PIONEER FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
Class A, Class B and Class C Shares
May 1, 1996
(revised September 3, 1996)
This Statement of Additional Information is not a Prospectus, but
should be read in conjunction with the Prospectus (the "Prospectus") dated May
1, 1996 of Pioneer Fund. A copy of the Prospectus can be obtained free of charge
by calling Shareholder Services at 1-800-225-6292 or by written request to
Pioneer Fund at 60 State Street, Boston, Massachusetts 02109. The most recent
Annual Report to Shareholders is attached to, and is hereby incorporated into,
this Statement of Additional Information.
TABLE OF CONTENTS
Page
1. Investment Policies and Restrictions.................................2
2. Management of the Fund...............................................8
3. Investment Adviser...................................................12
4. Shareholder Servicing/Transfer Agent.................................15
5. Custodian............................................................15
6. Principal Underwriter................................................15
7. Distribution Plans...................................................16
8. Independent Public Accountants.......................................19
9. Portfolio Transactions...............................................19
10. Dividends and Tax Status.............................................20
11. Description of Shares................................................24
12. Certain Liabilities..................................................25
13. Determination of Net Asset Value.....................................26
14. Systematic Withdrawal Plan.......................................... 26
15. Letter of Intention..................................................27
16. Investment Results...................................................27
17. Financial Statements.................................................30
Appendix A...........................................................32
Appendix B...........................................................44
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.
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1. INVESTMENT POLICIES AND RESTRICTIONS
The Fund's current prospectus (the "Prospectus") presents the investment
objective and the principal investment policies of the Fund. Additional
investment policies and a further description of some of the policies described
in the Prospectus appear below.
The following policies and restrictions supplement those discussed in the
Prospectus. Whenever an investment policy or restriction states a maximum
percentage of the Fund's assets that may be invested in any security or presents
a policy regarding quality standards, this standard or other restrictions shall
be determined immediately after and as a result of the Fund's investment.
Accordingly, any later increase or decrease resulting from a change in values,
net assets or other circumstances will not be considered in determining whether
the investment complies with the Fund's investment objectives and policies.
Lending of Portfolio Securities
In order to realize additional income, the Fund may lend its portfolio
securities, principally to broker-dealers, under agreements which would require
that the loans be secured continuously by cash equivalents or United States
("U.S.") Treasury bills equal at all times to at least the market value of the
securities loaned. The Fund would continue to receive interest or dividends on
the securities loaned and would also earn interest on the investment of the loan
collateral. The loan collateral would be invested only in U.S. Treasury notes,
certificates of deposit or other high-grade, short-term obligations or
interest-bearing cash equivalents. Although voting rights, or rights to consent
attendant to securities loaned, pass to the borrower, such loans will be called
so that the securities may be voted if a material event affecting the investment
is to occur.
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 Fund's Board of Trustees, which
will monitor the creditworthiness of any such firms. If the management of the
Fund decides to make securities loans, it is intended that the value of the
securities loaned by the Fund would not exceed 30% of the value of the Fund's
total assets. In the Fund's last fiscal year, it did not lend portfolio
securities with a value exceeding 5% of its net assets and, while it reserves
the right to do so, the Fund has no present intention of lending portfolio
securities with such a value during the coming year.
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Covered Call Options
The Fund may write (sell) covered call options on certain
portfolio securities, but options may not be written on more than 25% of the
aggregate market value of any single portfolio security (determined each time a
call is sold as of the date of such sale). As writers of a call option, the Fund
receives a premium less commission, and, in exchange, foregoes the opportunity
to profit from increases in the market value of the security covering the call
above the sum of the premium and the exercise price of the option during the
life of the option. The purchaser of such a call has the option of purchasing
the security from the Fund's portfolio at the option price during the life of
the option. Portfolio securities on which options may be written are purchased
solely on the basis of investment considerations consistent with the Fund's
investment objectives. The security covering the call is maintained in a
segregated account of the Fund's custodian. The Fund does not consider a
security covered by a call option to be "pledged" as that term is used in the
Fund's policy which limits the pledging or mortgaging of their assets.
The Fund will purchase a call option only when entering into a
"closing purchase transaction," i.e., a purchase of a call option on the same
security with the same exercise price and expiration date as a "covered" call
already written by the Fund. There is no assurance that the Fund will be able to
effect such closing purchase transactions at a favorable price; if the Fund
cannot enter into such a transaction it may be required to hold a security that
it might otherwise have sold. The Fund's portfolio turnover may increase through
the exercise of options if the market price of the underlying securities
appreciates and the Fund has not entered into a closing purchase transaction.
The commission on purchase or sale of a call option is higher in relation to the
premium than the commission in relation to the price on purchase or sale of the
underlying security.
Foreign Securities
The Fund may invest a portion of its assets in foreign
securities. Investment in securities of foreign companies and countries involves
certain considerations and risks that are not typically associated with
investment in U.S. Government securities and securities of domestic companies.
Foreign companies are not generally subject to uniform accounting, auditing and
financial standards and requirements comparable to those applicable to U.S.
companies. There may also be less government supervision and regulation of
foreign securities exchanges, brokers and listed companies than exists in the
United States. Dividends and interest paid by foreign issuers may be subject to
withholding and other foreign taxes which may decrease the net return on such
investments as compared to interest paid to the Fund by the U.S. Government or
by domestic companies. In addition, there may be the possibility of
expropriations, confiscatory taxation, political, economic or social instability
or diplomatic developments which could affect assets of the Fund held in foreign
countries. The value of foreign securities may be adversely affected by
fluctuations in the relative rates of
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exchange between the currencies of different nations and by exchange control
regulations. There may be less publicly available information about foreign
companies and governments compared to reports and ratings published about U.S.
companies. Some foreign securities markets have substantially less volume than
domestic markets and securities of some foreign companies are less liquid and
more volatile than securities of comparable U.S. companies. In connection with
its investments in foreign securities and in order to protect against
uncertainty in future exchange rates, the Fund may engage in foreign currency
exchange transactions.
Debt Securities
No more than 5% of the Fund's net assets may be invested in debt
securities, including convertible securities, rated below "BBB" by Standard &
Poor's Ratings Group ("Standard & Poor's") or the equivalent. If the rating of a
debt security is reduced below investment grade ("BBB" or higher), management
will consider whatever action is appropriate, consistent with the Fund's
investment objective and policies.
Bonds rated below "BBB" or comparable unrated securities are commonly
referred to as "junk bonds" and are considered speculative and may be
questionable as to principal and interest payments. In some cases, such bonds
may be highly speculative, have poor prospects for reaching investment standing
and be in default. As a result, investment in such bonds will entail greater
speculative risks than those associated with investment in investment grade
bonds (i.e., bonds rated "BBB" or better by Standard & Poor's or, if unrated by
such rating organization, determined to be of comparable quality by the Fund's
investment adviser).
The amount of junk bond securities outstanding has proliferated in
conjunction with the increase in merger and acquisition and leveraged buyout
activity. An economic downturn could severely affect the ability of highly
leveraged issuers to service their debt obligations or to repay their
obligations upon maturity. Factors having an adverse impact on the market value
of lower quality securities will have an adverse effect on the Fund's net asset
value to the extent that it invests in such securities. In addition, the Fund
may incur additional expenses to the extent it is required to seek recovery upon
a default in payment of principal or interest on its portfolio holdings.
The secondary market for junk bond securities, which is concentrated in
relatively few market makers, may not be as liquid as the secondary market for
more highly rated securities, a factor which may have an adverse effect on the
Fund's ability to dispose of a particular security when necessary to meet its
liquidity needs. Under adverse market or economic conditions, the secondary
market for junk bond securities could contract further, independent of any
specific adverse changes in the condition of a particular issuer. As a result,
the Fund could find it more difficult to sell these securities or may be able to
sell the securities only at prices lower than if such securities were widely
traded. Prices realized upon the sale of such
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lower rated or unrated securities, under these circumstances, may be less than
the prices used in calculating the Fund's net asset value.
Certain proposed and recently enacted federal laws including the
required divestiture by federally insured savings and loan associations of their
investments in junk bonds and proposals designed to limit the use, or tax and
other advantages, of junk bond securities could adversely affect the Fund's net
asset value and investment practices. Such proposals could also adversely affect
the secondary market for junk bond securities, the financial condition of
issuers of these securities and the value of outstanding junk bond securities.
The form of such proposed legislation and the possibility of such legislation
being passed are uncertain.
Since investors generally perceive that there are greater risks
associated with the medium to lower quality debt securities of the type in which
the Fund may invest a portion of its assets, the yields and prices of such
securities may tend to fluctuate more than those for higher rated securities. In
the lower quality segments of the debt securities market, changes in perceptions
of issuers' creditworthiness tend to occur more frequently and in a more
pronounced manner than do changes in higher quality segments of the debt
securities market, resulting in greater yield and price volatility.
Medium to lower rated and comparable unrated debt securities tend to
offer higher yields than higher rated securities with the same maturities
because the historical financial condition of the issuers of such securities may
not have been as strong as that of other issuers. Since medium to lower rated
securities generally involve greater risks of loss of income and principal than
higher rated securities, investors should consider carefully the relative risks
associated with investment in securities which carry medium to lower ratings and
in comparable unrated securities. In addition to the risk of default, there are
the related costs of recovery on defaulted issues. The Fund's investment adviser
will attempt to reduce these risks through portfolio diversification and by
analysis of each issuer and its ability to make timely payments of income and
principal, as well as broad economic trends and corporate developments.
The prices of all debt securities generally fluctuate in response to
the general level of interest rates. Another factor which causes fluctuations in
the prices of debt securities is the supply and demand for similarly rated
securities. Fluctuations in the prices of portfolio securities subsequent to
their acquisition will not affect any cash income from such securities but will
be reflected in the Fund's net asset value.
Investment Restrictions
It is the policy of the Fund not to concentrate its investments in
securities of companies in any particular industry. In the opinion of the
Commission, investments are concentrated in a particular industry if such
investments aggregate 25% or more of the Fund's total assets.
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The Fund's policy does not apply to investments in U.S. Government securities.
The 1940 Act provides that the policy of the Fund with respect to concentration
is a fundamental policy. In addition, the Fund has agreed not to change the
foregoing policy without the affirmative vote of a majority of the Fund's
outstanding shares of beneficial interest.
Fundamental Investment Restrictions. The Fund has adopted certain additional
investment restrictions which may not be changed without the affirmative vote of
the holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities. The Fund may not:
(1) Issue senior securities, except as permitted by the Fund's
borrowing, lending and commodity restrictions, and for purposes of this
restriction, the issuance of shares of beneficial interest in multiple classes
or series, the purchase or sale of options, futures contracts and options on
futures contracts, forward commitments, forward foreign exchange contracts,
repurchase agreements, fully covered reverse repurchase agreements, dollar
rolls, swaps and any other financial transaction entered into pursuant to the
Fund's investment policies as described in the Prospectus and this Statement of
Additional Information and in accordance with applicable SEC pronouncements, as
well as the pledge, mortgage or hypothecation of the Fund's assets within the
meaning of the Fund's fundamental investment restriction regarding pledging, are
not deemed to be senior securities.
(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 10% of the Fund's total assets (including
the amount borrowed) taken at market value. The Fund will not use leverage to
attempt to increase income. The Fund will not purchase securities while
outstanding borrowings (including reverse repurchase agreements and dollar
rolls) exceed 10% of the Fund's total assets.
(3) Guarantee the securities of any other company, or mortgage, pledge,
hypothecate or assign or otherwise encumber as security for indebtedness its
securities or receivables in an amount exceeding the amount of the borrowing
secured thereby.
(4) Purchase securities of a company if the purchase would result in
the Fund's having more than 5% of the value of its total assets invested in
securities of such company.
(5) Purchase securities of a company if the purchase would result in
the Fund's owning more than 10% of the outstanding voting securities of such
company.
(6) Act as an underwriter, except as it may deemed to be an underwriter
in a sale of restricted securities held in its portfolio.
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(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 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.
(10) Purchase securities for the purpose of controlling management of
other companies;
(11) Acquire the securities of any other domestic or foreign investment
company or investment fund (except in connection with a plan of merger or
consolidation with or acquisition of substantially all the assets of such other
investment company); provided, however, that nothing herein contained shall
prevent the Fund from investing in the securities issued by a real estate
investment trust, provided that such trust shall not be permitted to invest in
real estate or interests in real estate other than mortgages or other security
interests;
The Fund does not intend to enter into any reverse repurchase agreement or
dollar roll, lend portfolio securities or invest in securities index put and
call warrants, as described in fundamental investment restrictions (1), (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 issuer if those officers
and Trustees of the Fund, its adviser or principal underwriter, owning
individually more than one-half of 1% of the securities of such issuer, together
collectively own more than 5% of the securities of such issuer; or
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(2) 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 and foreign countries, the Fund has agreed to abide by certain additional
restrictions which may not be changed without the approval of the regulatory
agencies in such states and foreign countries (but which may be changed without
notice to or approval of the Fund's shareholders). These restrictions are that
the Fund will not: (1) purchase the securities of any issuer if such purchase
would result in the Fund owning more than 10% of any class of securities of such
issuer; (2) invest in uncovered puts or calls, or straddles, spreads, or any
combination thereof, or in oil, gas or other mineral leases or exploration or
development programs; (3) borrow in excess of 10% of gross assets taken at cost;
(4) pledge, mortgage, hypothecate or otherwise encumber any assets of the Fund;
(5) invest in foreign securities (exclusive of foreign securities listed on
recognized domestic or foreign securities exchanges), together with other
investments which are not readily marketable, in excess of 5% of average net
assets; and (6) 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 either the New York or American Stock Exchanges.
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 Investment Company Act of 1940, as amended (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") and
Forest-Starma (a Russian timber joint venture); President and Director of
Pioneer Plans Corporation ("PPC"), Pioneer Investment Corp. ("PIC"), Pioneer
Metals and Technology, Inc. ("PMT"), Pioneer International Corp. ("PIntl"),
Pioneer First Russia, Inc. ("First Russia") and Pioneer Omega, Inc. ("Omega");
Chairman of the Board and Director of Pioneer Goldfields Limited ("PGL") and
Teberebie Goldfields Limited; Chairman of the Supervisory Board of Pioneer Fonds
Marketing, GmbH ("Pioneer GmbH"); Member of the
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Supervisory Board of Pioneer First Polish Trust Fund Joint Stock Company
("PFPT"); Chairman, President and Trustee of all of the Pioneer mutual funds and
Partner, Hale and Dorr (counsel to the Fund).
RICHARD H. EGDAHL, M.D., Trustee, DOB: December 1926
Boston University Health Policy Institute, 53 Bay State Rd., 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, Winthrop Group, Inc (consulting firm) since 1982;
Manager of Research Operations, Xerox Palo Alto Research Center, from 1991 to
1994; Professor of Operations Management and Management of Technology, Boston
University School of Management ("BUSM"), from 1989 to 1993 and Trustee of all
of the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
JOHN W. KENDRICK, Trustee, DOB: July 1917
6363 Waterway Drive, Falls Church, VA 22044
Professor Emeritus and Adjunct Scholar, George Washington University;
Economic Consultant and Director, American Productivity and Quality Center;
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) 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, PIC, PIntl ,
First Russia, Omega and Pioneer SBIC Corporation, Executive Vice President and
Trustee of all of the Pioneer mutual funds.
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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.; 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, PIC, PIntl, PMT, PGL, First Russia, Omega and
Pioneer SBIC Corporation; Treasurer and Director of PPC and Treasurer of all of
the Pioneer mutual funds.
JOSEPH P. BARRI, Secretary, DOB: August 1946
Secretary of PGI, PMC, PPC, PIC, PIntl, PMT, First Russia, Omega and PCC;
Clerk of PFD and PSC; Partner, Hale and Dorr (counsel to the Fund) and Secretary
of all of the Pioneer mutual funds.
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 .formerly of Hale and Dorr (counsel
to the Fund) where he most recently served as junior partner.
JOHN A. CAREY, Vice President, DOB: May 1949
Vice President of PMC, Pioneer Equity-Income Fund, and Pioneer Income
Fund.
The Fund's Declaration of Trust (the "Declaration of Trust") provides
that the holders of two-thirds of its outstanding shares may vote to remove a
Trustee of the Fund at any meeting of shareholders. See "Description of Shares"
below. The business address of all officers is 60 State Street, Boston,
Massachusetts 02109.
All of the outstanding capital stock of PFD, PMC and PSC is owned,
directly or indirectly, by PGI, a publicly-owned Delaware corporation. PMC, the
Fund's investment
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adviser, serves as the investment adviser for the Pioneer mutual funds listed
below and manages the investments of certain institutional accounts. To the
knowledge of the Fund, no officer or Trustee of the Fund owned 5% or more of the
issued and outstanding shares of PGI as of the date of this Statement of
Additional Information, except Mr. Cogan who then owned approximately 14% of
such shares. As of the date of this Statement of Additional Information, the
Trustees and officers of the Fund owned less than 1% of the outstanding
securities of the Fund.
The table below lists all the Pioneer mutual funds currently offered to
the public and the investment adviser and principal underwriter for each fund.
Investment Principal
Fund Name Adviser Underwriter
Pioneer International Growth Fund PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer India Fund PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Mid-Cap Fund PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer Income Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer U.S. Government Money Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer Interest Shares, Inc. PMC Note 1
Pioneer Variable Contracts Trust PMC Note 2
Note 1 This fund is a closed-end fund.
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Note 2 This is a series of eight separate portfolios designed to provide
investment vehicles for the variable annuity and variable life insurance
contracts of various insurance companies or for certain qualified pension plans.
Compensation of Officers and Trustees
Commencing on January 1, 1996, each series of the Trust will pay an
annual trustees' fee to each Trustee who is not affiliated with PGI, PMC, 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 each series, estimated to
be approximately $2,069 for 1996. In addition, each series of the Trust will pay
a per meeting fee of $120 to each Trustee who is not affiliated with PGI, PMC,
PFD or PSC. The Trust also will pay an annual committee participation fee to
each Trustee who serves as a member of any committees established to act on
behalf of one or more of the of Pioneer mutual funds. Committee fees will be
allocated to the Trust on the basis of the Trust'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 trustees' fee, except
the Committee Chair who will receive an annual trustees' fee equal to 20% of the
aggregate annual trustees' fee. The 1996 fees for the Audit Committee members
and Chair are expected to be approximately $6,000 and $12,000, respectively.
Members of the Pricing Committee for the Pioneer mutual funds, as well as any
other committee which renders material functional services to the Board of
Trustees for the Pioneer mutual funds, will receive an annual fee equal to 5% of
the annual trustees' fee, except the Committee Chair who will receive an annual
trustees' fee equal to 10% of the annual trustees' fee. The 1996 fees for the
Pricing Committee members and Chair are expected to be approximately $3,000 and
$6,000, respectively. Any such fees paid to affiliates or interested persons of
PGI, PMC, PFD or PSC are reimbursed to the Trust under its Management Contract.
The Fund pays no salaries or compensation to any of its
officers. The Fund paid an annual trustees' fee of $5,000 and a payment of $300
plus expenses per meeting attended, to each Trustee who was not affiliated with
PGI, PMC, PFD or PSC and paid an annual trustees' fee of $500 plus expenses to
each Trustee affiliated with PGI, PMC, PFD or PSC. Any such fees and expenses
paid to affiliates or interested persons of PGI, PMC, PFD or PSC were reimbursed
to the Fund under its management contract.
The following table sets forth certain information with
respect to the compensation of each Trustee of the Fund:
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Aggregate Total Compensation from
Compensation the Trust and all
from the Trust * other Pioneer Mutual Funds **
Name of Trustee
John F. Cogan, Jr. $500.00 $11,000
Richard H. Egdahl, M.D. $7,197.00 $63,315
Margaret B.W. Graham $7,197.00 $62,398
John W. Kendrick $7,197.00 $62,398
Margeurite A. Piret $8,942.50 $76,704
David D. Tripple $500.00 $11,000
Stephen K. West $7,820.00 $68,180
John Winthrop $8,192.00 $71,199
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Total $5,371.50 $426,194
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* For the fiscal period ended December 31, 1995.
** For the calendar year ended December 31, 1995.
3. INVESTMENT ADVISER
The Fund has contracted with PMC, 60 State Street, Boston,
Massachusetts, to act as its investment adviser. PMC assists in the management
of the Fund and is authorized in its discretion to buy and sell securities for
the account of the Fund, subject to the right of the Fund's trustees to
disapprove any such purchase or sale. The Management contract expires initially
on May 31, 1997, but it is renewable annually by vote of a majority of the Board
of Trustees of the Fund (including a majority of the Trustees who are not
parties to the contract or interested persons of any such parties) cast in
person at a meeting called for the purpose of voting on such renewal. The
contract terminates if assigned and may be terminated without penalty by either
party by vote of its Board of Directors or Trustees or vote of a majority of its
outstanding securities and the giving of sixty days' written notice. The
management contract was approved by the shareholders of the Fund at a meeting of
shareholders held on April 30, 1996.
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 0.60% of the Fund's average daily net assets (the "Basic Fee"). An
appropriate percentage of this rate (based upon the number of days in the
current month) of this annual Basic Fee is applied to the Fund's average net
assets for the current month, giving a dollar amount which is the monthly fee.
Performance Fee Adjustment
The Basic Fee is subject to an upward or downward adjustment, depending on
whether and to what extent, the investment performance of the fund for the
performance period exceeds, or is exceeded by, the record of the index
determined by the Fund to be approprate over the same
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period. The Trustees have designated the Lipper Growth and Income Funds Index
(the "Index") for this purpose. The Index represents the arithmetic mean
performance (i.e., equally weighted) of the thirty largest funds with a growth
and income objective.
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 0.01%. The maximum
annualized adjustment rate is +/- 0.10%. This performance comparison is made at
the end of each month. An appropriate percentage of this rate (based upon the
number of days in the current month) is then applied to the fund's average net
assets for the entire performance period, giving a dollar amount that is added
to (or subtracted from) the Basic Fee.
The Fund's performance is calculated based on net asset value. For purposes of
calculating the performance adjustment, any dividends or capital gains
distributions paid by the Fund are treated as if reinvested in Fund shares at
the net asset value as of the record date for payment. The record for the Index
is based on change in value and is adjusted for any cash distributions from the
companies whose securities whose securities comprise the Index.
Application of Performance Adjustment
The application of the performance adjustment is illustrated by the following
hypothetical example, assuming that the net asset value of the Fund and the
level of the Index were $10 and 100, respectively, on the first day of the
performance period.
Investment Performance * Cumulative Change
First Day End of Period Absolute Percentage
Points
Fund $ 10 $ 13 +$ 3 + 30%
Index 100 123 + 23 + 23%
* Reflects performance at net asset value. Any dividends or capital gains
distributions paid by the Fund are treated as if reinvested in shares of the
Fund at net asset value as of the payment date and any dividends paid on
securities which comprise the Index are treated as if reinvested on the
ex-dividend date.
The difference in relative performance for the performance period is +7
percentage points. Accordingly, the annualized management fee rate for the last
month of the performance period would be calculated as follows: An appropriate
percentage (based upon the number of days in the current month) of the Basic Fee
of 0.60% would be applied to the Fund's average daily net
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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%. An appropriate percentage of this rate (based upon the number of
days in the current month) 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.
From time to time, the Trustees may determine that another securities index is a
more appropriate benchmark than the Index for purposes of evaluating the
perfromance of the Fund. In such event, a successor index may be substituted for
the Index. However, the calculation of the performance adjustment for any
portion of the performance period prior to the adoption of the seccessor index
would still be based upon the Fund's performance compared to the Index.
The Fund's current management contract with PMC became effective May 1, 1996.
Under the terms of the contract, beginning on May 1, 1996 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 current month and the preceding 35 months. At the
end of each succeeding month, the performance period will roll forward one month
so that it is always a 36-month period consisting of the current month and the
prior 35 months as described above. If including the intial rolling performance
period (that is, the period prior to the effectiveness of the management
contract), has the effect of increasing the Basic Fee for any month, such
aggregate prior results will be treated as Index neutral for purposes of
calculating the performance adjustment for such month. Otherwise, the
performance adjustment will be made as described above.
The Basic Fee is computed daily, the performance fee adjustment is
calculated once per month and the entire management fee is normally paid
monthly.
Prior to May 1, 1996, as compensation for its management services and
expenses incurred, PMC received 0.50% per annum of the Fund's average daily net
assets up to $250,000,000, 0.48% of such assets between $250,000,000 and
$300,000,000, and 0.45% of such assets in excess of $300,000,000. The fee was
computed daily and paid monthly.
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During its fiscal years ended December 31, 1995, 1994 and
1993, the Fund paid or owed management fees to PMC of approximately $10,330,000,
$9,362,000 and $8,774,000, respectively.
4. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with Pioneering Services Corporation
("PSC"), 60 State Street, Boston, Massachusetts, to act as its dividend
disbursing agent and transfer agent. This contract terminates if assigned and
may be terminated without penalty by either party by vote of its Board of
Directors or Trustees or a majority of its outstanding voting securities and the
giving of sixty 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 Fund shares; (ii) distributing dividends and capital gains
associated with Fund accounts; and (iii) maintaining account records and
responding to shareholder inquiries.
PSC receives an annual fee of $22.00 per shareholder account
from the Fund as compensation for the services described above. This fee is set
at an amount determined by vote of a majority of the Fund's 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 contracted to be an agent for specific transaction
processing and 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.
5. CUSTODIAN
Brown Brothers Harriman & Co. (the "Custodian") is the
custodian of the Fund's assets. The Custodian's responsibilities include
safekeeping and controlling the Fund's cash and securities, handling the receipt
and delivery of securities, and collecting interest and dividends on the Fund's
investments. The Custodian does not determine the investment policies of the
Fund or decide which securities the Fund will buy or sell. The Fund may,
however, invest in securities, including repurchase agreements, issued by the
Custodian and may deal with the Custodian as principal in securities
transactions. Portfolio securities may be deposited into the Federal
Reserve-Treasury Department Book Entry System or the Depository Trust Company.
6. PRINCIPAL UNDERWRITER
PFD, 60 State Street, Boston, Massachusetts, serves as the
principal underwriter for the Fund in connection with the continuous offering of
its shares. The Fund has entered into an Underwriting Agreement with PFD. The
Underwriting Agreement will continue from year to year if annually approved by
the Trustees in conjunction with the continuance of the Plan (as defined below).
The Underwriting Agreement provides that PFD will bear the distribution
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expenses of the Fund not borne by the Fund. During the Fund's 1995, 1994 and
1993 fiscal years, net underwriting commissions retained by PFD were
approximately $923,858, $990,413, and $880,000, respectively. Commissions
reallowed to dealers for the 1995, 1994 and 1993 fiscal years were approximately
$6,147,056, $6,589,413 and $7,303,666, respectively.
PFD bears all expenses it incurs in providing services under
the Underwriting Agreement. Such expenses include compensation to its employees
and representatives and to securities dealers for distribution related services
performed for the Fund. PFD also pays certain expenses in connection with the
distribution of the Fund's shares, including the cost of preparing, printing and
distributing advertising or promotional materials, and the cost of printing and
distributing prospectuses and supplements to prospective shareholders. The Fund
bears the cost of registering its shares under federal, state and foreign
securities law. The Fund and PFD have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended. Under the Underwriting Agreement, PFD will use its best efforts in
rendering services to the Fund.
The Fund 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 an
acquisition of portfolio securities (other than municipal debt securities issued
by state political subdivisions or their agencies or instrumentalities) pursuant
to a bona fide purchase of assets, merger or other reorganization provided (i)
the securities meet the investment objectives and policies of the Fund; (ii) the
securities are acquired by the Fund for investment and not for resale; (iii) the
securities are not restricted as to transfer either by law or liquidity of
market; and (iv) the securities have a value which is readily ascertainable (and
not established only by evaluation procedures) as evidenced by a listing on the
American Stock Exchange or the New York Stock Exchange, or by quotation under
the NASD Automated Quotation System. An exchange of securities for Fund shares
will generally be a taxable transaction to the shareholder.
7. DISTRIBUTION PLANS
The Fund has adopted a plans of distribution pursuant to Rule
12b-1 under the 1940 Act with respect to its Class A, Class B and Class C shares
(the "Class A Plan," the "Class B Plan" and the "Class C Plan") (together, the
"Plans").
Class A Plan
Pursuant to the Class A Plan the Fund may reimburse PFD for its
expenditures in financing any activity primarily intended to result in the sale
of the Class A shares of the Fund. 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
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pursuant to the Class A Plan are accrued on a fiscal year basis and may not
exceed 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 consideration of personal services
and/or account maintenance services rendered by the dealer with respect to Class
B shares. PFD will advance to dealers the first- year service fee at a rate
equal to 0.25% of the amount invested. As compensation therefor, PFD may retain
the service fee paid by the Fund with respect to such shares for the first year
after purchase. Dealers will become eligible for additional service fees with
respect to such shares commencing in the thirteenth month following purchase.
Dealers may from time to time be required to meet certain other criteria in
order to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class B Plan is
to compensate PFD for its distribution services to the Fund. PFD pays
commissions to dealers as well as expenses of printing prospectuses and reports
used for sales purposes, expenses with respect to the preparation and printing
of sales literature and other distribution related expenses, including, without
limitation, the cost necessary to provide distribution- related services, or
personnel, travel office expenses and equipment. The Class B Plan also provides
that PFD will receive all contingent deferred sales charges ("CDSCs")
attributable to Class B shares. (See "Distributions Plans" in the Prospectus.)
Class C Plan
The Class C Plan provides that the Fund will pay PFD, as the Fund's
distributor for its Class C shares, a distribution fee accrued daily and paid
quarterly, equal on an annual basis to 0.75% of the Fund's average daily net
assets attributable to Class C shares and will pay PFD a service fee equal to
0.25% of the Fund's average daily net assets attributable to Class C shares. PFD
will in turn pay to securities dealers which enter into a sales agreement with
PFD a distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the Fund's average daily net assets attributable to Class C
shares owned by investors for whom that
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securities dealer is the holder or dealer of record. The service fee is intended
to be in consideration of personal services and/or account maintenance services
rendered by the dealer with respect to Class C shares. PFD will advance to
dealers the first year's service fee at a rate equal to 0.25% of the amount
invested. As compensation therefor, PFD may retain the service fee paid by the
Fund with respect to such shares for the first year after purchase. Commencing
in the thirteenth month following a purchase of Class C shares, dealers will
become eligible for additional service fees at a rate of up to 0.25% of the
current value of the amount invested and additional compensation at a rate of up
to 0.75% of the average net asset value of such shares. Dealers may from time to
time be required to meet certain other criteria in order to receive service
fees. PFD or its affiliates are entitled to retain all service fees payable
under the Class C Plan for which there is no dealer of record or for which
qualification standards have not been met as partial consideration for personal
services and/or account maintenance services performed by PFD or its affiliates
for shareholder accounts.
The purpose of distribution payments to PFD under the Class C Plan is
to compensate PFD for its distribution services with respect to the Class C
shares of the Fund. PFD pays commissions to dealers as well as expenses of
printing prospectuses and reports used for sales purposes, expenses with respect
to the preparation and printing of sales literature and other
distribution-related expenses, including, without limitation, the cost necessary
to provide distribution-related services, or personnel, travel office expenses
and equipment. The Class C Plan also provides that PFD will receive all CDSCs
attributable to Class C shares. (See "Distributions Plans" in the Prospectus.)
General
In accordance with the terms of the Plan, PFD provides to the Fund for review by
the Trustees a quarterly written report of the amounts expended under the Plan
and the purpose for which such expenditures were made. In the Trustees'
quarterly review of the Plan, they will consider its continued appropriateness
and the level of compensation it provides.
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 Plan 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 Plan by the Fund and
except to the extent certain officers may have an interest in PFD's ultimate
parent, PGI.
Each Plan was 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 had any direct or indirect financial interest in the operation of
the Plan), cast in person at a meeting called for the purpose of voting on the
Plan. In approving each Plan, the Trustees identified and considered a number of
potential benefits
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which the Plan may provide. The Board of Trustees believes that there is a
reasonable likelihood that the Plan will benefit the Fund and its current and
future shareholders. Under its terms, each Plan remains in effect from year to
year provided such continuance is approved annually by vote of the Trustees in
the manner described above. Each Plan may not be amended to increase materially
the annual percentage limitation of average net assets which may be spent for
the services described therein without approval of the shareholders of the Fund.
Mmaterial amendments of each Plan must also be approved by the Trustees in the
manner described above. The Plans 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 Plans, or by a vote of a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act). . A Plan will automatically
terminate in the event of its assignment (as defined in the 1940 Act).
During the fiscal year ended December 31, 1995, the Fund
incurred total distribution fees pursuant to the Plan of $3,776,000.
Distribution fees were paid by the Fund to PFD in reimbursement of expenses
related to services, shareholder accounts and to compensating dealers and sales
personnel. Class B and Class C shares will first be offered on July 1, 1996.
8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP 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 Securities and
Exchange Commission.
9. PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities
are placed on behalf of the Fund by PMC pursuant to authority contained in the
management contract (subject to the right of the Trustees to reverse any such
transaction). The primary consideration in placing portfolio security
transactions is execution at the most favorable prices. Additionally, 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.
In circumstances where two or more broker-dealers are in a position to
offer comparable prices and execution, dealers may be selected who provide
brokerage and/or research services to the Fund and/or other investment companies
managed by PMC, or who sell shares of the Fund. In addition, if PMC determines
in good faith that the amount of commissions charged by a broker is reasonable
in relation to the value of the brokerage and research services provided
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by such broker, the Fund may pay commissions to such broker in an amount greater
than the amount another firm may charge. Brokerage and research services may
include advice concerning the value of securities; the advisability of investing
in, purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; providing stock price quotation services;
furnishing analyses, electronic information services, manuals and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, performance of accounts, comparative fund statistics and
credit rating service information; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement). PMC
maintains a listing of dealers who provide such services on a regular basis.
However, because it is anticipated that many transactions on behalf of the Fund
and other investment companies managed by PMC are placed with dealers (including
dealers on the listing) without regard to the furnishing of such services, it is
not possible to estimate the proportion of such transactions directed to such
dealers solely because such services were provided. Management believes that no
exact dollar value can be calculated for such services.
The receipt of research from dealers may be useful to PMC in
rendering investment management services to the Fund and other investment
companies managed by PMC, and 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.
The Trustees periodically review PMC's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Fund. During the fiscal years ended December 31, 1995, 1994, and
1993, the Fund paid or owed total brokerage commissions of approximately
$1,983,083, $1,016,736 and $1,270,000, respectively.
The Fund is managed by Pioneering Management Corporation
("PMC"), which also serves as investment adviser to other mutual funds in the
Pioneer group and private accounts with investment objectives similar to those
of the Fund. Securities frequently meet the investment objectives of the Fund,
such other mutual funds in the Pioneer group and such other private accounts. In
such cases, the decision to recommend a purchase to one mutual fund or account
rather than the other 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 client
presently has in a particular industry and the availability of investment funds
in each client account.
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It is possible that at times identical securities will be held
by more than one fund and/or account. However, the position of any mutual fund
or account in the same issue may vary and the length of time that any mutual
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 seeks to acquire the same security at about the
same time, the Fund may not be able to acquire as large a position in such
security as it desires or it may have to pay a higher price for the security.
Similarly, the Fund may not be able to obtain as large an execution of an order
to sell or as high a price for any particular portfolio security if PMC decides
to sell on behalf of another account the same portfolio security at the same
time. On the other hand, if the same securities are bought or sold at the same
time by more than one account, the resulting participation in volume
transactions could produce better executions for the Fund or the account. In the
event that more than one account purchases or sells the same security on a given
date, the purchases and sales will normally be made as nearly as practicable on
a pro rata basis in proportion to the amounts desired to be purchased or sold by
each. Although some of the other mutual funds in the Pioneer group have the same
general investment objectives and fundamental policies as the Fund, their
portfolios do not generally consist of the same investments as the Fund or each
other and their performance results are likely to differ from that of the Fund.
10. DIVIDENDS AND TAX STATUS
It is the Fund's policy to meet the requirements of Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code"), for
qualification as a regulated investment company. The requirements relate to the
sources of its income, diversification of its assets and distributions 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
receives, the Fund will be relieved of the necessity of paying federal income
tax.
Dividends from investment company taxable income, which
includes net investment income, net short-term capital gain in excess of net
long-term capital loss, and certain net foreign exchange gains are taxable as
ordinary income, whether received in cash or in additional shares. Dividends
from net long-term capital gain in excess of net short-term capital loss, if
any, whether received in cash or additional shares, are taxable to the Fund's
shareholders as long-term capital gains for federal income tax purposes without
regard to the length of time shares of the Fund have been held. The federal
income tax status of all distributions will be reported to shareholders
annually.
Any dividend declared by the Fund in October, November or
December as of a record date in such a month and paid during the following
January will be treated for federal income
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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, forward foreign currency contracts, foreign currencies, or payables
or receivables denominated in a foreign currency are subject to Section 988 of
the Code, which generally causes such gains and losses to be treated as ordinary
income and losses and may affect the amount, timing and character of
distributions to shareholders.
If the Fund acquires stock in certain non-U.S. corporations
that receive at least 75% of their annual gross income from passive sources
(such as interest, dividends, rents, royalties or capital gain) or hold at least
50% of their assets in investments producing such passive income ("passive
foreign investment companies"), the Fund could be subject to federal income tax
and additional interest charges on "excess distributions" received from such
companies or gain from the sale of stock in such companies, even if all income
or gain actually received by the Fund is timely distributed to its shareholders.
The Fund would not be able to pass through to its shareholders any credit or
deduction for such a tax. Certain elections may, if available, ameliorate these
adverse tax consequences, but any such election would require the Fund to
recognize taxable income or gain without the concurrent receipt of cash. The
Fund may limit and/or manage its holdings in passive foreign investment
companies to minimize its tax liability or maximize its return from these
investments.
The Fund may invest in debt obligations that are in the lower
rating categories or are unrated. Investments in debt obligations that are at
risk of default present special tax issues for the Fund. Tax rules are not
entirely clear about issues such as when the Fund may cease to accrue interest,
original issue discount, or market discount, when and to what extent deductions
may be taken for bad debts or worthless securities, how payments received on
obligations in default should be allocated between principal and income, and
whether exchanges of debt obligations in a workout context are taxable. These
and other issues will be addressed by the Fund, in the event it invests in such
securities, in order to ensure that it distributes sufficient income to preserve
its status as a regulated investment company and to avoid becoming subject to
federal income or excise tax.
If the Fund invests in certain PIKs, zero coupon securities,
or, in general, any other securities with original issue discount (or with
market discount if the Fund elects to include market discount in income
currently), the Fund must accrue income on such investments prior to the receipt
of the corresponding cash payments. However, the Fund must distribute, at least
annually, all or substantially all of its net income, including such accrued
income, to shareholders to qualify as a regulated investment company under the
Code and avoid Federal income and excise taxes. Therefore, the Fund may have to
dispose of its portfolio
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securities under disadvantageous circumstances to generate cash, or may have to
leverage itself by borrowing the cash, to satisfy distribution requirements.
At the time of an investor's purchase of Fund shares, a portion of the
purchase price is often attributable to realized or unrealized appreciation in
the Fund's portfolio or undistributed taxable income of the Fund. Consequently,
subsequent distributions from such appreciation or income may be taxable to such
investor even if the net asset value of the investor's shares is, as a result of
the distributions, reduced below the investor's cost for such shares and the
distributions in reality represent a return of a portion of the investment.
Redemptions and exchanges are taxable events. Any loss realized by a
shareholder upon the redemption or other sales 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 shares redeemed or exchanged have been held for less
than 91 days, (1) in the case of a reinvestment at net asset value pursuant to
the reinvestment privilege, the sales charge paid on such shares is not included
in their tax basis under the Code, and (2) in the case of an exchange, all or a
portion of the sales charge paid on such shares is not included in their tax
basis under the Code, to the extent a sales charge that would otherwise apply to
the shares received is reduced pursuant to the exchange privilege. In either
case, the portion of the sales charge not included in the tax basis of the
shares redeemed or surrendered in an exchange is included in the tax basis of
the shares acquired in the reinvestment or exchange. Losses on certain
redemptions may be disallowed under "wash sale" rules in the event of other
investments in the Fund (including those made pursuant to automatic dividend
reinvestment) within a period of 61 days beginning 30 days before and ending 30
days after a redemption or other sale of shares.
Options written by the Fund on certain securities may cause
the Fund to recognize gains or losses from marking-to-market at the end of its
taxable year even though such options may not have lapsed, been closed out, or
exercised and may affect the characterization as long-term or short-term of some
capital gains and losses realized by the Fund. Losses on certain options and/or
offsetting positions (portfolio securities or other positions with respect to
which the Fund's risk of loss is substantially diminished by one or more
options) may also be deferred under the tax straddle rules of the Code, which
may also affect the characterization of capital gains or losses from straddle
positions and certain successor positions as long-term or short- term. The
effect of these rules may be mitigated to the extent the Fund limits its
option-writing to "qualified covered call options" on portfolio stock. The tax
rules applicable to options and straddles may affect the amount, timing and
character of the Fund's income and losses and hence of its distributions to
shareholders.
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For purposes of the 70% dividends-received deduction available
to corporations, dividends received by the Fund, if any, from U.S. domestic
corporations in respect of any share of stock with a tax holding period of at
least 46 days (91 days in the case of certain preferred stock) in an unleveraged
position and distributed and designated by the Fund may be treated as qualifying
dividends. Any corporate shareholder should consult its tax 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. Corporate shareholders must meet the minimum holding
period requirement stated above (46 or 91 days), taking into account any holding
period reductions from certain hedging or other positions that diminish risk of
loss, with respect to their Fund shares in order to qualify for the deduction
and, if they borrow to acquire Fund shares, may be denied a portion of the
dividends-received deduction. The entire qualifying dividend, including the
otherwise deductible amount, will be included in determining the excess (if any)
of a corporation's adjusted current earnings over its alternative minimum
taxable income, which may increase a corporation's alternative minimum tax
liability.
The Fund may be subject to withholding and other taxes imposed
by foreign countries with respect to its investments in those countries. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes. The Fund does not expect to satisfy the requirements for passing through
to shareholders their pro rata shares of foreign taxes paid by the Fund, with
the result that 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 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 Applications,
or on separate W-9 Forms, 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.
Provided that the Fund qualifies as a regulated investment
company under the Code, it will not be required to pay any Massachusetts income,
corporate excise or franchise taxes.
-25-
<PAGE>
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. This description does not address the
special tax rules applicable to particular types of investors, such as banks,
insurance companies or tax exempt entities. Investors other than U.S. persons
may be subject to different U.S. tax treatment, including a possible 30%
non-resident alien U.S. withholding tax (or any 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 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.
11. DESCRIPTION OF SHARES
The Fund's Declaration of Trust permits its Board of Trustees
to authorize the issuance of an unlimited number of full and fractional shares
of beneficial interest (without par value) which may be divided into such
separate series as the Trustees may establish. Currently, the Fund consists of
only one series. The Trustees may 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. The Declaration of
Trust further authorizes the Trustees to classify or reclassify any series of
the shares into one or more classes.Pursuant thereto, the Trustees have
authorized the issuance of three classes of shares of the Fund, designated Class
A, Class B and Class C shares. Each share of a class 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 orclasses of shares, in which case the shares of each class of
a series would participate equally in the earnings, dividends and assets 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
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<PAGE>
will vote separately. No amendment adversely affecting the rights of
shareholders may be made to the Fund's Declaration of Trust without the
affirmative vote of a majority of its shares. Shares have no preemptive or
conversion rights. Shares are fully paid and non-assessable by the Fund, except
as stated below. See "Certain Liabilities."
12. CERTAIN LIABILITIES
The Fund has previously been organized as a Delaware corporation, a
Massachusetts corporation and a Massachusetts business trust and was reorganized
as a Delaware business trust on May 1, 1996, pursuant to an Agreement and Plan
of Reorganization approved by the shareholders of the Fund. As a Delaware
business trust, the Fund's operations are governed by its Declaration of Trust
dated May 1, 1996. A copy of the fund's Certificate of Trust, also dated May 1,
1996, is on file with the office of the Secretary of State of Delaware.
Generally, Delaware business trust shareholders are not personally liable for
obligations of the Delaware business trust under Delaware law. The Delaware
Business Trust Act (the "Delaware Act") provides that a shareholder of a
Delaware business trust shall be entitled to the same limitation of liability
extended to shareholders of private for-profit corporations. The Fund's
Declaration of Trust expressly provides that the Fund is organized under the
Delaware Act and that the Declaration of Trust is to be governed by Delaware
law. There is nevertheless a remote possibility that a Delaware business trust,
such as the fund, might become a party to an action in another state whose
courts refused to apply Delaware law, in which case the trust's shareholders
could become subject to personal liability.
To guard against this risk, the Declaration of Trust (I) contains an express
disclaimer of shareholder liability for acts or obligations of the Fund and
provides that notice of such disclaimer may be given in each agreement,
obligation or instrument entered into or executed by the Fund or its Trustees,
(ii) provides for the indemnification out of Fund property of any shareholders
held personally liable for any obligations of the Fund or any series of the Fund
and (iii) provides that the Fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the Fund and
satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss beyond his or her investment because of shareholder liability is
limited to circumstances in which all of the following factors are present: (1)
a court refused to apply Delaware law; (2) the liability arose under tort law
or, if not, no contractual limitation of liability was in effect; and (3) the
Fund itself would be unable to meet its obligations. In light of Delaware law,
the nature of the Fund's business and the nature of its assets, the risk of
personal liability to a Fund shareholder is remote.
The Declaration of Trust further provides that the Fund shall indemnify each of
its Trustees and officers against liabilities and expenses reasonably incurred
by them, in connection with, or arising out of, any action, suit or proceeding,
threatened against or otherwise involving such Trustee or officer, directly or
indirectly, by reason of being or having been a Trustee or officer
-27-
<PAGE>
of the Fund. The Declaration of Trust does not authorize the Fund to indemnify
any Trustee or officer against any liability to which he or she would otherwise
be subject by reason of or for willful misfeasance, bad faith, gross negligence
or reckless disregard of such person's duties.
13. 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
(normally 4:00 P.M., Eastern Time) on each day on which the New York Stock
Exchange is open for business. As of the date of this Statement of Additional
Information, the New York Stock Exchange is open for trading every weekday
except for the following holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The net asset value per share of each class of the Fund is also determined on
any other day in which the level of trading in its portfolio securities is
sufficiently high so that the current net asset value per share might be
materially affected by changes in the value of its portfolio securities. On any
day in which no purchase orders in good order for the shares of the Fund are
received and no shares are tendered for redemption, the net asset value per
share is not determined.
The net asset value per share of each class of the Fund is
computed by taking the amount of the value of all of the Fund's assets
attributable to a class, less the Fund's liabilities attributable to that class,
and dividing it by the number of outstanding shares for the class. Securities
which have not traded on the date of valuation or securities for which sales
prices are not generally reported are valued at the mean between the last bid
and asked prices. Securities for which no market quotations are readily
available (including those the trading of which has been suspended) will be
valued at fair value as determined in good faith by the Board of Trustees,
although the actual computations may be made by persons acting pursuant to the
direction of the Board. The maximum offering price per Class A share is the net
asset value per Class A share, plus the maximum sales charge. Class B and Class
C shares are offered at net asset value without the imposition of an initial
sales charge.
14. SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan ("SWP") is designed to provide
a convenient method of receiving fixed payments at regular intervals from shares
of the Fund deposited by the applicant under this SWP. You 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 you, or will be sent by
check to you, or any person designated by you. Class B accounts must meet the
minimum initial investment requirement prior to eastablishing a SWP. Withdrawals
from Class B and Class C accounts are limited to 10% of the value of the account
at the time the SWP is
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<PAGE>
established. See "Waiver or Reduction of Contingent Deferred Sales Charge" in
the prospectus. Designation of another person to receive the checks 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 an actual yield or income on his or her investment
because part of such payments may be a return of his or her capital.
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. The fees of PSC for maintaining the SWP is paid by the Fund.
15. LETTER OF INTENTION
Purchases of Class A shares of $50,000 or over (excluding any
reinvestments of dividends and capital gains distributions) made within a
13-month period pursuant to a Letter of Intention provided by PFD will qualify
for a reduced sales charge. Such reduced sales charge will be the charge that
would be applicable to the purchase of all Class A shares purchased during such
13-month period pursuant to a Letter of Intention had such shares been purchased
all at once. See "Information About Fund Shares" in the Prospectus. For example,
a person who signs a Letter of Intention providing for a total investment in the
Class A shares of the Fund of $50,000 over a 13-month period would be charged at
the 4.50% sales charge rate with respect to all purchases during that period.
Should the amount actually purchased during the 13-month period be more or less
than that indicated in the Letter, an adjustment in the sales charge will be
made. A Class A purchase not made pursuant to a Letter of Intention may be
included thereafter if the Letter is filed within 90 days of such purchase. Any
shareholder may also obtain the reduced sales charge by including the value (at
current offering price) of all his shares in the Fund and all other Pioneer
mutual funds held of record as of the date of his Letter of Intention as a
credit toward determining the applicable scale of sales charge for the Class A
shares to be purchased under the Letter of Intention.
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<PAGE>
The Letter of Intention authorizes PSC to escrow Class A
shares having a purchase price equal to 5% of the stated investment in the
Letter of Intention. A Letter of Intention is not a binding obligation upon the
investor to purchase, or the Fund to sell, the full amount indicated and the
investor should read the provisions of the Letter of Intention contained in the
Account Application carefully.
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 to that of other mutual funds with similar investment
objectives, and to stock or other relevant indices. For example, the totoal
return of the Fund's classes may be compared to rankings prepared by Lipper
Analytical Services, Inc., a widely recognized independent service which
monitors mutual fund performance; the Standard & Poor's 500 Stock Index ("S&P
500"), an index of unmanaged groups of common stock; or the Dow Jones Industrial
Average, a recognized unmanaged index of common stocks of 30 industrial
companies listed on the New York Stock Exchange; or the Frank Russell Indexes
("Russell 1000," "2000," "2500," "3000") and Wilshire Total Market Value Index
("Wilshire 5000"), 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, 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 Weisenberger, Donaghue'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.
Standardized Average Annual Total Returns
Quotations and Other Performance Quotations
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<PAGE>
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 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. 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 Prospectus, this Statement of
Additional Information or in advertising are calculated by standard methods
prescribed by the SEC.
Standardized Average Annual Total Return Quotations
Average annual total return quotations for each Class of Fund shares
are computed by finding the average annual compounded rates of return that would
cause a hypothetical investment in the class made on the first day of a
designated period (assuming all dividends and distributions are reinvested) to
equal the ending redeemable value of such hypothetical investment on the last
day of the designated period in accordance with the following formula:
P(1+T)n = ERV
Where:
P = a hypothetical initial payment of $1,000,
less the maximum sales load of 5.75% for
Class A shares or the deduction of the CDSC
for Class B and Class C shares at the end of
the period.
T = average annual total return
n = number of years
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<PAGE>
ERV = ending redeemable value of the hypothetical
$1,000 initial payment made at the beginning
of the designated period (or fractional
portion thereof)
For purposes of the above computation, it is assumed that 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 are taken into consideration. For any account fees that vary
with the size of the account, the account fee used for purposes of the above
computation is assumed to be the fee that would be charged to the Class' mean
account size.
The average annual compounded total return of the Class A
shares of the Fund for the one-year, five-year, ten-year and life-of-Fund
periods ending December 31, 1995, was-19.37%, 13.58%, 11.25% and 12.78%,
respectively. Class B and Class C shares will first be offered July 1, 1996.
The Fund may also present, from time to time, historical
information depicting the value of a hypothetical account over the time period
from the Fund's inception in 1928 until the present. The Fund also may depict
summary results of assumed investments in the Fund for each of the
ten-calendar-year periods in the Fund's history and for the ten-year periods
which began at recognized market highs or ended at recognized market lows. An
example of this historical information describing various performance
characteristics of the Fund from 1928 until the present is contained under the
caption "Investment Results" in this Statement of Additional Information.
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.
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;
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<PAGE>
o annualized 30-day yields on Pioneer fixed income funds;
o annualized 7-day yields and 7-day effective (compound) yields for
Pioneer money market funds; and
o dividends and capital gains distributions for all Pioneer mutual
funds.
Yields are calculated in accordance with SEC mandated standard
formulas.
In addition, by using a personal identification number
("PIN"), shareholders may enter purchases, exchanges and redemptions, access
their account balance and last three transactions and may order a duplicate
statement. See "FactFoneSM" in the Prospectus for more information.
All performance numbers communicated through FactFoneSM
represent past performance, and figures for all quoted bond funds include the
applicable maximum sales charge. A shareholder's actual yield and total return
will vary with changing market conditions. The value of Class A, Class B and
Class C shares (except for Pioneer money market funds, which seek a stable $1.00
share price) will also vary and may be worth more or less at redemption than
their original cost.
17. FINANCIAL STATEMENTS
The audited financial statements and related report of Arthur
Andersen LLP contained in the Fund's 1995 Annual Report are hereby incorporated
by reference and attached hereto. A copy of the Annual Report may be obtained
without charge by calling Shareholder Services at 1-800-225-6292 or by written
request to the Fund at 60 State Street, Boston, Massachusetts 02109.
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<PAGE>
APPENDIX A
Pioneer Fund
<TABLE>
<CAPTION>
Sales
Initial Offering Charge Shares Purchased Net Asset Value Per Initial Net
Date Investment Price Included Share Asset Value
<S> <C> <C> <C> <C> <C> <C>
3/1/28 $10,000 $0.93 5.75% 10,752.688 $0.8800 $9,450
Value of Shares
(Dividends and Capital Gains Reinvested)
From From Cap. Gains Reinvested From Dividends
Date Investment Reinvested Total Value
---- ----------- ---------- -----------
<S> <C> <C> <C> <C>
12/31/86 $212,042 $7,274,912 $5,135,185 $12,622,139
12/31/87 $198,710 $7,950,978 $5,159,386 $13,309,074
12/31/88 $218,710 $9,400,586 $6,129,240 $15,748,536
12/31/89 $250,322 $11,625,178 $7,556,504 $19,432,004
12/31/90 $202,044 $10,571,298 $6,614,590 $17,387,932
12/31/91 $217,635 $13,443,867 $7,682,794 $21,344,296
12/31/92 $231,291 $15,309,348 $8,705,733 $24,246,372
12/31/93 $249,998 $17,494,468 $9,950,970 $27,695,436
12/31/94 $229,247 $17,627,580 $9,679,349 $27,536,176
12/31/95 $261,936 $22,910,582 $11,700,045 $34,872,563
</TABLE>
Past performance does not guarantee future results. Return and share
price fluctuate and your shares when redeemed may be worth more or less than
your original purchase.
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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 be used, if appropriate. The indices
are not available for direct investment. The data presented is not meant to be
indicative of the performance of the Fund, reflects past performance and does
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 Composite Index
includes 500 of the largest stocks (in terms of stock market value) in the
United States; prior to March 1957 it consisted of 90 of the largest stocks.
DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of 30 blue chip stocks.
U.S. SMALL STOCK INDEX
This index is a market value weighted index of the ninth and tenth deciles of
the New York Stock Exchange (NYSE), plus stocks listed on the American Stock
Exchange (AMEX) and over-the-counter (OTC) with the same or less capitalization
as the upper bound of the NYSE ninth decile.
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 Index according to price-to-book ratios. The Growth Index contains
stocks with higher price-to-book ratios, and the Value Index contains stocks
with lower price-to-book ratios. Both indexes are market capitalization
weighted.
LONG-TERM U.S. GOVERNMENT BONDS
The total returns on long-term government bonds from 1977 to 1991 are
constructed with data from The Wall Street Journal. Over 1926-1976, data are
obtained from the Government bond file at the Center for Research in Security
Prices (CRSP), Graduate School of Business, University of Chicago. Each year, a
one-bond portfolio with a term of approximately 20 years and a reasonably
current coupon was used, and whose returns did not reflect potential tax
benefits, impaired negotiability, or special redemption or call privileges.
Where callable bonds had to be used, the term of the bond was assumed to be a
simple average of the maturity and first call dates
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<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
minus the current date. The bond was "held" for the calendar year and returns
were computed. Total returns for 1977-1991 are calculated as the change in the
flat price or and-interest price.
INTERMEDIATE-TERM U.S. GOVERNMENT BONDS
Total returns of the intermediate-term government bonds for 1977-1991 are
calculated from The Wall Street Journal prices, using the change in flat price.
Returns from 1934-1986 are obtained from the CRSP Government Bond File.
Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than 5 years, and this bond is "held"
for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934-1942, almost all bonds
with maturities near 5 years were partially or full tax-exempt and were selected
using the rules described above. Personal tax rates were generally low in that
period, so that yields on tax-exempt bonds were similar to yields on taxable
bonds. From 1926-1933, there are few bonds suitable for construction of a series
with a 5-year maturity. For this period, five year bond yield estimates are
used.
MSCI
Morgan Stanley Capital International Indices, developed by the Capital
International S.A., are based on share prices of some 1470 companies listed on
the stock exchanges around the world.
Countries in the MSCI EAFE Portfolio are:
Australia; Austria; Belgium; Denmark; Finland; France; Germany; Hong Kong;
Italy; Japan; Netherlands; N. Zealand; Norway; Singapore/Malaysia; Spain;
Sweden; Switzerland; United Kingdom.
6 MONTH CDs
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
LONG-TERM U.S. CORPORATE BONDS
For 1969-1991, corporate bond total returns are represented by the Salomon
Brothers Long-Term High-Grade Corporate Bond Index. Since most large corporate
bond transactions take place over the counter, a major dealer is the natural
source of these data. The index includes nearly all Aaa- and Aa-rated bonds. If
a bond is downgraded during a particular month, its return for the month is
included in the index before removing the bond from future portfolios.
Over 1926-1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946-1968, Ibbotson
and Sinquefield backdated the Salomon Brothers' index, using Salomon Brothers'
monthly yield data with a methodology similar to that used by Salomon for
1969-1991. Capital appreciation returns were calculated from yields assuming (at
the beginning of each monthly holding period) a 20-year maturity, a bond price
equal to par, and a coupon equal to the beginning-of-period yield. For the
period 1926-1945, the Standard and Poor's monthly High-Grade Corporate Composite
yield data were used, assuming a 4 percent coupon and a 20-year maturity. The
conventional present-value formula for bond price for the beginning and
end-of-month prices was used. (This formula is presented in Ross, Stephen A.,
and Randolph W. Westerfield, Corporate Finance, Times
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<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
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 for
1977-1991; the CRSP U.S. Government Bond File is the source until 1976. Each
month a one-bill portfolio containing the shortest-term bill having not less
than one month to maturity is constructed. (The bill's original term to maturity
is not relevant.) To measure holding period returns for the one-bill portfolio,
the bill is priced as of the last trading day of the previous month-end and as
of the last trading day of the current month.
NAREIT-EQUITY INDEX
All of the data is based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMSE and the NASDAQ. The data is
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 weighing at the beginning of the period.
Only those REITs listed for the entire period are used in the total return
calculation. Dividends are included in the month based upon their payment date.
There is no smoothing of income. Liquidating dividends, whether full or partial,
are treated as income.
RUSSELL 2000 SMALL STOCK INDEX
Index of the 2,000 smallest stocks in the Russell 3000 Index (TM); the smallest
company has a market capitalization of approximately $13 million. The Russell
3000 is comprised of the 3,000 largest US companies as determined by market
capitalization representing approximately 98% of the US equity market. The
largest company in the index has a market capitalization of $67 billion. The
Russell Indexes (TM) are reconstituted annually as of June 1st, based on May 31
market capitalization rankings.
WILSHIRE REAL ESTATE SECURITIES INDEX
The Wilshire Real Estate Securities Index is a market capitalization-weighted
index which measures the performance of more than 85 securities.
The index contains performance data on five major categories of property;
office, retail, industrial, apartment and miscellaneous. Additionally, the Index
has real estate portfolio encumbered by 16% third party mortgages. The companies
in the WRESEC are 79% equity and hybrid REIT's and 21% real estate operating
companies. The capitalization is 47% NYSE, 33% AMEX and 20% OTC."
STANDARD & POOR'S MIDCAP 400 INDEX
The Standard and Poor's MidCap 400 Index is a market-value-weighted index. The
performance data for the MidCap 400 Index were calculated by taking the stocks
presently in the MidCap 400 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 MidCap 400 Index 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.
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COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
The S&P MidCap 400 Index and the S&P 500 together represent approximately 85% of
the total market capitalization of stocks traded in the United States.
BANK SAVINGS ACCOUNT
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963-1987 and The Wall Street Journal for the years 1988-1994.
Source: Ibbotson Associates
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<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S&P 500 Dow U.S. Small S&P/ S&P/
Jones Stock U.S. BARRA BARRA
Industrials Index Inflation Growth Value
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A
Dec 1931 -43.34 -49.03 -49.75 -9.52 N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A
Dec 1933 53.99 73.71 142.87 0.51 N/A N/A
Dec 1934 -1.44 8.07 24.22 2.03 N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A
Dec 1942 20.34 14.12 44.51 9.29 N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A
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<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S&P 500 Dow U.S. Small S&P/ S&P/
Jones Stock U.S. BARRA BARRA
Industrials Index Inflation Growth Value
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60
Dec 1994 1.31 5.06 3.11 2.78 3.13 -0.64
Dec 1995 37.43 36.84 34.46 2.74 38.13 36.99
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<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Intermediate MSCI Long-
Long-Term -Term U.S. EAFE 6 Term U.S. U.S.
U.S. Gov't Government - Net of MONTH Corporate (30 Day)
Bonds Bonds Taxes CDs Bonds T- Bill
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 0.1 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
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 4.18 4.77 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 3.93
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PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Intermediate MSCI Long-
Long-Term -Term U.S. EAFE 6 Term U.S. U.S.
U.S. Gov't Government - Net of MONTH Corporate (30 Day)
Bonds Bonds Taxes CDs Bonds T- Bill
Dec 1966 3.65 4.69 N/A 5.75 0.20 4.76
Dec 1967 -9.18 1.01 N/A 5.48 -4.95 4.21
Dec 1968 -0.26 4.54 N/A 6.44 2.57 5.21
Dec 1969 -5.07 -0.74 N/A 8.71 -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 5.38 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 6.12 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 29.1 -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 6.58 -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 19.3 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 16.8 11.21 5.21 26.39 5.60
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PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S & P Bank
NAREIT - Russell Wilshire Midcap Savings
Equity 2000 Real Estate 400 Account
Dec 1925 N/A N/A N/A N/A N/A
Dec 1926 N/A N/A N/A N/A N/A
Dec 1927 N/A N/A N/A N/A N/A
Dec 1928 N/A N/A N/A N/A N/A
Dec 1929 N/A N/A N/A N/A N/A
Dec 1930 N/A N/A N/A N/A 5.30
Dec 1931 N/A N/A N/A N/A 5.10
Dec 1932 N/A N/A N/A N/A 4.10
Dec 1933 N/A N/A N/A N/A 3.40
Dec 1934 N/A N/A N/A N/A 3.50
Dec 1935 N/A N/A N/A N/A 3.10
Dec 1936 N/A N/A N/A N/A 3.20
Dec 1937 N/A N/A N/A N/A 3.50
Dec 1938 N/A N/A N/A N/A 3.50
Dec 1939 N/A N/A N/A N/A 3.40
Dec 1940 N/A N/A N/A N/A 3.30
Dec 1941 N/A N/A N/A N/A 3.10
Dec 1942 N/A N/A N/A N/A 3.00
Dec 1943 N/A N/A N/A N/A 2.90
Dec 1944 N/A N/A N/A N/A 2.80
Dec 1945 N/A N/A N/A N/A 2.50
Dec 1946 N/A N/A N/A N/A 2.20
Dec 1947 N/A N/A N/A N/A 2.30
Dec 1948 N/A N/A N/A N/A 2.30
Dec 1949 N/A N/A N/A N/A 2.40
Dec 1950 N/A N/A N/A N/A 2.50
Dec 1951 N/A N/A N/A N/A 2.60
Dec 1952 N/A N/A N/A N/A 2.70
Dec 1953 N/A N/A N/A N/A 2.80
Dec 1954 N/A N/A N/A N/A 2.90
Dec 1955 N/A N/A N/A N/A 2.90
Dec 1956 N/A N/A N/A N/A 3.00
Dec 1957 N/A N/A N/A N/A 3.30
Dec 1958 N/A N/A N/A N/A 3.38
Dec 1959 N/A N/A N/A N/A 3.53
Dec 1960 N/A N/A N/A N/A 3.86
Dec 1961 N/A N/A N/A N/A 3.90
Dec 1962 N/A N/A N/A N/A 4.08
Dec 1963 N/A N/A N/A N/A 4.17
Dec 1964 N/A N/A N/A N/A 4.19
Dec 1965 N/A N/A N/A N/A 4.23
Dec 1966 N/A N/A N/A N/A 4.45
Dec 1967 N/A N/A N/A N/A 4.67
Dec 1968 N/A N/A N/A N/A 4.68
Dec 1969 N/A N/A N/A N/A 4.80
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<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S & P Bank
NAREIT - Russell Wilshire Midcap Savings
Equity 2000 Real Estate 400 Account
Bank Savings Account
Dec 1970 N/A N/A N/A N/A 5.14
Dec 1971 N/A N/A N/A N/A 5.30
Dec 1972 8.01 N/A N/A N/A 5.37
Dec 1973 -15.52 N/A N/A N/A 5.51
Dec 1974 -21.40 N/A N/A N/A 5.96
Dec 1975 19.30 N/A N/A N/A 6.21
Dec 1976 47.59 N/A N/A N/A 6.23
Dec 1977 22.42 N/A N/A N/A 6.39
Dec 1978 10.34 N/A 13.04 N/A 6.56
Dec 1979 35.86 43.09 70.81 N/A 7.29
Dec 1980 24.37 38.58 22.08 N/A 8.78
Dec 1981 6.00 2.03 7.18 N/A 10.71
Dec 1982 21.60 24.95 24.47 22.68 11.19
Dec 1983 30.64 29.13 27.61 26.10 9.71
Dec 1984 20.93 -7.30 20.64 1.18 9.92
Dec 1985 19.10 31.05 22.20 35.58 9.02
Dec 1986 19.16 5.68 20.30 16.21 7.84
Dec 1987 -3.64 -8.77 -7.86 -2.03 6.92
Dec 1988 13.49 24.89 24.18 20.87 7.20
Dec 1989 8.84 16.24 2.37 35.54 7.91
Dec 1990 -15.35 -19.51 -33.46 -5.12 7.80
Dec 1991 35.7 46.05 20.03 50.1 4.61
Dec 1992 14.59 18.41 7.36 11.91 2.89
Dec 1993 19.65 18.91 15.24 13.96 2.73
Dec 1994 3.17 -1.82 1.64 -3.57 4.96
Dec 1995 15.27 28.44 13.65 30.94 5.24
Source: Ibbotson Associates
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<PAGE>
APPENDIX B
Other Pioneer Information
The Pioneer family of mutual funds was established in 1928 with the
creation of Pioneer Fund. Pioneer is one of the oldest, most respected and
successful money managers in the United States.
As of December 31, 1995, PMC employed a professional investment staff
of 44, with a combined average of 15 years' experience in the financial services
industry.
At December 31, 1995, there were 637,060 non-retirement shareholder
accounts and 345,309 retirement shareholder accounts in the Pioneer's funds.
Total assets for all Pioneer Funds at December 31, 1995 were $12,764,124
representing 982,369 shareholder.
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