File Nos. 2-25980 and 811-1466
As Filed With The Securities and Exchange Commission on February 29, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
----
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Pre-Effective Amendment No. ___ / /
Post-Effective Amendment No. 61 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 27 / X /
(Check appropriate box or boxes)
PIONEER FUND
(Exact name of registrant as specified in charter)
60 State Street, Boston, Massachusetts 02109
(Address of principal executive office) Zip Code
Registrant's Telephone Number, including Area Code: (617) 742-7825
Joseph P. Barri, Hale and Dorr, 60 State Street, Boston, MA 02109
(Name and address of agent for service)
It is proposed that this filing will become effective (check appropriate box):
___ immediately upon filing pursuant to paragraph (b)
___ on April 24, 1995 pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)
_X_ on May 1, 1996 pursuant to paragraph (a) of Rule 485
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) of the Investment Company Act
of 1940. The Registrant filed a notice required by Rule 24f-2 for its most
recent fiscal year on February 28, 1996.
<PAGE>
PIONEER FUND
Cross-Reference Sheet Showing Location in Prospectus and Statement
of Additional Information of Information Required by Items of
the Registration Form
Location in Prospectus
or Statement of
Form N-1A Item Number and Caption Additional Information
1. Cover Page.............................. Prospectus - Cover Page
2. Synopsis................................ Prospectus - Expense
Information
3. Condensed Financial Information......... Prospectus - Statement of
Selected Per Share Data
4. General Description of Registrant....... Prospectus - Investment
Objectives and Policies;
Management of the Fund;
Information About Fund
Shares
5. Management of the Fund.................. Prospectus - Management
of the Fund
6. Capital Stock and Other Securities...... Prospectus - Investment
Objectives and Policies;
Information About Fund
Shares
7. Purchase of Securities Being Offered.... Prospectus - Information
About Fund Shares;
Distribution Plan;
Shareholder Services
8. Redemption or Repurchase................ Prospectus - Information
About Fund Shares;
Shareholder Services
9. Pending Legal Proceedings............... Not Applicable
10. Cover Page.............................. Statement of Additional
Information - Cover Page
11. Table of Contents....................... Statement of Additional
Information - Cover Page
12. General Information and History......... Statement of Additional
Information - Cover Page;
Certain Liabilities;
Description of Shares
<PAGE>
13. Investment Objectives and Policies...... Statement of Additional
Information - Investment
Policies and Restrictions
14. Management of the Fund.................. Statement of Additional
Information - Management
of the Fund; Investment
Adviser
15. Control Persons and Principle
Holders of Securities................. Statement of Additional
Information - Management
of the Fund
16. Investment Advisory and Other
Services.............................. Statement of Additional
Information - Management
of the Fund; Investment
Advisor; Shareholder
Servicing/Transfer Agent;
Custodian; Independent
Public Accountants
17. Brokerage Allocation and Other
Practices............................. Statement of Additional
Information - Portfolio
Transactions
18. Capital Stock and Other Securities...... Statement of Additional
Information - Methods of
Accounting for Profits or
Losses from the Sale of
Securities; Description
of Shares; Certain
Liabilities
19. Purchase Redemption and Pricing of
Securities Being Offered.............. Statement of Additional
Information -
Determination of Net
Asset Value; Letter
Intention; Systematic
Withdrawal Plan
20. Tax Status.............................. Statement of Additional
Information - Tax Status
21. Underwriters............................ Statement of Additional
Information - Principal
Underwriter; Distribution
Plan
<PAGE>
22. Calculation of Performance Data......... Statement of Additional
Information - Investment
Results
23. Financial Statements.................... Statement of Additional
Information - Cover Page
<PAGE>
[Pioneer logo]
PIONEER
FUND
PROSPECTUS
May 1, 1996
The investment objectives of Pioneer Fund ("the Fund") are reasonable income and
growth of capital. The Fund seeks to achieve these objectives by investing in a
broad list of carefully selected, reasonably priced securities.
FUND RETURNS AND SHARE PRICES FLUCTUATE AND THE VALUE OF YOUR ACCOUNT UPON
REDEMPTION MAY BE MORE OR LESS THAN YOUR PURCHASE PRICE. SHARES IN THE FUND ARE
NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER
DEPOSITORY INSTITUTION, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY.
This Prospectus provides the information about the Fund that you should
know before investing in the Fund. Please read and retain it for your future
reference. More information about the Fund is included in the Statement of
Additional Information, dated May 1, 1996, which is incorporated into this
Prospectus by reference. A copy of the Statement of Additional Information and
the Fund's Annual Report may be obtained free of charge by calling Shareholder
Services at 1-800-225-6292 or by written request to the Fund at 60 State Street,
Boston, Massachusetts 02109. Other information about the Fund has been filed
with the Securities and Exchange Commission (the "SEC") and is available upon
request and without charge.
TABLE OF CONTENTS PAGE
I. EXPENSE INFORMATION
II. FINANCIAL HIGHLIGHTS
III. INVESTMENT OBJECTIVES AND POLICIES
IV. MANAGEMENT OF THE FUND
V. DISTRIBUTION PLAN
VI. INFORMATION ABOUT FUND SHARES
How to Purchase Shares
Net Asset Value and Pricing of Orders
Dividends, Distributions and Taxation
Redemptions and Repurchases
Redemption of Small Accounts
Description of Shares and Voting Rights
VII. SHAREHOLDER SERVICES
Account and Confirmation Statements
Additional Investments
Automatic Investment Plans
Financial Reports and Tax Information
Distribution Options
Directed Dividends
Direct Deposit
Voluntary Tax Withholding
Exchange Privilege
Telephone Transactions and Related Liabilities
FactFoneSM
Telecommunications Device for the Deaf (TDD)
Retirement Plans
Systematic Withdrawal Plans
Reinstatement Privilege
VIII. INVESTMENT RESULTS
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
I. EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses that you,
as a shareholder, will bear directly or indirectly when you invest in the Fund.
The table reflects estimated expenses based on actual expenses for the fiscal
year December 31, 1995. Management fees have been restated to reflect the
maximum, basic and minimum fees payable to Pioneering Management Corporation
("PMC") under the most recently approved management contract. See "Management of
the Fund." Actual management fees and total operating expenses for the fiscal
year ended December 31, 1995 were 0.46% and 0.94%, respectively,under a
management contract previously in effect.
SHAREHOLDER TRANSACTION EXPENSES:
<TABLE>
<CAPTION>
<S> <C>
Maximum Initial Sales Charge on Purchases (as a percentage of offering price) 1 5.75%
Maximum Sales Charge on Reinvestment of Dividends None
Maximum Deferred Sales Charge1 None
Redemption Fee2 None
Exchange Fee None
</TABLE>
ANNUAL OPERATING EXPENSES (as a percentage of average net assets):
Management Fee3
Basic Maximum Minimum
Management Fee 0.60% 0.70% 0.50%
12b-1 Fees 0.18% 0.18% 0.18%
Other Expenses (including accounting and
transfer agent fees, custodian fees and
printing expenses) 0.31% 0.31% 0.31%
----- ----- ----
TOTAL OPERATING EXPENSES 1.09% 1.19% 0.99%
==== ==== =====
(1) Purchases of $1,000,000 or more and purchases by participants in certain
group plans are not subject to an initial sales charge. A contingent deferred
sales charge ("CDSC") of 1% may, however, be charged on redemptions by such
accounts of shares held less than one year, as further described under
"Redemptions and Repurchases."
(2) Separate fees (currently $10 and $20, respectively) apply to domestic or
international bank wire transfers of redemption proceeds.
EXAMPLE:
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and constant expenses, with or without redemption at the end of
each time period:
<PAGE>
Management Fee 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
Basic $11 $33 $57 $126
Maximum $11 $35 $61 $135
Minimum $10 $30 $52 $116
The example above assumes reinvestment of all dividends and distributions and
that the percentage amounts listed under "Annual Operating Expenses" remain the
same each year.
THE EXAMPLE IS DESIGNED FOR INFORMATIONAL PURPOSES ONLY, AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURN. ACTUAL FUND
EXPENSES AND RETURN VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN THOSE
SHOWN.
For further information regarding management fees, 12b-1 fees and other expenses
of the Fund, see "Management of the Fund," "Distribution Plan" and "How To
Purchase Shares" in this Prospectus and "Management of the Fund" and
"Underwriting Agreement and Distribution Plan" in the Statement of Additional
Information. The Fund's payment of a 12b-1 fee may result in long-term
shareholders indirectly paying more than the economic equivalent of the maximum
sales charge permitted under the Rules of Fair Practice of the National
Association of Securities Dealers Inc. ("NASD").
The maximum sales charge is reduced on purchases of specified amounts and the
value of shares owned in other Pioneer mutual funds is taken into account in
determining the applicable sales charge. See "How to Purchase Shares." No sales
charge is applied to exchanges of shares of the Fund for shares of other
publicly available Pioneer mutual funds. See "Exchange Privilege."
II. FINANCIAL HIGHLIGHTS
The following information has been derived from financial statements of the Fund
which have been audited by Arthur Andersen LLP, independent public accountants.
Arthur Andersen LLP's report on the Fund's financial statements as of December
31, 1995 appears in the Fund's Annual Report which is incorporated by reference
into the Statement of Additional Information. The information listed below
should be read in conjunction with the financial statements contained in the
Fund's Annual Report. The Annual Report includes more information about the
Fund's performance and is available free of charge by calling Shareholder
Services at 1-800-225-6292.
<PAGE>
PIONEER FUND
FINANCIAL HIGHLIGHTS FOR EACH SHARE OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994 1993 1992 1991 1990
---- ---- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $21.32 $23.25 $21.51 $20.24 $18.79 $23.28
------ ------ ------ ------ ------ ------
Increase (decrease) from investment
operations-
Net investment income $0.49 $0.49 $0.47 $0.50 $0.61 $0.67
----- ----- ----- ----- ----- -----
Net realized and unrealized
gain (loss) on investments 5.13 (0.63) 2.57 2.22 3.49 (3.10)
------ ------ ---- ---- ---- ------
Total income (loss) from
investment operations $5.62 $(0.14) $3.04 $2.72 $4.10 $(2.43)
-----
Distribution to shareholders
from-
Net investment income (0.49) (0.49) (0.47) (0.50) (0.61) (0.67)
Net realized gain (2.09) (1.30) (0.83) (0.95) (2.04) (1.39)
------ ------ ------ ------ ------ ------
Net increase (decrease) in
net asset value $3.04 $(1.93) $1.74 $1.27 $1.45 $(4.49)
----- ------- ----- ------ ----- -------
Net asset value, end of year $24.36 $21.32 $23.25 $21.51 $20.24 $18.79
====== ====== ====== ====== ====== ======
Total return* 26.64% (0.57%) 14.23% 13.60% 22.76% (10.52%)
Ratio of net operating
expenses to average net
assets 0.95%+ 0.94% 0.95% 0.98% 0.87% 0.78%
Ratio of net investment
income to average net assets 2.01%+ 2.13% 2.04% 2.33% 2.87% 3.15%
Portfolio turnover rate 31.00% 20.00% 12.00% 13.00% 22.00% 17.00%
Net assets, end of year (in
thousands) $2,466,098 $2,011,051 $2,042,945 $1,786,031 $1,614,567 $1,395,520
Ratios assuming reduction for fees
paid indirectly:
Net operating expenses 0.94%
Net investment loss 2.02%
<PAGE>
YEAR ENDED DECEMBER 31,
1989 1988 1987 1986
----- --------- ---- ----
Net asset value, beginning of
year $20.34 $18.48 $19.72 $23.13
------ ------ ------ ------
Increase (decrease) from investment
operations-
Net investment income $0.61 $0.63 $0.62 $0.56
----- ----- ----- -----
Net realized and unrealized
gain (loss) on investments 4.09 2.72 0.41 1.95
----- ---- ---- ----
Total income (loss) from
investment operations $4.70 $3.35 $1.03 $2.51
Distribution to shareholders
from-
Net investment income (0.68) (0.62) (0.61) (0.67)
Net realized capital gains (1.08) (0.87) (1.66) (5.25)
------ ------- ------ ------
Net increase (decrease) in
net asset value $2.94 $1.86 $(1.24) $(3.41)
----- ----- ------- -------
Net asset value, end of year $23.28 $20.34 $18.48 $19.72
====== ====== ======= ======
Total return* 23.39% 18.33% 5.44% 11.49%
Ratio of net operating
expenses to average net
assets 0.75% 0.76% 0.70% 0.70%
Ratio of net investment
income to average net assets 2.60% 3.03% 2.75% 2.44%
Portfolio turnover rate 6.00% 11.00% 14.00% 31.00%
Net assets, end of year (in
thousands) $1,618,320 $1,409,755 $1,272,118 $1,302,120
+Ratios assuming no reduction for fees paid indirectly.
*Assumes initial investment at net asset value at the beginning of each year,
reinvestment of all dividends and distributions, and the complete redemption of
the investment at the net asset value at the end of each year and no sales
charges. Total return would be reduced if sales charges were taken into account.
</TABLE>
<PAGE>
III. INVESTMENT OBJECTIVES AND POLICIES
THE INVESTMENT OBJECTIVES OF THE FUND ARE REASONABLE INCOME AND GROWTH OF
CAPITAL. The Fund seeks these objectives by investing in a broad list of
carefully selected, reasonably priced securities rather than investing in
securities whose prices reflect a premium from their current market popularity.
Most of the Fund's assets are invested in common stocks and other equity
securities such as preferred stocks and securities convertible into common
stock, but the Fund may also invest in debt securities and cash equivalent
investments.
The largest portions of the Fund's portfolio are invested in securities that
have paid dividends within the preceding twelve months, but some non-income
producing securities are held for anticipated increases in value. Assets of the
Fund are substantially fully invested at all times because management avoids
speculating on broad changes in the level of the market.
Whenever the Fund wishes to obtain funds not otherwise available for the
purchase of an attractive security, it pursues the policy of selling that
security in its portfolio which seems the least attractive security owned. The
resulting rate of turnover of the portfolio is not considered an important
factor. See "Financial Highlights" for the Fund's actual turnover rate. The Fund
does not purchase and sell securities for short-term profits; however,
securities are sold without regard to the time they have been held whenever
selling seems advisable.
The Fund may enter into repurchase agreements with banks, generally not
exceeding seven days. Such repurchase agreements will be fully collateralized
with United States ("U.S.") Treasury and/or Agency obligations with a market
value of not less than 100% of the obligation, valued daily. Collateral will be
held in a segregated, safekeeping account for the benefit of the Fund. In the
event that a repurchase agreement is not fulfilled, the Fund could suffer a loss
to the extent that the value of the collateral falls below the repurchase price.
The Fund may write (sell) covered call options in standard contracts traded on
national securities exchanges or those which may be quoted on the Nasdaq market,
provided that it continues to own the securities covering each call until the
call has been exercised or has expired, or until the Fund has purchased a
closing call to offset the obligation to deliver securities for the call it has
written. The Fund does not expect to write (sell) covered call options with an
aggregate market value exceeding 5% of the Fund's total assets in the
foreseeable future. See the Statement of Additional Information for information
regarding the Fund's ability to write (sell) covered call options.
The Fund may invest in foreign securities if purchases of such securities are
otherwise consistent with the fundamental policies of the Fund. As a matter of
practice, however, the Fund does not invest in foreign securities if there
appears to be a substantial risk to the issuer of such securities of
nationalization, confiscation or other national restrictions. In connection with
its investments in foreign securities and in order to protect itself against
uncertainty in future exchange rates, the Fund may engage in foreign currency
exchange transactions.
<PAGE>
The Fund's fundamental investment objectives and the fundamental investment
restrictions set forth in the Statement of Additional Information may not be
changed without shareowner approval. Certain other investment policies,
strategies and restrictions on investment are noted throughout the Prospectus
and are set forth in the Statement of Additional Information. These
non-fundamental investment policies, strategies and restrictions may be changed
at any time by a vote of the Board of Trustees. Other investment policies and
restrictions on investments described in the Statement of Additional Information
include a policy on lending portfolio securities, and a restriction that the
Fund will not invest more than 5% of its net assets in debt securities,
including convertible securities, which are rated less than investment grade or
the equivalent. Since all investments are subject to inherent market risks and
fluctuations in value due to earnings, economic conditions and other factors,
the Fund, of course, cannot assure that its investment objectives will be
achieved.
IV. MANAGEMENT OF THE FUND
The Fund's Board of Trustees has overall responsibility for management and
supervision of the Fund. There are currently eight Trustees of the Fund, six of
whom are not "interested persons" of the Fund as defined in the Investment
Company Act of 1940 (the "1940 Act"), as amended. The Board meets at least
quarterly. By virtue of the functions performed by PMC as investment adviser,
the Fund requires no employees other than its executive officers, all of whom
receive their compensation from PMC or other sources. The Statement of
Additional Information contains the names of and general background information
regarding each Trustee and executive officer of the Fund.
The Fund is managed under a contract with PMC. PMC serves as investment adviser
to the Fund and is responsible for the overall management of the Fund's business
affairs, subject only to the authority of the Fund's Board of Trustees. PMC is a
wholly-owned subsidiary of The Pioneer Group, Inc. ("PGI"), a Delaware
corporation. PGI's indirect wholly-owned subsidiary, Pioneer Funds Distributor,
Inc. ("PFD"), is the principal underwriter of shares of the Fund.
Each domestic equity portfolio managed by PMC, including the Fund, is overseen
by the Domestic Equity Portfolio Management Committee, which consists of PMC's
most senior domestic equity professionals. The Committee is chaired by Mr. David
Tripple, PMC's President and Chief Investment Officer and Executive Vice
President of each of the Funds. Mr. Tripple joined PMC in 1974 and has had
general responsibility for PMC's investment operations and specific portfolio
assignments for over five years. Day-to-day management of the Fund has been the
responsibility of John A. Carey, Vice President of the Fund and PMC, since
February 1987. Mr. Carey joined PMC in 1979.
<PAGE>
John F. Cogan, Jr., Chairman and President of the Fund, Chairman of PFD, and
President and a Director of PGI and Chairman of PMC, owned approximately 15% of
the outstanding capital stock of PGI as of January 31, 1996.
In addition to the Fund, PMC also manages and serves as the investment adviser
for other mutual funds and is an investment adviser to certain other
institutional accounts. PMC's and PFD's executive offices are located at 60
State Street, Boston, Massachusetts 02109.
Under the terms of its contract with the Trust, PMC assists in the
management of the Fund and is authorized in its discretion to buy and sell
securities for the account of the Fund. PMC pays all the expenses, including
executive salaries and the rental of certain office space, related to its
services for the Fund, with the exception of the following which are to be
paid by the Fund: (a) charges and expenses for fund accounting, pricing and
appraisal services and related overhead, including, to the extent such
services are performed by personnel of PMC or its affiliates, office space
and facilities and personnel compensation, training and benefits; (b) the
charges and expenses of auditors; (c) the charges and expenses of any
custodian, transfer agent, plan agent, dividend disbursing agent and
registrar appointed by the Trust with respect to the Fund; (d) issue and
transfer taxes, chargeable to the Fund in connection with securities
transactions to which the Fund is a party; (e) insurance premiums, interest
charges, dues and fees for membership in trade associations, and all taxes
and corporate fees payable by the Fund to federal, state or other
governmental agencies; (f) fees and expenses involved in registering and
maintaining registrations of the Fund and/or its shares with the SEC,
individual states or blue sky securities agencies, territories and foreign
countries, including the preparation of Prospectuses and Statements of
Additional Information for filing with regulatory agencies; (g) all expenses
of shareholders' and Trustees' meetings and of preparing, printing and
distributing prospectuses, notices, proxy statements and all reports to
shareholders and to governmental agencies; (h) charges and expenses of legal
counsel to the Fund and the Trustees; (i) distribution fees paid by the Fund
in accordance with Rule 12b-1 promulgated by the SEC pursuant to the 1940
Act; (j) compensation of those Trustees of the Trust who are not affiliated
with or interested persons of PMC, the Trust (other than as Trustees), PGI or
PFD; (k) the cost of preparing and printing share certificates; and (l)
interest on borrowed money, if any. In addition to the expenses described
above, the Fund shall pay all brokers' and underwriting commissions
chargeable to the Fund in connection with securities transactions to which
the Fund is a party.
Orders for the Fund's portfolio securities transactions are placed by PMC, which
strives to obtain the best price and execution for each transaction. In
circumstances where two or more broker-dealers are in a position to offer
comparable prices and execution, consideration may be given to whether the
broker-dealer provides brokerage or research services or sells shares of the
Pioneer mutual funds. See the Statement of Additional Information for a further
description of PMC's brokerage allocation practices.
MANAGEMENT FEE
As compensation for its management services and certain expenses which PMC
incurs on behalf of the Fund, the Fund pays PMC a management fee that is
comprised of two components. The first component is a basic fee equal to 0.60%
per annum of the Fund's average daily net assets (the "Basic Fee"). The second
component is a performance fee adjustment.
COMPUTING THE PERFORMANCE FEE ADJUSTMENT. The Basic Fee is subject to an upward
or downward adjustment, depending on whether, and to what extent, the investment
performance of
<PAGE>
the Fund for the performance period exceeds, or is exceeded by, the record of
the index determined by the Fund to be appropriate over the same 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
investment 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%. Thus, 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 mutliptlied by the Fund's
average net assets for the entire performance period, giving a dollar amount
that will be added to (or subtracted from) the Basic Fee.
The Fund's performance is calculated based on its net asset value per share. For
purposes of calculating the performance adjustment, any dividends or capital
gains distributions paid by the Fund are treated as if reinvested in Fund shares
at the net asset value per share as of the record date for payment. The record
for the Index is based on change in value and is adjusted for any cash
distributions from the companies whose securities comprise the Index.
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 record of the Fund
is based solely on the relevant performance period without regard to the
cumulative performance over a longer or shorter period of time.
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
aggreagte prior results will be
<PAGE>
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.
Until May1, 1996, as compensation for its management services and certain
expenses which PMC incured, PMC was entitled to a management fee equal to 0.50%
per annum of the Fund's average daily net assets up to $250 million, 0.48% of
the next $50 million and 0.45% of the excess over $300 million. The fee was
normally computed daily and paid monthly. During the fiscal year ended December
31, 1995, the Fund incurred expenses of approximately $, including management
fees paid or payable to PMC of approximately $.
V. DISTRIBUTION PLAN
The Fund has adopted a Plan of Distribution (the "Plan") in accordance with Rule
12b-1 under the 1940 Act pursuant to which certain distribution fees are paid to
PFD. As required by Rule 12b-1, the Plan was approved by a majority of the
outstanding shares held by the shareholders of the Fund and by the Trustees,
including a majority of the Trustees who are not "interested persons" of the
Fund.
Pursuant to the Plan, the Fund reimburses PFD for its actual expenditures to
finance any activity primarily intended to result in the sale of Fund shares or
to provide services to Fund shareholders, provided the categories of expenses
for which reimbursement is made are approved by the Fund's Board of Trustees. As
of the date of this Prospectus, the Board of Trustees has approved the following
categories of expenses for the Fund: (i) a service fee to be paid to qualified
broker-dealers in an amount not to exceed 0.25% per annum of the Fund's daily
net assets; (ii) reimbursement to PFD for its expenditures for broker- dealer
commissions and employee compensation on certain sales of the Fund's shares with
no initial sales charge (see "How to Purchase Shares"); and (iii) reimbursement
to PFD for expenses incurred in providing services to shareholders and
supporting broker-dealers and other organizations (such as banks and trust
companies) in their efforts to provide such services. Banks are currently
prohibited under the Glass-Steagall Act from providing certain underwriting or
distribution services. If a bank was prohibited from acting in any capacity or
providing any of the described services, management would consider what action,
if any, would be appropriate.
Expenditures of the Fund pursuant to the Plan are accrued daily and may not
exceed 0.25% of average daily net assets. Distribution expenses of PFD are
expected to substantially exceed the distribution fees paid by the Fund in a
given year. The Plan does not provide for the carryover of reimbursable expenses
beyond 12 months from the time the Fund is first invoiced for an expense.
<PAGE>
The limited carryover provision in the Plan may result in an expense invoiced to
the Fund in one fiscal year being paid in the subsequent fiscal year and thus
being treated for purposes of calculating the maximum expenditures of the Fund
as having been incurred in the subsequent fiscal year. In the event of
termination or non-continuance of the Plan, the Fund has 12 months to reimburse
any expense which it incurs prior to such termination or non-continuance,
provided that payments by the Fund during such 12-month period shall not exceed
0.25% of the Fund's average net daily assets during such period. The 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.
VI. INFORMATION ABOUT FUND SHARES
HOW TO PURCHASE SHARES
YOU MAY BUY FUND SHARES FROM ANY SECURITIES BROKER-DEALER WHICH HAS A
SALES AGREEMENT WITH PFD. IF YOU DO NOT HAVE A SECURITIES BROKER-DEALER, PLEASE
CALL 1-800-225-6292. SHARES WILL BE PURCHASED AT THE PUBLIC OFFERING PRICE, THAT
IS, THE NET ASSET VALUE PER SHARE PLUS ANY APPLICABLE SALES CHARGE, NEXT
COMPUTED AFTER RECEIPT OF A PURCHASE ORDER, EXCEPT AS SET FORTH BELOW. THE
MINIMUM INITIAL INVESTMENT IS $50. Separate minimum investment requirements
apply to retirement plans and to telephone and wire orders placed by
broker-dealers; no sales charge or minimum investment requirements apply to the
reinvestment of dividends or capital gains distributions.
The Fund has a minimum account requirement of $500. As a new purchaser, you will
be given at least 24 months from your initial purchase to increase the value of
the account to $500. See "Redemptions and Repurchases."
TELEPHONE PURCHASES. Your account is automatically authorized to have the
telephone purchase privilege unless you indicated otherwise on your Account
Application or by writing to Pioneering Services Corporation ("PSC"). The
telephone purchase option may be used to purchase additional shares for an
existing mutual fund account; it may not be used to establish a new account.
Proper account identification will be required for each telephone purchase. A
maximum of $25,000 per account may be purchased by telephone each day. The
telephone purchase privilege is available to Individual Retirement Accounts
("IRAs") but may not be available to other types of retirement plan accounts.
Call PSC for more information.
YOU ARE STRONGLY URGED TO CONSULT WITH YOUR FINANCIAL REPRESENTATIVE PRIOR TO
REQUESTING A TELEPHONE PURCHASE. To purchase shares by telephone, you must
establish your bank account of record by completing the appropriate section of
your Account Application or an Account Options Form. PSC will electronically
debit the amount of each purchase from this pre-designated bank
<PAGE>
account. Telephone purchases may not be made for 30 days after the establishment
of your bank of record or any change to your bank information.
Telephone purchases will be priced at the net asset value plus any applicable
sales charge next determined after PSC's receipt of a telephone purchase
instruction and receipt of good funds (usually three days after the purchase
instruction). You may always elect to deliver purchases to PSC by mail. See
"Telephone Transactions and Related Liabilities" for additional information.
The public offering price is the net asset value per share next computed after
receipt of a purchase order, plus a sales charge as follows:
DEALER
SALES CHARGE AS % OF ALLOWANCE
NET AS A % OF
OFFERING AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than
$100,000 4.50 4.71 4.00
$100,000 but less
than $250,000 3.50 3.63 3.00
$250,000 but less
than $500,000 2.50 2.56 2.00
$500,000 but less
than $1,000,000 2.00 2.04 1.75
$1,000,000 or more -0- -0- see below
No sales charge is payable at the time of purchase on investments of $1,000,000
or more or on purchases by certain group plans ("Group Plans"), but for such
investments a CDSC of 1% is imposed in the event of certain redemption
transactions within one year of purchase. See "Redemptions and Repurchases"
below. PFD may, in its discretion, pay a commission to broker-dealers who
initiate and are responsible for such purchases as follows: 1% on the first $5
million invested; 0.50% on the next $45 million; and 0.25% on the excess over
$50 million. These commissions will not be paid if the purchaser is affiliated
with the broker-dealer or if the purchase represents the reinvestment of a
redemption made during the previous twelve calendar months. Broker-dealers who
receive a commission in connection with purchases at net asset value by 401(a)
or 401(k) retirement plans with 1,000 or more eligible participants or with at
least $10 million in plan assets will be required to return any commission paid
or a pro rata portion thereof if the retirement plan redeems its shares within
12 months of purchase. See also "Redemptions and Repurchases." In connection
with PGI's acquisition of Mutual of Omaha Fund Management Company and contingent
upon the achievement of certain sales objectives, PFD
<PAGE>
may pay to Mutual of Omaha Investor Services, Inc. 50% of PFD's retention of any
sales commission on sales of the Fund's shares through such dealer. Shares sold
outside the U.S. to persons who are not U.S. citizens may be subject to
different sales charges, CDSCs and dealer compensation arrangements in
accordance with local laws and business practices.
The schedule of sales charges above is applicable to purchases of shares of the
Fund by (i) an individual, (ii) an individual, his or her spouse and children
under the age of 21 and (iii) a trustee or other fiduciary of a trust estate or
fiduciary account or related trusts or accounts including pension,
profit-sharing and other employee benefit trusts qualified under Section 401 or
408 of the Internal Revenue Code of 1986, as amended (the "Code"), although more
than one beneficiary is involved.
The sales charge applicable to a current purchase of shares of the Fund by a
person listed above is determined by adding the value of shares to be purchased
to the aggregate value (at current offering price) of shares of any of the other
Pioneer mutual funds previously purchased and then owned, provided PFD is
notified by such person or his or her broker-dealer each time a purchase is made
which would qualify. Pioneer mutual funds include all mutual funds for which PFD
serves as principal underwriter. For example, a person investing $5,000 in the
Fund who currently owns shares of other Pioneer mutual funds with a value of
$45,000 would pay a sales charge of 4.50% of the offering price of the new
investment.
Sales charges may also be reduced through an agreement to purchase a specified
quantity of shares over a designated 13-month period by completing the "Letter
of Intention" section of the Account Application. Information about the Letter
of Intention procedure, including its terms, is contained in the Account
Application as well as in the Statement of Additional Information.
Shares of the Fund may be sold at a reduced or eliminated sales charge to
certain Group Plans under which a sponsoring organization makes recommendations
to, permits group solicitation of, or otherwise facilitates purchases by, its
employees, members or participants. Shares of the Fund may be sold to 401(k)
retirement plans with 100 or more participants or at least $500,000 in plan
assets. Shares of the Fund may be sold at net asset value per share without a
sales charge to Optional Retirement Program (the "Program") participants if (i)
the employer has authorized a limited number of investment company providers for
the Program, (ii) all authorized investment company providers offer their shares
to Program participants at net asset value, (iii) the employer has agreed in
writing to actively promote the authorized investment providers to Program
participants and (iv) the Program provides for a matching contribution for each
participant contribution. Information about such arrangements is available from
PFD.
Shares of the Fund may also be sold at net asset value per share without a sales
charge to: (a) current or former Trustees and officers of the Fund and partners
and employees of its legal counsel; (b) current or former directors, officers,
employees or sales representatives of PGI or its
<PAGE>
subsidiaries; (c) current or former directors, officers, employees or sales
representatives of any subadviser or predecessor investment adviser to any
investment company for which PMC serves as investment adviser, and the
subsidiaries or affiliates of such persons; (d) current or former officers,
partners, employees or registered representatives of broker-dealers which have
entered into sales agreements with PFD; (e) members of the immediate families of
any of the persons above; (f) any trust, custodian, pension, profit-sharing or
other benefit plan of the foregoing persons; (g) insurance company separate
accounts; (h) certain "wrap accounts" for the benefit of clients of financial
planners adhering to standards established by PFD; (i) other funds and accounts
for which PMC or any of its affiliates serves as investment adviser or manager;
and (j) certain unit investment trusts. Shares so purchased are purchased for
investment purposes only and may not be resold except through redemption or
repurchase by or on behalf of the Fund. The availability of this privilege
depends upon the receipt by PFD of written notification of eligibility. Shares
of the Fund may also be sold at net asset value without a sales charge in
connection with certain reorganization, liquidation or acquisition transactions
involving other investment companies or personal holding companies.
Investors who are clients of a broker-dealer with a current sales agreement with
PFD may purchase shares of the Fund at net asset value, without a sales charge,
to the extent that the purchase price is paid out of proceeds from one or more
redemptions by the investor of shares of certain other mutual funds. In order
for a purchase to qualify for this privilege, the investor must document to the
broker-dealer that the redemption occurred within 60 days immediately preceding
the purchase of shares of the Fund; that the client paid a sales charge on the
original purchase of the shares redeemed; and that the mutual fund whose shares
were redeemed also offers net asset value purchases to redeeming shareholders of
any of the Pioneer mutual funds. Further details may be obtained from PFD.
NET ASSET VALUE AND PRICING OF ORDERS
Shares of the Fund are sold at the public offering price, which is the net asset
value per share, plus the applicable sales charge. Net asset value per share of
the Fund is determined by dividing the value of its assets, less liabilities, by
the number of shares outstanding. The net asset value is computed once daily, on
each day the New York Stock Exchange (the "Exchange") is open, as of the close
of regular trading on the Exchange.
Securities are valued at the last sale price on the principal exchange or market
where they are traded. Securities which have not traded on the date of valuation
or securities for which sales prices are not generally reported are valued at
the mean between the current bid and asked prices. Securities quoted in foreign
currencies are converted to U.S. dollars utilizing foreign exchange rates
employed by the Fund's independent pricing services. Generally, trading in
foreign securities is substantially completed each day at various times prior to
the close of regular trading on the Exchange. The values of such securities used
in computing the net asset value of the
<PAGE>
Fund's shares are determined as of such times. Foreign currency exchange rates
are also generally determined prior to the close of regular trading on the
Exchange. Occasionally, events which affect the values of such securities and
such exchange rates may occur between the times at which they are determined and
the close of regular trading on the Exchange and will therefore not be reflected
in the computation of the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then these securities are
valued at their fair value as determined in good faith by the Trustees. All
assets of the Fund for which there is no other readily available valuation
method are valued at their fair value as determined in good faith by the
Trustees.
An order for shares received by a broker-dealer prior to the close of regular
trading on the Exchange (currently 4:00 p.m. Eastern Time) is confirmed at the
redemption price determined at the close of regular trading on the Exchange on
the day the order is received, provided the order is received by PFD prior to
PFD's close of business (usually 5:30 p.m. Eastern Time). It is the
responsibility of broker-dealers to transmit orders so that they will be
received by PFD prior to PFD's close of business. An order received by a
broker-dealer following the close of regular trading on the Exchange will be
confirmed at the offering price as of the close of regular trading on the
Exchange on the next trading day.
The Fund reserves the right in its sole discretion to withdraw all or any part
of the offering of shares when, in the judgment of the Fund's management, such
withdrawal is in the best interest of the Fund. An order to purchase shares is
not binding on, and may be rejected by, PFD until it has been confirmed in
writing by PFD and payment has been received.
DIVIDENDS, DISTRIBUTIONS AND TAXATION
The Fund has elected to be treated, has qualified, and intends to qualify each
year as a "regulated investment company" under Subchapter M of the Code, so that
it will not pay federal income taxes on income and capital gains distributed to
shareholders at least annually.
Under the Code, the Fund will be subject to a nondeductible 4% federal excise
tax on a portion of its undistributed ordinary income and capital gains if it
fails to meet certain distribution requirements with respect to each calendar
year. The Fund intends to make distributions in a timely manner and accordingly
does not expect to be subject to the excise tax.
The Fund's policy is to pay to shareholders dividends from net investment
income, if any, quarterly during the months of March, June, September and
December and to make distributions from net long term capital gains, if any, in
December. Distributions from net short-term capital gains, if any, may be paid
with such dividends, and other distributions from income and/or capital gains
may also be made at such other times as may be necessary to avoid federal income
or excise tax. Dividends from the Fund's net investment income, net short-term
capital gains and
<PAGE>
certain net foreign exchange gains are taxable as ordinary income. Dividends
from the Fund's net long-term capital gains are taxable as long-term capital
gains.
UNLESS SHAREHOLDERS SPECIFY OTHERWISE, ALL DISTRIBUTIONS WILL BE AUTOMATICALLY
REINVESTED IN ADDITIONAL FULL AND FRACTIONAL SHARES OF THE FUND. FOR FEDERAL
INCOME TAX PURPOSES, ALL DISTRIBUTIONS ARE TAXABLE AS DESCRIBED ABOVE WHETHER A
SHAREHOLDER TAKES THEM IN CASH OR REINVESTS THEM IN ADDITIONAL SHARES OF THE
FUND. INFORMATION AS TO THE FEDERAL TAX STATUS OF DISTRIBUTIONS WILL BE PROVIDED
TO SHAREHOLDERS ANNUALLY. For further information on the distribution options
available to shareholders, see "Distribution Options" and "Directed Dividends"
below.
Distributions by the Fund of dividend income it receives from U.S. domestic
corporations may qualify for the dividends-received deduction for corporate
shareholders, subject to certain minimum holding period requirements and
debt-financing restrictions under the Code.
Dividends and other distributions and the proceeds of redemptions, exchanges or
repurchases of Fund shares paid to individuals and other non-exempt payees will
be subject to a 31% backup withholding of federal income tax if the Fund is not
provided with the shareholder's correct taxpayer identification number and
certification that the number is correct and that the shareholder is not subject
to such backup withholding or if the Fund receives notice from the Internal
Revenue Service ("IRS") or a broker that such withholding applies. Please refer
to the Account Application for additional information.
The description above relates only to U.S. federal income tax consequences for
shareholders who are U.S. persons, i.e. U.S. citizens or residents, or U.S.
corporations, partnerships, trusts or estates and who are subject to U.S.
federal income tax. Non-U.S. shareholders and tax-exempt shareholders are
subject to different tax treatment that is not described above. You should
consult your own tax adviser regarding state, local and other applicable tax
laws.
REDEMPTIONS AND REPURCHASES
REDEMPTIONS BY MAIL. As a shareholder, you have the right to offer your shares
for redemption by delivering to PSC a written request for redemption in proper
form, signed by all registered owners, and your share certificates, if any,
properly endorsed and in good order for transfer. Redemptions will be made in
cash at the net asset value per share next determined following receipt in good
order by PSC of all necessary documents subject in certain cases to the CDSC
described below.
Good order means that there are no outstanding claims or requests to hold
redemptions on the account, any certificates are endorsed by the record owner(s)
exactly as the shares are registered and the signature(s) are guaranteed by any
of the following eligible guarantor institutions: (i) all
<PAGE>
brokers, dealers, municipal securities dealers and/or brokers and government
securities dealers and/or brokers who are members of a clearing agency or whose
net capital exceeds $100,000; (ii) all banks; (iii) all credit unions; (iv) all
savings associations, including all savings and loan associations; (v) all
national securities exchanges, registered securities associations, and all
clearing agencies; and (vi) all trust companies. In addition, in some cases
(involving fiduciary or corporate transactions), good order may require the
furnishing of additional documents.
Signature guarantees may be waived for redemption requests of $50,000 or less,
provided that the record holder executes the redemption request, payment is
directed to the record holder at the address of record, and the address has not
changed in the previous 30 days. You cannot provide a signature guarantee by
facsimile ("fax"). Payment normally will be made within seven days after receipt
of these documents. The Fund reserves the right to withhold payment until checks
received in payment of shares purchased have cleared, which may take up to 15
calendar days from the purchase date. For additional information about the
necessary documentation for redemption by mail, call PSC at 1-800-225-6292.
REDEMPTION BY TELEPHONE OR FAX. Your account is automatically authorized to have
the telephone redemption privilege unless you indicated otherwise on your
Account Application or by writing to PSC. Proper account identification will be
required for each telephone redemption. The telephone redemption option is not
available to retirement plan accounts. A maximum of $50,000 may be redeemed by
telephone or fax and the proceeds may be received by check or by bank wire or
electronic funds transfer. To receive the proceeds by check: the check must be
made payable exactly as the account is registered and the check must be sent to
the address of record which must not have changed in the last 30 days. To
receive the proceeds by bank wire or by electronic funds transfer: the proceeds
must be sent to your bank address of record which must have been properly
pre-designated either on your Account Application or on an Account Options Form
and which must not have changed in the last 30 days. To redeem by fax, send your
redemption request to 1-800-225-4240. You may always elect to deliver redemption
instructions to PSC by mail. See "Telephone Transactions and Related
Liabilities" below. Telephone redemptions will be priced as described above. YOU
ARE STRONGLY URGED TO CONSULT WITH YOUR FINANCIAL REPRESENTATIVE PRIOR TO
REQUESTING A TELEPHONE REDEMPTION.
SALES OF SHARES THROUGH BROKER-DEALERS. For the convenience of shareholders, the
Fund has authorized PFD to act as its agent in the repurchase of shares of the
Fund from qualified broker-dealers. The Fund reserves the right to terminate
this procedure at any time. Offers to sell shares to the Fund may be
communicated to PFD by wire or telephone by broker-dealers for their customers.
The Fund's practice will be to repurchase shares offered to it at the net asset
value per share determined as of the close of business of the Exchange on the
day the offer for repurchase is received and accepted by the broker-dealer if
the offer is received by PFD before the close of business on that day.
<PAGE>
A broker-dealer which receives an offer for repurchase is responsible for the
prompt transmittal of such offer to PFD. Payment of the repurchase proceeds will
be made in cash to the broker-dealer placing the order. Except for certain large
accounts subject to a CDSC (as described below), neither the Fund nor PFD
charges any fee or commission upon such repurchase which is then settled as an
ordinary transaction with the broker-dealer (which may charge the shareholder
for this service) delivering the shares repurchased. Payment will be made within
seven days of the receipt by PSC of valid instructions, including validly
endorsed certificates, if appropriate, in good order as described above.
ADDITIONAL CONDITIONS OF REDEMPTION. The net asset value per share received upon
redemption or repurchase may be more or less than the cost of shares to an
investor, depending upon the market value of the portfolio at the time of
redemption or repurchase. Redemptions and repurchases are taxable transactions
to shareholders. Shareholders whose accounts are registered in the name of a
broker, dealer or other financial institution must contact a representative of
the institution holding the shares to arrange for a redemption.
Redemptions may be suspended or payment postponed during any period in which any
of the following conditions exists: the Exchange is closed or trading on the
Exchange is restricted; an emergency exists as a result of which disposal by the
Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund to fairly determine the value of the net
assets of its portfolio; or the SEC, by order, so permits.
Purchases of $1,000,000 or more, and purchases by participants in a Group Plan
which have not been subject to a sales charge, may be subject to a CDSC upon
redemption or repurchase. A CDSC is payable on these investments in the event of
a share redemption within 12 months following the share purchase, at the rate of
1% of the lesser of the value of the shares redeemed (exclusive of reinvested
dividend and capital gain distributions) or the total cost of such shares. In
determining whether a CDSC is payable, and, if so, the amount of the CDSC, it is
assumed that shares purchased with reinvested dividend and capital gain
distributions and then such other shares which are held the longest will be the
first redeemed. Shares subject to the CDSC which are exchanged into another
Pioneer mutual fund will continue to be subject to the CDSC until the original
12-month period expires. See "Exchange Privilege" for more information. However,
no CDSC is payable with respect to purchases of shares by 401(a) or 401(k)
retirement plans with 1,000 or more eligible participants or with at least $10
million in plan assets.
WAIVER OR REDUCTION OF CONTINGENT DEFERRED SALES CHARGE. The CDSC on shares
subject to a CDSC may be waived or reduced for non-retirement accounts if: (a)
the redemption results from the death of all registered owners of an account (in
the case of UGMAs, UTMAs and trust accounts, waiver applies upon the death of
all beneficial owners) or a total and permanent disability (as defined in
Section 72 of the Code) of all registered owners occurring after the purchase of
the shares being redeemed or (b) the redemption is made in connection with
limited
<PAGE>
automatic redemptions as set forth in "Systematic Withdrawal Plans" (limited in
any year to 10% of the value of the account in the Fund at the time the
withdrawal plan is established).
The CDSC on shares subject to a CDSC may be waived or reduced for retirement
plan accounts if: (a) the redemption results from the death or a total and
permanent disability (as defined in Section 72 of the Code) occurring after the
purchase of the shares being redeemed of a shareholder or participant in an
employer-sponsored retirement plan; (b) the distribution is to a participant in
an IRA, 403(b) or employer-sponsored retirement plan, is part of a series of
substantially equal payments made over the life expectancy of the participant or
the joint life expectancy of the participant and his or her beneficiary or as
scheduled periodic payments to a participant (limited in any year to 10% of the
value of the participant's account at the time the distribution amount is
established; a required minimum distribution due to the participant's attainment
of age 70-1/2 may exceed the 10% limit only if the distribution amount is based
on plan assets held by Pioneer); (c) the distribution is from a 401(a) or 401(k)
retirement plan and is a return of excess employee deferrals or employee
contributions or a qualifying hardship distribution as defined by the Code or
results from a termination of employment (limited with respect to a termination
to 10% per year of the value of the plan's assets in the Fund as of the later of
the prior December 31 or the date the account was established unless the plan's
assets are being rolled over to or reinvested in the same class of shares of a
Pioneer mutual fund subject to the CDSC of the shares originally held); (d) the
distribution is from an IRA, 403(b) or employer-sponsored retirement plan and is
to be rolled over to or reinvested in the same class of shares in a Pioneer
mutual fund and which will be subject to the applicable CDSC upon redemption;
(e) the distribution is in the form of a loan to a participant in a plan which
permits loans (each repayment of the loan will constitute a new sale which will
be subject to the applicable CDSC upon redemption); or (f) the distribution is
from a qualified defined contribution plan and represents a participant's
directed transfer (provided that this privilege has been pre-authorized through
a prior agreement with PFD regarding participant directed transfers).
The CDSC on shares subject to a CDSC may be waived or reduced for either
non-retirement or retirement plan accounts if: (a) the redemption is made by any
state, county, or city, or any instrumentality, department, authority, or agency
thereof, which is prohibited by applicable laws from paying a CDSC in connection
with the acquisition of shares of any registered investment management company;
or (b) the redemption is made pursuant to the Fund's right to liquidate or
involuntarily redeem shares in a shareholder's account.
REDEMPTION OF SMALL ACCOUNTS
As a new shareholder, you have a minimum of 24 months (including the six months
following the mailing of the notice described below) to increase the value of
your account to $500 or more. If you hold shares of the Fund in an account with
a net asset value of less than $500 due to redemptions or exchanges or failure
to meet the initial minimum account requirement set forth
<PAGE>
above, the Fund may redeem the shares held in this account at net asset value if
you have not increased the net asset value of the account to at least $500
within six months of written notice by the Fund to you of the Fund's intention
to redeem the shares.
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund is a diversified open-end management investment company (commonly
referred to as a mutual fund) which was originally organized as a Delaware
corporation in 1928 and reorganized as a Massachusetts corporation in 1967, as a
Massachusetts business trust in 1985 and as a Delaware business trust on May 1,
1996. The Fund has authorized an unlimited number of shares of beneficial
interest. As an open-end investment company, the Fund continuously offers its
shares to the public and under normal conditions must redeem its shares upon the
demand of any shareholder at the then current net asset value per share. See
"Redemptions and Repurchases". The Fund is not required, and does not intend, to
hold annual shareowner meetings although special meetings may be called for the
purpose of electing or removing Trustees, changing fundamental investment
restrictions or approving a management contract.
The Fund reserves the right to create and issue additional series of shares, in
which case the shares of each series would participate equally in the earnings,
dividends and assets of the particular series. Shares of each series would be
entitled to vote separately to approve investment advisory agreements or changes
in investment restrictions, but shares of all series would be entitled to vote
together in the election or selection of Trustees and accountants.
The Trustees have the authority, without further shareowner approval, to
classify and reclassify the shares of the Fund, or any additional series of the
Fund, into one or more classes. As of the date of this Prospectus, the Trustees
have authorized the issuance of only one class of shares, entitled shares of
beneficial interest. Each share represents an equal proportionate interest in
the Fund with each other share. Shareholders are entitled to one vote for each
share held and may vote in the election and removal of Trustees and on other
matters submitted to shareholders. Shares have no preemptive or conversion
rights.
In addition to the requirements under Delaware law, the Declaration of Trust
provides that a shareowner of the Fund may bring a derivative action on behalf
of the Fund only if the following conditions are met: (a) shareholders eligible
to bring such derivative action under Delaware law who hold at least 10% of the
outstanding shares of the Fund, or 10% of the outstanding shares of the series
or class to which such action relates, shall join in the request for the
Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such shareowner request and investigate
the basis of such claim. The Trustees shall be entitled to retain counsel or
other advisers in considering the merits of the request and shall require an
undertaking by the shareholders making such request to reimburse the Fund for
the expense of any such advisers in the event that the Trustees determine not to
bring such action.
<PAGE>
When issued and paid for in accordance with the terms of the Prospectus and
Statement of Additional Information, shares of the Fund are fully-paid and
non-assessable. Upon liquidation of the Fund, the Fund's shareholders would be
entitled to share pro rata in the Fund's net assets available for distribution.
Shares will remain on deposit with the Fund's transfer agent and certificates
will not normally be issued. Certificates for fractional shares will not be
issued. The Fund reserves the right to charge a fee for the issuance of
certificates.
VII. SHAREHOLDER SERVICES
PSC is the shareholder services and transfer agent for shares of the Fund. PSC,
a Massachusetts corporation, is a wholly-owned subsidiary of PGI. PSC's offices
are located at 60 State Street, Boston, Massachusetts 02109, and inquiries to
PSC should be mailed to Shareholder Services, Pioneering Services Corporation,
P.O. Box 9014, Boston, Massachusetts 02205-9014. Brown Brothers Harriman & Co.
("the Custodian") serves as custodian of the Fund's portfolio securities. The
principal business address of the mutual fund division of the Custodian is 40
Water Street, Boston, Massachusetts 02109.
ACCOUNT AND CONFIRMATION STATEMENTS
PSC maintains an account for each shareholder and all transactions of the
shareholder are recorded in this account. Confirmation statements showing the
details of transactions are sent to shareholders as transactions occur, except
Automatic Investment Plan transactions which are confirmed quarterly. The
Pioneer Combined Account Statement, mailed quarterly, is available to all
shareholders who have more than one Pioneer account.
Shareholders whose shares are held in the name of an investment broker-dealer or
other party will not normally have an account with the Fund and might not be
able to utilize some of the services available to shareholders of record.
Examples of services which might not be available are investment or redemption
of shares by mail, automatic reinvestment of dividends and capital gains
distributions, withdrawal plans, Letters of Intention, Rights of Accumulation,
telephone exchanges and redemptions, newsletters and other informational
mailings.
ADDITIONAL INVESTMENTS
You may add to your account by sending a check ($50 minimum) to PSC (account
number should be clearly indicated). The bottom portion of a confirmation
statement may be used as a remittance slip to make additional investments.
Additions to your account, whether by check or through a Pioneer Investomatic
Plan, are invested in full and fractional shares of the Fund at the
<PAGE>
applicable offering price in effect as of the close of regular trading on the
Exchange on the day of receipt.
AUTOMATIC INVESTMENT PLANS
You may arrange for regular automatic investments of $50 or more through
government/military allotments or through a Pioneer Investomatic Plan. A Pioneer
Investomatic Plan provides for a monthly or quarterly investment by means of a
preauthorized draft drawn on a checking account. Pioneer Investomatic Plan
investments are voluntary and you may discontinue the plan without penalty upon
30 days' written notice to PSC. PSC acts as agent for the purchaser, the
broker-dealer, and PFD in maintaining these plans.
FINANCIAL REPORTS AND TAX INFORMATION
As a shareholder, you will receive financial reports at least semi-annually. In
January of each year, the Fund will mail you information about the tax status of
dividends and other distributions.
DISTRIBUTION OPTIONS
Dividends and capital gains distributions, if any, will automatically be
invested in additional shares of the Fund, at the applicable net asset value per
share, unless you indicate another option on the Account Application.
Two other available options are (a) dividends in cash and capital gains
distributions in additional shares; and (b) all dividends and distributions in
cash. These two options are not available, however, for retirement plans or an
account with a net asset value of less than $500. Changes in the distribution
options may be made by written request to PSC.
DIRECTED DIVIDENDS
You may elect (in writing) to have the dividends paid by one Pioneer mutual fund
account invested in a second Pioneer mutual fund account. The value of this
second account must be at least $1,000 ($500 for the Fund or Pioneer II).
Invested dividends may be in any amount, and there are no fees or charges for
this service. Retirement plan shareholders may only direct dividends to accounts
with identical registrations i.e., PGI IRA Cust for John Smith may only go into
another account registered PGI IRA Cust for John Smith.
DIRECT DEPOSIT
If you have elected to take distributions, whether dividends or dividends and
capital gains, in cash, or have established a Systematic Withdrawal Plan, you
may choose to have those cash
<PAGE>
payments deposited directly into your savings, checking or NOW bank account. You
may establish this service by completing the appropriate section on the Account
Application when opening a new account or the Account Options Form for an
existing account.
VOLUNTARY TAX WITHHOLDING
You may request (in writing) that PSC withhold 28% of the dividends and capital
gains distribution paid from your account (before any reinvestment) and forward
the amount withheld to the IRS as a credit against your federal income taxes.
This option is not available for retirement plan accounts or for accounts
subject to backup withholding.
EXCHANGE PRIVILEGE
Exchanges must be at least $1,000. You may exchange your shares of the Fund at
net asset value, without a sales charge, for shares of other Pioneer mutual
funds which do not offer different classes of shares or for the Class A shares
of those Pioneer mutual funds that offer more than one class of shares. There
are currently no fees or sales charges on such an exchange. An exchange of
shares may be made only in states where legally permitted.
A new Pioneer mutual fund account opened through an exchange must have a
registration identical to that on the original account. PSC will process
exchanges only after receiving an exchange request in proper form.
WRITTEN EXCHANGES. If the exchange request is in writing, it must be signed by
all record owner(s) exactly as the shares are registered. If your original
account includes a Pioneer Investomatic or Systematic Withdrawal Plan and you
open a new account by exchange, you should specify whether the plans should
continue in your new account or remain with your original account.
TELEPHONE EXCHANGES. Your account is automatically authorized to have the
telephone exchange privilege unless you indicated otherwise on your Account
Application or by writing to PSC. Proper account identification will be required
for each telephone exchange. Telephone exchanges may not exceed $500,000 per
account per day. Each telephone exchange request, whether by voice or by
FactFoneSM, will be recorded. YOU ARE STRONGLY URGED TO CONSULT WITH YOUR
FINANCIAL REPRESENTATIVE PRIOR TO REQUESTING A TELEPHONE EXCHANGE. See
"Telephone Transactions and Related Liabilities" below.
AUTOMATIC EXCHANGE. You may automatically exchange shares from one Pioneer
mutual fund account to another Pioneer mutual fund account on a regular
schedule, either monthly or quarterly. The accounts must have identical
registrations and the originating account must have a minimum balance of $5,000.
The exchange will occur on the 18th day of each month.
<PAGE>
If an exchange request is received by PSC before 4:00 p.m. Eastern Time (or
before the time that the Exchange closes for regular trading on that day, if
different), the exchange will be effective on that day if the requirements above
have been met. If the exchange request is received after this time, the exchange
will be effective on the following business day.
You should consider the differences in objectives and policies of the Pioneer
mutual funds, as described in each fund's current prospectus, before making any
exchange. For federal and (generally) state income tax purposes, an exchange
represents a sale of the shares exchanged and a purchase of shares in another
fund. Therefore, an exchange could result in a gain or loss on the shares sold,
depending on the tax basis of these shares and the timing of the transaction,
and special tax rules may apply.
For the protection of the Fund's performance and shareholders, the Fund and PFD
reserve the right to refuse any exchange request or restrict, at any time
without notice, the number and/or frequency of exchanges to prevent abuses of
the exchange privilege. Such abuses may arise from frequent trading in response
to short-term market fluctuations, a pattern of trading by an individual or
group that appears to be an attempt to "time the market," or any other exchange
request which, in the view of management, will have a detrimental effect on the
Fund's portfolio management strategy or its operations. In addition, the Fund
and PFD reserve the right to charge a fee for exchanges or to modify, limit,
suspend or discontinue the exchange privilege with notice to shareholders as
required by law. TELEPHONE TRANSACTIONS AND RELATED LIABILITIES
Your account is automatically authorized to have telephone transaction
privileges unless you indicated otherwise on your Account Application or by
writing to PSC. You may purchase, sell or exchange Fund shares by telephone. See
"Net Asset Value and Pricing of Orders" for more information. For personal
assistance, call 1-800-225-6292 between 8:00 a.m. and 9:00 p.m. Eastern Time on
weekdays. Computer-assisted transactions may be available to shareholders who
have pre-recorded certain bank information (see "FactFone(SM)"). YOU ARE
STRONGLY URGED TO CONSULT WITH YOUR FINANCIAL REPRESENTATIVE PRIOR TO REQUESTING
ANY TELEPHONE TRANSACTION. See "Net Asset Value and Pricing of Orders,"
"Redemptions and Repurchases" and "Exchange Privilege" for more information. To
confirm that each transaction instruction received by telephone is genuine, PSC
will record each telephone transaction, require the caller to provide the
personal identification number ("PIN") for the account and send you a written
confirmation of each telephone transaction. Different procedures may apply to
accounts that are registered to non-U.S. citizens or that are held in the name
of an institution or in the name of an investment broker-dealer or other
third-party. If reasonable procedures, such as those described above, are not
followed, the Fund may be liable for any loss due to unauthorized or fraudulent
instructions. The Fund may implement other procedures from time to time. In all
other cases, neither the
<PAGE>
Fund, PSC or PFD will be responsible for the authenticity of instructions
received by telephone, therefore, you bear the risk of loss for unauthorized or
fraudulent telephone transactions.
During times of economic turmoil or market volatility or as a result of severe
weather or a natural disaster, it may be difficult to contact the Fund by
telephone to institute a redemption or exchange. You should communicate with the
Fund in writing if you are unable to reach the Fund by telephone.
FACTFONE SM
FactFone SM is an automated inquiry and telephone transaction system available
to Pioneer shareholders by dialing 1-800-225-4321. FactFone SM allows you to
obtain current information on your Pioneer mutual fund accounts and to inquire
about the prices and yields of all publicly available Pioneer mutual funds. In
addition, you may use FactFone SM to make computer-assisted telephone purchases,
exchanges and redemptions from your Pioneer accounts if you have activated your
PIN. Telephone purchases and redemptions require the establishment of a bank
account of record. YOU ARE STRONGLY URGED TO CONSULT WITH YOUR FINANCIAL
REPRESENTATIVE PRIOR TO REQUESTING ANY TELEPHONE TRANSACTION. Shareholders whose
accounts are registered in the name of a broker-dealer or other third party may
not be able to use FactFone SM. See "How to Purchase Fund Shares," "Exchange
Privilege," "Redemptions and Repurchases" and "Telephone Transactions and
Related Liabilities." Call PSC for assistance.
TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD)
If you have a hearing disability and your own TDD keyboard equipment, you can
call our TDD number toll-free at 1-800- 225-1997, weekdays from 8:30 a.m. to
5:30 p.m. Eastern Time, to contact our telephone representatives with questions
about your account.
RETIREMENT PLANS
You should contact the Retirement Plans Department of PSC at 1-800-622-0176 for
information on retirement plans for businesses, Simplified Employee Pensions
Plans, IRAs, and Section 403(b) retirement plans for employees of certain
non-profit organizations and public school systems, all of which are available
in conjunction with investments in the Fund. The Account Application
accompanying this Prospectus should not be used to establish any of these plans.
Separate applications are required.
SYSTEMATIC WITHDRAWAL PLANS
If your account has a total value of at least $10,000, you may establish a
Systematic Withdrawal Plan ("SWP") providing for fixed payments at regular
intervals. Periodic checks of $50 or more
<PAGE>
will be sent to you monthly or quarterly and your periodic redemptions of shares
may be taxable to you. You may also direct that withdrawal checks be paid to
another person, although if you make this designation after you have opened your
account, a signature guarantee must accompany your instructions. Purchases of
shares of the Fund at a time when you have a SWP in effect may result in the
payment of unnecessary sales charges and may therefore be disadvantageous.
You may obtain additional information by calling PSC at 1-800-225-6292 or by
referring to the Statement of Additional Information.
REINSTATEMENT PRIVILEGE
If you redeem all or part of your shares of the Fund, you may reinvest all or
part of the redemption proceeds without a sales commission in shares of the Fund
if you send a written request to PSC not more than 90 days after your shares
were redeemed. Your redemption proceeds will be reinvested at the next
determined net asset value of the shares of the Fund after receipt of the
written request for reinstatement. You may realize a gain or loss for federal
income tax purposes as a result of the redemption, and special tax rules may
apply if a reinstatement occurs. Subject to the provisions outlined under
"Exchange Privilege" above, you may also reinvest in any other Pioneer mutual
funds; in this case you must meet the minimum investment requirement for each
fund you enter.
The 90-day reinstatement period may be extended by PFD for periods of up to one
year for shareholders living in areas that have experienced a natural disaster,
such as a flood, hurricane, tornado, or earthquake.
THE OPTIONS AND SERVICES AVAILABLE TO SHAREHOLDERS, INCLUDING THE TERMS OF THE
EXCHANGE PRIVILEGE AND THE PIONEER INVESTOMATIC PLAN, MAY BE REVISED, SUSPENDED,
OR TERMINATED AT ANY TIME BY PFD OR BY THE FUND. YOU MAY ESTABLISH THE SERVICES
DESCRIBED IN THIS SECTION WHEN YOU OPEN YOUR ACCOUNT. YOU MAY ALSO ESTABLISH OR
REVISE MANY OF THEM ON AN EXISTING ACCOUNT BY FILLING OUT AN ACCOUNT OPTIONS
FORM, WHICH YOU MAY REQUEST BY CALLING 1-800-225-6292.
VIII. INVESTMENT RESULTS
The Fund may include in advertisements, and furnish to existing or prospective
shareholders, information concerning the average annual total return on an
investment in the Fund for a designated period of time. Whenever this
information is provided, it includes a standardized calculation of average
annual total return computed by determining the average annual compounded rate
of return that would cause a hypothetical investment (after deduction of the
maximum sales charge) made on the first day of the designated period (assuming
all dividends
<PAGE>
and distributions are reinvested) to equal the resulting net asset value of such
hypothetical investment on the last day of the designated period. The periods
illustrated would normally include one, five and ten years. These standardized
calculations do not reflect the impact of federal or state income taxes.
The foregoing computation method is prescribed for advertising and other
communications subject to SEC Rule 482. Communications not subject to this rule
may contain one or more additional measures of investment results, computation
methods and assumptions, including but not limited to: historical total returns;
distribution returns; results of actual or hypothetical investments; changes in
dividends, distributions or share values; or any graphic illustration of such
data. These data may cover any period of the Fund's existence and may or may not
include the impact of sales charges, taxes or other factors.
Other investments or savings vehicles and/or unmanaged market indexes,
indicators of economic activity, or averages of mutual funds results may be
cited or compared with the investment results of the Fund. Rankings or listings
by magazines, newspapers or independent statistical or ratings services, such as
Lipper Analytical Services, Inc. or Ibbotson Associates, may also be referenced.
The Fund's investment results will vary from time to time depending on market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. Therefore, any prior investment results of the Fund should not be
considered representative of what an investment in the Fund may earn in any
future period. These factors and possible differences in the methods used in
calculating investment results should be considered when comparing performance
information regarding the Fund to information published for other investment
companies, investment vehicles, and unmanaged indexes. The Fund's investment
results should also be considered relative to the risks associated with the
Fund's investment objectives and policies.
For further information about the calculation methods used for computing the
Fund's investment results, see the Statement of Additional Information.
<PAGE>
THE PIONEER FAMILY OF MUTUAL FUNDS
International Growth Funds
Pioneer International Growth Fund
Pioneer Europe Fund
Pioneer Emerging Markets Fund
Pioneer India Fund
Growth Funds
Pioneer Captial Growth Fund
Pioneer Mid-Cap Fund
Pioneer Growth Shares
Pioneer Small Company Fund
Pioneer Gold Shares
Growth and Income Funds
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer II
Pioneer Real Estate Shares
Income Funds
Pioneer Short-Term Income Trust
Pioneer America Income Trust
Pioneer Bond Fund
Pioneer Income Fund
Tax-Free Income Funds
Pioneer Intermediate Tax-Free Fund*
Pioneer Tax-Free Income Fund*
Money Market Funds
Pioneer Cash Reserves Fund
*Not suitable for retirement accounts
<PAGE>
Pioneer
Fund
60 State Street
Boston, Massachusetts 02109
OFFICERS
JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
JOHN A. CAREY, Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
INVESTMENT ADVISER
PIONEERING MANAGEMENT CORPORATION
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: 1-800-225-6292
SERVICE INFORMATION
If you would like information on the following, please call:
Existing and new accounts, prospectuses,
applications, service forms and
telephone transactions .................................. 1-800-225-6292
FactFone SM
Automated fund yields, automated prices
and account information ................................. 1-800-225-4321
Retirement plans ......................................... 1-800-622-0176
Toll-free fax ............................................ 1-800-225-4240
Telecommunications Device for the Deaf (TDD) ............. 1-800-225-1997
0496-xxxx
(C) Pioneer Funds Distributor, Inc.
<PAGE>
PIONEER FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
May 1, 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 in to, this Statement of
Additional Information.
TABLE OF CONTENTS
Page
1. Investment Policies and Restrictions.................................B-2
2. Management of the Fund...............................................B-6
3. Investment Adviser...................................................B-10
4. Shareholder Servicing/Transfer Agent.................................B-10
5. Custodian............................................................B-10
6. Principal Underwriter................................................B-11
7. Distribution Plan....................................................B-11
8. Independent Public Accountants..................................... B-12
9. Portfolio Transactions...............................................B-12
10. Dividends and Tax Status.............................................B-14
11. Description of Shares................................................B-17
12. Certain Liabilities..................................................B-17
13. Determination of Net Asset Value.....................................B-18
14. Systematic Withdrawal Plan.......................................... B-18
15. Letter of Intention..................................................B-19
16. Investment Results...................................................B-19
Appendix...........................................................B-22
THIS STATEMENT OF ADDITIONAL INFORMATION IS
NOT A PROSPECTUS AND IS AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS
ONLY IF PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
<PAGE>
1. INVESTMENT POLICIES AND RESTRICTIONS
The Fund's current prospectus (the "Prospectus") presents the investment
objective and the principal investment policies of the Fund. Additional
investment policies and a further description of some of the policies described
in the Prospectus appear below.
The following policies and restrictions supplement those discussed in the
Prospectus. Whenever an investment policy or restriction states a maximum
percentage of the Fund's assets that may be invested in any security or presents
a policy regarding quality standards, this standard or other restrictions shall
be determined immediately after and as a result of the Fund's investment.
Accordingly, any later increase or decrease resulting from a change in values,
net assets or other circumstances will not be considered in determining whether
the investment complies with the Fund's investment objectives and policies.
Lending of Portfolio Securities
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
Investment Restrictions
Fundamental Investment Restrictions. The Fund has adopted certain
additional investment restrictions which may not be changed without the
affirmative vote of the holders of a "majority" (as defined in the 1940 Act) of
the Fund's outstanding voting securities. The Fund may not:
(1)......Issue senior securities, except as permitted by the Fund's
borrowing, lending and commodity restrictions, and for purposes of this
restriction, the issuance of shares of beneficial interest in multiple classes
or series, the purchase or sale of options, futures contracts and options on
futures contracts, forward commitments, forward foreign exchange contracts,
repurchase agreements, reverse repurchase agreements, dollar rolls, swaps and
any other financial transaction entered into pursuant to the Fund's investment
policies as described in the Prospectus and this Statement of Additional
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 on
underwriter in a sale of restricted securities held in its portfolio.
(7)......Make loans, except by purchase of debt obligations in which
the Fund may invest consistent with its investment policies, by entering into
repurchase agreements or through the
<PAGE>
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, 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.
It is the policy of the Fund not to concentrate its investments in securities of
companies in any particular industry. In the opinion of the Commission,
investments are concentrated in a particular industry if such investments
aggregate 25% or more of the Fund's total assets. The Fund's policy does not
apply to investments in U.S. Government securities. The Fund has agreed to abide
by the foregoing non-fundamental policy which it will not change without the
affirmative vote of a majority of the Fund's outstanding shares of beneficial
interest.
The following restrictions have been designated as non-fundamental and may be
changed by a vote of the Fund's Board of Trustees without approval of
shareholders.
The Fund may not:
(1) purchase or retain the securities of any company if officers of the
Fund or Trustees of the Fund, or officers and directors of its adviser or
principal underwriter, individually own
<PAGE>
more than one-half of 1% of the securities of such company or collectively own
more than 5% of the securities of such company; or
(2) 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 corporation); 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 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).
<PAGE>
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.
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.
<PAGE>
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 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,
<PAGE>
except Mr. Cogan who then owned approximately 15% 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.
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.
<PAGE>
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 for the year ended December 31, 1995:
<TABLE>
<CAPTION>
Pension or Retirement Total Compensation from
Aggregate Benefits Accrued as the Trust and all other
Compensation Part of the Trust's Pioneer Mutual Funds **
from the Trust * Expenses
Name of Trustee
<S> <C> <C> <C>
John F. Cogan, Jr. $500.00 $0 $11,000
Richard H. Egdahl, M.D. $7,197.00 $0 $63,315
Margaret B.W. Graham $7,197.00 $0 $62,398
John W. Kendrick $7,197.00 $0 $62,398
Margeurite A. Piret $8,942.50 $0 $76,704
David D. Tripple $500.00 $0 $11,000
Stephen K. West $7,820.00 $0 $68,180
John Winthrop $8,192.00 $0 $71,199
--------- -- -------
Total $5,371.50 $0 $426,194
======== == ========
</TABLE>
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 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
<PAGE>
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 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.
<PAGE>
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.
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
<PAGE>
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.
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 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, $880,000 and $831,000, respectively. Commissions reallowed to dealers
for the 1994, 1993 and 1992 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
<PAGE>
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 PLAN
The Fund has adopted a plan of distribution pursuant to Rule 12b-1
under the 1940 Act (the "Plan") pursuant to which the Fund may reimburse PFD for
its expenditures in financing any activity primarily intended to result in the
sale of the 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 Plan" in the Prospectus. The expenses of the Fund pursuant to the
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. 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.
<PAGE>
The 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 the Plan, the Trustees identified and considered a number of potential
benefits 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, the Plan remains in effect from year
to year provided such continuance is approved annually by vote of the Trustees
in the manner described above. The 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, and material amendments of the Plan must also be approved by the
Trustees in the manner described above. The Plan may be terminated at any time,
without payment of any penalty, by vote of the majority of the Trustees who are
not interested persons of the Fund and have no direct or indirect financial
interest in the operations of the Plan, or by a vote of a majority of the
outstanding voting securities of the Fund (as defined in the 1940 Act). The Plan
was approved at a meeting of shareholders held on October 15, 1991. The 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.
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.
<PAGE>
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 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
$x,xxx,xxx, $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
<PAGE>
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.
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.
<PAGE>
Any dividend declared by the Fund in October, November or December as
of a record date in such a month and paid during the following January will be
treated for federal income tax purposes as received by shareholders on December
31 of the calendar year in which it is declared.
Foreign exchange gains and losses realized by the Fund in connection
with certain transactions involving foreign currency-denominated debt
securities, 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
<PAGE>
distribute, at least annually, all or substantially all of its net income,
including such accrued income, to shareholders to qualify as a regulated
investment company under the Code and avoid Federal income and excise taxes.
Therefore, the Fund may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash, or may have to leverage itself
by borrowing the cash, to satisfy distribution requirements.
At the time of an investor's purchase of Fund shares, a portion of the
purchase price is often attributable to realized or unrealized appreciation in
the Fund's portfolio or undistributed taxable income of the Fund. Consequently,
subsequent distributions from such appreciation or income may be taxable to such
investor even if the net asset value of the investor's shares is, as a result of
the distributions, reduced below the investor's cost for such shares and the
distributions in reality represent a return of a portion of the investment.
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
<PAGE>
straddles may affect the amount, timing and character of the Fund's income and
losses and hence of its distributions to shareholders.
For purposes of the 70% dividends-received deduction 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.
<PAGE>
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.
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 only one class of shares of the Fund. Each share
represents an equal proportionate interest with each other share. The shares of
any additional series would participate equally in the earnings, dividends and
assets of the particular series, and would be entitled to vote separately to
approve investment advisory agreements or changes in investment restrictions
Upon liquidation of the Fund, the Fund's shareholders are entitled to share pro
rata in the Fund's net assets available for distribution to shareholders.
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
<PAGE>
vote together in the election and selection of Trustees and accountants. Shares
of all series of the Fund vote together as a class on matters that affect all
series of the Fund in substantially the same manner. As to matters affecting a
single series or class, shares of such series or class will vote separately. No
amendment adversely affecting the rights of shareholders may be made to the
Fund's Declaration of Trust without the affirmative vote of a majority of its
shares. Shares have no preemptive or conversion rights. Shares are fully paid
and non-assessable by the Fund, except as stated below.
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
<PAGE>
unable to meet its obligations. In light of Delaware law, the nature of the
Fund's business and the nature of its assets, the risk of personal liability to
a Fund shareholder is remote.
The Declaration of Trust further provides that the Fund shall indemnify each of
its Trustees and officers against liabilities and expenses reasonably incurred
by them, in connection with, or arising out of, any action, suit or proceeding,
threatened against or otherwise involving such Trustee or officer, directly or
indirectly, by reason of being or having been a Trustee or officer of the Fund.
The Declaration of Trust does not authorize the Fund to indemnify any Trustee or
officer against any liability to which he or she would otherwise be subject by
reason of or for willful misfeasance, bad faith, gross negligence or reckless
disregard of such person's duties.
13. DETERMINATION OF NET ASSET VALUE
The net asset value per share 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
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 the Fund is computed by taking the
amount of the value of all of its assets, less its liabilities, and dividing it
by the number of outstanding shares. 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.
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
<PAGE>
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. 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 $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 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 Fund shares of $50,000 over a
13-month period would be charged at the 4.50% sales charge rate with respect to
all purchases during that period. Should the amount actually purchased during
the 13-month period be more or less than that indicated in the Letter, an
adjustment in the sales charge will be made. A purchase not made pursuant to a
Letter of Intention may be included thereafter if the Letter is filed within 90
days of such purchase. Any shareholder may also obtain the reduced sales charge
by including the value (at current offering price) of all his shares in the Fund
and all other Pioneer mutual funds, except the Class A shares of Pioneer Money
Market Trust, 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 shares to
be purchased under the Letter of Intention.
<PAGE>
The Letter of Intention authorizes PSC to escrow 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 Fund's
performance 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 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
<PAGE>
One of the methods used to measure the Fund's performance is "total
return." "Total return" will normally represent the percentage change in value
of an account, or of a hypothetical investment in the Fund, over any period up
to the lifetime 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.
Generally, performance illustrations will include or be accompanied by
the Fund's average annual total return over the prior one year, five year and
ten year periods. The average annual total return ("T") is computed by equating
the value at the end of the period ("ERV") with a hypothetical initial
investment of $1,000 ("P") over a period of years ("n") according to the
following formula specified by the SEC: P(1+T)n = ERV.
These computations will assume the deduction of the maximum sales
charge of 5.75% from the initial investment, the reinvestment of dividends and
distributions at net asset value on the appropriate dates and a redemption of
the account at the end of the period.
The average annual compounded total return 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 XX.XX%, respectively.
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
<PAGE>
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;
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 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.
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.
<PAGE>
APPENDIX A
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.
<PAGE>
APPENDIX
ILLUSTRATION OF A $10,000 INVESTMENT
IN PIONEER FUND ON MARCH 1, 1928
The total amounts of dividends and capital gains distributions reinvested were
$7,755,389 and $15,448,054. The total return for the period illustrated is
275,361.5%, or an average annual total return of 12.58%.
<TABLE>
<CAPTION>
Value of Account Assuming Value of Account Assuming
Dividends Taken in Cash Dividends Reinvested
Year
Ended Cash Dividends Account Dividends Reinvested Account Value
12/31 Paid Each Year Value During the Year
<S> <C> <C> <C> <C>
1928 $403 $10,968 $403 $11,435
1929 457 10,215 476 11,094
1930 457 6,344 496 7,198
1931 457 4,409 519 5,363
1932 457 5,484 556 7,362
1933 457 6,237 613 9,070
1934 457 7,419 665 11,581
1935 498 9,785 777 16,298
1936 538 12,796 896 22,484
1937 498 6,774 875 12,366
1938 498 7,849 909 15,383
1939 498 8,710 976 18,151
1940 498 8,387 1,038 18,478
1941 498 9,462 1,097 22,084
1942 847 11,398 1,978 28,983
1943 782 16,667 2,022 44,748
1944 1,203 22,688 3,301 64,501
1945 1,149 33,000 3,322 97,802
1946 1,504 35,705 4,527 110,365
1947 1,638 35,025 5,151 113,389
1948 1,791 33,554 5,907 114,345
1949 1,656 36,686 5,751 131,275
1950 1,911 43,539 6,968 163,507
<PAGE>
1951 1,887 49,586 7,177 193,588
1952 1,986 53,103 7,865 215,453
1953 2,218 53,746 9,135 227,190
1954 2,394 71,676 10,278 315,010
1955 2,421 82,784 10,769 375,190
1956 2,796 89,374 12,830 418,471
1957 2,971 78,830 14,081 381,682
1958 3,112 108,110 15,271 541,611
Value of Account Assuming Dividends Value of Account Assuming Dividends
Taken in Cash Reinvested
Year
Ended Cash Dividends Paid Account Dividends Reinvested Account Value
12/31 Each Year Value During the Year
<S> <C> <C> <C> <C>
1959 3,180 120,118 16,095 618,458
1960 3,382 118,991 17,602 630,683
1961 3,532 144,719 18,906 786,407
1962 4,052 130,609 22,268 732,169
1963 4,313 145,338 24,454 839,496
1964 4,547 161,951 26,559 963,188
1965 4,739 197,061 28,473 1,203,295
1966 5,123 182,817 31,590 1,147,238
1967 5,617 245,981 35,593 1,582,809
1968 6,528 310,038 42,395 2,042,023
1969 7,264 253,789 48,287 1,714,636
1970 7,982 247,558 54,625 1,731,675
1971 8,245 272,248 58,332 1,964,839
1972 8,676 304,879 63,308 2,265,381
1973 9,227 285,379 69,390 2,190,733
1974 10,350 222,920 80,532 1,780,164
1975 11,136 297,832 90,323 2,474,181
1976 12,415 393,658 104,490 3,386,262
1977 14,170 393,328 123,524 3,510,093
1978 15,540 425,249 140,730 3,942,860
1979 17,842 523,607 167,801 5,042,040
1980 21,841 658,922 213,459 6,588,757
1981 27,303 611,931 277,290 6,390,741
1982 28,998 660,386 308,821 7,252,753
<PAGE>
1983 28,440 794,482 316,959 9,060,386
1984 29,801 756,492 344,935 8,982,792
1985 30,947 917,825 372,870 11,321,114
1986 27,930 993,960 348,345 12,622,128
1987 30,392 1,019,330 396,119 13,309,062
1988 34,198 1,170,655 451,556 15,748,522
1989 39,181 1,403,092 532,900 19,431,988
1990 40,381 1,216,567 565,533 17,387,916
1991 39,495 1,451,371 570,554 21,344,277
1992 35,854 1,610,754 532,016 24,246,351
1993 35,195 1,803,044 533,893 27,695,413
1994 38,000 1,755,142 1 588,234 27,536,153
<FN>
1 Account value includes capital gains distributions of $1,253,811 but does
not include total dividends of $695,250.
2 Account value includes reinvested capital gains distributions of
$15,448,054 and reinvested dividends of $7,755,389.
</FN>
</TABLE>
WORST CASE/BEST CASE INVESTMENT
SCENARIOS $5,000 Yearly Investments in
Pioneer Fund from 1974
<TABLE>
<CAPTION>
Worst Case Best Case
(Purchase at Yearly DJIA Highs) (Purchase at Yearly DJIA Lows)
----------------------------------------- -----------------------------------------
Cumulative Value Cumulative Value
Year High Date Investment on 12/31 Low Date Investment on 12/31
---- --------- ---------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
1975 07/15/75 5,000 9,194 01/02/75 5,000 15,540
1976 09/21/76 10,000 21,869 01/02/76 10,000 35,319
1977 01/03/77 15,000 32,011 11/02/77 15,000 44,824
1978 09/08/78 20,000 42,174 02/28/78 20,000 58,483
1979 10/05/79 25,000 61,117 11/07/79 25,000 83,336
1980 11/20/80 30,000 87,689 04/21/80 30,000 119,778
1981 04/27/81 35,000 91,846 09/25/81 35,000 123,629
1982 12/27/82 40,000 110,810 08/12/82 40,000 148,991
1983 11/29/83 45,000 144,828 01/03/83 45,000 194,499
<PAGE>
1984 01/06/84 50,000 149,796 07/24/84 50,000 200,016
1985 12/16/85 55,000 194,984 01/04/85 55,000 260,199
1986 12/02/86 60,000 223,279 01/22/86 60,000 297,170
1987 08/25/87 65,000 239,385 10/19/87 65,000 318,783
1988 10/21/88 70,000 288,687 01/20/88 70,000 383,884
1989 10/09/89 75,000 361,660 01/03/89 75,000 480,590
1990 07/16/90 80,000 328,842 10/11/90 80,000 436,580
1991 12/31/91 85,000 409,008 01/09/91 85,000 543,372
1992 06/01/92 90,000 470,401 10/09/92 90,000 623,324
1993 12/29/93 95,000 543,196 01/20/93 95,000 718,431
1994 01/31/94 100,000 545,749 04/04/94 100,000 720,583
</TABLE>
Annual Growth Rate:
(Internal Rate of Return) 13.03% 14.96%
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 U.S.;
prior to March 1957 it consisted of 90 of the largest stocks.
DOW JONES INDUSTRIAL AVERAGE *
This is a total return index based on the performance of 30 blue chip stocks.
SMALL CAPITALIZATION STOCKS *
This index is a market value weighted index of the ninth and tenth deciles of
the New York Stock Exchange (NYSE), plus stocks listed on the American Stock
Exchange (AMEX) and over-the-counter (OTC) with the same or less capitalization
as the upper bound of the NYSE ninth decile.
INFLATION *
The Consumer Price Index for All Urban Consumers (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S. Department of Labor, Bureau of Labor Statistics, Washington, DC.
<PAGE>
S&P/BARRA INDEXES *
"The S&P/BARRA Growth and Value Indexes are constructed by dividing the stocks
in the S&P 500 Index according to price-to-book ratios. The Growth Index
contains stocks with higher price-to-book ratios, and the Value Index contains
stocks with lower price-to-book ratios. Both indexes are market capitalization
weighted."
LONG-TERM MUNICIPAL BOND PORTFOLIO *
For 1926-1984, returns are calculated form yields on 20-year prime issues from
Solomon Brothers' Analytical Record of Yields and Yields Spreads, assuming
coupon equals previous year-end yield and a 20-year maturity. For 1985-present,
returns are calculated using Moody's Bond Record, using the December average
municipal yield as the beginning-of-following year coupon (average of Aaa, Aa,
A, Baa grades).
LONG-TERM CORPORATE BONDS *
For 1969-1991, corporate bond total returns are represented by the Salomon
Brothers Long-Term High-Grade Corporate Bond Index. Since most large corporate
bond transactions take place over the counter, a major dealer is the natural
source of these data. The index includes nearly all Aaa- and Aa-rated bonds. If
a bond is downgraded during a particular month, its return for the month is
included in the index before removing the bond from future portfolios.
<PAGE>
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 Mirror/Mosby, St. Louis,
1990, p. 97 ["Level-Coupon Bonds"].) The monthly income return was assumed to be
one-twelfth the coupon.
LONG-TERM GOVERNMENT BOND TOTAL RETURN *
The total returns on long-term government bonds from 1977 to 1991 are
constructed with data from The Wall Street Journal. Over 1926-1976, data are
obtained from the Government bond file at the Center for Research in Security
Prices (CRSP), Graduate School of Business, University of Chicago. Each year, a
one-bond portfolio with a term of approximately 20 years and a reasonably
current coupon was used, and whose returns did not reflect potential tax
benefits, impaired negotiability, or special redemption or call privileges.
Where callable bonds had to be used, the term of the bond was assumed to be a
simple average of the maturity and first call dates minus the current date. The
bond was "held" for the calendar year and returns were computed. Total returns
for 1977-1991 are calculated as the change in the flat price or and-interest
price.
INTERMEDIATE-TERM GOVERNMENT BONDS TOTAL RETURN *
Total returns of the intermediate-term government bonds for 1977-1991 are
calculated from The Wall Street Journal prices, using the change in flat price.
Returns from 1934-1986 are obtained from the CRSP Government Bond File.
Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than 5 years, and this bond is "held"
for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934-1942, almost all bonds
with maturities near 5 years were partially or full tax-exempt and were selected
using the rules described above. Personal tax rates were generally low in that
period, so that yields on tax-exempt bonds were similar to yields on taxable
bonds. From 1926-1933, there are few bonds suitable for construction of a series
with a 5-year maturity. For this period, five year bond yield estimates are
used.
U.S. (30 DAY) TREASURY BILL TOTAL RETURNS *
For the U.S. Treasury bill index, data from The Wall Street Journal are used for
1977-1991; the CRSP U.S. Government Bond File is the source until 1976. Each
month a one-bill portfolio containing the shortest-term bill having not less
than one month to maturity is constructed. (The bill's original term to maturity
is not relevant.) To measure holding period returns for the one-bill portfolio,
the bill is priced as of the last trading day of the previous month-end and as
of the last trading day of the current month.
BANK SAVINGS ACCOUNT **
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963-1987 and The Wall Street Journal for the years 1988-1994.
<PAGE>
6 MONTH CD **
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
MSCI
Morgan Stanley Capital International Indices, developed by the Capital
International S.A., are based on share prices of some 1470 companies listed on
the stock exchanges around the world.
Countries in the MSCI EAFE Portfolio * are: Australia; Austria; Belgium;
Denmark; Finland; France; Germany; Hong Kong; Italy; Japan; Netherlands; N.
Zealand; Norway; Singapore/Malaysia; Spain; Sweden; Switzerland; United Kingdom.
Countries in the MSCI EUROPE 14 Portfolio *** are: Austria, Belgium, Denmark,
Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Spain, Sweden,
Switzerland, United Kingdom
Countries in the MSCI WORLD Portfolio *** are: Australia; Austria; Belgium;
Canada; Denmark; Finland; France; Germany; Hong Kong; Italy; Japan; Netherlands;
N. Zealand; Norway; Singapore/Malaysia; Spain; Sweden; Switzerland; United
Kingdom; United States.
INTERNATIONAL FINANCE CORPORATION COMPOSITE *
An index representing the performance of a composite of Latin America
(Argentina, Brazil, Chile, Columbia, Mexico, Peru, Venezuela), East Asia (China,
Korea, Philippines, Taiwan), South Asia (India, Indonesia, Malaysia, Pakistan,
Sri Lanka, Thailand), Europe/Mideast/Africa (Greece, Hungary, Jordan, Nigeria,
Poland, Portugal, Turkey, Zimbabwe).
Sources: * Ibbotson Associates
** Towers Data Systems
*** Lipper Analytical Services
<PAGE>
EQUITY COMPARATIVE PERFORMANCE STATISTICS
<TABLE>
<CAPTION>
Dow Jones U.S. Small S&P/BARRA S&P/BARRA
S&P500 Ind'l Avg Stock Index U.S. Inflation Growth Value
%TR %TR %TR %TR %TR %TR
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A
Dec 1931 -43.34 -49.03 -49.75 -9.52 N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A
Dec 1933 53.99 73.71 142.87 0.51 N/A N/A
Dec 1934 -1.44 8.07 24.22 2.03 N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A
Dec 1942 20.34 14.12 44.51 9.29 N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A
<PAGE>
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60
Dec 1994 1.31 5.06 3.11 2.78 3.13 -0.64
</TABLE>
Source: Ibbotson Associates
<PAGE>
PIONEER FUND
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
The financial highlights of the Registrant for the fiscal year ended
December 31, 1995 are included in Part A of the Registration Statement
and the financial statements of the Registrant are incorporated by
reference into Part B of the Regisration Statement from the 1996 Annual
Report to Shareholders for the fiscal year ended December 31, 1995
(filed electronically on February 28, 1996; file no. 811-1466;
accession number 0000078713-96-000002 ).
(b) Exhibits:
1. Declaration of Trust*
2. By-Laws*
3. None
4. Specimen Stock Certificate*
5. Form of Management Contract
6.1. Underwriting Agreement*
6.2. Form of Dealer Sales Agreement*
7. None
8.2. Form of Custodian Agreement with Brown Brothers Harriman & Co.*
9. Investment Company Service Agreement*
9.2 Form of Agreement and Plan of Reorganization
10. Opinion of Hale and Dorr*
11. Consent of Arthur Andersen LLP
12. 1995 Annual Report to Shareholders
13. Form of Stock Purchase Agreement*
14. None
C-1
<PAGE>
15. Distribution Plan*
16. Description of Average Annual Total Return*
17. Financial Data Schedule
19. Powers of Attorney*
* Previously filed. Incorporated by reference from the exhibits filed
with the Registration Statement, as amended from time to time, of the
Registrant (File Nos. 2-25980 and 811-1466). Parts A and B of this
Post-Effective Amendment No. 61 describe certain changes from
Registrant's currently effective Registration Statement proposed to
take effect on May 1, 1996 following approval by shareholders of the
Registrant at a meeting scheduled to be held on April 23, 1996. These
changes include the reorganization of the Registrant as a Delaware
business trust and the adoption of a new management contract in the
form filed herewith. If the proposed changes are approved by
shareholders, certain Exhibits relating to the same will be filed by an
additional Post-Effective Amendment which will become simultaneously
effective with this Post-Effective Amendment.
Item 25. Persons Controlled By or Under Common Control With Registrant
The Pioneer Group, Inc., a publicly-traded Delaware corporation
("PGI"), owns 100% of the outstanding capital stock of Pioneering Management
Corporation, a Delaware corporation ("PMC"), Pioneering Services Corporation
("PSC"), Pioneer Funds Distributor, Inc. ("PFD"), Pioneer Capital Corporation
("PCC"), Pioneer Fonds Marketing GmbH ("GmbH"), Pioneer SBIC Corp. ("SBIC"),
Pioneer Associates, Inc., Pioneer International Corporation, Pioneer Plans
Corporation ("PPC"), Pioneer Goldfields Limited ("PGL"), and Pioneer Investments
Corporation ("PIC"), all Massachusetts corporations. PGI also owns 100% of the
outstanding capital stock of Pioneer Metals and Technology, Inc. ("PMT"), a
Delaware corporation, and Pioneer First Polish Trust Fund Joint Stock Company
("First Polish"), a Polish corporation. PGI owns 90% of the outstanding shares
of Teberebie Goldfields Limited ("TGL"). The Registrant, Pioneer II, Pioneer
Bond Fund, Pioneer Intermediate Tax-Free Fund, Pioneer Growth Trust, Pioneer
Europe Fund, Pioneer International Growth Fund, Pioneer Short-Term Income Trust,
Pioneer Tax-Free State Series Trust and Pioneer America Income Trust (each of
the foregoing, a Massachusetts business trust), and Pioneer Interest Shares,
Inc. (a Nebraska corporation) and Pioneer Growth Shares, Pioneer Income Fund,
Pioneer India Fund, Pioneer Tax-Free Income Fund, Pioneer Small Company Fund,
Pioneer Real Estate Shares, Pioneer Mid-Cap Fund, Pioneer Money
C-2
<PAGE>
Market Trust, Pioneer Emerging Markets Fund and Pioneer Variable Contracts Trust
(each of the foregoing, a Delaware business trust) are all parties to management
contracts with PMC. PCC owns 100% of the outstanding capital stock of SBIC. SBIC
is the sole general partner of Pioneer Ventures Limited Partnership, a
Massachusetts limited partnership. John F. Cogan, Jr. owns approximately 15% of
the outstanding shares of PGI. Mr. Cogan is Chairman of the Board, President and
Trustee of the Registrant and of each of the Pioneer investment companies;
Director and President of PGI; President and Director of PPC, PIC, Pioneer
International Corporation and PMT; Director of PCC and PSC; Chairman of the
Board and Director of PMC, PFD and TGL; Chairman, President and Director of PGL;
Chairman of the Supervisory Board of GmbH; Chairman and Member of Supervisory
Board of First Polish; and Chairman and Partner, Hale and Dorr.
Item 26. Number of Holders of Securities
At January 31, 1996, there were approximately 231,658 holders of the
Registrant's shares of beneficial interest.
Item 27. Indemnification
Except for the Declaration of Trust dated January 8, 1985 establishing
the Registrant as a trust under Massachusetts law, there is no contract,
arrangement or statute under which any director, officer, underwriter or
affiliated person of the Registrant is insured or indemnified. The Declaration
of Trust provides that no Trustee or officer will be indemnified against any
liability of which the Registrant would otherwise be subject by reason of or for
willful misfeasance, bad faith, gross negligence or reckless disregard of such
person's duties.
Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "Act"), may be available to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment of the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
C-3
<PAGE>
Item 28. Business and other Connections of Investment Adviser
All of the information required by this item is set forth in the Form
ADV, as amended, of Pioneering Management Corporation. The following sections of
such Form ADV are incorporated herein by reference:
(a) Items 1 and 2 of Part 2;
(b) Section 6, Business Background, of each Schedule D.
Item 29. Principal Underwriter
(a) See Item 25 above.
(b) Directors and Officers of PFD:
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
John F. Cogan, Jr. Director and Chairman Chairman of the Board,
President and Trustee
Robert L. Butler Director and President None
David D. Tripple Director Executive Vice
President and Trustee
Steven M. Graziano Senior Vice President None
Stephen W. Long Senior Vice President None
John C. Drachman Vice President None
Barry C. Knight Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Elizabeth B. Rice Vice President None
Gail A. Smyth Vice President None
Constance S. Spiros Vice President None
Marcy Supovitz Vice President None
Steven R. Berke Assistant Vice None
President
C-4
<PAGE>
Mary Sue Hoban Assistant Vice None
President
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
Mary Kleeman Vice President None
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts and records are maintained at the Registrant's office at
60 State Street, Boston, Massachusetts; contact the Treasurer.
Item 31. Management Services
The Registrant is not a party to any management-related service
contract, except as described in the Prospectus and the Statement of Additional
Information.
Item 32. Undertakings
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given, a copy of the Registrant's report to shareholders furnished pursuant to
and meeting the requirements of Rule 30d-1 from which the specified information
is incorporated by reference, unless such person currently holds securities of
the Registrant and otherwise has received a copy of such report, in which case
the Registrant shall state in the Prospectus that it will furnish, without
charge, a copy of such report on request, and the name, address and telephone
number of the person to whom such a request should be directed.
The Registrant's prior undertaking which set forth certain
indemnification provisions of its officers and Trustees as set forth in the
Registrant's Declaration of Trust has been deleted. All indemnification
provisions are contained in the Registrant's Declaration of Trust, as approved
by shareholders on January 8, 1985. See Item 27 above.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment No. 61 to its
Registration Statement pursuant to Rule 485(a) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to its Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Boston and The Commonwealth of Massachusetts, on the 28th day of
February, 1996.
PIONEER FUND
By: /s/Joseph P. Barri
Joseph P. Barri
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 61 to the Registrant's Registration Statement (File
Nos. 2-25980 and 811-1466) has been signed below by the following persons in the
capacities and on the dates indicated:
Signature Title Date
John F. Cogan, Jr.* Chairman of the Board )
John F. Cogan, Jr. and President )
(Principal Executive )
Officer) )
) February 28, 1996
)
William H. Keough* Chief Financial Officer )
William H. Keough and Treasurer (Principal )
Financial and Accounting )
Officer) )
Trustees:
)
John F. Cogan, Jr. )
John F. Cogan, Jr. )
)
)
Richard H. Egdahl, M.D.* )
Richard H. Egdahl, M.D. )
<PAGE>
)
)
Margaret B. W. Graham* )
Margaret B. W. Graham )
)
)
John W. Kendrick* )
John W. Kendrick )
)
)
Marguerite A. Piret* )
Marguerite A. Piret )
)
)
David D. Tripple* )
David D. Tripple )
)
)
Stephen K. West* )
Stephen K. West )
)
)
John Winthrop* )
John Winthrop )
- ------------
*By:/s/Joseph P. Barri Dated: February 28, 1996
-----------------------
Joseph P. Barri
Attorney-in-fact
<PAGE>
EXHIBIT INDEX
Exhibit Number Exhibit
5. Form of Management contract
9.2. Form of Agreement and Plan of Reorganization
11. Consent of Arthur Andersen LLP
EXHIBIT A
MANAGEMENT CONTRACT
THIS AGREEMENT dated this 1st day of May, 1996 between Pioneer Fund, a
Delaware business trust (the "Trust"), and Pioneering Management Corporation, a
Delaware corporation (the "Manager").
W I T N E S S E T H
WHEREAS, the Trust is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Registration
Statement") for the purpose of registering its shares for public offering under
the Securities Act of 1933, as amended (the "1933 Act"),
WHEREAS, the parties hereto deem it mutually advantageous that the
Manager should be engaged, subject to the supervision of the Trust's Board of
Trustees and officers, to manage the Trust.
NOW, THEREFORE, in consideration of the mutual covenants and benefits
set forth herein, the Trust and the Manager do hereby agree as follows:
1. (a) The Manager will regularly provide the Trust with investment
research, advice and supervision and will furnish continuously an investment
program for the Trust, consistent with the investment objectives and policies of
the Trust. The Manager will determine from time to time what securities shall be
purchased for the Trust, what securities shall be held or sold by the Trust and
what portion of the Trust's assets shall be held uninvested as cash, subject
always to the provisions of the Trust's Certificate of Trust, Agreement and
Declaration of Trust, By-Laws and its registration statements under the 1940 Act
and under the 1933 Act covering the Trust's shares, as filed with the Securities
and Exchange Commission, and to the investment objectives, policies and
restrictions of the Trust, as each of the same shall be from time to time in
effect, and subject, further, to such policies and instructions as the Board of
Trustees of the Trust may from time to time establish. To carry out such
determinations, the Manager will exercise full discretion and act for the Trust
in the same manner and with the same force and effect as the Trust itself might
or could do with respect to purchases, sales or other transactions, as well as
with respect to all other things necessary or incidental to the furtherance or
conduct of such purchases, sales or other transactions.
<PAGE>
(b) The Manager will, to the extent reasonably required in the conduct
of the business of the Trust and upon the Trust's request, furnish to the Trust
research, statistical and advisory reports upon the industries, businesses,
corporations or securities as to which such requests shall be made, whether or
not the Trust shall at the time have any investment in such industries,
businesses, corporations or securities. The Manager will use its best efforts in
the preparation of such reports and will endeavor to consult the persons and
sources believed by it to have information available with respect to such
industries, businesses, corporations or entities.
(c) The Manager will maintain all books and records with respect to the
Trust's securities transactions required by subparagraphs (b)(5), (6), (9) and
(10) and paragraph (f) of Rule 31a-1 under the 1940 Act (other than those
records being maintained by the custodian or transfer agent appointed by the
Trust) and preserve such records for the periods prescribed therefor by Rule
31a-2 under the 1940 Act. The Manager will also provide to the Board of Trustees
such periodic and special reports as the Board may reasonably request.
2. (a) Except as otherwise provided herein, the Manager, at its own
expense, shall furnish to the Trust office space in the offices of the Manager
or in such other place as may be agreed upon from time to time, and all
necessary office facilities, equipment and personnel for managing the Trust's
affairs and investments, and shall arrange, if desired by the Trust, for members
of the Manager's organization to serve as officers or agents of the Trust.
(b) The Manager shall pay directly or reimburse the Trust for: (i) the
compensation (if any) of the Trustees who are affiliated with, or "interested
persons" (as defined in the 1940 Act) of, the Manager and all officers of the
Trust as such; and (ii) all expenses not hereinafter specifically assumed by the
Trust where such expenses are incurred by the Manager or by the Trust in
connection with the management of the affairs of, and the investment and
reinvestment of the assets of, the Trust.
(c) The Trust shall assume and shall pay: (i) charges and expenses for
fund accounting, pricing and appraisal services and related overhead, including,
to the extent such services are performed by personnel of the Manager, or its
affiliates, office space and facilities and personnel compensation, training and
benefits; (ii) the charges and expenses of auditors; (iii) the charges and
expenses of any custodian, transfer agent, plan agent, dividend disbursing agent
and registrar appointed by the Trust with respect to the Trust; (iv) issue and
transfer taxes chargeable to the Trust in connection with securities
transactions
A-2
<PAGE>
to which the Trust is a party; (v) insurance premiums, interest charges, dues
and fees for membership in trade associations and all taxes and corporate fees
payable by the Trust to federal, state or other governmental agencies; (vi) fees
and expenses involved in registering and maintaining registrations of the Trust
and/or its shares with the Commission, state or blue sky securities agencies and
foreign countries, including the preparation of Prospectuses and Statements of
Additional Information for filing with the Commission; (vii) all expenses of
shareholders' and Trustees' meetings and of preparing, printing and distributing
prospectuses, notices, proxy statements and all reports to shareholders and to
governmental agencies; (viii) charges and expenses of legal counsel to the Trust
and the Trustees; (ix) any distribution fees paid by the Trust in accordance
with Rule 12b-1 promulgated by the Commission pursuant to the 1940 Act; (x)
compensation of those Trustees of the Trust who are not affiliated with or
interested persons of the Manager, the Trust (other than as Trustees), The
Pioneer Group, Inc. or Pioneer Trusts Distributor, Inc.; (xi) the cost of
preparing and printing share certificates; and (xii) interest on borrowed money,
if any.
(d) In addition to the expenses described in Section 2(c) above, the
Trust shall pay all brokers' and underwriting commissions chargeable to the
Trust in connection with securities transactions to which the Trust is a party.
3. (a) The Trust shall pay to the Manager, as compensation for the
Manager's services and expenses assumed hereunder, a fee as set forth below.
Management fees payable hereunder shall be computed daily and paid monthly in
arrears.
(i) The fee payable hereunder shall be composed of the Basic
Fee (defined below) and a Performance Adjustment (defined below) to the Basic
Fee based upon the investment performance of the Trust in relation to the
investment record of a securities index determined by the Trustees of the Trust
to be appropriate over the same period. The Trustees have initially designated
the Lipper Growth & Income Funds Index (the "Index") for this purpose.
(ii) From time to time, the Trustees may by a vote of the
Trustees of the Trust voting in person, including a majority of its Trustees who
are not parties to this Agreement or "interested persons" (as defined in the
1940 Act) of any such parties, determine that another securities index is a more
appropriate benchmark than the Index for purposes of evaluating the performance
of the Trust. In such event, after ten days' written notice to the Manager, a
successor index (the "Successor Index") may be substituted for the Index in
prospectively
A-3
<PAGE>
calculating the Performance Adjustment. However, the calculation of that portion
of the Performance Adjustment attributable to any portion of the performance
period prior to the adoption of the Successor Index will still be based upon the
Trust's performance compared to the Index.
(iii) The Basic Fee is payable at an annual rate of 0.60% of
the Trust's average daily net assets.
(iv) The Performance Adjustment consists of an adjustment to
the monthly Basic Fee to be made by applying a performance adjustment rate to
the average net assets of the Trust over the performance period. The resulting
dollar figure will be added to or subtracted from the Basic Fee depending on
whether the Trust experienced better or worse performance than the Index.
The Performance Adjustment rate is 0.01% per annum for each percentage
point rounded to the nearer point (the higher point if exactly one-half point)
that the Trust's investment performance for the period was better or worse than
the record of the Index as then constituted. The maximum performance adjustment
is 0.10% per annum. In addition, as the Trust's average daily net assets over
the performance period may differ substantially from the Trust's average daily
net assets during the current year, the performance adjustment may be further
adjusted to the extent necessary to insure that the total adjustment to the
Basic Fee on an annualized basis does not exceed 0.10%.
The initial performance period will consist of the 36 month period
beginning June 1, 1993 and ending May 31, 1996. Each month thereafter, the
performance period shall consist of the current month plus the preceding 35
months. In the event that the inclusion in the rolling performance period of
aggregate results from prior to May 1, 1996 would have 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.
The Trust's investment performance will be measured by comparing the
(i) opening net asset value of one share of the Trust on the first business day
of the performance period with (ii) the closing net asset value of the one share
of the Trust as of the last business day of such period. In computing the
investment performance of the Trust and the investment record of the Index,
distributions of realized capital gains, the value of capital gains taxes per
share paid or payable on undistributed realized long-term capital gains
accumulated to the end of such period and dividends paid out of investment
income on the part of the Trust, and all cash distributions of the companies
whose stock comprise the Index, will be treated as reinvested in accordance
A-4
<PAGE>
with Rule 205-1 or any other applicable rule under the Investment Advisers Act
of 1940, as the same from time to time may be amended.
The computation of the performance adjustment will not be cumulative. A
positive fee adjustment will apply even though the performance of the Trust over
some period of time shorter than the performance period has been behind that of
the Index, and, conversely, a negative fee adjustment will apply for the month
even though the performance of the Trust over some period of time shorter than
the performance period has been ahead of that of the Index.
(iv) An appropriate percentage (based on the number of days in
the current month) of the annual Performance Adjustment rate shall be multiplied
by the average of the net assets of the Trust (computed in the manner set forth
in the Declaration of Trust of the Trust adjusted as provided above, if
applicable) determined as of the close of business on each business day through
out the performance period. The resulting dollar amount is added to or deducted
from the Basic Fee.
(v) In the event of termination of this Agreement, the Basic
Fee then in effect shall be computed on the basis of the period ending on the
last business day on which this Agreement is in effect subject to a pro rata
adjustment based on the number of days elapsed in the current month as a
percentage of the total number of days in such month. The amount of any
Performance Adjustment to the Basic Fee will be computed on the basis of and
applied to net assets averaged over the 36 month period ending on the last
business day on which this Agreement is in effect, provided that if this
Agreement has been in effect less than 36 months, the computation will be made
on the basis of the period of time during which it has been in effect.
(b) If the operating expenses of the Trust in any year exceed the
limits set by state securities laws or regulations in states in which shares of
the Trust are sold, the amount payable to the Manager under subsection (a) above
will be reduced (but not below $0), and the Manager shall make other
arrangements concerning expenses but, in each instance, only as and to the
extent required by such laws or regulations. If amounts have already been
advanced to the Manager under this Agreement, the Manager will return such
amounts to the Trust to the extent required by the preceding sentence.
(c) In addition to the foregoing, the Manager may from time to time
agree not to impose all or a portion of its fee otherwise payable hereunder (in
advance of the time such fee or a portion thereof would otherwise accrue) and/or
undertake to pay
A-5
<PAGE>
or reimburse the Trust for all or a portion of its expenses not otherwise
required to be borne or reimbursed by the Manager. Any such fee reduction or
undertaking may be discontinued or modified by the Manager at any time.
4. It is understood that the Manager may employ one or more
sub-investment advisers (each a "Subadviser") to provide investment advisory
services to the Trust by entering into a written agreement with each such
Subadviser; provided, that any such agreement first shall be approved by the
vote of a majority of the Trustees, including a majority of the Trustees who are
not "interested persons" (as defined in the 1940 Act) of the Trust, the Manager
or any such Subadviser, at a meeting of Trustees called for the purpose of
voting on such approval and by the affirmative vote of a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of the Trust. The
authority given to the Manager in Sections 1 through 6 hereof may be delegated
by it under any such agreement; provided, that any Subadviser shall be subject
to the same restrictions and limitations on investments and brokerage discretion
as the Manager. The Trust agrees that the Manager shall not be accountable to
the Trust or the Trust's shareholders for any loss or other liability relating
to specific investments directed by any Subadviser, even though the Manager
retains the right to reverse any such investment, because, in the event a
Subadviser is retained, the Trust and the Manager will rely almost exclusively
on the expertise of such Subadviser for the selection and monitoring of specific
investments.
5. The Manager will not be liable for any error of judgment or mistake
of law or for any loss sustained by reason of the adoption of any investment
policy or the purchase, sale, or retention of any security on the recommendation
of the Manager, whether or not such recommendation shall have been based upon
its own investigation and research or upon investigation and research made by
any other individual, firm or corporation, but nothing contained herein will be
construed to protect the Manager against any liability to the Trust or its
shareholders by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
6. (a) Nothing in this Agreement will in any way limit or restrict the
Manager or any of its officers, directors, or employees from buying, selling or
trading in any securities for its or their own accounts or other accounts. The
Manager may act as an investment advisor to any other person, firm or
corporation, and may perform management and any other services for any other
person, association, corporation, firm or other entity pursuant to any contract
or otherwise, and take any action or do any thing in
A-6
<PAGE>
connection therewith or related thereto; and no such performance of management
or other services or taking of any such action or doing of any such thing shall
be in any manner restricted or otherwise affected by any aspect of any
relationship of the Manager to or with the Trust or deemed to violate or give
rise to any duty or obligation of the Manager to the Trust except as otherwise
imposed by law. The Trust recognizes that the Manager, in effecting transactions
for its various accounts, may not always be able to take or liquidate investment
positions in the same security at the same time and at the same price.
(b) In connection with purchases or sales of securities for the account
of the Trust, neither the Manager nor any of its Trustees, officers or employees
will act as a principal or agent or receive any commission except as permitted
by the 1940 Act. The Manager shall arrange for the placing of all orders for the
purchase and sale of securities for the Trust's account with brokers or dealers
selected by the Manager. In the selection of such brokers or dealers and the
placing of such orders, the Manager is directed at all times to seek for the
Trust the most favorable execution and net price available except as described
herein. It is also understood that it is desirable for the Trust that the
Manager have access to supplemental investment and market research and security
and economic analyses provided by brokers who may execute brokerage transactions
at a higher cost to the Trust than may result when allocating brokerage to other
brokers on the basis of seeking the most favorable price and efficient
execution. Therefore, the Manager is authorized to place orders for the purchase
and sale of securities for the Trust with such brokers, subject to review by the
Trust's Trustees from time to time with respect to the extent and continuation
of this practice. It is understood that the services provided by such brokers
may be useful to the Manager in connection with its or its affiliates' services
to other clients.
(c) On occasions when the Manager deems the purchase or sale of a
security to be in the best interest of the Trust as well as other clients, the
Manager, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be sold or purchased in order to obtain the best
execution and lower brokerage commissions, if any. In such event, allocation of
the securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Manager in the manner it considers to be the
most equitable and consistent with its fiduciary obligations to the Trust and to
such clients.
7. This Agreement shall become effective on the date hereof and shall
remain in force until May, 1997 and from year to year thereafter, but only so
long as its continuance is approved annually by a vote of the Trustees of the
Trust voting in person,
A-7
<PAGE>
including a majority of its Trustees who are not parties to this Agreement or
"interested persons" (as defined in the 1940 Act) of any such parties, at a
meeting of Trustees called for the purpose of voting on such approval or by a
vote of a "majority of the outstanding voting securities" (as defined in the
1940 Act) of the Trust, subject to the right of the Trust and the Manager to
terminate this contract as provided in Section 8 hereof.
8. Either party hereto may, without penalty, terminate this Agreement by
vote of its Board of Trustees or Directors, as the case may be, or by vote of a
"majority of its outstanding voting securities" (as defined in the 1940 Act) and
the giving of 60 days' written notice to the other party.
9. This Agreement shall automatically terminate in the event of its
assignment. For purposes of this Agreement, the term "assignment" shall have the
meaning given it by Section 2(a)(4) of the 1940 Act.
10. The Trust agrees that in the event that neither the Manager nor any of
its affiliates acts as an investment adviser to the Trust, the name of the Trust
will be changed to one that does not contain the name "Pioneer" or otherwise
suggest an affiliation with the Manager.
11. The Manager is an independent contractor and not an employee of the
Trust for any purpose. If any occasion should arise in which the Manager gives
any advice to its clients concerning the shares of the Trust, the Manager will
act solely as investment counsel for such clients and not in any way on behalf
of the Trust or any series thereof.
12. This Agreement states the entire agreement of the parties hereto, and
is intended to be the complete and exclusive statement of the terms hereof. It
may not be added to or changed orally, and may not be modified or rescinded
except by a writing signed by the parties hereto and in accordance with the 1940
Act, when applicable.
13. This Agreement and all performance hereunder shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts.
14. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms or provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction.
A-8
<PAGE>
15. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
A-9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers and their seal to be hereto affixed
as of the day and year first above written.
ATTEST: PIONEER FUND
By:
Joseph P. Barri John F. Cogan, Jr.
Secretary Chairman and President
ATTEST: PIONEERING MANAGEMENT
CORPORATION
By:
Joseph P. Barri David D. Tripple
Secretary President
A-10
EXHIBIT B
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is made as of the day of
April, 1996, by and between Pioneer Fund, a Massachusetts business trust (the
"Current Fund"), and Pioneer Fund, a business trust duly formed under the laws
of the State of Delaware (the "Successor Trust").
This Agreement is intended to be and is adopted as a plan of
reorganization within the meaning of Section 368 (a)(1) of the U.S. Internal
Revenue Code of 1986, as amended (the "Code"), and is intended to effect the
reorganization (a "reorganization") of the Current Fund, as a new separate
series of the Successor Trust. The reorganization will involve the transfer of
all of the assets of the Current Fund to the sole series of the Successor Trust
(the "Successor Fund") solely in exchange for (1) assumption by the Successor
Fund of all liabilities of the Current Fund and (2) the issuance of shares of
beneficial interest (the "Successor Shares") by the Successor Trust on behalf of
the Successor Fund to the Current Fund, followed by the pro rata distribution on
the Closing Date (as defined below) of the Successor Shares to the holders of
shares of beneficial interest of the Current Fund (the "Current Fund
Shareholders") in exchange for their shares of the Current Fund in liquidation
and termination of the Current Fund, all upon the terms and conditions
hereinafter set forth in this Agreement.
In consideration of the premises and of the covenants and agreements
hereinafter set forth the parties hereto covenant and agree as follows.
1. TRANSFER OF ASSETS OF THE CURRENT FUND IN EXCHANGE FOR ASSUMPTION OF
LIABILITIES AND ISSUANCE OF SUCCESSOR SHARES OF THE SUCCESSOR TRUST;
TERMINATION OF THE CURRENT FUND
1.1 Subject to the terms and conditions set forth herein and on the
basis of the representations and warranties contained herein, the Current Fund
agrees to transfer all of the assets of the Current Fund as set forth in
paragraph 1.2 and assign and transfer all of its liabilities to the Successor
Fund of the Successor Trust which has been established solely for the purpose of
acquiring all of the assets and assuming all of the liabilities of the Current
Fund. The Successor Trust has not issued any Shares or commenced operations. The
Successor Trust on behalf of the Successor Fund agrees that in exchange for all
of the assets of the Current Fund (1) the Successor Fund shall assume all of the
liabilities of the Current Fund, whether contingent or otherwise, then existing,
and further (2) the Successor Trust shall deliver to the Current Fund the number
of full and fractional Successor
B-1
<PAGE>
Shares equal to the value of the assets of the Current Fund transferred to the
Successor Fund, minus the liabilities of the Current Fund assumed by the
Successor Fund (the "Net Assets"), as described in paragraph 3.1 on the Closing
Date provided for in paragraph 3.1. Such transactions shall take place at the
Closing provided for in paragraph 3.1.
1.2 The assets of the Current Fund to be acquired by the Successor Fund
shall include, without limitation, all cash, cash equivalents, securities,
receivables (including interest and dividends receivable), any claims or rights
of action or rights to register shares under applicable securities laws, any
books or records of the Current Fund and other property owned by the Current
Fund and any deferred or prepaid expenses shown as assets on the books of the
Current Fund on the Closing Date provided for in paragraph 3.1.
1.3 Immediately upon delivery to the Current Fund of Successor Shares,
any duly authorized officer of the Current Fund shall cause the Current Fund, as
the then sole shareholder of the Successor Fund, to (i) elect as Trustees of the
Successor Trust the persons who currently serve as Trustees of the Current Fund;
(ii) ratify the selection of the independent accountants; (iii) approve an
investment advisory agreement for the Successor Fund in the form currently
approved by the shareholders of the Current Fund; (iv) approve a Rule 12b-1 plan
in the form currently in place with respect to the Current Fund; and (v) adopt,
on behalf of the Successor Fund, the investment objectives, investment policies
and investment restrictions of the Current Fund.
1.4 As provided in paragraph 3.4, on the Closing Date the Current Fund
will distribute in liquidation the Successor Shares pro rata in proportion to
the Current Fund's respective shares of beneficial interest in the Current Fund
("Current Fund Shares") to Current Fund Shareholders of record determined as of
the close of business on the Closing Date, in exchange for the Current Fund
Shares. Such distribution will be accomplished by the transfer of the Successor
Shares then credited to the account of the Current Fund on the share records of
the Successor Trust to open accounts on those records in the names of the
Current Fund Shareholders and representing the respective pro rata number of the
Successor Shares received from the Successor Trust on behalf of the Successor
Fund due the Current Fund Shareholders. The Successor Trust shall not issue
certificates representing Successor Shares in connection with such distribution.
Fractional Successor Shares shall be rounded to the third place after the
decimal point.
B-2
<PAGE>
1.5 As soon as practicable after the distribution of the Successor
Shares as set forth in Section 1.4, the Current Fund shall be terminated and any
such further actions shall be taken in connection therewith as are required by
applicable law.
1.6 Ownership of the Successor Shares of each Successor Fund
Shareholder shall be maintained separately on the books of Pioneering Services
Corporation as the Successor Trust's shareholder services and transfer agent.
1.7 Any transfer taxes payable upon issuance of Successor Shares in a
name other than the registered holder of the Current Fund Shares on the books of
the Current Fund as of that time shall be paid by the person to whom such
Successor Shares are to be distributed as a condition of such transfer.
2. VALUATION
2.1 The value of the Current Fund's Net Assets to be acquired by the
Successor Trust on behalf of the Successor Fund hereunder shall be the net asset
value computed as of the valuation time provided in the Current Fund's
prospectus on the Closing Date using the valuation procedures set forth in the
Current Fund's current prospectus or statement of additional information.
2.2 The value of full and fractional Successor Shares to be issued in
exchange for the Current Fund's Net Assets shall be equal to the value of the
Net Assets of the Current Fund on the Closing Date, and the number of such
Successor Shares shall equal the number of full and fractional Current Fund
Shares of the Current Fund on the Closing Date.
2.3 All computations of value shall be made by Brown Brothers Harriman
& Co. as custodian for the Current Fund and the Successor Trust.
3. CLOSING AND CLOSING DATE
3.1 The transfer of the Current Fund's assets in exchange for the
assumption by the Successor Fund of the Current Fund's liabilities and the
issuance of Successor Shares to the Current Fund, as described above, together
with related acts necessary to consummate such acts (the "Closing"), shall occur
at the offices of Hale and Dorr at 60 State Street, Boston, Massachusetts 02109
on April 30, 1996 ("Closing Date"), or at such other place or date on or prior
to May 31, 1996 as the parties may agree in writing. All acts taking place at
the Closing shall be deemed to take place
B-3
<PAGE>
simultaneously as of the last daily determination of the net asset value of any
Current Fund or at such other time and/or place as the parties may agree.
3.2 In the event that on the Closing Date (a) the New York Stock
Exchange is closed to trading or trading thereon is restricted or (b) trading or
reporting of trading on said Exchange or in any market in which portfolio
securities of any Current Fund are traded is disrupted so that accurate
appraisal of the value of the total net assets of the Current Fund is
impracticable, the Closing shall be postponed until the first business day upon
which trading shall have been fully resumed and reporting shall have been
restored.
3.3 The Current Fund shall deliver at the Closing a certificate or
separate certificates of an authorized officer stating that it has notified the
Custodian, as custodian for the Current Fund, of the Current Fund's
reorganization as the Successor Fund.
3.4 Pioneering Services Corporation, as shareholder services and
transfer agent for the Current Fund, shall deliver at the Closing a certificate
as to the conversion on its books and records of the Current Fund Shareholder
account to an account as a holder of Successor Shares. The Successor Trust shall
issue and deliver to the Current Fund a confirmation evidencing the Successor
Shares to be credited on the Closing Date or provide evidence satisfactory to
the Current Fund that such Successor Shares have been credited to the Current
Fund's account on the books of the Successor Trust. At the Closing each party
shall deliver to the other such bills of sale, checks, assignments, stock
certificates, receipts or other documents as such other party or its counsel may
reasonably request.
3.5 Portfolio securities that are not held in book-entry form in the
name of the Custodian as record holder for the Current Fund shall be presented
by the Current Fund to the Custodian for examination no later than five business
days preceding the Closing Date. Portfolio securities which are not held in
book-entry form shall be delivered by the Current Fund to the Custodian for the
account of the Successor Fund on the Closing Date, duly endorsed in proper form
for transfer, in such condition as to constitute good delivery thereof in
accordance with the custom of brokers, and shall be accompanied by all necessary
federal and state stock transfer stamps or a check for the appropriate purchase
price thereof. Portfolio securities held of record by the Custodian in
book-entry form on behalf of the Current Fund shall be delivered to the
Successor Fund by the Custodian by recording the transfer
B-4
<PAGE>
of beneficial ownership thereof on its records. The cash delivered shall be in
the form of currency or by the Custodian crediting the Successor Fund' account
maintained with the Custodian with immediately available funds.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Current Fund represents and warrants as follows:
4.1.A. The Current Fund is a business trust duly organized,
validly existing and in good standing under the laws of The Commonwealth of
Massachusetts and has the power to own all of its properties and assets and,
subject to approval by the shareholders of the Current Fund, to perform its
obligations under this Agreement. The Current Fund is not required to qualify to
do business in any jurisdiction in which it is not so qualified or where failure
to qualify would not subject it to any material liability or disability. The
Current Fund has all necessary federal, state and local authorizations to own
all of its properties and assets and to carry on its business as now being
conducted;
4.1.B. The Current Fund is a registered investment company
classified as a management company of the open-end type and its registration
with the Securities and Exchange Commission (the "Commission") as an investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
is in full force and effect;
4.1.C. The Current Fund is not, and the execution, delivery
and performance of this Agreement will not result, in violation of any provision
of its Declaration of Trust or By-laws, or any agreement, indenture, instrument,
contract, lease or other undertaking to which the Current Fund is a party or by
which the Current Fund is bound;
4.1.D. The Current Fund has no material contracts or other
commitments (other than this Agreement or agreements on behalf of a Current Fund
for the purchase of securities entered into in the ordinary course of business
and consistent with its obligations under this Agreement) that will not be
terminated without liability to the Current Fund on or prior to the Closing
Date;
4.1.E. No material litigation or administrative proceeding or
investigation of or before any court or governmental body presently is pending
or threatened against the Current Fund or any of its properties or assets. The
Current Fund knows of no facts that might form the basis for the institution of
such
B-5
<PAGE>
proceedings and the Current Fund is not a party to, or subject to, the
provisions of any order, decree or judgment of any court or governmental body
that materially and adversely affects its business or its ability to consummate
the transactions herein contemplated;
4.1.F. At the date hereof and at the Closing Date, all
federal, state and other tax returns and reports, including information returns
and payee statements, of the Current Fund required by law to have been filed or
furnished by such dates shall have been filed or furnished and all federal,
state and other taxes, interest and penalties shall have been paid so far as due
or provision shall have been made for the payment thereof and no such return is
currently under audit and no assessment has been asserted with respect to any of
such returns or reports;
4.1.G. The Current Fund has elected to be treated as a
regulated investment company under Subchapter M of the Code, has qualified as
such for each taxable year since its inception, and will qualify as such as of
the Closing Date;
4.1.H. The authorized capital of the Current Fund consists of
an unlimited number of shares of beneficial interest. All issued and outstanding
shares of beneficial interest of the Current Fund are, and at the Closing Date
will be, duly and validly issued and outstanding, fully paid and nonassessable.
The Current Fund does not have outstanding any options, warrants or other rights
to subscribe for or purchase any of its shares of beneficial interest, nor is
there outstanding any security convertible into any of its shares of beneficial
interest;
4.1.I. The information to be furnished by the Current Fund for
use in applications for orders, registration statements, proxy materials and
other documents which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete and shall comply in all
material respects with federal securities and other laws and regulations
thereunder applicable thereto;
4.1.J. All of the issued and outstanding Current Fund Shares
will at the time of the Closing be held by the persons and in the amounts as
certified in accordance with the provisions of paragraph 3.4;
4.1.K. At the Closing Date, the Current Fund will have good
and marketable title to the assets to be transferred to the Successor Fund
pursuant to paragraph 1.1, and full right, power and authority to sell, assign,
transfer and deliver such assets hereunder, and upon delivery and in payment for
such assets, the
B-6
<PAGE>
Successor Fund will acquire good and marketable title thereto subject to no
restrictions on the full transfer thereof, including such restrictions as might
arise under the Securities Act of 1933, as amended;
4.1.L. The execution, delivery and performance of this
Agreement will have been duly authorized prior to the Closing Date by all
necessary action on the part of the Current Fund and this Agreement constitutes
a valid and binding obligation of the Current Fund enforceable in accordance
with its terms, subject to the approval of the Current Fund's Shareholders; and
4.1.M. No consent, approval, authorization or order of any
court or governmental authority is required for the consummation by the Current
Fund of the transactions contemplated herein, except such as shall have been
obtained prior to the Closing Date.
4.2 The Successor Trust represents and warrants as follows:
4.2.A. The Successor Trust is a business trust duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the power to own all of its properties and assets and to perform its
obligations under this Agreement; the Successor Trust is not required to qualify
to do business in any jurisdiction in which it is not so qualified or where
failure to qualify would not subject it to any material liability or disability;
the Successor Trust has all necessary federal, state and local authorizations to
own all of its properties and assets and to carry on its business as now being
conducted; that as of the date hereof and as of the Closing Date, the Successor
Fund is the only series of the Successor Trust; and the Successor Fund is a duly
established and designated series of the Successor Trust;
4.2.B. The Successor Trust is not, and the execution, delivery
and performance of this Agreement will not result, in violation of any provision
of the Declaration of Trust or By-laws of the Successor Trust or any agreement,
indenture, instrument, contract, lease or other undertaking to which the
Successor Trust is a party or by which the Successor Trust is bound;
4.2.C. No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or threatened against the Successor Trust or any of its properties or assets.
The Successor Trust knows of no facts that might form the basis for the
institution of such proceedings, and the Successor Trust is not a party to, or
subject to, the provisions of any order, decree or judgment of any
B-7
<PAGE>
court or governmental body that materially and adversely affects its business or
its ability to consummate the transactions herein contemplated;
4.2.D. The Successor Trust will cause the Successor Fund to
qualify as a regulated investment company under subchapter M of the Code for the
taxable year in which the Closing occurs and to continue to qualify as such for
each taxable year;
4.2.E. Prior to the Closing Date, there shall be no issued and
outstanding Successor Shares or any other securities of the Successor Trust;
Successor Shares issued in connection with the transactions contemplated herein
will be duly and validly issued and outstanding and fully paid and non-
assessable;
4.2.F. The execution, delivery and performance of this
Agreement has been duly authorized by all necessary action on the part of the
Successor Trust, and this Agreement constitutes a valid and binding obligation
of the Successor Trust enforceable against the Successor Trust in accordance
with its terms;
4.2.G. The information to be furnished by the Successor Trust
for use in applications for orders, registration statements, proxy materials and
other documents which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete and shall comply in all
material respects with Federal securities and other laws and regulations
applicable thereto; and
4.2.H. No consent, approval, authorization or order of any
court or governmental authority is required for the consummation by the
Successor Trust of the transactions contemplated herein, except such as shall
have been obtained prior to the Closing Date.
5. COVENANTS OF THE CURRENT FUND AND THE SUCCESSOR TRUST
5.1 The Current Fund covenants that the Successor Shares are not being
acquired for the purpose of making any distribution thereof, other than in
accordance with the terms of this Agreement.
5.2 The Current Fund covenants that it will assist the Successor Trust
in obtaining such information as the Successor Trust reasonably requests
concerning the beneficial ownership of Current Fund Shares.
5.3 The Current Fund will, from time to time, as and when requested by
the Successor Trust execute and deliver, or cause to
B-8
<PAGE>
be executed and delivered, all such assignments and other instruments, and will
take or cause to be taken such further action, as the Successor Trust may deem
necessary or desirable in order to vest in, and confirm to, the Successor Fund,
title to, and possession of, all the assets of the Current Fund to be sold,
assigned, transferred and delivered hereunder and otherwise to carry out the
intent and purpose of this Agreement.
5.4 The Successor Trust will, from time to time, as and when requested
by the Current Fund, execute and deliver or cause to be executed and delivered
all such assignments and other instruments, and will take or cause to be taken
such further action, as the Current Fund may deem necessary or desirable in
order to vest in, and confirm to, the Current Fund, on behalf of the Current
Funds, title to, and possession of, the Successor Shares issued, sold, assigned,
transferred and delivered hereunder and otherwise to carry out the intent and
purpose of this Agreement.
5.5 The Successor Trust shall use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act and such
state securities laws as it may deem appropriate in order to operate after the
Closing Date.
5.6 Subject to the provisions of this Agreement, the Successor Trust
and the Current Fund each will take, or cause to be taken, all action and will
do or cause to be done all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.7 As promptly as practicable, but in any event within 60 days after
the Closing Date, the Current Fund shall furnish to the Successor Trust, in such
form as is reasonably satisfactory to the Successor Trust, a statement of the
earnings and profits of the Current Fund for federal income tax purposes, and of
any capital loss carryovers and other items that will be carried over to the
Successor Fund as a result of Section 381 of the Code, and which statement will
be certified by the President or Treasurer of the Current Fund.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CURRENT FUND
The obligations of the Current Fund to consummate the transactions
provided for herein shall be subject to the performance by the Successor Trust
of all the obligations to be performed by the Successor Trust hereunder on or
before the Closing Date and, in addition thereto, to the following further
conditions:
6.1 All representations and warranties of the Successor Trust contained
in this Agreement shall be true and correct in all
B-9
<PAGE>
material respects as of the date hereof except as they may be affected by the
transactions contemplated by this Agreement, as of the Closing Date, with the
same force and effect as if made on and as of the Closing Date; and
6.2 The Successor Trust shall have delivered on the Closing Date to the
Current Fund a certificate executed in the Successor Trust's name by its
President or Vice President, in form and substance satisfactory to the Current
Fund, dated as of the Closing Date, to the effect that the representations and
warranties of the Successor Trust made in this Agreement are true and correct at
and as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as the Current Fund
shall reasonably request.
Each of the foregoing conditions precedent may be waived by the Current Fund.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SUCCESSOR TRUST
The obligations of the Successor Trust to consummate the transactions
provided for herein shall be subject to the performance by the Current Fund of
all the obligations to be performed by the Current Fund hereunder on or before
the Closing Date and, in addition thereto, to the following further conditions:
7.1 All representations and warranties of the Current Fund contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date, with the same force and effect as if
made on and as of the Closing Date;
7.2 The Current Fund shall have delivered to the Successor Trust on the
Closing Date a statement of the Current Fund's assets and liabilities, prepared
in accordance with generally accepted accounting principles consistently
applied, together with a certificate of the Treasurer or Assistant Treasurer of
the Current Fund as to its portfolio securities and the Current Fund's federal
income tax basis and holding period for each such portfolio security as of the
Closing Date; and
7.3 The Current Fund shall have delivered to the Successor Trust on the
Closing Date a certificate executed in the Current Fund's name by its President
or Vice President, in form and substance satisfactory to the Successor Trust,
dated as of the Closing Date, to the effect that the representations and
warranties of the Current Fund made in this Agreement are true and
B-10
<PAGE>
correct at and as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement, and as to such other matters as the
Successor Trust shall reasonably request.
Each of the foregoing conditions precedent may be waived by the
Successor Trust.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CURRENT FUND AND THE
SUCCESSOR TRUST
The obligations of the Current Fund and the Successor Trust are each
subject to the further conditions that on or before the Closing Date:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the Current Fund's Shareholders in
accordance with applicable law;
8.2 On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with,
the transactions contemplated hereby;
8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state securities authorities) deemed necessary by the
Successor Trust or the Current Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of the
Successor Trust or the Current Fund, provided that either party hereto may for
itself waive any of such conditions;
8.4 The President of the Successor Trust shall have delivered a
certificate to the Current Fund on the Closing Date certifying that the
Successor Trust has taken all necessary action so that it shall be a registered
open-end investment company under the 1940 Act; and
8.5 The Current Fund and the Successor Trust shall have received on or
before the Closing Date an opinion of Hale and Dorr satisfactory to the Current
Fund and the Successor Trust, substantially to the effect that, with respect to
the Current Fund, for federal income tax purposes:
B-11
<PAGE>
8.5.A. The acquisition of all of the assets of a
Current Fund by the Successor Fund solely in exchange for the
issuance of Successor Shares to the Current Fund and the
assumption by the Successor Fund of all of the liabilities of
the Current Fund, followed by the distribution in liquidation
by the Current Fund of such Successor Shares to the Current
Fund Shareholders in exchange for their Current Fund Shares
and the termination of the Current Fund, will constitute a
reorganization within the meaning of Section 368(a)(1) of the
Code, and the Current Fund and the Successor Fund will each be
"a party to a reorganization" within the meaning of Section
368(b) of the Code;
8.5.B. No gain or loss will be recognized by the
Current Fund upon (i) the transfer of all of its assets to the
Successor Fund solely in exchange for the issuance of
Successor Shares to the Current Fund and the assumption by the
Successor Fund of the Current Fund's liabilities and (ii) the
distribution by the Current Fund of the Successor Shares to
the Current Fund Shareholders;
8.5.C. No gain or loss will be recognized by any
Successor Fund upon its receipt of all of the Current Fund's
assets solely in exchange for the issuance of the Successor
Shares to the Current Fund and the assumption by the Successor
Fund of all of the liabilities of the Current Fund;
8.5.D. The tax basis of the assets acquired by a
Successor Fund from the Current Fund will be the same as the
tax basis of those assets in the Current Fund's hands
immediately before the transfer;
8.5.E. The tax holding period of the assets of the
Current Fund in the hands of the Successor Fund will include
the Current Fund's tax holding period for those assets;
8.5.F. The Current Fund's Shareholders will not
recognize gain or loss upon the exchange of all of their
Current Fund Shares solely for Successor Shares as part of the
transaction;
8.5.G. The tax basis of the Successor Shares received
by Current Fund Shareholders in the transaction will be, for
each shareholder, the same as the tax basis of the Current
Fund Shares surrendered in exchange therefor; and
B-12
<PAGE>
8.5.H. The tax holding period of the Successor Shares
received by Current Fund Shareholders will include, for each
such Shareholder, the tax holding period for the Current Fund
Shares surrendered in exchange therefor, provided that the
Current Fund Shares were held as capital assets on the date of
the exchange.
The Current Fund and Successor Trust each agree to make and provide
representations with respect to the Current Fund and the Successor Fund which
are reasonably necessary to enable Hale and Dorr to deliver an opinion
substantially as set forth in this paragraph 8.5, which opinion may address such
other federal income tax consequences, if any, as Hale and Dorr believes to be
material to the transaction.
Each of the foregoing conditions precedent to the obligations of a
party, except for the receipt of the opinion of Hale and Dorr set forth in
paragraph 8.5, may be waived by that party.
9. BROKERAGE FEES AND EXPENSES
9.1 The Successor Trust and the Current Fund each represent and warrant
to the other that there are no broker's or finder's fees payable in connection
with the transactions contemplated hereby.
9.2 The Current Fund and the Successor Fund shall each be liable for
its own expenses incurred in connection with entering into and carrying out the
provisions of this Agreement whether or not the transactions contemplated hereby
are consummated; if the transactions are consummated, such expenses of the
Current Fund will be assumed by the Successor Fund as part of the transactions.
10. ENTIRE AGREEMENT
The Successor Trust and the Current Fund agree that neither party has
made any representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties. The
representations, warranties and covenants contained herein or in any document
delivered pursuant hereto or in connection herewith shall survive the
consummation of the transactions contemplated hereunder.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Successor Trust and the Current Fund. In addition, either the Successor Trust or
the Current Fund may at its option terminate this Agreement at or prior to the
Closing Date because:
B-13
<PAGE>
11.1.A. There exists a material breach by the other
party of any representations, warranties or agreements
contained herein to be performed at or prior to the Closing
Date; or
11.1.B. A condition herein expressed to be precedent
to the obligations of the terminating party has not been met
and it reasonably appears that it will not or cannot be met.
11.2 In the event of any such termination, there shall be no liability
for damages on the part of the Successor Trust or the Current Fund, or their
respective trustees, directors or officers, to the other party or its trustees,
directors or officers.
12. AMENDMENT
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the parties; provided, however,
that following the approval of this Agreement by the Current Funds'
Shareholders, no such amendment may have the effect of changing the provisions
for determining the number of Successor Shares to be paid to the Current Fund
Shareholders under this Agreement to the detriment of the Current Fund
Shareholders without their further approval.
13. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
13.1 The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance
with the laws of The Commonwealth of Massachusetts.
13.4 This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder shall be
made by any party without the written consent of the other party. Nothing herein
expressed or implied is intended or shall be construed to confer upon or give
any person, firm or corporation other than the parties hereto and their
respective successors and assigns any rights or remedies under or by reason of
this Agreement.
B-14
<PAGE>
13.5 All persons dealing with the Successor Trust must look solely to
the property of the Successor Trust for the enforcement of any claims against
the Successor Trust as neither the Trustees, officers, agents nor shareholders
of the Successor Trust assume any personal liability for obligations entered
into on behalf of the Successor Trust. No other series of the of the Successor
Trust hereafter established shall be responsible for any obligations assumed by
the Successor Trust on behalf of the Successor Fund under this Agreement.
13.6 A copy of the Agreement and Declaration of Trust of the Current
Fund is on file with the Secretary of State of The Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed on
behalf of the Trustees of the Current Fund as trustees and not individually and
that the obligations of this instrument are not binding upon any of the
trustees, officers, or shareholders of the Current Fund individually, but are
binding only upon the assets and property of the Current Fund.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Current Fund or the
Successor Trust, each at 60 State Street, Boston, Massachusetts 02109,
Attention: Secretary.
B-15
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officer.
PIONEER FUND
By:_____________________________
Its:____________________________
Title
PIONEER FUND
a Delaware business trust,
on behalf of Pioneer Fund
By:_____________________________
Its:____________________________
Title
B-16
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated February 2, 1996 included in Pioneer Fund's 1995 Annual Report (and to all
references to our firm) included in or made a part of the Pioneer Fund
Post-Effective Amendment No. 61 and Amendment No. 27 to Registration Statement
File Nos. 2-25980 and 811-1466, respectively.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 29, 1996
[ARTICLE] 6
[CIK] 0000078713
[NAME] PIONEER FUND
[MULTIPLIER] 1,000
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-END] DEC-31-1995
[INVESTMENTS-AT-COST] 1639603
[INVESTMENTS-AT-VALUE] 2460247
[RECEIVABLES] 8091
[ASSETS-OTHER] 72
[OTHER-ITEMS-ASSETS] 607
[TOTAL-ASSETS] 2469017
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 2919
[TOTAL-LIABILITIES] 2919
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1644509
[SHARES-COMMON-STOCK] 101253
[SHARES-COMMON-PRIOR] 94325
[ACCUMULATED-NII-CURRENT] 951
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 820638
[NET-ASSETS] 2466098
[DIVIDEND-INCOME] 66095
[INTEREST-INCOME] 955
[OTHER-INCOME] 0
[EXPENSES-NET] (21209)
[NET-INVESTMENT-INCOME] 45841
[REALIZED-GAINS-CURRENT] 194768
[APPREC-INCREASE-CURRENT] 287048
[NET-CHANGE-FROM-OPS] 527657
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (45343)
[DISTRIBUTIONS-OF-GAINS] (194671)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 9317
[NUMBER-OF-SHARES-REDEEMED] 11449
[SHARES-REINVESTED] 9061
[NET-CHANGE-IN-ASSETS] 455047
[ACCUMULATED-NII-PRIOR] 457
[ACCUMULATED-GAINS-PRIOR] 63
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 10330
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 21453
[AVERAGE-NET-ASSETS] 2060869
[PER-SHARE-NAV-BEGIN] 21.32
[PER-SHARE-NII] 0.49
[PER-SHARE-GAIN-APPREC] 5.13
[PER-SHARE-DIVIDEND] (0.49)
[PER-SHARE-DISTRIBUTIONS] (2.09)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 24.36
[EXPENSE-RATIO] 0.95
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
