Shares only
**Not suitable for retirement accounts
19
<PAGE>
[Pioneer logo]
PIONEER MID-CAP
FUND
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
OFFICERS
JOHN F. COGAN, JR., CHAIRMAN AND PRESIDENT
DAVID D. TRIPPLE, EXECUTIVE VICE PRESIDENT
STEVEN C. CARHART, 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 LLP
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 and
account information............................ 1-800-225-4321
Retirement plans................................ 1-800-622-0176
Toll-free fax................................... 1-800-225-4240
Telecommunications Device for the Deaf (TDD).... 1-800-225-1997
Visit our web site........................ www.pioneerfunds.com
0198-4874
(C)Pioneer Funds Distributor, Inc.
<PAGE>
PIONEER MID-CAP FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
CLASS A, CLASS B AND CLASS C SHARES
JANUARY 28, 1998
This Statement of Additional Information is not a Prospectus, but should be read
in conjunction with the Prospectus, dated January 28, 1998 (the "Prospectus"). 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. The most recent Annual
Report to Shareholders is attached to this Statement of Additional Information
and is hereby incorporated in this Statement of Additional Information by
reference.
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................................ 17
6. Custodian........................................................... 17
7. Principal Underwriter............................................... 17
8. Independent Public Accountants...................................... 18
9. Portfolio Transactions.............................................. 18
10. Tax Status.......................................................... 19
11. Description of Shares............................................... 24
12. Certain Liabilities................................................. 24
13. Letter of Intent.................................................... 25
14. Systematic Withdrawal Plan.......................................... 26
15. Determination of Net Asset Value.................................... 26
16. Investment Results.................................................. 27
17. Financial Statements................................................ 30
Appendix A.......................................................... 31
Appendix B.......................................................... 46
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
1
<PAGE>
1. INVESTMENT POLICIES AND RESTRICTIONS
The Prospectus 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. Capitalized
terms not otherwise defined herein have the meaning given to them in the
Prospectus.
The following policies and restrictions supplement those discussed in the
Prospectus. Whenever an investment policy or restriction states a maximum
percentage of the Fund's assets that may be invested in any security or presents
a policy regarding quality standards, 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 objective and policies.
LENDING OF PORTFOLIO SECURITIES
The Fund may lend portfolio securities to member firms of the Exchange under
agreements which would require that the loans be secured continuously by
collateral in cash, cash equivalents or 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 enter into 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 transactions in forward
foreign currency contracts will be limited to hedging either specific
transactions or portfolio positions. Transaction hedging is the purchase or sale
of forward foreign currency contracts with respect to
2
<PAGE>
specific receivables or payables of the Fund, accrued in connection with
the purchase and sale of its portfolio securities denominated in foreign
currencies. Portfolio hedging is the use of forward foreign currency contracts
to offset portfolio security positions denominated or quoted in such foreign
currencies. There is no guarantee that the Fund will be engaged in hedging
activities when adverse exchange rate movements occur. The Fund 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 it anticipates. The cost to the Fund of
engaging in foreign currency transactions varies with such factors as the
currency involved, the size of the contract, the length of the contract period
and the market conditions then prevailing. Since transactions in foreign
currency and forward contracts are usually conducted on a principal basis, no
fees or commissions are involved. The Fund may close out a forward position in a
currency by selling the forward contract or 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 real estate investment
trusts ("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
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
3
<PAGE>
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 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-Cap 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 500 Stock Index.
INVESTMENT RESTRICTIONS
FUNDAMENTAL INVESTMENT RESTRICTIONS. The Fund has adopted certain investment
restrictions which may not be changed without the affirmative vote of the
holders of a "majority" (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
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.
4
<PAGE>
(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 an 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 REITs 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.
It is the fundamental policy of the Fund not to concentrate its investments in
securities of companies in any particular industry. Following the current
opinion of the staff of the SEC, the Fund's investments are concentrated in a
particular industry if such investments aggregate 25% or more of the Fund's
total assets. The Fund's policy does not apply to investments in U.S. Government
Securities.
The Fund does not intend to enter into any reverse repurchase agreement, lend
portfolio securities or invest in securities index put and call warrants, as
described in fundamental investment restrictions (2), (7) and (8) above, during
the coming year.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. The following restrictions have been
designated as non-fundamental and may be changed by a vote of the Fund's Board
of Trustees without approval of shareholders.
The Fund may not:
(1) purchase 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
5
<PAGE>
(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 in equity 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 officers of the Fund are responsible for the Fund's
operations. The Trustees and executive officers of the Fund are listed below,
together with their principal occupations during the past five years. An
asterisk indicates those Trustees who are interested persons of the Fund within
the meaning of the 1940 Act.
JOHN F. COGAN, JR.*, CHAIRMAN OF THE BOARD, PRESIDENT AND TRUSTEE, DOB:
JUNE 1926
President, Chief Executive Officer and a Director of The Pioneer Group,
Inc. ("PGI"); Chairman and a Director of Pioneering Management Corporation
("PMC") and Pioneer Funds Distributor, Inc. ("PFD"); Director of Pioneering
Services Corporation ("PSC"), Pioneer Capital Corporation ("PCC"), Pioneer Real
Estate Advisors, Inc., Pioneer Forest, Inc., Pioneer Explorer, Inc., Pioneer
Management (Ireland) Ltd. ("PMIL") and Closed Joint Stock Company
"Forest-Starma"; President and Director of Pioneer Metals and Technology, Inc.
("PMT"), Pioneer International Corp. ("PIntl"), Pioneer First Russia, Inc.
("First Russia") and Pioneer Omega, Inc. ("Omega"); Chairman of the Board and
Director of Pioneer Goldfields Limited ("PGL") and Teberebie Goldfields Limited;
Chairman of the Supervisory Board of Pioneer Fonds Marketing, GmbH, Pioneer
First Polish Trust Fund Joint Stock Company, S.A. and Pioneer Czech Investment
Company, A.S.; Chairman, President and Trustee of all of the Pioneer mutual
funds; Director of Pioneer Global Equity Fund Plc, Pioneer Global Bond Fund Plc,
Pioneer DM Cashfonds Plc, Pioneer European Equity Fund Plc, Pioneer Central and
Eastern Europe Fund Plc and Pioneer US Real Estate Fund Plc; and Partner, Hale
and Dorr LLP (counsel to PGI and the Fund).
6
<PAGE>
MARY K. BUSH, TRUSTEE, DOB: APRIL 1948
4201 CATHEDRAL AVENUE, NW, WASHINGTON, DC 20016
President, Bush & Co., an international financial advisory firm;
Director and Trustee of Mortgage Guaranty Insurance Corporation, Novecon
Management Company, Hoover Institution, Folger Shakespeare Library, March of
Dimes, Project 2000, Inc., Small Enterprise Assistance Fund and Wilberforce
University; Advisory Board Member, Washington Mutual Investors Fund, a
registered investment company; and Trustee of all the Pioneer mutual funds,
except Pioneer Variable Contracts Trust.
RICHARD H. EGDAHL, M.D., TRUSTEE, DOB: DECEMBER 1926
BOSTON UNIVERSITY HEALTH POLICY INSTITUTE, 53 BAY STATE ROAD, BOSTON, MA 02115
Professor of Management, Boston University School of Management;
Professor of Public Health, Boston University School of Public Health; Professor
of Surgery, Boston University School of Medicine; Director, Boston University
Health Policy Institute and Boston University Medical Center; Executive Vice
President and Vice Chairman of the Board, University Hospital; Academic Vice
President for Health Affairs, Boston University; Director, Essex Investment
Management Company, Inc. (investment adviser), Health Payment Review, Inc.
(health care containment software firm), Mediplex Group, Inc. (nursing care
facilities firm), Peer Review Analysis, Inc. (health care facilities firm) and
Springer-Verlag New York, Inc. (publisher); Honorary Trustee, Franciscan
Children's Hospital; and Trustee of all of the Pioneer mutual funds.
MARGARET B.W. GRAHAM, TRUSTEE, DOB: MAY 1947
THE KEEP, P.O. BOX 110, LITTLE DEER ISLE, ME 04650
Founding Director, The Winthrop Group, Inc. (consulting firm); Manager
of Research Operations, Xerox Palo Alto Research Center, from 1991 to 1994;
Professor of Operations Management and Management of Technology and Associate
Dean, Boston University School of Management, from 1989 to 1993; and Trustee of
all the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
JOHN W. KENDRICK, TRUSTEE, DOB: JULY 1917
6363 WATERWAY DRIVE, FALLS CHURCH, VA 22044
Professor Emeritus, George Washington University; Director, American
Productivity and Quality Center; Adjunct Scholar, American Enterprise Institute;
and Trustee of all of the Pioneer mutual funds, except Pioneer Variable
Contracts Trust.
MARGUERITE A. PIRET, TRUSTEE, DOB: MAY 1948
ONE BOSTON PLACE, SUITE 2635, BOSTON, MA 02108
President, Newbury, Piret & Company, Inc. (merchant banking firm);
Trustee of Boston Medical Center; Member of the Board of Governors of the
Investment Company Institute; and Trustee of all of the Pioneer mutual funds.
DAVID D. TRIPPLE*, TRUSTEE AND EXECUTIVE VICE PRESIDENT, DOB: FEBRUARY 1944
Executive Vice President and a Director of PGI; President, Chief
Investment Officer and a Director of PMC; Director of PFD, PCC, PIntl, First
Russia, Omega, Pioneer SBIC Corporation ("Pioneer SBIC"), PMIL, Pioneer Global
Equity Fund Plc, Pioneer Global Bond Fund Plc, Pioneer DM
7
<PAGE>
Cashfonds Plc, Pioneer European Equity Fund Plc, Pioneer Central and
Eastern Europe Fund Plc and Pioneer US Real Estate Fund Plc; and Executive Vice
President and Trustee of all of the Pioneer mutual funds.
STEPHEN K. WEST, TRUSTEE, DOB: SEPTEMBER 1928
125 BROAD STREET, NEW YORK, NY 10004
Partner, Sullivan & Cromwell (law firm); Trustee, The Winthrop Focus
Funds (mutual funds); and Trustee of all of the Pioneer mutual funds.
JOHN WINTHROP, TRUSTEE, DOB: JUNE 1936
ONE NORTH ADGERS WHARF, CHARLESTON, SC 29401
President, John Winthrop & Co., Inc. (private investment firm); Director of
NUI Corp. (energy sales, services and distribution); Trustee of Alliance Capital
Reserves, Alliance Government Reserves and Alliance Tax Exempt Reserves; and
Trustee of all of the Pioneer mutual funds, except Pioneer Variable Contracts
Trust.
WILLIAM H. KEOUGH, TREASURER, DOB: APRIL 1937
Senior Vice President, Chief Financial Officer and Treasurer of PGI;
Treasurer of PFD, PMC, PSC, PCC, PIntl, PMT, PGL, First Russia, Omega and
Pioneer SBIC; and Treasurer of all of the Pioneer mutual funds.
JOSEPH P. BARRI, SECRETARY, DOB: AUGUST 1946
Corporate Secretary of PGI and most of its subsidiaries; Secretary of
all of the Pioneer mutual funds; and Partner, Hale and Dorr LLP.
ERIC W. RECKARD, ASSISTANT TREASURER, DOB: JUNE 1956
Manager of Fund Accounting of PMC since May 1994; Manager of Auditing,
Compliance and Business Analysis for PGI prior to May 1994; and Assistant
Treasurer of all of the Pioneer mutual funds.
ROBERT P. NAULT, ASSISTANT SECRETARY, DOB: MARCH 1964
General Counsel and Assistant Secretary of PGI since 1995; Assistant
Secretary of PMC, PIntl, PGL, First Russia, Omega and all of the Pioneer mutual
funds; Assistant Clerk of PFD and PSC; and junior partner of Hale and Dorr prior
to 1995.
STEVEN C. CARHART, VICE PRESIDENT, DOB: NOVEMBER 1948
Vice President of PMC since July 1996; formerly a portfolio manager for
a number of investment advisers.
The Fund's Agreement and Declaration of Trust, dated January 12, 1996
(the "Declaration"), provides that the holders of two-thirds of its outstanding
shares may vote to remove a Trustee of the Fund at any meeting of shareholders.
See "Description of Shares" below. The business address of all officers is 60
State Street, Boston, Massachusetts 02109.
8
<PAGE>
All of the outstanding capital stock of PFD, PMC and PSC is owned,
directly or indirectly, by PGI, a publicly owned Delaware corporation. PMC, the
Fund's investment adviser, serves as the investment adviser for the Pioneer
mutual funds listed below and manages the investments of certain institutional
accounts.
The table below lists all of 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 International Growth Fund PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer World Equity Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer India Fund PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Mid-Cap Fund PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Micro-Cap Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Balanced Fund PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer Interest Shares PMC Note 1
Pioneer Variable Contracts Trust PMC Note 2
- ---------------------------------------- ----------------------- ---------------
Note 1 This fund is a closed-end fund.
Note 2 This is a series of ten 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.
9
<PAGE>
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 14% of
such shares. As of the date of this Statement of Additional Information, the
Trustees and officers of the Fund owned beneficially in the aggregate less than
1% of the outstanding shares of the Fund. As of December 31, 1997, PFD, 60 State
Street, Boston, MA 02109 owned approximately 13.18% (6,926) of the outstanding
Class C shares of the Fund; Merrill Lynch Pierce Fenner & Smith Inc., 4800 Deer
Lake Drive East 3rd Fl, Jacksonville, FL 32246-6484 owned approximately 20.91%
(10,988) of the outstanding Class C shares of the Fund; Retirement Accounts &
Co, FBO Wayne E. Thomson, Box 173785, Denver, CO 80217-3785 owned approximately
5.31% (2,791) of the outstanding Class C shares of the Fund; and PaineWebber for
the Benefit of William E. Einstein and Gay L. Einstein, 1323 Titania Lane,
McLean, VA 22102-2750 owned approximately 5.02% (2,641) of the outstanding Class
C shares of the Fund.
COMPENSATION OF OFFICERS AND TRUSTEES
The Fund pays no salaries or compensation to any of its officers. The Fund will
pay an annual trustee's fee to each Trustee who is not affiliated with PMC, PGI,
PFD or PSC consisting of two components: (a) a base fee of $500 and (b) a
variable fee, calculated on the basis of the average net assets of the Fund. In
addition, the Fund will pay a per meeting fee of $100 to each Trustee who is not
affiliated with PMC, PGI, PFD or PSC. The Fund also will pay an annual committee
participation fee to Trustees who serve as members of committees established to
act on behalf of one or more of the Pioneer mutual funds. Committee fees will be
allocated to the Fund on the basis of the Fund's average net assets. Each
Trustee who is a member of the Audit Committee for the Pioneer mutual funds will
receive an annual fee equal to 10% of the aggregate annual trustee's fee, except
the Committee Chair who will receive an annual trustee's fee equal to 20% of the
aggregate annual trustee's fee. Members of the Pricing Committee for the Pioneer
mutual funds, as well as any other committee which renders material functional
services to the Boards of Trustees for the Pioneer mutual funds, will receive an
annual fee equal to 5% of the annual trustee's fee, except the Committee Chair
who will receive an annual trustee's fee equal to 10% of the annual trustee's
fee. Any such fees paid to affiliates or interested persons of PGI, PMC, PFD or
PSC are reimbursed to the Fund under its management contract.
The following table sets forth certain information with respect to the
compensation of each Trustee of the Fund.
10
<PAGE>
<TABLE>
<CAPTION>
- ------------------------ ---------------------- ------------------------ --------------------------
PENSION OR RETIREMENT TOTAL COMPENSATION FROM
BENEFITS ACCRUED AS THE FUND AND OTHER
AGGREGATE PART OF FUND EXPENSES PIONEER MUTUAL FUNDS**
COMPENSATION FROM
NAME OF TRUSTEE THE FUND*
- ------------------------ ---------------------- ------------------------ --------------------------
<S> <C> <C> <C>
John F. Cogan, Jr. $ 500.00 $0 $ 12,000.00
Mary K. Bush 706.00 30,000.00
Richard H. Egdahl, M.D. 2,967.00 0 62,000.00
Margaret B.W. Graham 3,067.00 0 60,000.00
John W. Kendrick 2,867.00 0 55,800.00
Marguerite A. Piret 4,075.00 0 80,000.00
David D. Tripple 500.00 0 12,000.00
Stephen K. West 3,188.00 0 63,800.00
John Winthrop 3,419.00 0 69,000.00
-------- - ---------
$ 21,289.00 $0 444,600.00
- ------------------------ ---------------------- ------------------------ --------------------------
</TABLE>
* For the fiscal year ended September 30, 1997.
** For the calendar year ended December 31, 1997.
3. INVESTMENT ADVISER
The Fund has contracted with PMC, 60 State Street, Boston, Massachusetts 02109,
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 60 days' written notice
by vote of the Board of Directors or Trustees or a majority of the Fund's
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 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
12
<PAGE>
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 Class A shares of
the Fund for the performance period exceeds, or is exceeded by, the record of
the Standard & Poor's MidCap 400 Index of mid-capitalization stocks (the
"Index") over the same period. The Index is comprised of 400 domestic stocks
chosen for market size (with company market capitalization ranging from $213
million to $13.74 billion as of December 1997), liquidity and industry group
representation. It is a market-value weighted index and was the first benchmark
of midcap stock price movement. 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 +/- 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 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 of the Fund's
Class A shares. For purposes of calculating the performance adjustment, any
dividends or capital gains distributions paid by the Fund are treated as if
reinvested in Class A 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 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 Class A shares 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 Class A 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
12
<PAGE>
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.
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.
The Basic Fee is computed daily, the performance fee is calculated once each
month and the entire management fee, allocated in proportion to the average
daily net assets of each class of shares, is normally paid monthly.
Phase-In of Performance Adjustment
For the period February 1, 1996 through June 30, 1996, the management fee was
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 (the fee rate under a management contract prior to February 1, 1996).
Because the performance adjustment operated on a prospective basis only, neither
investment results nor average assets from periods prior to February 1, 1996
were considered in the initial implementation of the performance based fee.
Additionally, a performance adjustment increasing the Basic Fee was permitted
starting in January 1997 after a 12-month performance record had accrued.
Performance adjustments that had the effect of lowering the Basic Fee started in
July 1996 after a 6-month performance record had accrued.
Accordingly, starting with July 1996, the Basic Fee took effect and was adjusted
for the relative performance of the Fund and the record of the Index from
February 1, 1996 onward which had the effect of lowering the Basic Fee. Starting
with January, 1997, the Basic Fee was adjusted to reflect both increases and
decreases based upon the Fund's 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 the fiscal year ended September 30, 1995 and for the period October 1,
1995 through June 30, 1996, the Fund paid or owed total management fees to PMC
of approximately $4,701,000 and $3,550,000, respectively, pursuant to the prior
management contract. For the period July 1, 1996
13
<PAGE>
through September 30, 1996 and the fiscal year ended September 30, 1997,
under the current management contract, the Fund paid or owed total management
fees to PMC of approximately $1,385,000 and $4,849,000, respectively.
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 or compensated by the Fund under the distribution plans
(discussed below). PFD bears all expenses it incurs in providing services under
the Underwriting Agreement. Such expenses include compensation to its employees
and representatives and to securities dealers for distribution related services
performed for the Fund. PFD also pays certain expenses in connection with the
distribution of the Fund's shares, including the cost of preparing, printing and
distributing advertising or promotional materials, and the cost of printing and
distributing prospectuses and supplements to prospective shareholders. The Fund
bears the cost of registering its shares under federal 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 the
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 shares.
CLASS B PLAN
The Class B Plan provides that the Fund shall pay PFD, as the Fund's distributor
for its Class B shares, a daily distribution fee equal on an annual basis to
0.75% of the Fund's average daily net assets attributable to Class B shares and
will pay PFD a service fee equal to 0.25% of the Fund's average daily net assets
attributable to Class B shares (which PFD will in turn pay to securities dealers
which enter into a sales agreement with PFD at a rate of up to 0.25% of the
Fund's average daily net assets attributable to Class B shares owned by
investors for whom that securities dealer is the holder or dealer of record).
This service fee is intended to be in consideration of personal services and/or
account maintenance services rendered by the dealer with respect to Class B
shares. PFD will advance to
14
<PAGE>
dealers the first-year service fee at a rate equal to 0.25% of the amount
invested. As compensation therefor, PFD may retain the service fee paid by the
Fund with respect to such shares for the first year after purchase. Dealers will
become eligible for additional service fees with respect to such shares
commencing in the thirteenth month following purchase. Dealers may from time to
time be required to meet certain other criteria in order to receive service
fees. PFD or its affiliates are entitled to retain all service fees payable
under the Class B Plan for which there is no dealer of record or for which
qualification standards have not been met as partial consideration for personal
services and/or account maintenance services performed by PFD or its affiliates
for shareholder accounts.
The purpose of distribution payments to PFD under the Class B Plan is to
compensate PFD for its distribution services with respect to Class B 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 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.) When a broker-dealer sells Class B
shares and elects, with PFD's approval, to waive its right to receive the
commission normally paid at the time of the sale, PFD may cause all or a portion
of the distribution fees described above to be paid to the broker-dealer.
CLASS C PLAN
The Class C Plan provides that the Fund will pay PFD, as the Fund's distributor
for its Class C shares, a distribution fee accrued daily and paid quarterly,
equal on an annual basis to 0.75% of the Fund's average daily net assets
attributable to Class C shares and will pay PFD a service fee equal to 0.25% of
the Fund's average daily net assets attributable to Class C shares. PFD will in
turn pay to securities dealers which enter into a sales agreement with PFD a
distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the Fund's average daily net assets attributable to Class C
shares owned by investors for whom that securities dealer is the holder or
dealer of record. The service fee is intended to be in consideration of personal
services and/or account maintenance services rendered by the dealer with respect
to Class C shares. PFD will advance to dealers the first-year 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,
15
<PAGE>
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.) When a broker-dealer sells Class
C shares and elects, with PFD's approval, to waive its right to receive the
commission normally paid at the time of the sale, PFD may cause all or a portion
of the distribution fees described above to be paid to the broker-dealer.
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 the Fund and its current and
future shareholders. Under their terms, the Plans remain in effect from year to
year provided such continuance is approved annually by vote of the Trustees in
the manner described above. The Plans may not be amended to increase materially
the annual percentage limitation of average net assets which may be spent for
the services described therein without approval of the shareholders of the Fund
affected thereby, and material amendments 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 (as defined in the 1940 Act) of the respective
Class of the Fund. A Plan will automatically terminate in the event of its
assignment (as defined in the 1940 Act).
During the fiscal year ended September 30, 1997, the Fund incurred total
distribution fees pursuant to the Fund's Class A Plan, Class B Plan and Class C
Plan, respectively, as follows: $1,814,000, $32,000 and $5,000. Distribution
fees were paid by the Fund to PFD in reimbursement of or compensation for
expenses related to servicing of shareholder accounts and to compensating
dealers and sales personnel.
Upon redemption, Class A shares may be subject to a 1% CDSC, Class B shares are
subject to a CDSC at a rate declining from a maximum 4% of the lower of the cost
or market value of the shares and Class C shares are subject to a 1% CDSC.
During the fiscal year ended September 30, 1997, CDSCs in the
16
<PAGE>
amount to approximately $11,000 were paid to PFD in reimbursement of or
compensation for expenses related to servicing of shareholders' accounts and
compensation paid to dealers and sales personnel.
5. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with PSC, 60 State Street, Boston, Massachusetts 02109,
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 90 days' written notice.
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 $22.75 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. The Fund may compensate entities which have agreed to provide certain
sub-accounting services such as specific transaction processing and
recordkeeping services. Any such payments by the Fund would be in lieu of the
per account fee which would otherwise be paid by the Fund to PSC.
6. CUSTODIAN
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts 02109, is
the custodian (the "Custodian") of the Fund's assets. The Custodian's
responsibilities include safekeeping and controlling the Fund's cash and
securities, 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, 60 State Street, Boston, Massachusetts 02109, 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, 1995, September 30, 1996 and September 30, 1997 total underwriting
commissions paid to PFD in connection with the offering of Class A shares of the
Fund were approximately $1,409,000, $1,001,000 and $826,000, respectively.
Commissions reallowed to dealers during the same periods were approximately
$1,224,000, $870,000 and $717,000, respectively.
17
<PAGE>
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.
8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, 225 Franklin Street, 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 SEC.
9. PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on behalf
of the Fund by PMC pursuant to authority contained in the 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 or other accounts 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 or
accounts managed by PMC are placed with broker-dealers (including broker-dealers
on the listing) without regard to the furnishing of such services, it is not
possible to estimate the proportion of such transactions directed to such
dealers solely because such services were provided.
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
or other accounts 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.
18
<PAGE>
In circumstances where two or more broker-dealers offer comparable prices and
executions, preference may be given to a broker-dealer which has sold shares of
the Fund as well as shares of other investment companies or accounts managed by
PMC. This policy does not imply a commitment to execute all portfolio
transactions through all broker-dealers that sell shares of the Fund.
The 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, 1995, September 30, 1996 and
September 30, 1997 the Fund paid aggregate brokerage and underwriting
commissions of approximately $857,000, $2,105,000 and $1,440,000, respectively.
Differences in brokerage commissions reflected above were due to increased or
decreased portfolio activity and changes in net assets as a result of
shareholder transactions throughout the respective periods.
10. TAX STATUS
It is the Fund's policy to meet the requirements of Subchapter M of the Code for
qualification as a regulated investment company. These requirements relate to
the sources of the Fund's income, the diversification of its assets and the
distribution of its income to shareholders. If the Fund meets all such
requirements and distributes to its shareholders, in accordance with the Code's
timing requirements, all investment company taxable income and net capital gain,
if any, which it earns, the Fund will be relieved of the necessity of paying
federal income tax.
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<PAGE>
In order to qualify as a regulated investment company under Subchapter M, the
Fund must, among other things, derive at least 90% of its annual gross income
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock, securities or foreign currencies, and
certain other income derived with respect to its business of investing in such
stock, securities or currencies (the "90% income test"), and satisfy certain
annual distribution and quarterly diversification requirements.
Dividends from investment company taxable income, which includes net investment
income, net short-term capital gain in excess of net long-term capital loss, and
certain net foreign exchange gains, are taxable as ordinary income, whether
received in cash or reinvested in additional shares. Dividends from net
long-term capital gain in excess of net short-term capital loss ("net capital
gain"), if any, whether received in cash or reinvested in additional shares, are
taxable to the Fund's shareholders as capital gains for federal income tax
purposes without regard to the length of time shares of the Fund have been held.
As a result of the enactment of the Taxpayer Relief Act of 1997 (the "1997 TRA")
on August 5, 1997, gain recognized after May 6, 1997 from the sale of a capital
asset is taxable to individual (noncorporate) investors at different maximum
federal income tax rates, depending generally upon the tax holding period for
the asset, the federal income tax bracket of the taxpayer, and the dates the
asset was acquired and/or sold. The Treasury Department has issued guidance
under the 1997 TRA that (subject to possible modification by future "technical
corrections" legislation) enables the Fund to pass through to its shareholders
the benefits of the capital gains tax rates enacted in the 1997 TRA. The Fund
will provide appropriate information to its shareholders about its
distributions, including the tax rate(s) applicable to its distributions from
long-term capital gains, in accordance with this and any future guidance.
Shareholders should consult their own tax advisers on the correct application of
these new rules in their particular circumstances.
Any dividend declared by the Fund in October, November or December as of a
record date in such a month and paid during the following January will be
treated for federal income tax purposes as received by shareholders on December
31 of the calendar year in which it is declared.
Foreign exchange gains and losses realized by the Fund in connection with
certain transactions involving foreign currency-denominated debt securities,
foreign currency forward contracts, foreign currencies, or payables or
receivables denominated in a foreign currency are subject to Section 988 of the
Code, which generally causes such gains and losses to be treated as ordinary
income and losses and may affect the amount, timing and character of
distributions to shareholders. Under future regulations, any such transactions
that are not directly related to the Fund's investments in stock or securities
(or its options contracts with respect to stock or securities) may need to be
limited in order to enable the Fund to satisfy the 90% income test. If the net
foreign exchange loss for a year were to exceed the Fund's investment company
taxable income (computed without regard to such loss), the resulting ordinary
loss for such year would not be deductible by the Fund or its shareholders in
future years.
If the Fund acquires any equity interest (under proposed regulations, generally
including not only stock but also an option to acquire stock such as is inherent
in a convertible bond) in certain foreign corporations that receive at least 75%
of their annual gross income from passive sources (such as interest, dividends,
certain rents and royalties or capital gains) or hold at least 50% of their
assets in investments producing such passive income ("passive foreign investment
companies"), the Fund could be subject to federal income tax and additional
interest charges on "excess distributions" received from
20
<PAGE>
such companies or gain from the sale of stock in such companies, even if
all income or gain actually received by the Fund is timely distributed to its
shareholders. The Fund would not be able to pass through to its shareholders any
credit or deduction for such a tax. An election may generally be available that
would ameliorate these adverse tax consequences, but any such election could
require the Fund to recognize taxable income or gain (subject to tax
distribution requirements) without the concurrent receipt of cash. These
investments could also result in the treatment of associated capital gains as
ordinary income. The Fund may limit and/or manage its holdings in passive
foreign investment companies to minimize its tax liability or maximize its
return from these investments.
If the Fund invests in certain pay-in-kind securities ("PIKs"), zero coupon
securities, deferred interest securities or, in general, any other securities
with original issue discount (or with market discount if the Fund elects to
include market discount in income currently), the Fund must accrue income on
such investments for each taxable year, which generally will be prior to the
receipt of the corresponding cash payments. However, the Fund must distribute,
at least annually, all or substantially all of its net income, including such
accrued income, to shareholders to qualify as a regulated investment company
under the Code and avoid federal income and excise taxes. Therefore, the Fund
may have to dispose of its portfolio securities under disadvantageous
circumstances to generate cash, or may have to leverage itself by borrowing the
cash, to satisfy distribution requirements.
For federal income tax purposes, the Fund is permitted to carry forward a net
capital loss for any year to offset its capital gains, if any, during the eight
years following the year of the loss. To the extent subsequent capital gains are
offset by such losses, they would not result in federal income tax liability to
the Fund and therefore are not expected to be distributed as such to
shareholders. As of the end of its most recent taxable year, the Fund had no
capital loss carryforwards.
At the time of an investor's purchase of Fund shares, a portion of the purchase
price may be attributable to realized or unrealized appreciation in the Fund's
portfolio or undistributed taxable income of the Fund. Consequently, subsequent
distributions by the Fund on these shares from such appreciation or income may
be taxable to such investor even if the net asset value of the investor's shares
is, as a result of the distributions, reduced below the investor's cost for such
shares and the distributions economically represent a return of a portion of the
investment.
Redemptions and exchanges are taxable events for shareholders that are subject
to tax. Shareholders should consult their own tax advisers with reference to
their individual circumstances to determine whether any particular transaction
in Fund shares is properly treated as a sale for tax purposes, as the following
discussion assumes, and the character of and tax rate applicable to any gains or
losses recognized in such transactions under the new rate structure enacted in
the 1997 TRA. Any loss realized by a shareholder upon the redemption, exchange
or other disposition of shares with a tax holding period of six months or less
will be treated as a long-term capital loss to the extent of any amounts treated
as distributions of long-term capital gain with respect to such shares.
In addition, if Class A shares redeemed or exchanged have been held for less
than 91 days, (1) in the case of a reinvestment in the Fund at net asset value
pursuant to the reinvestment privilege, the sales charge paid on such shares is
not included in their tax basis under
21
<PAGE>
the Code, and (2) in the case of an exchange, all or a portion of the sales
charge paid on such shares is not included in their tax basis under the Code, to
the extent a sales charge that would otherwise apply to the shares received is
reduced pursuant to the exchange privilege. In either case, the portion of the
sales charge not included in the tax basis of the shares redeemed or surrendered
in an exchange is included in the tax basis of the shares acquired in the
reinvestment or exchange. Losses on redemptions or other dispositions of shares
may be disallowed under "wash sale" rules in the event of other investments in
the Fund (including those made pursuant to reinvestment of dividends and/or
capital gain distributions) within a period of 61 days beginning 30 days before
and ending 30 days after a redemption or other disposition of shares. In such a
case, the disallowed portion of any loss would be included in the federal tax
basis of the shares acquired in the other investments.
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
forward contracts may not have been performed or closed out. Forward contracts
relating to foreign currency are generally subject to Section 988, as described
above, and may accordingly produce ordinary income or loss. Additionally, the
Fund may be required to recognize gain if an option, forward contract, or other
transaction that is not subject to the mark to market rules is treated as a
"constructive sale" of an "appreciated financial position" held by the Fund
under Section 1259 of the Code. Any net mark to market gains and/or gains from
constructive sales may also have to be distributed to satisfy the distribution
requirements referred to above even though no corresponding cash amounts may
concurrently be received, possibly requiring the disposition of portfolio
securities or borrowing to obtain the necessary cash. Losses on certain 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 forward contracts) may also be deferred under the tax straddle rules of
the Code, which may also affect the characterization of capital gains or losses
from straddle positions and certain successor positions as long-term or
short-term. Certain tax elections may be available that would enable the Fund to
ameliorate some adverse effects of the tax rules described in this paragraph.
The tax rules applicable to forward contracts and straddles may affect the
amount, timing and character of the Fund's income and losses and hence of its
distributions to shareholders.
For purposes of the 70% dividends-received deduction generally available to
corporations under the Code, dividends received by the Fund from U.S. 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) extending before
and after each dividend held in an unleveraged position and distributed and
designated by the Fund may be treated as qualifying dividends. Any corporate
shareholder should consult its tax advisor regarding the possibility that its
tax basis in its shares may be reduced, for federal income tax purposes, by
reason of "extraordinary dividends" received with respect to the shares and, to
the extent such basis would be reduced below zero, current recognition of income
may be required. In order to qualify for the deduction, corporate shareholders
must meet the minimum holding period requirement stated above with respect to
their Fund shares, taking into account any holding period reductions from
certain hedging or other transactions or positions that diminish their risk of
loss with respect to their Fund shares, and, if they borrow to acquire or
otherwise incur debt attributable to Fund shares, they may be denied a portion
of the dividends- received deduction. The entire qualifying dividend, including
the otherwise deductible amount, will be included in determining the excess (if
any) of a corporation's adjusted current earnings over its alternative minimum
taxable income, which may increase a corporation's alternative minimum tax
liability.
22
<PAGE>
The Fund may be subject to withholding and other taxes imposed by foreign
countries, including taxes on interest, dividends and capital gains with respect
to its investments in those countries. Tax conventions between certain countries
and the U.S. may reduce or eliminate such taxes in some cases. The Fund does not
expect to satisfy the requirements for passing through to its shareholders their
pro rata shares of qualified foreign taxes paid by the Fund, with the result
that 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.
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 IRS Forms W-9, that the Social Security
Number or other Taxpayer Identification Number they provide is their correct
number and that they are not currently subject to backup withholding, or that
they are exempt from backup withholding. The Fund may nevertheless be required
to withhold if it receives notice from the IRS or a broker that the number
provided is incorrect or backup withholding is applicable as a result of
previous underreporting of interest or dividend income.
If, as anticipated, the Fund continues to qualify as a regulated investment
company under the Code, it will not be required to pay any Massachusetts income,
corporate excise or franchise taxes or any Delaware corporation income tax.
The description of certain federal tax provisions above relates only to U.S.
federal income tax consequences for shareholders who are U.S. persons, I.E. U.S.
citizens or residents or U.S. corporations, partnerships, trusts or estates, and
who are subject to U.S. federal income tax. This description does not address
the special tax rules that may be applicable to particular types of investors,
such as financial institutions, insurance companies, securities dealers, or
tax-exempt or tax-deferred plans, accounts or entities. Investors other than
U.S. persons may be subject to different U.S. tax treatment, including a
possible 30% non-resident alien U.S. withholding tax (or non- resident alien
withholding tax at a lower treaty rate) on amounts treated as ordinary dividends
from the Fund and, unless an effective IRS Form W-8 or authorized substitute for
Form W-8 is on file, to 31% backup withholding on certain other payments from
the Fund. Shareholders should consult their own tax advisers on these matters
and on state, local and other applicable tax laws.
23
<PAGE>
11. DESCRIPTION OF SHARES
The Declaration permits the Board of Trustees to authorize the issuance of an
unlimited number of full and fractional shares of beneficial interest which may
be divided into such separate series as the Trustees may establish. Currently,
the Fund consists of only one series. The Trustees may, however, establish
additional series of shares, and may divide or combine the shares into a greater
or lesser number of shares without thereby changing the proportionate beneficial
interests in the Fund. The Declaration further authorizes the Trustees to
classify or reclassify any series of the shares into one or more classes.
Pursuant thereto, the Trustees have authorized the issuance of three classes of
shares of the Fund, designated as Class A shares, Class B shares 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 Declaration without the affirmative vote of a
majority of the Fund's shares. Shares have no preemptive or conversion rights.
Shares are fully paid and non-assessable by the Fund, except as stated below.
12. CERTAIN LIABILITIES
The Fund (formerly 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 the Declaration. A copy of the Fund's Certificate of
Trust, 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 Declaration expressly provides that the Fund is organized
under the Delaware Act and that the Declaration is to be governed by Delaware
law. There is nevertheless a possibility that a Delaware business trust, such as
the Fund, might become a party
24
<PAGE>
to an action in another state whose courts refused to apply Delaware law,
in which case the trust's shareholders could become subject to personal
liability.
To guard against this risk, the Declaration (i) contains an express disclaimer
of shareholder liability for acts or obligations of the Fund and provides that
notice of such disclaimer may be given in each agreement, obligation or
instrument entered into or executed by the Fund or its Trustees, (ii) provides
for the indemnification out of Fund property of any shareholders held personally
liable for any obligations of the Fund or any series of the Fund and (iii)
provides that the Fund shall, upon request, assume the defense of any claim made
against any shareholder for any act or obligation of the Fund and satisfy any
judgment thereon. Thus, the risk of a shareholder incurring financial loss
beyond his or her investment because of shareholder liability is limited to
circumstances in which all of the following factors are present: (1) a court
refused to apply Delaware law; (2) the liability arose under tort law or, if
not, no contractual limitation of liability was in effect; and (3) the Fund
itself would be unable to meet its obligations. In light of Delaware law, the
nature of the Fund's business and the nature of its assets, the risk of personal
liability to a Fund shareholder is remote.
The Declaration further provides that the Fund shall indemnify each of its
Trustees and officers against liabilities and expenses reasonably incurred by
them, in connection with, or arising out of, any action, suit or proceeding,
threatened against or otherwise involving such Trustee or officer, directly or
indirectly, by reason of being or having been a Trustee or officer of the Fund.
The Declaration does not authorize the Fund to indemnify any Trustee or officer
against any liability to which he or she would otherwise be subject by reason of
or for willful misfeasance, bad faith, gross negligence or reckless disregard of
such person's duties.
13. LETTER OF INTENT (CLASS A ONLY)
A Letter of Intent ("LOI") may be established by completing the LOI section of
the Account Application. When you sign the Account Application, you agree to
irrevocably appoint PSC your attorney-in-fact to surrender for redemption any or
all shares held in escrow with full power of substitution. An LOI is not a
binding obligation upon the investor to purchase, or the Fund to sell, the full
amount indicated.
If the total purchases, less redemptions, exceed the amount specified under the
LOI and are in an amount which would qualify for a further quantity discount,
all transactions will be recomputed on the expiration date of the LOI to effect
the lower sales charge. Any difference in the sales charge resulting from such
recomputation will be either delivered to you in cash or invested in additional
shares at the lower sales charge. The dealer, by signing the Account
Application, agrees to return to PFD, as part of such retroactive adjustment,
the excess of the commission previously reallowed or paid to the dealer over
that which is applicable to the actual amount of the total purchases under the
LOI.
If the total purchases, less redemptions, are less than the amount specified
under the LOI, you must remit to PFD any difference between the sales charge on
the amount actually purchased and the amount originally specified in the LOI
section of the Account Application. When the difference is paid, the shares held
in escrow will be deposited to your account. If you do not pay the difference in
sales charge within 20 days after written request from PFD or your dealer, PSC,
after receiving instructions from PFD,
25
<PAGE>
will redeem the appropriate number of shares held in escrow to realize the
difference and release any excess. See "How to Purchase Fund Shares - Letter of
Intent" in the Prospectus for more information.
14. SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan ("SWP") is designed to provide a convenient
method of receiving fixed payments at regular intervals from 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 payments 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 the applicant. Class B
accounts must meet the minimum initial investment requirement prior to
establishing a SWP. Withdrawals from Class B share accounts are limited to 10%
of the value of the account at the time the SWP is established. See "Waiver or
Reduction of Contingent Deferred Sales Charge" in the Prospectus. Designation of
another person to receive the payments subsequent to opening an account must be
accompanied by a signature guarantee.
Any income dividends or capital gains distributions on shares under the SWP will
be credited to the SWP account on the payment date in full and fractional shares
at the net asset value per share in effect on the record date.
SWP payments are made from the proceeds of the redemption of shares deposited
under the SWP in a SWP account. To the extent that such redemptions for periodic
withdrawals exceed dividend income reinvested in the SWP account, such
redemptions will reduce and may ultimately exhaust the number of shares
deposited in the Plan account. Redemptions are potentially 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.
The SWP may be terminated at any time (1) by written notice to PSC or from PSC
to the shareholder; (2) upon receipt by PSC of appropriate evidence of the
shareholder's death; or (3) when all shares under the SWP have been redeemed.
15. 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, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The net asset value per share of each class of the Fund is also determined on
any other day in which the level of trading in its portfolio securities is
sufficiently high 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 in good order for the shares of the Fund are received and no
shares are tendered for redemption.
26
<PAGE>
The net asset value per share of each class of the Fund is computed by taking
the value of all of the Fund's assets attributable to a class, less the Fund's
liabilities attributable to that class, and dividing the result by the number of
outstanding shares of 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.
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; STANDARD & POOR'S MIDCAP 400 INDEX (the "S&P 400," described
above); STANDARD & POOR'S 500 STOCK INDEX (the "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 Exchange; or the
RUSSELL U.S. EQUITY INDEXES or the WILSHIRE TOTAL MARKET VALUE INDEX, which are
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.
27
<PAGE>
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
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 SEC.
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 [superscript] = 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
28
<PAGE>
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%.
In determining the average annual total return (calculated as provided above),
recurring fees, if any, that are charged to all shareholder accounts of a
particular class of shares are taken into consideration. For any account fees
that vary with the size of the account, the account fee used for purposes of the
above computation is assumed to be the fee that would be charged to a class's
mean account size.
The total returns for each Class of shares of the Fund as of September 30, 1997,
are as follows:
<TABLE>
<CAPTION>
Average Annual Total Return (%)
- ----------------- ------------------ ---------------- ---------------------- ---------------
SINCE
ONE YEAR FIVE YEARS TEN YEARS INCEPTION*
- ----------------- ------------------ ---------------- ---------------------- ---------------
- ----------------- ------------------ ---------------- ---------------------- ---------------
<S> <C> <C> <C> <C>
Class A Shares 14.37 12.72 10.54 13.18
- ----------------- ------------------ ---------------- ---------------------- ---------------
- ----------------- ------------------ ---------------- ---------------------- ---------------
Class B Shares 15.87 N/A N/A 15.88
- ----------------- ------------------ ---------------- ---------------------- ---------------
- ----------------- ------------------ ---------------- ---------------------- ---------------
Class C Shares 21.07 N/A N/A 18.96
- ----------------- ------------------ ---------------- ---------------------- ---------------
</TABLE>
*Inception was November 19, 1982 for Class A shares. Class B shares and Class C
shares were first offered February 1, 1996.
AUTOMATED INFORMATION LINE
FactFoneSM, Pioneer's 24-hour automated information line, allows shareholders to
dial toll-free 1-800-225-4321 and hear recorded fund information, including:
o net asset value prices for all Pioneer mutual funds;
o annualized 30-day yields on Pioneer's fixed income
funds;
o annualized 7-day yields and 7-day effective
(compound) yields for Pioneer's money market fund;
and
o dividends and capital gains distributions on all
Pioneer mutual funds.
29
<PAGE>
Yields are calculated in accordance with SEC mandated standard formulas.
In addition, by using a personal identification number ("PIN"),
shareholders may enter purchases, exchanges and redemptions, access their
account balances and last three transactions and may order a duplicate
statement. See "FactFoneSM" in the Prospectus for more information.
All performance numbers communicated through FactFoneSM represent past
performance, and 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 Cash Reserves Fund, which seeks to maintain a stable
$1.00 share price) will also vary, and such shares may be worth more or less at
redemption than their original cost.
17. FINANCIAL STATEMENTS
The Fund's financial statements for the fiscal year ended September 30, 1997 and
the Report of Independent Public Accountants contained in the Fund's Annual
Report for that fiscal year end have been included in reliance upon the report
of Arthur Andersen LLP, independent public accountants, as experts in accounting
and auditing. The Fund's Annual Report, filed with the SEC on November 21, 1997
(Accession No. 0000706155-97-000013), is 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
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 [superscript]
MOODY'S INVESTORS SERVICE, INC.2 [superscript]
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 [superscript] THE RATINGS INDICATED HEREIN ARE BELIEVED TO BE THE MOST
RECENT RATINGS AVAILABLE AT THE DATE OF THIS STATEMENT OF ADDITIONAL INFORMATION
FOR THE SECURITIES LISTED. RATINGS ARE GENERALLY GIVEN TO SECURITIES AT THE TIME
OF ISSUANCE. WHILE THE RATING AGENCIES MAY FROM TIME TO TIME REVISE SUCH
RATINGS, THEY UNDERTAKE NO OBLIGATION TO DO SO, AND THE RATINGS INDICATED DO NOT
NECESSARILY REPRESENT RATINGS WHICH WILL BE GIVEN TO THESE SECURITIES ON THE
DATE OF THE FUND'S FISCAL YEAR-END.
2 [superscript] 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 GROUP3 [superscript]
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 [superscript] RATES ALL GOVERNMENTAL BODIES HAVING $1,000,000 OR MORE OF
DEBT OUTSTANDING, UNLESS ADEQUATE INFORMATION IS NOT AVAILABLE.
<PAGE>
PIONEER MID-CAP FUND
CLASS A
<TABLE>
<CAPTION>
DATE INITIAL OFFERING PRICE SALES CHARGE SHARES PURCHASED NET ASSET VALUE INITIAL NET ASSET
INVESTMENT INCLUDED PER SHARE VALUE
<S> <C> <C> <C> <C> <C> <C>
11/19/82 $10,000 $10.61 5.75% 942.507 $10.00 $9,425
</TABLE>
<TABLE>
<CAPTION>
DIVIDENDS AND CAPITAL GAINS REINVESTED
VALUE OF SHARES
DATE FROM INVESTMENT FROM CAPITAL GAINS FROM DIVIDENDS TOTAL VALUE
REINVESTED REINVESTED
<S> <C> <C> <C> <C>
12/31/82 $9,425 $0 $0 $9,425
12/31/83 $11,941 $161 $140 $12,242
12/31/84 $12,055 $335 $438 $12,828
12/31/85 $14,194 $803 $917 $15,914
12/31/86 $14,307 $2,094 $1,295 $17,696
12/31/87 $11,414 $3,381 $1,502 $16,297
12/31/88 $13,874 $5,060 $2,251 $21,185
12/31/89 $15,108 $7,311 $3,100 $25,519
12/31/90 $12,055 $7,039 $3,119 $22,213
12/31/91 $15,919 $9,579 $4,813 $30,311
12/31/92 $18,190 $12,106 $6,099 $36,395
12/31/93 $19,416 $15,856 $7,012 $42,284
12/31/94 $16,984 $16,297 $6,612 $39,893
12/31/95 $18,407 $21,522 $7,673 $47,602
12/31/96 $18,897 $26,818 $8,307 $54,022
12/31/97 $17,021 $33,402 $7,483 $57,906
</TABLE>
<TABLE>
<CAPTION>
PIONEER MID-CAP FUND
CLASS B
Date Initial Offering Price Shares Purchased Net Asset Value per Initial Net Asset
Investment Share Value CDSC
<S> <C> <C> <C> <C> <C> <C>
2/1/96 $10,000 $19.28 518.672 $19.28 $10,000 4.00%
</TABLE>
<TABLE>
<CAPTION>
DIVIDENDS AND CAPITAL GAINS REINVESTED
VALUE OF SHARES
Date From Investment From Capital Gains From Dividends Contingent Deferred Total Value CDSC
Reinvested Reinvested Sales Charge
<S> <C> <C> <C> <C> <C> <C>
12/31/96 $10,321 $1,004 $81 $400 $11,006 4.00%
12/31/97 $9,129 $2,853 $72 $365 $11,689 4.00%
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
PIONEER MID-CAP FUND
CLASS C
Date Initial Offering Price Shares Purchased Net Asset Value per Initial Net Asset CDSC
Investment Share Value
<S> <C> <C> <C> <C> <C> <C>
2/1/96 $10,000 $19.28 518.672 $19.28 $10,000 1.00%
</TABLE>
<TABLE>
<CAPTION>
DIVIDENDS AND CAPITAL GAINS REINVESTED
VALUE OF SHARES
Date From Investment From Capital Gains From Dividends Contingent Deferred Total Value CDSC
Reinvested Reinvested Sales Charge
<S> <C> <C> <C> <C> <C> <C>
12/31/96 $10,368 $1,001 $61 $100 $11,330 1.00%
12/31/97 $9,304 $2,860 $55 $0 $12,219 0.00%
</TABLE>
34
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
The following securities indices are well known, unmanaged measures of market
performance. Advertisements and sales literature for the Fund may refer to these
indices or may present comparisons between the performance of the Fund and one
or more of the indices. Other indices may also be used, if appropriate. The
indices are not available for direct investment. The data presented are not
meant to be indicative of the performance of the Fund, do not reflect past
performance and do not guarantee future results.
S&P 500
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P 500 includes 500 of
the largest stocks (in terms of stock market value) in the U.S.
DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of stocks of 30 blue chip
companies widely held by individuals and institutional investors. The 30 stocks
represent about a fifth of the $8 trillion-plus market value of all U.S. stocks
and about a fourth of the value of stocks listed on the New York Stock Exchange
(NYSE).
U.S. SMALL STOCK INDEX
This index is a market value weighted index of the ninth and tenth deciles of
the NYSE, plus stocks listed on the American Stock Exchange and over the counter
with the same or less capitalization as the upper bound of the NYSE ninth
decile.
U.S. INFLATION
THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S. Department of Labor, Bureau of Labor Statistics, Washington, DC.
S&P/BARRA INDEXES
The S&P/BARRA GROWTH AND VALUE INDEXES are constructed by dividing the stocks in
the S&P 500 according to price-to-book ratios. The GROWTH INDEX contains stocks
with higher price-to-book ratios, and the VALUE INDEX contains stocks with lower
price-to-book ratios. Both indexes are market capitalization weighted.
35
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
MERRILL LYNCH MICRO-CAP INDEX
The MERRILL LYNCH MICRO-CAP INDEX represents the performance of 2,148 stocks
ranging in market capitalization from $5 million to $60 million. Index returns
are calculated monthly.
LONG-TERM U.S. GOVERNMENT BONDS
The total returns on long-term government bonds after 1977 are constructed with
data from The Wall Street Journal and are calculated as the change in the flat
price or and-interest price. From 1926 to 1976, data are obtained from the
government bond file at the Center for Research in Security Prices (CRSP),
Graduate School of Business, University of Chicago. Each year, a one-bond
portfolio with a term of approximately 20 years and a reasonably current coupon
was used and whose returns did not reflect potential tax benefits, impaired
negotiability or special redemption or call privileges. Where callable bonds had
to be used, the term of the bond was assumed to be a simple average of the
maturity and first call dates minus the current date. The bond was "held" for
the calendar year and returns were computed.
INTERMEDIATE-TERM U.S. GOVERNMENT BONDS
Total returns of intermediate-term government bonds after 1977 are calculated
from The Wall Street Journal prices, using the change in flat price. Returns
from 1934 to 1976 are obtained from the CRSP government bond file.
Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than five years, and this bond is
"held" for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934 to 1942, almost all bonds
with maturities near five years were partially or fully tax-exempt and were
selected using the rules described above. Personal tax rates were generally low
in that period, so that yields on tax-exempt bonds were similar to yields on
taxable bonds. From 1926 to 1933, there are few bonds suitable for construction
of a series with a five-year maturity. For this period, five-year bond yield
estimates are used.
MORGAN STANLEY CAPITAL INTERNATIONAL ("MSCI")
MSCI's indices are based on the share prices of approximately 1,700 companies
listed on stock exchanges in the 22 countries that make up the MSCI World Index.
MSCI's emerging market indices are comprised of approximately 1000 stocks from
26 countries.
Countries in the MSCI EAFE INDEX are: Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia,
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland and
United Kingdom.
Countries in the MSCI EMERGING MARKETS FREE INDEX are: Argentina, Brazil,
Canada, Chile, China, Czech Republic, Colombia, Greece, Hong Kong, Hungary,
Indonesia, Jordan, Korea (at 50%),
36
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
Malaysia, Mexico Free, Pakistan, Peru, Philippines Free, Poland, Portugal,
South Africa, Sri Lanka, Taiwan (at 50%), Thailand Free, Turkey and Venezuela
Free.
6-MONTH CDS
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
LONG-TERM U.S. CORPORATE BONDS
Since 1969, corporate bond total returns are represented by the Salomon Brothers
Long-Term High-Grade Corporate Bond Index. As most large corporate bond
transactions take place over the counter, a major dealer is the natural source
of these data. The index includes nearly all Aaa- and Aa-rated bonds. If a bond
is downgraded during a particular month, its return for the month is included in
the index before removing the bond from future portfolios.
From 1926 to 1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946 to 1968,
Ibbotson and Sinquefield backdated the Salomon Brothers' index, using Salomon
Brothers' monthly yield data with a methodology similar to that used by Salomon
Brothers for 1969 to 1991. Capital appreciation returns were calculated from
yields assuming (at the beginning of each monthly holding period) a 20-year
maturity, a bond price equal to par, and a coupon equal to the
beginning-of-period yield. For the period 1926 to 1945, Standard & Poor's
monthly high-grade corporate composite yield data were used, assuming a 4%
coupon and a 20-year maturity. The conventional present-value formula for bond
price for the beginning and end-of-month prices was used. (This formula is
presented in Ross, Stephen A., and Randolph W. Westerfield, Corporate Finance,
Times Mirror/Mosby, St. Louis, 1990, p. 97 ["Level-Coupon Bonds"].) The monthly
income return was assumed to be one-twelfth the coupon.
U.S. (30-DAY) TREASURY BILLS
For the U.S. TREASURY BILL INDEX, data from The Wall Street Journal are used
after 1977; the CRSP government bond file is the source until 1976. Each month a
one-bill portfolio containing the shortest-term bill having not less than one
month to maturity is constructed. (The bill's original term to maturity is not
relevant.) To measure holding period returns for the one-bill portfolio, the
bill is priced as of the last trading day of the previous month-end and as of
the last trading day of the current month.
NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT TRUSTS ("NAREIT")EQUITY REIT
INDEX All of the data are based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMEX and NASDAQ. The data are
market-value-weighted. Prior to 1987 REITs were added to the index the January
following their listing. Since 1987 newly formed or listed REITs are added to
the total shares outstanding figure in the month that the shares are issued.
Only common shares issued by the REIT are included in the index. The total
return calculation is based upon the weighting at the beginning of the period.
Only those REITs listed for the entire period are used in the
37
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
total return calculation. Dividends are included in the month based upon
their payment date. There is no smoothing of income. Liquidating dividends,
whether full or partial, are treated as income.
RUSSELL U.S. EQUITY INDEXES
The RUSSELL 3000AE INDEX (the "Russell 3000") is comprised of the 3,000 largest
U.S. companies as determined by market capitalization representing approximately
98% of the U.S. equity market. The average market capitalization is
approximately $2.8 billion. The RUSSELL 2500TM INDEX measures performance of the
2,500 smallest companies in the Russell 3000. The average market capitalization
is approximately $733.4 million, and the largest company in the index has an
approximate market capitalization of $2.9 billion. The RUSSELL 2000AE INDEX
measures performance of the 2,000 smallest stocks in the Russell 3000; the
largest company in the index has a market capitalization of approximately $1.1
billion. The RUSSELL 1000AE INDEX (the "Russell 1000") measures the performance
of the 1,000 largest companies in the Russell 3000. The average market
capitalization is approximately $7.6 billion. The smallest company in the index
has an approximate market capitalization of $1.1 billion. The RUSSELL MIDCAPTM
INDEX measures performance of the 800 smallest companies in the Russell 1000.
The largest company in the index has an approximate market capitalization of
$8.0 billion.
The Russell indexes are reconstituted annually as of June 1, based on May 31
market capitalization rankings.
WILSHIRE REAL ESTATE SECURITIES INDEX
The WILSHIRE REAL ESTATE SECURITIES INDEX is a market capitalization weighted
index of 120 publicly traded real estate securities, such as REITs, real estate
operating companies ("REOCs") and partnerships.
The index contains performance data on five major categories of property:
office, retail, industrial, apartment and miscellaneous. The companies in the
index are 91.33% equity and hybrid REITs and 8.33% REOCs.
STANDARD & POOR'S MIDCAP 400 INDEX
The S&P 400 is a market-value-weighted index. The performance data for the index
were calculated by taking the stocks presently in the index and tracking them
backwards in time as long as there were prices reported. No attempt was made to
determine what stocks "might have been" in the S&P 400 five or ten years ago had
it existed. Dividends are reinvested on a monthly basis prior to June 30, 1991,
and are reinvested daily thereafter.
LIPPER BALANCED FUNDS INDEX
This index represents equally weighted performance, adjusted for capital gains
distributions and income dividends, of approximately 30 of the largest funds
with a primary objective of conserving
38
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
principal by maintaining at all times a balanced portfolio of stocks and
bonds. Typically, the stock/bond ratio ranges around 60%/40%.
BANK SAVINGS ACCOUNT
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963 to 1987; and The Wall Street Journal thereafter.
Sources: Ibbotson Associates, Towers Data Systems, Lipper Analytical
Services, Inc. and PGI
39
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
DOW S&P/ S&P/
S&P JONES U.S. SMALL BARRA BARRA MERRILL LYNCH
500 INDUSTRIAL STOCK U.S. 500 500 MICRO-CAP
AVERAGE INDEX INFLATION GROWTH VALUE INDEX
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 11.62 N/A 0.28 -1.49 N/A N/A N/A
Dec 1927 37.49 N/A 22.10 -2.08 N/A N/A N/A
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A N/A
Dec 1931 -43.34 -49.02 -49.75 -9.52 N/A N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A N/A
Dec 1933 53.99 73.72 142.87 0.51 N/A N/A N/A
Dec 1934 -1.44 8.08 24.22 2.03 N/A N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A N/A
Dec 1942 20.34 14.13 44.51 9.29 N/A N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A N/A
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
DOW S&P/ S&P/
S&P JONES U.S. SMALL BARRA 500 BARRA MERRILL LYNCH
500 INDUSTRIAL STOCK U.S. GROWTH 500 MICRO-CAP
AVERAGE INDEX INFLATION VALUE INDEX
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A N/A
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38 N/A
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93 N/A
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57 N/A
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16 27.76
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16 43.18
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59 32.32
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02 9.18
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04 33.62
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89 42.44
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52 -14.97
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68 22.89
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67 3.45
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68 -13.84
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67 22.76
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13 8.06
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85 -29.55
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56 57.44
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53 36.62
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60 31.32
Dec 1994 1.31 5.06 3.11 2.67 3.13 -0.64 1.81
Dec 1995 37.43 36.84 34.46 2.54 38.13 36.99 30.70
Dec 1996 23.07 28.84 17.62 3.32 23.96 21.99 13.88
Dec 1997 33.36 24.88 22.78 1.92 36.52 29.98 24.61
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
LONG- INTERMEDIATE- MSCI LONG-
TERM TERM U.S. EAFE 6- TERM U.S. U.S.
U.S. GOV'T GOVERNMENT (Net of MONTH CORPORATE T-BILL
BONDS BONDS Taxes) CDS BONDS (30-Day)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A
Dec 1926 7.77 5.38 N/A N/A 7.37 3.27
Dec 1927 8.93 4.52 N/A N/A 7.44 3.12
Dec 1928 0.10 0.92 N/A N/A 2.84 3.56
Dec 1929 3.42 6.01 N/A N/A 3.27 4.75
Dec 1930 4.66 6.72 N/A N/A 7.98 2.41
Dec 1931 -5.31 -2.32 N/A N/A -1.85 1.07
Dec 1932 16.84 8.81 N/A N/A 10.82 0.96
Dec 1933 -0.07 1.83 N/A N/A 10.38 0.30
Dec 1934 10.03 9.00 N/A N/A 13.84 0.16
Dec 1935 4.98 7.01 N/A N/A 9.61 0.17
Dec 1936 7.52 3.06 N/A N/A 6.74 0.18
Dec 1937 0.23 1.56 N/A N/A 2.75 0.31
Dec 1938 5.53 6.23 N/A N/A 6.13 -0.02
Dec 1939 5.94 4.52 N/A N/A 3.97 0.02
Dec 1940 6.09 2.96 N/A N/A 3.39 0.00
Dec 1941 0.93 0.50 N/A N/A 2.73 0.06
Dec 1942 3.22 1.94 N/A N/A 2.60 0.27
Dec 1943 2.08 2.81 N/A N/A 2.83 0.35
Dec 1944 2.81 1.80 N/A N/A 4.73 0.33
Dec 1945 10.73 2.22 N/A N/A 4.08 0.33
Dec 1946 -0.10 1.00 N/A N/A 1.72 0.35
Dec 1947 -2.62 0.91 N/A N/A -2.34 0.50
Dec 1948 3.40 1.85 N/A N/A 4.14 0.81
Dec 1949 6.45 2.32 N/A N/A 3.31 1.10
Dec 1950 0.06 0.70 N/A N/A 2.12 1.20
Dec 1951 -3.93 0.36 N/A N/A -2.69 1.49
Dec 1952 1.16 1.63 N/A N/A 3.52 1.66
Dec 1953 3.64 3.23 N/A N/A 3.41 1.82
Dec 1954 7.19 2.68 N/A N/A 5.39 0.86
Dec 1955 -1.29 -0.65 N/A N/A 0.48 1.57
Dec 1956 -5.59 -0.42 N/A N/A -6.81 2.46
Dec 1957 7.46 7.84 N/A N/A 8.71 3.14
Dec 1958 -6.09 -1.29 N/A N/A -2.22 1.54
Dec 1959 -2.26 -0.39 N/A N/A -0.97 2.95
Dec 1960 13.78 11.76 N/A N/A 9.07 2.66
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
LONG- INTERMEDIATE- MSCI LONG-
TERM TERM U.S. EAFE 6- TERM U.S. U.S.
U.S. GOV'T GOVERNMENT (Net of MONTH CORPORATE T-BILL
BONDS BONDS Taxes) CDS BONDS (30-Day)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dec 1961 0.97 1.85 N/A N/A 4.82 2.13
Dec 1962 6.89 5.56 N/A N/A 7.95 2.73
Dec 1963 1.21 1.64 N/A N/A 2.19 3.12
Dec 1964 3.51 4.04 N/A 4.17 4.77 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 3.93
Dec 1966 3.65 4.69 N/A 5.76 0.20 4.76
Dec 1967 -9.18 1.01 N/A 5.47 -4.95 4.21
Dec 1968 -0.26 4.54 N/A 6.45 2.57 5.21
Dec 1969 -5.07 -0.74 N/A 8.70 -8.09 6.58
Dec 1970 12.11 16.86 -11.66 7.06 18.37 6.52
Dec 1971 13.23 8.72 29.59 5.36 11.01 4.39
Dec 1972 5.69 5.16 36.35 5.39 7.26 3.84
Dec 1973 -1.11 4.61 -14.92 8.60 1.14 6.93
Dec 1974 4.35 5.69 -23.16 10.20 -3.06 8.00
Dec 1975 9.20 7.83 35.39 6.51 14.64 5.80
Dec 1976 16.75 12.87 2.54 5.22 18.65 5.08
Dec 1977 -0.69 1.41 18.06 6.11 1.71 5.12
Dec 1978 -1.18 3.49 32.62 10.21 -0.07 7.18
Dec 1979 -1.23 4.09 4.75 11.90 -4.18 10.38
Dec 1980 -3.95 3.91 22.58 12.33 -2.76 11.24
Dec 1981 1.86 9.45 -2.28 15.50 -1.24 14.71
Dec 1982 40.36 29.10 -1.86 12.18 42.56 10.54
Dec 1983 0.65 7.41 23.69 9.65 6.26 8.80
Dec 1984 15.48 14.02 7.38 10.65 16.86 9.85
Dec 1985 30.97 20.33 56.16 7.82 30.09 7.72
Dec 1986 24.53 15.14 69.44 6.30 19.85 6.16
Dec 1987 -2.71 2.90 24.63 6.59 -0.27 5.47
Dec 1988 9.67 6.10 28.27 8.15 10.70 6.35
Dec 1989 18.11 13.29 10.54 8.27 16.23 8.37
Dec 1990 6.18 9.73 -23.45 7.85 6.78 7.81
Dec 1991 19.30 15.46 12.13 4.95 19.89 5.60
Dec 1992 8.05 7.19 -12.17 3.27 9.39 3.51
Dec 1993 18.24 11.24 32.56 2.88 13.19 2.90
Dec 1994 -7.77 -5.14 7.78 5.40 -5.76 3.90
Dec 1995 31.67 16.80 11.21 5.21 27.20 5.60
Dec 1996 -0.93 2.10 6.05 5.21 1.40 5.21
Dec 1997 15.85 8.38 1.78 5.71 12.95 5.26
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
NAREIT LIPPER MSCI
EQUITY RUSSELL WILSHIRE BALANCED EMERGING BANK
REIT 2000 REAL ESTATE S&P FUND MARKETS SAVINGS
INDEX INDEX SECURITIES 400 INDEX FREE INDEX ACCOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 N/A N/A N/A N/A N/A N/A N/A
Dec 1927 N/A N/A N/A N/A N/A N/A N/A
Dec 1928 N/A N/A N/A N/A N/A N/A N/A
Dec 1929 N/A N/A N/A N/A N/A N/A N/A
Dec 1930 N/A N/A N/A N/A N/A N/A 5.30
Dec 1931 N/A N/A N/A N/A N/A N/A 5.10
Dec 1932 N/A N/A N/A N/A N/A N/A 4.10
Dec 1933 N/A N/A N/A N/A N/A N/A 3.40
Dec 1934 N/A N/A N/A N/A N/A N/A 3.50
Dec 1935 N/A N/A N/A N/A N/A N/A 3.10
Dec 1936 N/A N/A N/A N/A N/A N/A 3.20
Dec 1937 N/A N/A N/A N/A N/A N/A 3.50
Dec 1938 N/A N/A N/A N/A N/A N/A 3.50
Dec 1939 N/A N/A N/A N/A N/A N/A 3.40
Dec 1940 N/A N/A N/A N/A N/A N/A 3.30
Dec 1941 N/A N/A N/A N/A N/A N/A 3.10
Dec 1942 N/A N/A N/A N/A N/A N/A 3.00
Dec 1943 N/A N/A N/A N/A N/A N/A 2.90
Dec 1944 N/A N/A N/A N/A N/A N/A 2.80
Dec 1945 N/A N/A N/A N/A N/A N/A 2.50
Dec 1946 N/A N/A N/A N/A N/A N/A 2.20
Dec 1947 N/A N/A N/A N/A N/A N/A 2.30
Dec 1948 N/A N/A N/A N/A N/A N/A 2.30
Dec 1949 N/A N/A N/A N/A N/A N/A 2.40
Dec 1950 N/A N/A N/A N/A N/A N/A 2.50
Dec 1951 N/A N/A N/A N/A N/A N/A 2.60
Dec 1952 N/A N/A N/A N/A N/A N/A 2.70
Dec 1953 N/A N/A N/A N/A N/A N/A 2.80
Dec 1954 N/A N/A N/A N/A N/A N/A 2.90
Dec 1955 N/A N/A N/A N/A N/A N/A 2.90
Dec 1956 N/A N/A N/A N/A N/A N/A 3.00
Dec 1957 N/A N/A N/A N/A N/A N/A 3.30
Dec 1958 N/A N/A N/A N/A N/A N/A 3.38
Dec 1959 N/A N/A N/A N/A N/A N/A 3.53
Dec 1960 N/A N/A N/A N/A 5.77 N/A 3.86
Dec 1961 N/A N/A N/A N/A 20.59 N/A 3.90
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
NAREIT LIPPER MSCI
EQUITY RUSSELL WILSHIRE BALANCED EMERGING BANK
REIT 2000 REAL ESTATE S&P FUND MARKETS SAVINGS
INDEX INDEX SECURITIES 400 INDEX FREE INDEX ACCOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1962 N/A N/A N/A N/A -6.80 N/A 4.08
Dec 1963 N/A N/A N/A N/A 13.10 N/A 4.17
Dec 1964 N/A N/A N/A N/A 12.36 N/A 4.19
Dec 1965 N/A N/A N/A N/A 9.80 N/A 4.23
Dec 1966 N/A N/A N/A N/A -5.86 N/A 4.45
Dec 1967 N/A N/A N/A N/A 15.09 N/A 4.67
Dec 1968 N/A N/A N/A N/A 13.97 N/A 4.68
Dec 1969 N/A N/A N/A N/A -9.01 N/A 4.80
Dec 1970 N/A N/A N/A N/A 5.62 N/A 5.14
Dec 1971 N/A N/A N/A N/A 13.90 N/A 5.30
Dec 1972 8.01 N/A N/A N/A 11.13 N/A 5.37
Dec 1973 -15.52 N/A N/A N/A -12.24 N/A 5.51
Dec 1974 -21.40 N/A N/A N/A -18.71 N/A 5.96
Dec 1975 19.30 N/A N/A N/A 27.10 N/A 6.21
Dec 1976 47.59 N/A N/A N/A 26.03 N/A 6.23
Dec 1977 22.42 N/A N/A N/A -0.72 N/A 6.39
Dec 1978 10.34 N/A 13.04 N/A 4.80 N/A 6.56
Dec 1979 35.86 43.09 70.81 N/A 14.67 N/A 7.29
Dec 1980 24.37 38.58 22.08 N/A 19.70 N/A 8.78
Dec 1981 6.00 2.03 7.18 N/A 1.86 N/A 10.71
Dec 1982 21.60 24.95 24.47 22.68 30.63 N/A 11.19
Dec 1983 30.64 29.13 27.61 26.10 17.44 N/A 9.71
Dec 1984 20.93 -7.30 20.64 1.18 7.46 N/A 9.92
Dec 1985 19.10 31.05 22.20 35.58 29.83 N/A 9.02
Dec 1986 19.16 5.68 20.30 16.21 18.43 N/A 7.84
Dec 1987 -3.64 -8.77 -7.86 -2.03 4.13 N/A 6.92
Dec 1988 13.49 24.89 24.18 20.87 11.18 40.43 7.20
Dec 1989 8.84 16.24 2.37 35.54 19.70 64.96 7.91
Dec 1990 -15.35 -19.51 -33.46 -5.12 0.66 -10.55 7.80
Dec 1991 35.70 46.05 20.03 50.10 25.83 59.91 4.61
Dec 1992 14.59 18.41 7.36 11.91 7.46 11.40 2.89
Dec 1993 19.65 18.91 15.24 13.96 11.95 74.83 2.73
Dec 1994 3.17 -1.82 1.64 -3.57 -2.05 -7.32 4.96
Dec 1995 15.27 28.44 13.65 30.94 24.89 -5.21 5.24
Dec 1996 35.26 16.53 36.87 19.20 13.01 6.03 4.95
Dec 1997 20.29 22.36 19.80 32.26 20.05 -11.59 5.17
Source: Lipper Analytical Services. Inc.
</TABLE>
45
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX B
- --------------------------------------------------------------------------------
OTHER PIONEER INFORMATION
The Pioneer group of mutual funds was established in 1928 with the creation of
Pioneer Fund. Pioneer is one of the oldest and most experienced money managers
in the United States.
As of December 31, 1997, PMC employed a professional investment staff of 58,
with a combined average of 12 years' experience in the financial services
industry.
Total assets of all Pioneer mutual funds at December 31, 1997, were
approximately $19.8 billion representing 1,177,148 shareholder accounts, 791,468
non-retirement accounts and 385,680 retirement accounts.
[g:\edgar\sai\current\midcap3.doc]
46
<PAGE>
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
The financial highlights of the Registrant for the fiscal year
ended September 30, 1997 are included in Part A of the
Registration Statement and the financial statements of the
Registrant for the fiscal year ended September 30, 1997 are
part of the 1997 Annual Report to Shareholders (filed
electronically on November 21, 1997; File No. 811-07525;
Accession No. 0000706155-97-000013) which is incorporated by
reference into Part B of the Registration Statement.
(b) Exhibits:
1. Agreement and Declaration of Trust*
2. By-Laws*
3. None
4.1 Specimen Share Certificate*
5. Management Contract*
6.1 Underwriting Agreement*
6.2 Form of Dealer Sales Agreement*
7. None
8. Form of Custody Agreement with Brown Brothers
Harriman & Co.*
9. Investment Company Service Agreement*
10. None
11. Consent of Arthur Andersen LLP
12. None
13. None
14. None
15.1 Class A Distribution Plan*
15.2 Class B Distribution Plan*
15.3 Class C Distribution Plan*
16. None
17. Financial Data Schedules
18. Multiple Class Plan Pursuant to Rule 18f-3*
19. Powers of Attorney*
19.1 Power of Attorney for Mary K. Bush
- ------------------------
*Previously filed. Incorporated herein by reference from the exhibits
filed with Post-Effective Amendment No. 21 to the Registration Statement (File
No. 2-79140) as filed with the Securities and Exchange Commission on February 1,
1996 (Accession No. 0000706155-96-000003).
Item 25. Persons Controlled by or Under Common Control with Registrant
No person is controlled by the Registrant. A common control
relationship could exist from a management perspective because the Chairman and
President of the Registrant owns approximately 14%
C-1
<PAGE>
of the outstanding shares of The Pioneer Group, Inc. (PGI), the parent company
of the Registrant's investment adviser, and certain Trustees or officers of the
Registrant (i) hold similar positions with other investment companies advised by
PGI and (ii) are directors or officers of PGI and/or its direct or indirect
subsidiaries. The following lists all U.S. and the principal non-U.S.
subsidiaries of PGI and those registered investment companies with a common or
similar Board of Trustees advised by PGI.
OWNED BY PERCENT STATE/COUNTRY OF
COMPANY OF SHARES INCORPORATION
Pioneering Management Corp. (PMC) PGI 100% DE
Pioneer Funds Distributor, Inc. (PFD) PMC 100% MA
Pioneer Explorer, Inc. (PEI) PMC 100% DE
Pioneer Fonds Marketing GmbH (GmbH) PFD 100% Germany
Pioneer Forest, Inc. (PFI) PGI 100% DE
CJSC "Forest-Starma" (Forest-Starma) PFI 95% Russia
Pioneer Metals and Technology, Inc. (PMT) PGI 100% DE
Pioneer Capital Corp. (PCC) PGI 100% DE
Pioneer SBIC Corp. PCC 100% MA
Pioneer Real Estate Advisors, Inc. (PREA) PGI 100% DE
Pioneer Management (Ireland) Ltd. (PMIL) PGI 100% Ireland
Pioneer Plans Corporation (PPC) PGI 100% DE
PIOGlobal Corp. (PIOGlobal) PGI 100% DE
Pioneer Investments Corp. (PIC) PGI 100% MA
Pioneer Goldfields Holdings, Inc. (PGH) PGI 100% DE
Pioneer Goldfields Ltd. (PGL) PGH 100% Gurensey
Teberebie Goldfields Ltd. (TGL) PGL 90% Ghana
Pioneer Omega, Inc. (Omega) PGI 100% DE
Pioneer First Russia, Inc. (First Russia) Omega 81.65% DE
Pioneering Services Corp. (PSC) PGI 100% MA
Pioneer International Corp. (PIntl) PGI 100% DE
Pioneer First Polish Trust Fund JSC, S.A.
(First Polish) PIntl 100% Poland
Pioneer Czech Investment Company, A.S.
(Pioneer Czech) PIntl 100% Czech Republic
Registered investment companies that are parties to management contracts with
PMC:
FUNDS BUSINESS TRUST
Pioneer International Growth Fund MA
Pioneer World Equity Fund DE
Pioneer Europe Fund MA
Pioneer Emerging Markets Fund DE
Pioneer India Fund DE
Pioneer Growth Trust MA
Pioneer Mid-Cap Fund DE
Pioneer Growth Shares DE
Pioneer Small Company Fund DE
Pioneer Fund DE
C-2
<PAGE>
Pioneer II DE
Pioneer Real Estate Shares DE
Pioneer Short-Term Income Trust MA
Pioneer America Income Trust MA
Pioneer Bond Fund MA
Pioneer Balanced Fund DE
Pioneer Intermediate Tax-Free Fund MA
Pioneer Tax-Free Income Fund DE
Pioneer Money Market Trust DE
Pioneer Variable Contracts Trust DE
Pioneer Interest Shares DE
Pioneer Micro-Cap Fund DE
The following table list's John F. Cogan, Jr.'s positions with the
investment companies, PGI and principal direct or indirect PGI subsidiaries
referenced above and the Registrant's counsel.
TRUSTEE/
ENTITY CHAIRMAN PRESIDENT DIRECTOR OTHER
Pioneer mutual
funds X X X
PGL X X X
PGI X X X
PPC X X
PIC X X
PIntl X X
PMT X X
Omega X X
PIOGlobal X X
First Russia X X
PCC X
PSC X
PMIL X
PEI X
PFI X
C-3
<PAGE>
PREA X
Forest-Starma X
PMC X X
PFD X X
TGL X X
First Polish Chairman of Supervisory
Board
GmbH Chairman of Supervisory
Board
Pioneer Czech Chairman of Supervisory
Board
Hale and Dorr LLP Partner
Item 26. Number of Holders of Securities
(1)
Title of Class (2)
Shares of Beneficial Interest Number of Record Holders
(without par value) as of December 31, 1997
Class A shares 49,308
Class B shares 657
Class C shares 125
Item 27. Indemnification
Except for the Agreement and Declaration of Trust (the "Declaration"),
dated January 12, 1996, establishing the Registrant as a business trust under
Delaware law, there is no contract, arrangement or statute under which any
Trustee, officer, underwriter or affiliated person of the Registrant is insured
or indemnified. The Declaration provides that no Trustee or officer will be
indemnified against any liability to which the Registrant would otherwise be
subject by reason of or for willful misfeasance, bad faith, gross negligence or
reckless disregard of such person's duties.
Item 28. Business and Other Connections of Investment Adviser
All of the information required by this item is set forth in the Form
ADV, as amended, of PMC, the Registrant's investment adviser. The following
sections of such Form ADV are incorporated herein by reference:
(a) Items 1 and 2 of Part 2; and
(b) Section IV, Business Background, of each Schedule D.
C-4
<PAGE>
Item 29. Principal Underwriters
(a) See Item 25 above.
(b) Directors and officers of PFD:
POSITIONS AND OFFICER WITH POSITIONS AND OFFICER WITH
NAME UNDERWRITER REGISTRANT
John F. Cogan, Jr. Director and Chairman Chairman of the Board,
President and Trustee
Robert L. Butler Director and President None
David D. Tripple Director Executive Vice President and
Trustee
Steven M. Graziano Senior Vice President None
Stephen W. Long Senior Vice President None
Barry G. Knight Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Elizabeth B. Bennett Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy L. Supovitz Vice President None
Mary Kleeman Vice President None
Steven R. Berke Assistant Vice President None
Steven H. Forss Assistant Vice President None
Mary Sue Hoban Assistant Vice President None
Debra A. Levine Assistant Vice President None
Junior Roy McFarland Assistant Vice President None
Marie E. Moynihan Assistant Vice President None
C-5
<PAGE>
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
The principal business address of each of these individuals is 60 State Street,
Boston, Massachusetts 02109-1820.
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts and records are maintained at the Registrant's office at
60 State Street, Boston, Massachusetts; contact the Treasurer.
Item 31. Management Services
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. Undertakings
(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.
C-6
<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. 23 to
its Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Post-Effective Amendment No. 23 to such
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Boston and The Commonwealth of Massachusetts, on
the 28th day of January, 1998.
PIONEER MID-CAP FUND
By: /s/ David D. Tripple
David D. Tripple
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 23 to the Registrant's Registration Statement has
been signed below by the following persons in the capacities and on the date
indicated:
Signature Title
John F. Cogan, Jr.* Chairman of the Board )
John F. Cogan, Jr. and President )
(Principal Executive )
Officer) )
)
)
/s/ William H. Keough Chief Financial Officer )
William H. Keough and Treasurer (Principal )
Financial and Accounting )
Officer) )
)
)
Trustees: )
)
)
Mary K. Bush* )
Mary K. Bush )
)
)
John F. Cogan, Jr.* )
John F. Cogan, Jr. )
)
)
Richard H. Egdahl, M.D.* )
Richard H. Egdahl, M.D. )
)
)
<PAGE>
Margaret B. W. Graham* )
Margaret B. W. Graham )
)
)
John W. Kendrick* )
John W. Kendrick )
)
)
Marguerite A. Piret* )
Marguerite A. Piret )
)
)
/s/ David D. Tripple )
David D. Tripple )
)
)
Stephen K. West* )
Stephen K. West )
)
)
John Winthrop* )
John Winthrop )
)
)
*By: /s/ David D. Tripple Dated: January 28, 1998)
David D. Tripple
Attorney-in-fact
<PAGE>
Exhibit Index
Exhibit
Number Document Title
11. Consent of Arthur Andersen LLP
17. Financial Data Schedules
19.1. Power of Attorney for Mary K. Bush
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated October 31, 1997
for Pioneer Mid-Cap Fund and to all references to our firm included in or made a
part of Post-Effective Amendment No. 23 and Amendment No. 23 to registration
statement File Nos. 2-79140 and 811-07525, respectively.
/s/ Arthur Andersen LLP
Boston, Massachusetts
January 27, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
ON FORM N-SAR DATED SEPTEMBER 30, 1997 FOR PIONEER MID-CAP FUND AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000706155
<NAME> PIONEER MID-CAP FUND
<SERIES>
<NUMBER> 001
<NAME> PIONEER MID-CAP FUND CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 731649
<INVESTMENTS-AT-VALUE> 1045344
<RECEIVABLES> 11605
<ASSETS-OTHER> 37
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1056986
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2541
<TOTAL-LIABILITIES> 2541
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 595596
<SHARES-COMMON-STOCK> 44831
<SHARES-COMMON-PRIOR> 47735
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 145154
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 313695
<NET-ASSETS> 1054445
<DIVIDEND-INCOME> 4677
<INTEREST-INCOME> 351
<OTHER-INCOME> 0
<EXPENSES-NET> (8495)
<NET-INVESTMENT-INCOME> (3467)
<REALIZED-GAINS-CURRENT> 145155
<APPREC-INCREASE-CURRENT> 50131
<NET-CHANGE-FROM-OPS> 191819
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (87843)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2538
<NUMBER-OF-SHARES-REDEEMED> 9688
<SHARES-REINVESTED> 4247
<NET-CHANGE-IN-ASSETS> 40950
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 88141
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6199
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8776
<AVERAGE-NET-ASSETS> 988206
<PER-SHARE-NAV-BEGIN> 21.12
<PER-SHARE-NII> (0.08)
<PER-SHARE-GAIN-APPREC> 4.23
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.88)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.39
<EXPENSE-RATIO> 0.87
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
ON FORM N-SAR DATED SEPTEMBER 30, 1997 FOR PIONEER MID-CAP FUND AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000706155
<NAME> PIONEER MID-CAP FUND
<SERIES>
<NUMBER> 002
<NAME> PIONEER MID-CAP FUND CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 731649
<INVESTMENTS-AT-VALUE> 1045344
<RECEIVABLES> 11605
<ASSETS-OTHER> 37
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1056986
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2541
<TOTAL-LIABILITIES> 2541
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 595596
<SHARES-COMMON-STOCK> 220
<SHARES-COMMON-PRIOR> 235
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 145154
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 313695
<NET-ASSETS> 1054445
<DIVIDEND-INCOME> 4677
<INTEREST-INCOME> 351
<OTHER-INCOME> 0
<EXPENSES-NET> (8495)
<NET-INVESTMENT-INCOME> (3467)
<REALIZED-GAINS-CURRENT> 145155
<APPREC-INCREASE-CURRENT> 50131
<NET-CHANGE-FROM-OPS> 191819
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (268)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 274
<NUMBER-OF-SHARES-REDEEMED> 303
<SHARES-REINVESTED> 13
<NET-CHANGE-IN-ASSETS> 40950
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 88141
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6199
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8776
<AVERAGE-NET-ASSETS> 3242
<PER-SHARE-NAV-BEGIN> 21.02
<PER-SHARE-NII> (0.22)
<PER-SHARE-GAIN-APPREC> 4.06
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.88)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 22.98
<EXPENSE-RATIO> 2.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
ON FORM N-SAR DATED SEPTEMBER 30, 1997 FOR PIONEER MID-CAP FUND AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000706155
<NAME> PIONEER MID-CAP FUND
<SERIES>
<NUMBER> 003
<NAME> PIONEER MID-CAP FUND CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 731649
<INVESTMENTS-AT-VALUE> 1045344
<RECEIVABLES> 11605
<ASSETS-OTHER> 37
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1056986
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2541
<TOTAL-LIABILITIES> 2541
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 595596
<SHARES-COMMON-STOCK> 32
<SHARES-COMMON-PRIOR> 18
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 145154
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 313695
<NET-ASSETS> 1054445
<DIVIDEND-INCOME> 4677
<INTEREST-INCOME> 351
<OTHER-INCOME> 0
<EXPENSES-NET> (8495)
<NET-INVESTMENT-INCOME> (3467)
<REALIZED-GAINS-CURRENT> 145155
<APPREC-INCREASE-CURRENT> 50131
<NET-CHANGE-FROM-OPS> 191819
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (30)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24
<NUMBER-OF-SHARES-REDEEMED> 11
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 40950
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 88141
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6199
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8776
<AVERAGE-NET-ASSETS> 461
<PER-SHARE-NAV-BEGIN> 21.12
<PER-SHARE-NII> (0.20)
<PER-SHARE-GAIN-APPREC> 4.29
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.88)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.33
<EXPENSE-RATIO> 1.91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
PIONEER EMERGING MARKETS FUND
PIONEER EUROPE FUND
PIONEER GROWTH TRUST
PIONEER INDIA FUND
PIONEER INTERNATIONAL GROWTH FUND
PIONEER WORLD EQUITY FUND
PIONEER GROWTH SHARES
PIONEER MID-CAP FUND
PIONEER SMALL COMPANY FUND
PIONEER MICRO-CAP FUND
PIONEER BALANCED FUND
PIONEER FUND
PIONEER II
PIONEER REAL ESTATE SHARES
PIONEER AMERICA INCOME TRUST
PIONEER BOND FUND
PIONEER SHORT TERM INCOME TRUST
PIONEER INTERMEDIATE TAX-FREE FUND
PIONEER MONEY MARKET TRUST
POWER OF ATTORNEY
Dated October 7, 1997
I, the undersigned Trustee of each of the above-listed registered
investment companies (each a "Fund"), each a Delaware or a Massachusetts
business trust, do hereby constitute and appoint John F. Cogan, Jr., David D.
Tripple, and Joseph P. Barri, and each of them acting singly, to be my true,
sufficient and lawful attorneys, with full power to each of them, and each of
them acting singly, to sign for me, in my name and in my capacity as trustee,
any and all amendments to the Registration Statement on Form N-1A to be filed by
each Fund under the Investment Company Act of 1940, as amended (the "1940 Act"),
and under the Securities Act of 1933, as amended (the "1933 Act"), with respect
to the offering of its shares of beneficial interest and any and all other
documents and papers relating thereto, and generally to do all such things in my
name and on my behalf in my capacity as trustee to enable each Fund to comply
with the 1940 Act and the 1933 Act, and all requirements of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by said attorneys or each of them to any and all amendments to
said Registration Statement.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument as
of the date first written above.
/s/ Mary K. Bush
Mary K. Bush, Trustee
