File Nos. 2-25980
811-1466
As Filed with The Securities and Exchange Commission April 30, 1997
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. 64 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 30 [X]
(Check appropriate box or boxes)
PIONEER FUND
----------------------------------------------------
(Exact name of registrant as specified in charter)
60 State Street, Boston, Massachusetts 02109
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(Address of principal executive office) Zip Code
Registrant's Telephone Number, including Area Code: (617) 742-7825
Joseph P. Barri, Hale and Dorr LLP, 60 State Street, Boston, MA 02109
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(Name and address of agent for service)
It is proposed that this filing will become effective:
[X] on April 30, 1997 pursuant to paragraph (b) of Rule 485
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) of the Investment Company Act
of 1940. Registrant filed a Rule 24f-2 Notice for its fiscal year ending
December 31, 1996 on February 27, 1997.
<PAGE>
PIONEER FUND
Cross-Reference Sheet Showing Location in Prospectus and
Statement of Additional Information of Information
Required by Items of the Registration Form
<TABLE>
<CAPTION>
Location in
Prospectus or
Statement of Additional
Form N-1A Item Number and Caption Information
<C> <S>
1. Cover Page........................................Prospectus - Cover Page
2. Synopsis..........................................Prospectus - Expense Information
3. Condensed Financial
Information.......................................Prospectus - Financial Highlights
4. General Description of Registrant.................Prospectus - Investment Objectives and Policies; Management
of the Fund; Fund Share Alternatives; Share Price; How to
Buy Fund Shares; How to Sell Fund Shares; How to Exchange
Fund Shares; The Fund
5. Management of the Fund............................Prospectus - Management of the Fund
6. Capital Stock and
Other Securities..................................Prospectus - Investment Objectives and Policies; Management
of the Fund; Fund Share Alternatives; Share Price; How to
Buy Fund Shares; How to Sell Fund Shares; How to Exchange
Fund Shares; Dividends,
<PAGE>
Distributions and Taxation; The Fund
7. Purchase of Securities Being
Offered..........................................Prospectus - Fund Share Alternatives; Share Price; How to
Buy Fund Shares; How to Sell Fund Shares; How to Exchange
Fund Shares; Distribution Plans; Shareholder Services; The
Fund
8. Redemption or Repurchase.........................Prospectus - Fund Share Alternatives; Share Price; How to
Buy Fund Shares; How to Sell Fund Shares; How to Exchange
Fund Shares; Shareholder Services; The Fund
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 - Description of Shares
13. Investment Objectives
and Policies.....................................Statement of Additional Information - Investment Policies
and Restrictions
14. Management of the Fund...........................Statement of Additional Information -
2
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Management of the Fund; Investment Adviser
15. Control Persons and
Principal Holders
of Securities....................................Statement of Additional Information - Management of the Fund
16. Investment Advisory
and Other Services...............................Statement of Additional Information - Management of the
Fund; Investment Adviser; Principal Underwriter;
Distribution Plans; 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 - Description of Shares
19. Purchase, Redemption and
Pricing of Securities
Being Offered....................................Statement of Additional Information - Letter of Intention;
Systematic Withdrawal Plan; Determination of Net Asset Value
20. Tax Status.......................................Statement of Additional Information -
3
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Dividends and Tax Status
21. Underwriters.....................................Statement of Additional Information - Distribution Plans;
Principal Underwriter
22. Calculation of
Performance Data.................................Statement of Additional Information - Investment Results
23. Financial Statements.............................Financial Statements
</TABLE>
4
<PAGE>
Pioneer [Pioneer logo]
Fund
Class A, Class B and Class C Shares
Prospectus
April 30, 1997
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 April 30, 1997, 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 ................................. 2
II. FINANCIAL HIGHLIGHTS ................................. 3
III. INVESTMENT OBJECTIVES AND POLICIES .................. 6
IV. MANAGEMENT OF THE FUND .............................. 6
V. FUND SHARE ALTERNATIVES .............................. 8
VI. SHARE PRICE .......................................... 9
VII. HOW TO BUY FUND SHARES .............................. 9
VIII. HOW TO SELL FUND SHARES .............................. 12
IX. HOW TO EXCHANGE FUND SHARES ........................... 13
X. DISTRIBUTION PLANS .................................... 14
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION ............... 15
XII. SHAREHOLDER SERVICES ................................. 15
Account and Confirmation Statements .................. 15
Additional Investments .............................. 16
Automatic Investment Plans ........................... 16
Financial Reports and Tax Information ............... 16
Distribution Options ................................. 16
Directed Dividends ................................. 16
Direct Deposit ....................................... 16
Voluntary Tax Withholding ........................... 16
Telephone Transactions and Related Liabilities ...... 16
FactFone(SM) ........................................ 17
Telecommunications Device for the Deaf (TDD) ......... 17
Retirement Plans .................................... 17
Systematic Withdrawal Plans ........................ 17
Reinstatement Privilege (Class A Shares Only) ...... 17
XIII. THE FUND ............................................. 17
XIV. INVESTMENT RESULTS .................................... 18
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
I. EXPENSE INFORMATION
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 expenses based on actual Class A expenses for the
fiscal year ended December 31, 1996. Management fees have been restated to
reflect the annualized effective fee payable to Pioneering Management
Corporation ("PMC") for the period ended December 31, 1996 under the
performance-based management contract in effect since May 31, 1996. Actual
management fees for Class A shares for the fiscal period ended December 31, 1996
were 0.52%, reflecting a management contract in effect through April 30, 1996.
See "Management of the Fund." For Class B and Class C shares, operating expenses
are based on expenses that would have been incurred if such shares had been
outstanding for the entire fiscal year ended December 31, 1996.
Shareholder Transaction Expenses: Class A Class B Class C
Maximum Initial Sales Charge on Purchases (as
a percentage of offering price) ............ 5.75%(1) None None
Maximum Sales Charge on Reinvestment
of Dividends .............................. None None None
Maximum Deferred Sales Charge (as a
percentage of original purchase price or
redemption proceeds, as applicable) ...... None(1) 4.00% 1.00%
Redemption fee(2) ........................... None None None
Exchange fee .............................. None None None
Annual Operating Expenses (as a
percentage of average net assets):
Management fee* ............................. 0.55% 0.55% 0.55%
12b-1 fees ................................ 0.20% 1.00% 1.00%
Other Expenses (including accounting and
transfer agent fees, custodian fees and
printing expenses) ....................... 0.27% 0.25% 0.53%
------- ------- -------
Total Operating Expenses .................... 1.02% 2.02% 2.08%
======= ======= =======
- ---------
1 Purchases of $1 million or more and purchases by participants in certain group
plans are not subject to an initial sales charge but may be subject to a
contingent deferred sales charge ("CDSC") as further described under "How to
Sell Fund Shares."
2 Separate fees (currently $10 and $20, respectively) apply to domestic and
international wire transfers of redemption proceeds.
* The Fund pays a management fee that may vary from 0.50% to 0.70% based on its
performance. See "Management of the Fund."
Example:
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return, reinvestment of all dividends and distributions and that the
percentage amounts listed under "Annual Operating Expenses" remain the same each
year:
1 Year 3 Years 5 Years 10 Years
------- ------- ------- --------
Class A Shares $67 $88 $111 $175
Class B Shares*
- --Assuming complete redemption
at end of period $58 $87 $117 $191*
- --Assuming no redemption $18 $57 $ 97 $191*
Class C shares**
- --Assuming complete redemption
at end of period $31 $65 $112 $241
- --Assuming no redemption $21 $65 $112 $241
- ---------
*Class B shares convert to Class A shares eight years after purchase;
therefore, Class A expenses are used after year eight.
**Class C shares redeemed during the first year after purchase are subject to a
1% CDSC.
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 Plans" and
"How To Buy Fund Shares" in this Prospectus and "Management of the Fund" and
"Underwriting Agreement and Distribution Plans" in the Statement of Additional
Information. The Fund's payment of a 12b-1 fee may result in long-term
shareholders indirectly paying more than the economic equivalent of the maximum
sales charge permitted under the Conduct Rules of the National Association of
Securities Dealers Inc. ("NASD").
The maximum sales charge is reduced on purchases of specified amounts of
Class A shares and the value of shares owned in other Pioneer mutual funds is
taken into account in determining the applicable sales charge. See "How to Buy
Fund Shares." No sales charge is applied to exchanges of shares of the Fund for
shares of other publicly available Pioneer mutual funds. See "How to Exchange
Fund Shares."
2
<PAGE>
II. FINANCIAL HIGHLIGHTS
The following information has been audited by Arthur Andersen LLP,
independent public accountants. Arthur Andersen LLP's report on the Fund's
financial statements as of December 31, 1996 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.
Pioneer Fund
Selected Data for a Class A Share Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------
1996 1995 1994 1993
------------- ------------ ------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period ......... $ 24.36 $ 21.32 $ 23.25 $ 21.51
---------- ---------- --------- - ---------
Increase (decrease) from
investment operations:
Net investment income ...... $ 0.37 $ 0.49 $ 0.49 $ 0.47
Net realized and
unrealized gain (loss)
on investments and
foreign currency
transactions ............... 4.35 5.13 (0.63) 2.57
---------- ---------- --------- - ---------
Total increase (decrease)
from investment
operations .................. $ 4.72 $ 5.62 $ (0.14) $ 3.04
Distribution to shareholders
from:
Net investment income ......... (0.37) (0.49) (0.49) (0.47)
Net realized capital gains .... (1.82) (2.09) (1.30) (0.83)
---------- ---------- --------- - ---------
Net increase (decrease) in
net asset value ............ $ (2.53) $ 3.04 $ (1.93) $ 1.74
---------- ---------- --------- - ---------
Net asset value, end of
period ..................... $ 26.89 $ 24.36 $ 21.32 $ 23.25
========== ========== ========= = =========
Total return* .................. 19.70% 26.64% (0.57%) 14.23%
Ratio of net expenses to
average net assets ......... 1.01%+ 0.95%+ 0.94% 0.95%
Ratio of net investment
income to average net
assets ..................... 1.40%+ 2.01%+ 2.13% 2.04%
Portfolio turnover rate ...... 25% 31% 20% 12%
Average commission rate
paid(1) ..................... $ 0.0599 -- -- --
Net assets, end of period
(in thousands) ............... $2,896,670 $2,466,098 $2,011,051 $2,042,945
Ratios assuming reduction
for fees paid indirectly:
Net expenses ............... 0.99% 0.94%
Net investment income ...... 1.42% 2.02%
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------
1992 1991 1990 1989 1988 1987
------------ ------------ ------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ......... $ 20.24 $ 18.79 $ 23.28 $ 20.34 $ 18.48 $ 19.72
--------- --------- ---------- --------- --------- ---------
Increase (decrease) from
investment operations:
Net investment income ...... $ 0.50 $ 0.61 $ 0.67 $ 0.61 $ 0.63 $ 0.62
Net realized and
unrealized gain (loss)
on investments and
foreign currency
transactions ............... 2.22 3.49 (3.10) 4.09 2.72 0.41
--------- --------- ---------- --------- --------- ---------
Total increase (decrease)
from investment
operations .................. $ 2.72 $ 4.10 $ (2.43) $ 4.70 $ 3.35 $ 1.03
Distribution to shareholders
from:
Net investment income ......... (0.50) (0.61) (0.67) (0.68) (0.62) (0.61)
Net realized capital gains . (0.95) (2.04) (1.39) (1.08) (0.87) (1.66)
--------- --------- ---------- --------- --------- ---------
Net increase (decrease) in
net asset value ............ $ 1.27 $ 1.45 $ (4.49) $ 2.94 $ 1.86 $ (1.24)
--------- --------- ---------- --------- --------- ---------
Net asset value, end of
period ..................... $ 21.51 $ 20.24 $ 18.79 $ 23.28 $ 20.34 $ 18.48
========= ========= ========== ========= ========= =========
Total return* .................. 13.60% 22.76% (10.52%) 23.39% 18.33% 5.44%
Ratio of net expenses to
average net assets ......... 0.98% 0.87% 0.78% 0.75% 0.76% 0.70%
Ratio of net investment
income to average net
assets ..................... 2.33% 2.87% 3.15% 2.60% 3.03% 2.75%
Portfolio turnover rate ...... 13% 22% 17% 6% 11% 14%
Average commission rate
paid(1) ..................... -- -- -- -- -- --
Net assets, end of period
(in thousands) ............... $1,786,031 $1,614,567 $1,395,520 $1,618,320 $1,409,755 $1,272,118
Ratios assuming reduction
for fees paid indirectly:
Net expenses ...............
Net investment income ......
</TABLE>
- ---------
+ Ratios assuming no reduction for fees paid indirectly.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all dividends and distributions, and the complete
redemption of the investment at the net asset value at the end of each period
and no sales charges. Total return would be reduced if sales charges were
taken into account.
(1)Amount represents the rate of commission paid per share on the Fund's
exchange listed security transactions.
- --------------------------------------------------------------------
3
<PAGE>
II. FINANCIAL HIGHLIGHTS (continued)
Selected Data for a Class B Share Outstanding for the Period Presented+:
July 1, 1996
to
December 31, 1996
-------------------
Net asset value, beginning of period ................... $ 26.40
--------
Increase (decrease) from investment operations:
Net investment income (loss) ........................... $ 0.07
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ......... 2.50
--------
Total increase (decrease) from investment operations .... $ 2.57
--------
Distributions to shareholders:
Net investment income ................................. (0.07)
In excess of net investment income ................... (0.06)
From net realized gain .................................. (1.82)
--------
Net increase (decrease) in net asset value ............. $ 0.62
--------
Net asset value, end of period ......................... $ 27.02
========
Total return* ........................................... 9.92%
Ratio of net expenses to average net assets ............. 1.82%**++
Ratio of net investment income to average net assets .... 0.46%**++
Portfolio turnover rate .................................. 25%
Average commission rate paid(1) ......................... $ 0.0599
Net assets end of period (in thousands) ................ $ 8,940
Ratios assuming reduction for fees paid indirectly:
Net expenses .......................................... 1.80%**
Net investment income (loss) ......................... 0.48%**
- -------------
+ The per share data presented above is based upon average shares outstanding
and average net assets for the period presented.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
++ Ratios assuming no reduction for fees paid indirectly.
(1) Amount represents the rate of commission paid per share on the Fund's
exchange listed security transactions.
4
<PAGE>
II. FINANCIAL HIGHLIGHTS (continued)
Selected Data for a Class C Share Outstanding for the Period Presented+:
July 1, 1996
to
December 31, 1996
------------------
Net asset value, beginning of period .................... $ 26.40
--------
Increase (decrease) from investment operations:
Net investment income (loss) ............................ $ 0.03
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ........... 2.23
--------
Total increase (decrease) from investment operations ..... $ 2.26
--------
Distributions to shareholders:
Net investment income .................................. (0.03)
In excess of net investment income .................... (0.07)
From net realized gain ................................... (1.82)
--------
Net increase (decrease) in net asset value .............. $ 0.34
--------
Net asset value, end of period .......................... $ 26.74
========
Total return* ............................................ 8.74%
Ratio of net expenses to average net assets .............. 2.11%**++
Ratio of net investment income to average net assets ..... 0.20%**++
Portfolio turnover rate ................................... 25%
Average commission rate paid(1) .......................... $ 0.0599
Net assets end of period (in thousands) ................. $ 1,831
Ratios assuming reduction for fees paid indirectly:
Net expenses ........................................... 2.08%**
Net investment income (loss) .......................... 0.23%**
- -------------
+ The per share data presented above is based upon average shares
outstanding and average net assets for the period presented.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
++ Ratios assuming no reduction for fees paid indirectly.
(1) Amount represents the rate of commission paid per share on the Fund's
exchange listed security transactions.
5
<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 and
broker-dealers, 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
Stock 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. While there is no
requirement to do so, the Fund intends to limit its investments in foreign
securities to no more than 10% of its total assets. 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.
Investing in securities of foreign companies involves certain
considerations and risks which are not typically associated with investing in
securities of domestic companies. Foreign companies are not subject to uniform
accounting, auditing and financial standards and requirements comparable to
those applicable to U.S. companies. There may also be less publicly available
information about foreign companies compared to reports and ratings published
about U.S. companies. In addition, foreign securities markets have substantially
less volume than domestic markets and securities of some foreign companies are
less liquid and more volatile than securities of comparable U.S. companies.
There may also be less government supervision and regulation of foreign
securities exchanges, brokers and listed companies than exists in the United
States. Dividends or interest paid by foreign issuers may be subject to
withholding and other foreign taxes which will decrease the net return on such
investments as compared to dividends or interest paid to the Fund by domestic
companies. Finally, there may be the possibility of expropriations, confiscatory
taxation, political, economic or social instability or diplomatic developments
which could adversely affect assets of the Fund held in foreign countries. The
value of foreign securities may also be adversely affected by fluctuations in
the relative rates of exchange between the currencies of different nations and
by exchange control regulations.
The Fund's fundamental investment objectives and the fundamental investment
restrictions set forth in the Statement of Additional Information may not be
changed without shareholder approval. Certain other investment policies,
strategies and restrictions on investment are noted throughout the 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 are described in the Statement of Additional
Information, including 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 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, as amended (the "1940 Act"). The Board meets at least
quarterly. By virtue of the functions performed by Pioneering Management
Corporation ("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
6
<PAGE>
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 publicly-traded Delaware corporation. PGI's
indirect wholly-owned subsidiary, Pioneer Funds Distributor, Inc. ("PFD"), is
the principal underwriter of shares of the Fund.
Mr. David Tripple, President and Chief Investment Officer of PMC and
Executive Vice President of each Pioneer mutual fund, has general responsibility
for PMC's investment operations. Each domestic equity portfolio managed by PMC,
including the Fund, is the general responsibility of a committee of PMC's equity
portfolio managers. Mr. Tripple chairs the committee, which meets regularly to
review the investment operations of Pioneer's domestic equity mutual funds. Mr.
Tripple joined PMC in 1974.
The Fund is covered by a team of portfolio managers and analysts which does
research for and oversees the management of several funds with similar
objectives. Members of the team meet regularly to discuss holdings, prospective
investments and portfolio composition.
Day-to-day management of the Fund is the responsibility of Mr. John A.
Carey, Vice President of the Fund and PMC, since July 1986. Mr. Carey joined PMC
in 1979 and has 18 years of investment experience.
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 14%
of the outstanding capital stock of PGI as of the date of this Prospectus.
In addition to the Fund, PMC also manages and serves as the investment
adviser for other mutual funds and is an investment adviser to certain other
institutional accounts. PMC's and PFD's executive offices are located at 60
State Street, Boston, Massachusetts 02109. In an effort to avoid conflicts of
interest with the Fund, the Fund and PMC have adopted a Code of Ethics that is
designed to maintain a high standard of personal conduct by directing that all
personnel defer to the interests of the Fund and its shareholders in making
personal securities transactions.
Under the terms of its contract with the Fund, PMC 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 office space relating to its services for
the Fund, with the exception of the following, which are 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. The
Fund also pays all brokers' and underwriting commissions chargeable to the Fund
in connection with its portfolio transactions.
Orders for the Fund's portfolio securities transactions are placed by PMC,
which strives to obtain the best price and execution for each transaction. In
circumstances 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 or other funds for which PMC or its affiliates serves as
investment adviser or manager. See the Statement of Additional Information for a
further description of PMC's brokerage allocation practices.
Management Fee
As compensation for its management services and certain expenses which PMC
incurs on behalf of the Fund, the Fund pays PMC a management fee that is
comprised of two components. The first component is a basic fee equal to 0.60%
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 the Class A shares of 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 multiplied 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.
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The Fund's performance is calculated based on the net asset value per share
of its Class A shares. For purposes of calculating the performance adjustment,
any dividends or capital gains distributions paid by the Fund are treated as if
reinvested in the Fund's Class A shares at the net asset value per share as of
the record date for payment. The record for the Index is based on change in
value and is adjusted for any cash distributions from the companies whose
securities comprise the Index.
Because the adjustment to the Basic Fee is based on the comparative
performance of the Class A shares of the Fund and the record of the Index, the
controlling factor is not whether 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 Class A shares 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
performance 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 successor 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, the Fund pays 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 initial 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
certain expenses which PMC incurred, 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. See "Expense Information" in the
Prospectus and "Investment Adviser" in the Statement of Additional Information.
V. FUND SHARE ALTERNATIVES
The Fund continuously offers three Classes of shares designated as Class A,
Class B and Class C shares, as described more fully in "How to Buy Fund Shares."
If you do not specify in your instructions to the Fund which Class of shares you
wish to purchase, exchange or redeem, the Fund will assume that your
instructions apply to Class A shares.
Class A Shares. If you invest less than $1 million in Class A shares, you
will pay an initial sales charge. Certain purchases may qualify for reduced
initial sales charges. If you invest $1 million or more in Class A shares, no
sales charge will be imposed at the time of purchase; however, shares redeemed
within 12 months of purchase may be subject to a CDSC. Class A shares are
subject to distribution and service fees at a combined annual rate of up to
0.25% of the Fund's average daily net assets attributable to Class A shares.
Class B Shares. If you plan to invest up to $250,000, Class B shares are
available to you. Class B shares are sold without an initial sales charge, but
are subject to a CDSC of up to 4% if redeemed within six years. Class B shares
are subject to distribution and service fees at a combined annual rate of 1.00%
of the Fund's average daily net assets attributable to Class B shares. Your
entire investment in Class B shares is available to work for you from the time
you make your investment, but the higher distribution fee paid by Class B shares
will cause your Class B shares (until conversion) to have a higher expense ratio
and to pay lower dividends, to the extent dividends are paid, than Class A
shares. Class B shares will automatically convert to Class A shares, based on
relative net asset value, eight years after the initial purchase.
Class C Shares. Class C shares are sold without an initial sales charge,
but are subject to a 1% CDSC if they are redeemed within the first year after
purchase. Class C shares are subject to distribution and service fees at a
combined annual rate of up to 1.00% of the Fund's average daily net assets
attributable to Class C shares. Your entire investment in Class C shares is
available to work for you from the time you make your investment, but the higher
distribution fee paid by Class C shares will cause your Class C shares to have a
higher expense ratio and to pay lower dividends, to the extent dividends are
paid, than Class A shares. Class C shares have no conversion feature.
Selecting a Class of Shares. The decision as to which Class to purchase
depends on the amount you invest, the intended length of the investment and your
personal situation. If you are making an investment that qualifies for reduced
sales charges, you might consider Class A shares. If you prefer not to pay an
initial sales charge on an investment of $250,000 or less and you plan to hold
the investment for at least six years, you might consider Class B shares. If you
prefer not to pay an initial sales charge and you plan to hold your investment
for one to eight years, you may prefer Class C shares.
Investment dealers or their representatives may receive different
compensation depending on which Class of shares they sell. Shares may be
exchanged only for shares of the same Class of another Pioneer mutual fund and
shares acquired in the exchange will continue to be subject to any CDSC
applicable to the shares of the Pioneer mutual fund originally purchased. Shares
sold outside the U.S. to persons who are not U.S. citizens may be subject to
different sales charges, CDSCs and dealer compensation arrangements in
accordance with local laws and business practices.
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VI. SHARE PRICE
Shares of the Fund are sold at the public offering price, which is the net
asset value per share, plus any applicable sales charge. The net asset value per
share of each Class of the Fund is determined by dividing the value of its
assets, less liabilities attributable to that Class, by the number of shares of
that Class outstanding. The net asset value is computed once daily, on each day
the New York Stock Exchange (the "Exchange") is open, as of the close of regular
trading on the Exchange.
Securities are valued at the last sale price on the principal exchange or
market where they are traded. Securities which have not traded on the date of
valuation or securities for which sales prices are not generally reported are
valued at the mean between the current bid and asked prices. Securities quoted
in foreign currencies are converted to U.S. dollars utilizing foreign exchange
rates employed by the Fund's independent pricing services. Generally, trading in
foreign securities is substantially completed each day at various times prior to
the close of the Exchange. The values of such securities used in computing the
net asset value of the Fund's shares are determined as of such times. Foreign
currency exchange rates are also generally determined prior to the close of the
Exchange. Occasionally, events which affect the values of such securities and
such exchange rates may occur between the times at which they are determined and
the close of the Exchange and will therefore not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of such
securities occur during such period, then these securities are valued at their
fair value as determined in good faith by the Trustees. All assets of the Fund
for which there is no other readily available valuation method are valued at
their fair value as determined in good faith by the Trustees.
VII. HOW TO BUY FUND SHARES
You may buy Fund shares from any securities broker-dealer which has a
selling 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 for Class A share accounts and $1,000
for Class B and Class C share accounts, except as specified below. 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 minimum subsequent investment is $50 for Class A shares and
$500 for Class B and Class C shares except that the subsequent minimum
investment for Class B and Class C shares may be as little as $50 if an
automatic investment plan (see "Automatic Investment Plans") is established.
The Fund has a minimum Class A 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 Class A account to $500. See "How to Sell Fund
Shares."
Telephone Purchases. Your account is automatically authorized to have the
telephone purchase privilege unless you indicate otherwise on your Account
Application or by writing to Pioneering Services Corporation ("PSC"). The
telephone purchase option may be used to purchase additional shares for an
existing mutual fund account; it may not be used to establish a new account.
Proper account identification will be required for each telephone purchase. A
maximum of $25,000 per account may be purchased by telephone each day. The
telephone purchase privilege is available to Individual Retirement Accounts
("IRAs") but may not be available to other types of retirement plan accounts.
Call PSC for more information.
You are strongly urged to consult with your financial representative prior
to requesting a telephone purchase. To purchase shares by telephone, you must
establish your bank account of record by completing the appropriate section of
your Account Application or an Account Options Form. PSC will electronically
debit the amount of each purchase from this predesignated bank account.
Telephone purchases may not be made for 30 days after the establishment of your
bank of record or any change to your bank information.
Telephone purchases will be priced at the net asset value plus any
applicable sales charge next determined after PSC's receipt of a telephone
purchase instruction and receipt of good funds (usually three days after the
purchase instruction). You may always elect to deliver purchases to PSC by mail.
See "Telephone Transactions and Related Liabilities" for additional information.
Class A Shares
You may buy Class A shares at the public offering price, including a sales
charge as follows:
Sales Charge as % of Dealer
------------------------ Allowance
Net as a % of
Offering Amount Offering
Amount of Purchase Price Invested Price
- ------------------------ ----------- ----------- -----------
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than
$100,000 4.50 4.71 4.00
$100,000 but less than
$250,000 3.50 3.63 3.00
$250,000 but less than
$500,000 2.50 2.56 2.00
$500,000 but less than
$1,000,000 2.00 2.04 1.75
$1,000,000 or more -0- -0- see below
The schedule of sales charges above is applicable to purchases of Class A
shares of the Fund by (i) an individual, (ii) an individual, 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 Class A shares of the Fund by a person
listed above is determined by adding the value of shares to be purchased to the
aggregate value (at current offering price) of shares of any of the other
Pioneer mutual funds previously purchased and then owned, provided PFD is
notified by
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<PAGE>
such person or his or her broker-dealer each time a purchase is made which would
qualify. At the sole discretion of PFD, holdings of funds domiciled outside the
U.S., but which are managed by affiliates of PMC, may be included for this
purpose.
No sales charge is payable at the time of purchase on investments of $1
million or more or on purchases in certain group plans (discussed below),
subject to a CDSC of 1% which may be imposed in the event of a redemption of
Class A shares within 12 months of purchase. See "How to Sell Fund Shares." 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 12 calendar months. Broker-dealers who receive a
commission in connection with Class A share purchases at net asset value by
401(a) or 401(k) retirement plans with 1,000 or more eligible participants or
with at least $10 million in plan assets will be required to return any
commission paid or a pro rata portion thereof if the retirement plan redeems its
shares within 12 months of purchase. See also "How to Sell Fund Shares." In
connection with PGI's acquisition of Mutual of Omaha Fund Management Company and
contingent upon the achievement of certain sales objectives, PFD may pay to
Mutual of Omaha Investor Services, Inc. 50% of PFD's retention of any sales
commission on sales of the Fund's Class A shares through such dealer. From time
to time, PFD may elect to reallow the entire initial sales charge to
participating dealers for all sales of Class A shares with respect to which
orders are placed during a particular period. Dealers to whom substantially the
entire sales charge is reallowed may be deemed to be underwriters under the
federal securities laws.
Qualifying for a Reduced Sales Charge. Class A shares of the Fund may be
sold at a reduced or eliminated sales charge to certain group plans ("Group
Plans") under which a sponsoring organization makes recommendations to, permits
group solicitation of, or otherwise facilitates purchases by, its employees,
members or participants. Class A shares of the Fund may be sold to 401(k)
retirement plans with 100 or more participants or at least $500,000 in plan
assets. Information about such arrangements is available from PFD.
Class A shares of the Fund may also be sold at net asset value per share
without a sales charge to: (a) current or former Trustees and officers of the
Fund and partners and employees of its legal counsel; (b) current or former
directors, officers, employees or sales representatives of PGI or its
subsidiaries; (c) current or former directors, officers, employees or sales
representatives of any subadviser or predecessor investment adviser to any
investment company for which PMC serves as 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. Class A
shares of the Fund may be sold at net asset value per share without a sales
charge to Optional Retirement Program (the "Program") participants if (i) the
employer has authorized a limited number of investment company providers for the
Program, (ii) all authorized investment company providers offer their shares to
Program participants at net asset value, (iii) the employer has agreed in
writing to actively promote the authorized investment providers to Program
participants and (iv) the Program provides for a matching contribution for each
participant contribution. Class A shares of the Fund may also be sold at net
asset value without a sales charge in connection with certain reorganization,
liquidation or acquisition transactions involving other investment companies or
personal holding companies.
Reduced sales charges are available for purchases of $50,000 or more of
Class A shares (excluding any reinvestments of dividends and capital gains
distributions) made within a 13-month period pursuant to a Letter of Intent
("LOI") which may be established by completing the Letter of Intent section of
the Account Application. The reduced sales charge will be the charge that would
be applicable to the purchase of the specified amount of Class A shares as if
the shares had all been purchased at the same time. A purchase not made pursuant
to an LOI may be included if the LOI is submitted to PSC within 90 days of such
purchase. You may also obtain the reduced sales charge by including the value
(at current offering price) of all your Class A shares in the Fund and all other
Pioneer mutual funds held of record as of the date of your LOI in the amount
used to determine the applicable sales charge for the Class A shares to be
purchased under the LOI. Five percent of your total intended purchase amount
will be held in escrow by PSC, registered in your name, until the terms of the
LOI are fulfilled.
You are not obligated to purchase the amount specified in your LOI. If,
however, the amount actually purchased during the 13-month period is more or
less than that indicated in your LOI, an adjustment in the sales charge will be
made. If a payment to cover actual sales charges is due, it must be paid to PFD
within 20 days after PFD or your dealer sends you a written request or PFD will
direct PSC to liquidate sufficient shares from your escrow account to cover the
amount due. See the Statement of Additional Information for more information.
Investors who are clients of a broker-dealer with a current selling
agreement with PFD may purchase Class A shares of the Fund at net asset value,
without a sales charge, to the extent that the purchase price is paid out of
proceeds from one or more redemptions by the investor of shares of certain other
mutual funds. In order for a purchase to qualify for this privilege, the
investor must document to the broker-dealer that the
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<PAGE>
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.
Class B Shares
You may buy Class B shares at the net asset value per share next computed
after receipt of a purchase order without the imposition of an initial sales
charge; however, Class B shares redeemed within six years of purchase will be
subject to a CDSC at the rates shown in the table below. The charge will be
assessed on the amount equal to the lesser of the current market value or the
original purchase cost of the shares being redeemed. No CDSC will be imposed on
increases in account value above the initial purchase price, including shares
derived from the reinvestment of dividends or capital gains distributions.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of purchase until the time of redemption of Class B shares. For
the purpose of determining the number of years from the time of any purchase,
all payments during a quarter will be aggregated and deemed to have been made on
the first day of that quarter. In processing redemptions of Class B shares, the
Fund will first redeem shares not subject to any CDSC, and then shares held
longest during the six-year period. As a result, you will pay the lowest
possible CDSC.
The CDSC for Class B shares subject to a CDSC upon redemption will be
determined as follows:
Year Since CDSC as a Percentage of Dollar
Purchase Amount Subject to CDSC
- ------------------------------ --------------------------------
First ..................... 4.0%
Second ..................... 4.0%
Third ..................... 3.0%
Fourth ..................... 3.0%
Fifth ..................... 2.0%
Sixth ..................... 1.0%
Seventh and thereafter ...... none
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class B shares, including the payment of
compensation to broker-dealers.
Class B shares will automatically convert into Class A shares at the end of
the calendar quarter that is eight years after the purchase date, except as
noted below. Class B shares acquired by exchange from Class B shares of another
Pioneer mutual fund will convert into Class A shares based on the date of the
initial purchase and the applicable CDSC. Class B shares acquired through
reinvestment of distributions will convert into Class A shares based on the date
of the initial purchase to which such shares relate. For this purpose, Class B
shares acquired through reinvestment of distributions will be attributed to
particular purchases of Class B shares in accordance with such procedures as the
Trustees may determine from time to time. The conversion of Class B shares to
Class A shares is subject to the continuing availability of a ruling from the
Internal Revenue Service ("IRS") that such conversions will not constitute
taxable events for federal tax purposes. The conversion of Class B shares to
Class A shares will not occur if such ruling is not available and, therefore,
Class B shares would continue to be subject to higher expenses than Class A
shares for an indeterminate period.
Class C Shares
You may buy Class C shares at net asset value without the imposition of an
initial sales charge; however, Class C shares redeemed within one year of
purchase will be subject to a CDSC of 1.00%. The charge will be assessed on the
amount equal to the lesser of the current market value or the original purchase
cost of the shares being redeemed. No CDSC will be imposed on increases in
account value above the initial purchase price, including shares derived from
the reinvestment of dividends or capital gains distributions. Class C shares do
not convert to any other Class of Fund shares.
For the purpose of determining the time of any purchase, all payments
during a quarter will be aggregated and deemed to have been made on the first
day of that quarter. In processing redemptions of Class C shares, the Fund will
first redeem shares not subject to any CDSC, and then shares held for the
shortest period of time during the one-year period. As a result, you will pay
the lowest possible CDSC.
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class C shares, including the payment of
compensation to broker-dealers.
Waiver or Reduction of Contingent Deferred Sales Charge. The CDSC on Class
B shares may be waived or reduced for non-retirement accounts if: (a) the
redemption results from the death of all registered owners of an account (in the
case of UGMAs, UTMAs and trust accounts, waiver applies upon the death of all
beneficial owners) or a total and permanent disability (as defined in Section 72
of the Code) of all registered owners occurring after the purchase of the shares
being redeemed or (b) the redemption is made in connection with limited
automatic redemptions as set forth in "Systematic Withdrawal Plans" (limited in
any year to 10% of the value of the account in the Fund at the time the
withdrawal plan is established).
The CDSC on Class B shares may be waived or reduced for retirement plan
accounts if: (a) the redemption results from the death or a total and permanent
disability (as defined in Section 72 of the Code) occurring after the purchase
of the shares being redeemed of a shareholder or participant in an
employer-sponsored retirement plan; (b) the distribution is to a participant in
an IRA, 403(b) or employer-sponsored retirement plan, is part of a series of
substantially equal payments made over the life expectancy of the participant or
the joint life expectancy of the participant and his or her beneficiary or as
scheduled periodic payments to a participant (limited in any year to 10% of the
value of the participant's account at the time the distribution amount is
established; a required minimum distribution due to the participant's attainment
of age 701/2 may exceed the 10% limit only if the distribution amount is based
on plan assets held by Pioneer); (c) the dis-
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tribution 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 Class C shares and on any Class A shares subject to a CDSC may
be waived or reduced as follows: (a) for automatic redemptions as described in
"Systematic Withdrawal Plans" (limited to 10% of the value of the account); (b)
if the redemption results from the death or a total and permanent disability (as
defined in Section 72 of the Code) occurring after the purchase of the shares
being redeemed of a shareholder or participant in an employer-sponsored
retirement plan; (c) if the distribution is part of a series of substantially
equal payments made over the life expectancy of the participant or the joint
life expectancy of the participant and his or her beneficiary; or (d) if the
distribution is to a participant in an employer-sponsored retirement plan and is
(i) a return of excess employee deferrals or contributions, (ii) a qualifying
hardship distribution as defined by the Code, (iii) from a termination of
employment, (iv) in the form of a loan to a participant in a plan which permits
loans, or (v) from a qualified defined contribution plan and represents a
participant's directed transfer (provided that this privilege has been pre-
authorized through a prior agreement with PFD regarding participant directed
transfers).
The CDSC on any shares subject to a CDSC may be waived or reduced for
either non-retirement or retirement plan accounts if the redemption is made
pursuant to the Fund's right to liquidate or involuntarily redeem shares in a
shareholder's account. The CDSC on any shares subject to a CDSC will not be
applicable if the selling broker-dealer elects, with PFD's approval, to waive
receipt of the commission normally paid at the time of the sale.
Broker-Dealers. An order for any Class of Fund shares received by PFD from
a broker-dealer prior to the close of regular trading on the Exchange is
confirmed at the price appropriate for that Class as determined at the close of
regular trading on the Exchange on the day the order is received, provided the
order is received by PFD prior to PFD's close of business (usually, 5:30 p.m.
Eastern Time). It is the responsibility of broker-dealers to transmit orders so
that they will be received by PFD prior to its close of business. PFD or its
affiliates may provide additional compensation to certain dealers or such
dealers' affiliates based on certain objective criteria established from time to
time by PFD. All such payments are made out of PFD's or the affiliate's own
assets. These payments will not change the price an investor will pay for shares
or the amount that the Fund will receive from such sale.
General. The Fund reserves the right in its sole discretion to withdraw all
or any part of the offering of shares when, in the judgment of the Fund's
management, such withdrawal is in the best interest of the Fund. An order to
purchase shares is not binding on, and may be rejected by, PFD until it has been
confirmed in writing by PFD and payment has been received.
VIII. HOW TO SELL FUND SHARES
You can arrange to sell (redeem) Fund shares on any day the Exchange is
open by selling either some or all of your shares to the Fund.
You may sell your shares either through your broker-dealer or directly to
the Fund. Please note the following:
[bullet] If you are selling shares from a retirement account, other than an
IRA, you must make your request in writing (except for exchanges to
other Pioneer mutual funds which can be requested by phone or in
writing). Call 1-800-622-0176 for more information.
[bullet] If you are selling shares from a non-retirement account or IRA, you
may use any of the methods described below.
Your shares will be sold at the share price next calculated after your
order is received in good order less any applicable CDSC. Sale proceeds
generally will be sent to you in cash, normally within seven days after your
order is received in good order. The Fund reserves the right to withhold payment
of the sale proceeds until checks received by the Fund in payment for the shares
being sold have cleared, which may take up to 15 calendar days from the purchase
date.
In Writing. You may sell your shares by delivering a written request,
signed by all registered owners, in good order to PSC; however, you must use a
written request, including a signature guarantee, to sell your shares if any of
the following situations applies:
[bullet] you wish to sell over $50,000 worth of shares,
[bullet] your account registration or address has changed within the last 30
days,
[bullet] the check is not being mailed to the address on your account
(address of record),
[bullet] the check is not being made out to the account owners, or
[bullet] the sale proceeds are being transferred to a Pioneer mutual fund
account with a different registration.
Your request should include your name, the Fund's name, your Fund account
number, the Class of shares to be redeemed, the dollar amount or number of
shares to be redeemed, and any other applicable requirements as described below.
Unless instructed otherwise, PSC will send the proceeds of the sale to the
address of record. Fiduciaries
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or corporations are required to submit additional documents. For more
information, contact PSC at 1-800-225-6292.
Written requests will not be processed until they are received in good
order and accepted by PSC. 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 an eligible guarantor. You should be able to obtain a
signature guarantee from a bank, broker, dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency or savings
association. A notary public cannot provide a signature guarantee. Signature
guarantees are not accepted by facsimile ("fax"). For additional information
about the necessary documentation for redemption by mail, please contact PSC at
1-800-225-6292.
By Telephone or Fax. Your account is automatically authorized to have the
telephone redemption privilege unless you indicate otherwise on your Account
Application or by writing to PSC. Proper account identification will be required
for each telephone redemption. The telephone redemption option is not available
to retirement plan accounts, except IRAs. A maximum of $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.
Selling Shares Through Your Broker-Dealer. The Fund has authorized PFD to
act as its agent in the repurchase of shares of the Fund from qualified
broker-dealers and reserves the right to terminate this procedure at any time.
Your broker-dealer must receive your request before the close of business on the
Exchange and transmit it to PFD before PFD's close of business to receive that
day's redemption price. Your broker-dealer is responsible for providing all
necessary documentation to PFD and may charge you for its services.
Small Accounts. 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 the minimum account value of $500. If
you hold shares of the Fund in an account with a net asset value of less than
the minimum required amount due to redemptions or exchanges or failure to meet
the initial minimum account requirement set forth 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 the minimum required amount within six
months of notice by the Fund to you of the Fund's intention to redeem the
shares.
CDSC on Class A Shares. Purchases of Class A shares of $1,000,000 or more,
or by participants in a Group Plan which were not subject to an initial sales
charge, may be subject to a CDSC upon redemption. A CDSC is payable to PFD on
these investments in the event of a share redemption within 12 months following
the share purchase, at the rate of 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividend and capital gain distributions) or
the total cost of such shares. Shares subject to the CDSC which are exchanged
into another Pioneer mutual fund will continue to be subject to the CDSC until
the original 12-month period expires. However, no CDSC is payable upon
redemption with respect to Class A shares purchased by 401(a) or 401(k)
retirement plans with 1,000 or more eligible participants or with at least $10
million in plan assets.
General. Redemptions may be suspended or payment postponed during any
period in which any of the following conditions exist: the Exchange is closed or
trading on the Exchange is restricted; an emergency exists as a result of which
disposal by the Fund of securities owned by it is not reasonably practicable or
it is not reasonably practicable for the Fund to fairly determine the value of
the net assets of its portfolio; or the SEC, by order, so permits.
Redemptions and repurchases are taxable transactions to shareholders. The
net asset value per share received upon redemption or repurchase may be more or
less than the cost of shares to an investor, depending on the market value of
the portfolio at the time of redemption or repurchase.
IX. HOW TO EXCHANGE FUND SHARES
Written Exchanges. You may exchange your shares by sending a letter of
instruction to PSC. Your letter should include your name, the name of the
Pioneer mutual fund out of which you wish to exchange and the name of the
Pioneer mutual fund into which you wish to exchange, your fund account
number(s), the Class of shares to be exchanged and the dollar amount or number
of shares to be exchanged. Written exchange requests must be signed by all
record owner(s) exactly as the shares are registered.
Telephone Exchanges. Your account is automatically authorized to have the
telephone exchange privilege unless you indicate otherwise on your Account
Application or by writing to PSC. Proper account identification will be required
for each telephone exchange. Telephone exchanges may not exceed $500,000 per
account per day. Each telephone exchange request, whether by voice or by
FactFone(SM), will be recorded. You are strongly urged to consult with your
financial representative prior to requesting a telephone exchange. See
"Telephone Transactions and Related Liabilities" below.
Automatic Exchanges. You may automatically exchange shares from one Pioneer
mutual fund account for shares of the same Class in another Pioneer mutual fund
account on a monthly or quarterly basis. The accounts must have identical
registrations and the originating account must have a minimum balance of $5,000.
The exchange will be effective on
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the day of the month designated on your Account Application or Account Options
Form.
General. Exchanges must be at least $1,000. You may exchange your
investment from one Class of Fund shares at net asset value, without a sales
charge, for shares of the same Class of any other Pioneer mutual fund. Not all
Pioneer mutual funds offer more than one Class of shares. A new Pioneer mutual
fund account opened through an exchange must have a registration identical to
that on the original account.
Shares which would normally be subject to a CDSC upon redemption will not
be charged the applicable CDSC at the time of an exchange. Shares acquired in an
exchange will be subject to the CDSC of the shares originally held. For purposes
of determining the amount of any applicable CDSC, the length of time you have
owned shares acquired by exchange will be measured from the date you acquired
the original shares and will not be affected by any subsequent exchange.
Exchange requests received by PSC before 4:00 p.m. Eastern Time will be
effective on that day if the requirements above have been met, otherwise, they
will be effective on the next business day. PSC will process exchanges only
after receiving an exchange request in good order. There are currently no fees
or sales charges imposed at the time of an exchange. An exchange of shares may
be made only in states where legally permitted. For federal and (generally)
state income tax purposes, an exchange is considered to be a sale of the shares
of the Fund exchanged and a purchase of shares in another Pioneer mutual fund.
Therefore, an exchange could result in a gain or loss on the shares sold,
depending on the tax basis of these shares and the timing of the transaction,
and special tax rules may apply.
You should consider the differences in objectives and policies of the
Pioneer mutual funds, as described in each fund's current prospectus, before
making any exchange. For the protection of the Fund's performance and
shareholders, the Fund and PFD reserve the right to refuse any exchange request
or restrict, at any time without notice, the number and/or frequency of
exchanges to prevent abuses of the exchange privilege. Such abuses may arise
from frequent trading in response to short-term market fluctuations, a pattern
of trading by an individual or group that appears to be an attempt to "time the
market," or any other exchange request which, in the view of management, will
have a detrimental effect on the Fund's portfolio management strategy or its
operations. In addition, the Fund and PFD reserve the right to charge a fee for
exchanges or to modify, limit, suspend or discontinue the exchange privilege
with notice to shareholders as required by law.
X. DISTRIBUTION PLANS
The Fund has adopted a Plan of Distribution for each Class of shares (the
"Class A Plan," the "Class B Plan" and the "Class C Plan") in accordance with
Rule 12b-1 under the 1940 Act pursuant to which certain distribution fees are
paid to PFD.
Pursuant to the Class A Plan, the Fund reimburses PFD for its actual
expenditures to finance any activity primarily intended to result in the sale of
the Class A shares of the Fund or to provide services to holders of Class A
shares, provided the categories of expenses for which reimbursement is made are
approved by the Fund's Board of Trustees. As of the date of this Prospectus, the
Board of Trustees has approved the following categories of expenses for the
Class A shares of the Fund: (i) a service fee to be paid to qualified
broker-dealers in an amount not to exceed 0.25% per annum of the Fund's daily
net assets attributable to Class A shares; (ii) reimbursement to PFD for its
expenditures for broker-dealer commissions and employee compensation on certain
sales of the Fund's Class A shares with no initial sales charge (see "How to Buy
Fund Shares"); and (iii) reimbursement to PFD for expenses incurred in providing
services to Class A shareholders and supporting broker-dealers and other
organizations (such as banks and trust companies) in their efforts to provide
such services. Banks are currently prohibited under the Glass-Steagall Act from
providing certain underwriting or distribution services. If a bank was
prohibited from acting in any capacity or providing any of the described
services, management would consider what action, if any, would be appropriate.
Expenditures of the Fund pursuant to the Class A Plan are accrued daily and
may not exceed 0.25% of average daily net assets attributable to Class A shares.
Distribution expenses of PFD are expected to substantially exceed the
distribution fees paid by the Fund in a given year. The Class A Plan does not
provide for the carryover of reimbursable expenses beyond 12 months from the
time the Fund is first invoiced for an expense. The limited carryover provision
in the Class A 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 Class A 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 attributable to Class A shares during such
period. The Class A Plan may not be amended to increase materially the annual
percentage limitation of average net assets which may be spent for the services
described therein without approval of the Class A shareholders of the Fund.
Both the Class B Plan and the Class C Plan provide that the Fund will
compensate PFD by paying a distribution fee at the annual rate of 0.75% of the
Fund's average daily net assets attributable to the applicable Class of shares
and will pay PFD a service fee at the annual rate of 0.25% of the Fund's average
daily net assets attributable to that Class of shares. The distribution fee is
intended to compensate PFD for its Class B and Class C distribution services to
the Fund. The service fee is intended to be additional compensation for personal
services and/or account maintenance services with respect to Class B or Class C
shares. PFD also receives the proceeds of any CDSC imposed on the redemption of
Class B or Class C shares.
Commissions of 4% of the amount invested in Class B shares, equal to 3.75%
of the amount invested and a first year's service fee equal to 0.25% of the
amount invested, are paid to broker-dealers who have selling agreements with
PFD. PFD may advance to dealers the first year service fee at
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a rate up to 0.25% of the purchase price of such shares and, as compensation
therefor, PFD may retain the service fee paid by the Fund with respect to such
shares for the first year after purchase. Commencing in the 13th month following
the purchase of Class B shares, dealers will become eligible for additional
annual service fees of up to 0.25% of the net asset value of such shares.
Commissions of up to 1% of the amount invested in Class C shares,
consisting of 0.75% of the amount invested and a first year's service fee of
0.25% of the amount invested, are paid to broker-dealers who have selling
agreements with PFD. PFD may advance to dealers the first year service fee at a
rate up to 0.25% of the purchase price of such shares and, as compensation
therefor, PFD may retain the service fee paid by the Fund with respect to such
shares for the first year after purchase. Commencing in the 13th month following
the purchase of Class C shares, dealers will become eligible for additional
annual distribution fees and services fees of up to 0.75% and 0.25%,
respectively, of the average net asset value of such shares.
When a broker-dealer sells Class B or Class C shares and elects, with PFD's
approval, to waive its right to receive the commission normally paid at the time
of the sale, PFD may cause all or a portion of the distribution fees described
above to be paid to the broker-dealer.
Dealers may from time to time be required to meet certain criteria in order
to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan or the Class C Plan for which there
is no dealer of record or for which qualification standards have not been met as
partial consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareowner accounts.
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION
The Fund has elected to be treated, has qualified, and intends to qualify
each year as a "regulated investment company" under Subchapter M of the Code, so
that it will not pay federal income tax on income and capital gains distributed
to shareholders as required under the Code.
Under the Code, the Fund will be subject to a nondeductible 4% 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; dividends from income and/or capital gains may also be paid
at such other times as may be necessary for the Fund to avoid federal income or
excise tax. Generally, dividends from the Fund's net investment income, market
discount income, net short-term capital gains and certain net foreign exchange
gains are taxable under the Code as ordinary income, and dividends from the
Fund's net 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 the dividend income it receives from U.S.
domestic corporations may qualify for the dividends-received deduction for
corporate shareholders, subject to holding-period requirements and
debt-financing restrictions under the Code.
The Fund may be subject to foreign withholding taxes or other foreign taxes
on income (possibly including, in some cases, capital gains) on certain of its
foreign investments which will reduce the yield on or return from those
investments. If, as anticipated, the Fund does not qualify to pass such taxes
through to its shareholders, they will neither treat such taxes as additional
income nor be entitled to any associated foreign tax credits or deductions.
Dividends and other distributions and the proceeds of redemptions,
exchanges or repurchases of Fund shares paid to individuals and other non-exempt
payees will be subject to 31% backup withholding of federal income tax if the
Fund is not provided with the shareholder's correct taxpayer identification
number and certification that the number is correct and that the shareholder is
not subject to backup withholding or if the Fund receives notice from the
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. Shareholders
should consult their own tax advisors regarding state, local and other
applicable tax laws.
XII. SHAREHOLDER SERVICES
PSC is the shareholder services and transfer agent for shares of the Fund.
PSC, a Massachusetts corporation, is a wholly-owned subsidiary of PGI. PSC's
offices are located at 60 State Street, Boston, Massachusetts 02109, and
inquiries to PSC should be mailed to Shareholder Services, Pioneering Services
Corporation, P.O. Box 9014, Boston, Massachusetts 02205-9014. Brown Brothers
Harriman & Co. ("the Custodian") serves as custodian of the Fund's portfolio
securities. 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
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Automatic Investment Plan transactions which are confirmed quarterly. The
Pioneer Combined Account Statement, mailed quarterly, is available to all
shareholders who have more than one Pioneer mutual fund account.
Shareholders whose shares are held in the name of an investment
broker-dealer or other party will not normally have an account with the Fund and
might not be able to utilize some of the services available to shareholders of
record. Examples of services which might not be available are purchases,
exchanges and redemptions of shares by mail or telephone, automatic reinvestment
of dividends and capital gains distributions, withdrawal plans, Letters of
Intent, Rights of Accumulation and newsletters.
Additional Investments
You may add to your account by sending a check ($50 minimum for Class A
shares and $500 for Class B and C shares) to PSC (account number and Class of
shares should be clearly indicated). The bottom portion of a confirmation
statement may be used as a remittance slip to make additional investments.
Additions to your account, whether by check or through a Pioneer Investomatic
Plan, are invested in full and fractional shares of the Fund at the applicable
offering price in effect as of the close of regular trading on the Exchange on
the day of receipt.
Automatic Investment Plans
You may arrange for regular automatic investments of $50 or more through
government/military allotments, payroll deduction or through a Pioneer
Investomatic Plan. A Pioneer Investomatic Plan provides for a monthly or
quarterly investment by means of a preauthorized electronic funds transfer or
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 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 options are available: (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 for
an account with a net asset value of less than $500. Changes in the distribution
options may be made by written request to PSC.
If you elect to receive either dividends or capital gains or both in cash
and a distribution check issued to you is returned by the U.S. Postal Service as
not deliverable or a distribution check remains uncashed for six months or more,
the amount of the check may be reinvested in your account. Such additional
shares will be purchased at the then current net asset value. Furthermore, the
distribution option on the account will automatically be changed to the
reinvestment option until such time as you request a different option by writing
to PSC.
Directed Dividends
You may elect (in writing) to have the dividends paid by one Pioneer mutual
fund account invested in a second Pioneer mutual fund account. The value of this
second account must be at least $1,000 ($500 for 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 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.
Telephone Transactions and Related Liabilities
Your account is automatically authorized to have telephone transaction
privileges unless you indicate otherwise on your Account Application or by
writing to PSC. You may purchase, sell or exchange Fund shares by telephone. See
"How to Buy Fund Shares" 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 "How to Buy Fund Shares," "How to Sell Fund Shares"
and "How to Exchange Fund Shares" for more information.
To confirm that each transaction instruction received by telephone is
genuine, PSC will record each telephone transaction, require the caller to
provide the personal identification number ("PIN") for the account and send you
a written confirmation of each telephone transaction. Different procedures may
apply to accounts that are registered to non-U.S. citizens or that are held in
the name of an institution or in the name of an investment broker-dealer or
other third-party. If reasonable procedures, such as those described above, are
not followed, the Fund may be liable for any loss due to unauthorized or
fraudulent instructions. The Fund may implement other procedures from time to
time. In all other cases, neither the Fund, PSC or PFD will be
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responsible for the authenticity of instructions received by telephone,
therefore, you bear the risk of loss for unauthorized or fraudulent telephone
transactions.
During times of economic turmoil or market volatility or as a result of
severe weather or a natural disaster, it may be difficult to contact the Fund by
telephone to institute a redemption or exchange. You should communicate with the
Fund in writing if you are unable to reach the Fund by telephone.
FactFone(SM)
FactFone(SM) is an automated inquiry and telephone transaction system
available to Pioneer shareholders by dialing 1-800-225-4321. FactFone(SM) allows
you to obtain current information on your Pioneer mutual fund accounts and to
inquire about the prices and yields of all publicly available Pioneer mutual
funds. In addition, you may use FactFone(SM) to make computer-assisted telephone
purchases, exchanges and redemptions from your Pioneer mutual fund accounts if
you have activated your PIN. Telephone purchases and redemptions require the
establishment of a bank account of record. You are strongly urged to consult
with your financial representative prior to requesting any telephone
transaction. Shareholders whose accounts are registered in the name of a
broker-dealer or other third party may not be able to use FactFone(SM). See "How
to Buy Fund Shares," "How to Exchange Fund Shares," "How to Sell Fund Shares"
and "Telephone Transactions and Related Liabilities." Call PSC for assistance.
Telecommunications Device for the Deaf (TDD)
If you have a hearing disability and access to TDD keyboard equipment, you
can call our TDD number toll-free at 1-800-225-1997, weekdays from 8:30 a.m. to
5:30 p.m. Eastern Time, to contact our telephone representatives with questions
about your account.
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. Withdrawals from Class B and Class C shares accounts are limited to
10% of the value of the account at the time the SWP is implemented. See "Waiver
of Contingent Deferred Sales Charges" for more information. Periodic checks of
$50 or more will be sent to you monthly or quarterly and your periodic
redemptions of shares may be taxable to you. Payments can be made either by
check or electronic transfer to a bank account designated by you. 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 (Class A Shares Only)
If you redeem all or part of your Class A shares of the Fund, you may
reinvest all or part of the redemption proceeds without a sales charge in Class
A shares of the Fund if you send a written request to PSC not more than 90 days
after your shares were redeemed. Your redemption proceeds will be reinvested at
the next determined net asset value of the Class A shares of the Fund after
receipt of the written request for reinstatement. You may realize a gain or loss
for federal income tax purposes as a result of the redemption, and special tax
rules may apply if a reinstatement occurs. In addition, if a redemption resulted
in a loss and an investment is made in shares of the Fund within 30 days before
or after the redemption, you may not be able to recognize the loss for federal
income tax purposes. Subject to the provisions outlined under "How to Exchange
Fund Shares" above, you may also reinvest in Class A shares of 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.
XIII. THE FUND
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, less
any applicable CDSC. See "How to Sell Fund Shares" above. The Fund is not
required, and does not intend, to hold annual shareholder meetings although
special meetings may be called for the purpose of electing or removing Trustees,
changing fundamental investment restrictions or approving a management contract.
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The Fund reserves the right to create and issue additional series of
shares. The Trustees have the authority, without further shareholder approval,
to classify and reclassify the shares of the Fund, or any additional series of
the Fund, into one or more classes. As of the date of this Prospectus, the
Trustees have authorized the issuance of three classes of shares, designated
Class A, Class B and Class C. The shares of each class represent an interest in
the same portfolio of investments of the Fund. Each class has equal rights as to
voting, redemption, dividends and liquidation, except that each class bears
different distribution and transfer agent fees and may bear other expenses
properly attributable to the particular class. Class A, Class B and Class C
shareholders have exclusive voting rights with respect to the Rule 12b-1
distribution plans adopted by holders of those shares in connection with the
distribution of shares.
In addition to the requirements under Delaware law, the Declaration of
Trust provides that a shareholder of the Fund may bring a derivative action on
behalf of the Fund only if the following conditions are met: (a) shareholders
eligible to bring such derivative action under Delaware law who hold at least
10% of the outstanding shares of the Fund, or 10% of the outstanding shares of
the series or class to which such action relates, shall join in the request for
the Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such shareholder request and investigate
the basis of such claim. The Trustees shall be entitled to retain counsel or
other advisers in considering the merits of the request and shall require an
undertaking by the shareholders making such request to reimburse the Fund for
the expense of any such advisers in the event that the Trustees determine not to
bring such action.
When issued and paid for in accordance with the terms of the Prospectus and
Statement of Additional Information, shares of the Fund are fully-paid and
non-assessable. Shares will remain on deposit with the Fund's transfer agent and
certificates will not normally be issued. The Fund reserves the right to charge
a fee for the issuance of certificates.
XIV. INVESTMENT RESULTS
The average annual total return (for a designated period of time) on an
investment in the Fund may be included in advertisements, and furnished to
existing or prospective shareholders. The average annual total return for each
Class is computed in accordance with the SEC's standardized formula. The
calculation for all Classes assumes the reinvestment of all dividends and
distributions at net asset value and does not reflect the impact of federal or
state income taxes. In addition, for Class A shares the calculation assumes the
deduction of the maximum sales charge of 5.75%; for Class B and Class C shares
the calculation reflects the deduction of any applicable CDSC. The periods
illustrated would normally include one, five and ten years (or since the
commencement of the public offering of the shares of a Class, if shorter)
through the most recent calendar quarter.
One or more additional measures and assumptions, including but not limited
to historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share values;
or any graphic illustration of such data may also be used. These data may cover
any period of the Fund's existence and may or may not include the impact of
sales charges, taxes or other factors.
Other investments or savings vehicles and/or unmanaged market indices,
indicators of economic activity or averages of mutual fund results may be cited
or compared with the investment results of the Fund. Rankings or listings by
magazines, newspapers or independent statistical or rating services, such as
Lipper Analytical Services, Inc., may also be referenced. The Fund may also
include securities industry, real estate industry or comparative performance
information in advertising or materials marketing the Fund's shares. Such
performance information may include rankings or listings by magazines,
newspapers, or independent statistical or ratings services, such as Lipper
Analytical Services, Inc. or Ibbotson Associates.
The Fund's investment results will vary from time to time depending on
market conditions, the composition of the Fund's portfolio and operating
expenses of the Fund. All quoted investment results are historical and should
not be considered representative of what an investment in the Fund may earn in
any future period. For further information about the calculation methods and
uses of the Fund's investment results, see the Statement of Additional
Information.
18
<PAGE>
THE PIONEER FAMILY OF MUTUAL FUNDS
Growth Funds
Global/International
--Pioneer Emerging Markets Fund
Pioneer Europe Fund
Pioneer Gold Shares
Pioneer India Fund
Pioneer International Growth Fund
Pioneer World Equity Fund
United States
--Pioneer Capital Growth Fund
Pioneer Growth Shares
Pioneer Mid-Cap Fund
Pioneer Small Company Fund
Pioneer Micro-Cap Fund*
Growth and Income Funds
--Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer Real Estate Shares
Pioneer II
Income Funds
Taxable
--Pioneer America Income Trust
Pioneer Bond Fund
Pioneer Short-Term Income Trust*
Tax-Exempt
--Pioneer Intermediate Tax-Free Fund**
Pioneer Tax-Free Income Fund**
Money Market Fund
Pioneer Cash Reserves Fund
*Offers Class A and B Shares only
**Not suitable for retirement accounts
19
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Pioneer [Pioneer logo]
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 LLP
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: 1-800-225-6292
SERVICE INFORMATION
If you would like information on the following, please call:
Existing and new accounts, prospectuses,
applications, service forms and
telephone transactions .................................... 1-800-225-6292
FactFone(SM)
Automated fund yields, 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
0497-4104
- - Pioneer Funds Distributor, Inc.
<PAGE>
PIONEER FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
Class A, Class B and Class C Shares
April 30, 1997
This Statement of Additional Information is not a Prospectus, but
should be read in conjunction with the Prospectus (the "Prospectus") dated April
30, 1997 of Pioneer Fund. A copy of the Prospectus can be obtained free of
charge by calling Shareholder Services at 1-800-225-6292 or by written request
to Pioneer Fund at 60 State Street, Boston, Massachusetts 02109. The most recent
Annual Report to Shareholders is attached to, and is hereby incorporated into,
this Statement of Additional Information.
TABLE OF CONTENTS
Page
1. Investment Policies and Restrictions.......................2
2. Management of the Fund.....................................8
3. Investment Adviser........................................12
4. Shareholder Servicing/Transfer Agent......................15
5. Custodian.................................................15
6. Principal Underwriter.....................................15
7. Distribution Plans........................................16
8. Independent Public Accountants............................19
9. Portfolio Transactions....................................19
10. Dividends and Tax Status..................................20
11. Description of Shares.....................................24
12. Certain Liabilities.......................................25
13. Determination of Net Asset Value..........................26
14. Systematic Withdrawal Plan................................26
15. Letter of Intent..........................................27
16. Investment Results........................................27
17. Financial Statements......................................30
Appendix A - Bond Ratings....................................32
Appendix B - Performance Statistics..........................44
Appendix C - Other Pioneer Information.......................44
<PAGE>
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.
2
<PAGE>
1. INVESTMENT POLICIES AND RESTRICTIONS
The Fund's current 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.
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 a writer of a call option, the
3
<PAGE>
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 its 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 the 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 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.
4
<PAGE>
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 grade
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 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.
5
<PAGE>
Since investors generally perceive that there are greater risks
associated with the medium to lower quality debt securities of the type in which
the Fund may invest a portion of its assets, the yields and prices of such
securities may tend to fluctuate more than those for higher rated securities. In
the lower quality segments of the debt securities market, changes in perceptions
of issuers' creditworthiness tend to occur more frequently and in a more
pronounced manner than do changes in higher quality segments of the debt
securities market, resulting in greater yield and price volatility.
Medium to lower rated and comparable unrated debt securities tend to
offer higher yields than higher rated securities with the same maturities
because the historical financial condition of the issuers of such securities may
not have been as strong as that of other issuers. Since medium to lower rated
securities generally involve greater risks of loss of income and principal than
higher rated securities, investors should consider carefully the relative risks
associated with investment in securities which carry medium to lower ratings and
in comparable unrated securities. In addition to the risk of default, there are
the related costs of recovery on defaulted issues. The Fund's investment adviser
will attempt to reduce these risks through portfolio diversification and by
analysis of each issuer and its ability to make timely payments of income and
principal, as well as broad economic trends and corporate developments.
The prices of all debt securities generally fluctuate in response to
the general level of interest rates. Another factor which causes fluctuations in
the prices of debt securities is the supply and demand for similarly rated
securities. Fluctuations in the prices of portfolio securities subsequent to
their acquisition will not affect any cash income from such securities but will
be reflected in the Fund's net asset value.
Investment Restrictions
It is a policy of the Fund not to concentrate its investments in
securities of companies in any particular industry. Following the current
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 1940 Act
provides that the policy of the Fund with respect to concentration is a
fundamental policy. In addition, the Fund has agreed not to change the foregoing
policy without the affirmative vote of a majority of the Fund's outstanding
shares of beneficial interest.
Fundamental Investment Restrictions. The Fund has adopted certain additional
investment restrictions which may not be changed without the affirmative vote of
the holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities. The Fund may not:
(1) Issue senior securities, except as permitted by the Fund's
borrowing, lending and commodity restrictions, and for purposes of this
restriction, the issuance of shares of beneficial interest in multiple classes
or series, the purchase or sale of options, futures contracts and options on
futures contracts, forward commitments, forward foreign exchange contracts,
repurchase
6
<PAGE>
agreements, fully covered reverse repurchase agreements, dollar rolls, swaps and
any other financial transaction entered into pursuant to the Fund's investment
policies as described in the Prospectus and this Statement of Additional
Information and in accordance with applicable SEC pronouncements, as well as the
pledge, mortgage or hypothecation of the Fund's assets within the meaning of the
Fund's fundamental investment restriction regarding pledging, are not deemed to
be senior securities.
(2) Borrow money, except from banks as a temporary measure to
facilitate the meeting of redemption requests or for extraordinary or emergency
purposes and except pursuant to reverse repurchase agreements or dollar rolls,
in all cases in amounts not exceeding 10% of the Fund's total assets (including
the amount borrowed) taken at market value. The Fund will not use leverage to
attempt to increase income. The Fund will not purchase securities while
outstanding borrowings (including reverse repurchase agreements and dollar
rolls) exceed 10% of the Fund's total assets.
(3) Guarantee the securities of any other company, or mortgage, pledge,
hypothecate or assign or otherwise encumber as security for indebtedness its
securities or receivables in an amount exceeding the amount of the borrowing
secured thereby.
(4) Purchase securities of a company if the purchase would result in
the Fund's having more than 5% of the value of its total assets invested in
securities of such company.
(5) Purchase securities of a company if the purchase would result in
the Fund's owning more than 10% of the outstanding voting securities of such
company.
(6) Act as an underwriter, except as it may deemed to be an underwriter
in a sale of restricted securities held in its portfolio.
(7) Make loans, except by purchase of debt obligations in which the
Fund may invest consistent with its investment policies, by entering into
repurchase agreements or through the lending of portfolio securities, in each
case only to the extent permitted by the Prospectus and this Statement of
Additional Information.
(8) Invest in real estate, commodities or commodity contracts, except
that the Fund may invest financial futures contracts and related options and in
any other financial instruments which may be deemed to be commodities or
commodity contracts in which the Fund is not prohibited from investing by the
Commodity Exchange Act and the rules and regulations thereunder
(9) Purchase securities on "margin" or effect " short sales" of
securities.
(10) Purchase securities for the purpose of controlling management of
other companies;
(11) Acquire the securities of any other domestic or foreign investment
company or investment fund (except in connection with a plan of merger or
consolidation with or acquisition of
7
<PAGE>
substantially all the assets of such other investment company); provided,
however, that nothing herein contained shall prevent the Fund from investing in
the securities issued by a real estate investment trust, provided that such
trust shall not be permitted to invest in real estate or interests in real
estate other than mortgages or other security interests;
The Fund does not intend to enter into any reverse repurchase agreement or
dollar roll, lend portfolio securities or invest in securities index put and
call warrants, as described in fundamental investment restrictions (1), (2), (7)
and (8) above, during the coming year.
Non-Fundamental Investment Restrictions.
The following restrictions have been designated as non-fundamental and may be
changed by a vote of the Fund's Board of Trustees without approval of
shareholders.
The Fund may not:
(1) purchase or retain the securities of any issuer if these officers
and Trustees of the Fund of its adviser or principal underwriter, owning
individually more than one-half of 1% of the securities of such issuer, together
collectively own more than 5% of the securities of such issuer; or
(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.
8
<PAGE>
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 the 1940 Act.
JOHN F. COGAN, JR.*, Chairman of the Board, President and Trustee,
DOB: June 1926
President, Chief Executive Officer and a Director of The Pioneer Group,
Inc. ("PGI"); Chairman and a Director of Pioneering Management Corporation
("PMC") and Pioneer Funds Distributor, Inc. ("PFD"); Director of Pioneering
Services Corporation ("PSC"), Pioneer Capital Corporation ("PCC") and
Forest-Starma (a Russian timber joint venture); President and Director of
Pioneer Plans Corporation ("PPC"), Pioneer Investment Corp. ("PIC"), Pioneer
Metals and Technology, Inc. ("PMT"), Pioneer International Corp. ("PIntl"),
Luscina, Inc., Pioneer First Russia, Inc. ("First Russia") and Pioneer Omega,
Inc. ("Omega") and Theta Enterprises, Inc.; 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 LLP (counsel to the Fund).
RICHARD H. EGDAHL, M.D., Trustee, DOB: December 1926
Boston University Health Policy Institute, 53 Bay State Rd., Boston, MA 02115
Professor of Management, Boston University School of Management, since
1988; 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.
9
<PAGE>
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.
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 LLP (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.
10
<PAGE>
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 LLP
(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 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, except Mr. Cogan who then owned
approximately 14% of such shares. As of the date of this Statement of Additional
Information, the Trustees and officers of the Fund owned less than 1% of the
outstanding securities of the Fund. MLPF&S For the Sole Benefit of its
Customers, Mutual Fund Administration, 4800 Deer Lake Drive East, Third Floor,
Jacksonville, Florida 32246-6484, owned approximately 26,660 (5.04%) of the
Class B shares of the Fund and 13,859 (17.09%) of the Class C shares of the
Fund. Rauscher Pierce Refsnes FBO Mary B. Savage, 4126 West T C Jester BLVD,
Houston, TX 77018-4645, owned approximately 4,355 (5.37%) of the outstanding
Class C shares 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 World Equity Fund PMC PFD
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 Micro-Cap Fund PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Equity-Income Fund PMC PFD
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Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Balanced Fund PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer Interest Shares, 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.
Compensation of Officers and Trustees
The Fund pays no salaries or compensation to any of its
officers. The Fund will pay an annual trustee's fee to each Trustee who is not
affiliated with PMC, PGI, PFD or PSC consisting of two components: (a) a base
fee of $500 and (b) a variable fee, calculated on the basis of the average net
assets of the Fund. In addition, the Fund will pay a per meeting fee of $100 to
each Trustee who is not affiliated with PMC, PGI, PFD or PSC. The Fund will also
will pay an annual committee participation fee to trustees who serve as members
of committees established to act on behalf of one or more of the Pioneer mutual
funds. Committee fees will be allocated to the Fund on the basis of the Fund's
average net assets. Each Trustee who is a member of the Audit Committee for the
Pioneer mutual funds will receive an annual fee equal to 10% of the aggregate
annual trustee's fee, except the Committee Chair who will receive an annual
trustee's fee equal to 20% of the aggregate annual trustee's fee. Members of the
Pricing Committee for the Pioneer mutual funds, as well as any other committee
which renders material functional services to the Board of Trustees for the
Pioneer mutual funds, will receive an annual fee equal to 5% of the annual
trustee's fee, except the Committee Chair who will receive an annual trustee's
fee equal to 10% of the annual trustee's fee. Any such fees paid to affiliates
or interested persons of PGI, PMC, PFD or PSC are reimbursed to the Fund under
its Management Contract.
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The following table sets forth certain information with respect to the
compensation of each Trustee of the Fund:
Total
Pension or Compensation
Aggregate Retirement from the Fund
Compensation Benefits and all other
Name of Trustee From the Fund* Accrued Pioneer Mutual Funds**
- --------------- ------------- ----------- -----------------------
John F. Cogan, Jr. $500 0 $11,083
Richard H. Egdahl, M.D. $5,321 0 $59,858
Margaret B.W. Graham $5,421 0 $59,858
John W. Kendrick $5,421 0 $59,858
Margeurite A. Piret $8,179 0 $79,842
David D. Tripple $500 0 $11,083
Stephen K. West $6,216 0 $67,850
John Winthrop $6,360 0 $66,442
------ -------
Total $37,918 $417,052
====== ========
* For the fiscal period ended December 31, 1996.
** For the calendar year ended December 31, 1996.
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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 (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 Class A shares
of 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
objective.
The performance period consists of the current month and the prior 35
months ("performance period"). Each percentage point of difference (up to a
maximum of +/-10) is multiplied by a performance adjustment rate of 0.01%. The
maximum annualized adjustment rate is +/- 0.10%. This performance comparison is
made at the end of each month. An appropriate percentage of this rate (based
upon the number of days in the current month) is then applied to the 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 the net asset value of
the Fund's Class A shares. For purposes of calculating the performance
adjustment, any dividends or capital gains distributions paid by the Fund are
treated as if reinvested at the net asset value as of the record date for
payment. The record for the Index is based on change in value and is adjusted
for any cash distributions from the companies whose securities comprise the
Index.
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Application of Performance Adjustment
The application of the performance adjustment is illustrated by the
following hypothetical example, assuming that the net asset value of the Class A
shares of the Fund and the level of the Index were $10 and 100, respectively, on
the first day of the performance period.
Investment Performance* Cumulative Change
First Day End of Period Absolute Percentage
Points
Fund $ 10 $ 13 +$ 3 + 30%
Index 100 123 + 23 + 23%
* Reflects performance at net asset value. Any dividends or capital gains
distributions paid by the Fund are treated as if reinvested 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.
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 performance 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 successor index
would still be based upon the Fund's performance compared to the Index.
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<PAGE>
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 paid
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 initial 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, 1996, 1995 and 1994, the
Fund paid or owed management fees to PMC of approximately $13,798,000,
$10,330,000 and $9,362,000., respectively.
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<PAGE>
4. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with PSC, 60 State Street, Boston,
Massachusetts, to act as its dividend disbursing agent and transfer agent. This
contract terminates if assigned and may be terminated without penalty by either
party by vote of its Board of Directors or Trustees or a majority of its
outstanding voting securities and the giving of sixty days' written notice.
Under the terms of its contract with the Fund, PSC services shareholder
accounts, and its duties include: (i) processing sales, redemptions and
exchanges of Fund shares; (ii) distributing dividends and capital gains
associated with Fund accounts; and (iii) maintaining account records and
responding to shareholder inquiries.
PSC receives an annual fee of $22.75 per shareholder account from the
Fund as compensation for the services described above. This fee is set at an
amount determined by vote of a majority of the Fund's Trustees (including a
majority of the Trustees who are not parties to the contract with PSC or
interested persons of any such parties) to be comparable to fees for such
services being paid by other investment companies. The Fund may compensate
entities which have agreed to provide certain sub-accounting services such as
specific transaction processing and recordkeeping services. Any such payments by
the Fund would be in lieu of the per account fee which would otherwise be paid
by the Fund to PSC.
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 Plans (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 1996, 1995 and
1994 fiscal years, net underwriting commissions retained by PFD were
approximately $1,176,156, $923,858 and $990,413,
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<PAGE>
respectively. Commissions reallowed to dealers for the 1996, 1995 and 1994
fiscal years were approximately $7,758,483, $6,147,056 and $6,589,413,
respectively.
PFD bears all expenses it incurs in providing services under the
Underwriting Agreement. Such expenses include compensation to its employees and
representatives and to securities dealers for distribution related services
performed for the Fund. PFD also pays certain expenses in connection with the
distribution of the Fund's shares, including the cost of preparing, printing and
distributing advertising or promotional materials, and the cost of printing and
distributing prospectuses and supplements to prospective shareholders. The Fund
bears the cost of registering its shares under federal, state and foreign
securities law. The Fund and PFD have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended. Under the Underwriting Agreement, PFD will use its best efforts in
rendering services to the Fund.
The Fund will not generally issue Fund shares for consideration other
than cash. At the Fund's sole discretion, however, it may issue Fund shares for
consideration other than cash in connection with a reorganization, statutory
merger or other acquisition of portfolio securities.
7. DISTRIBUTION PLANS
The Fund has adopted a plan of distribution pursuant to Rule 12b-1
under the 1940 Act with respect to its Class A, Class B and Class C shares (the
"Class A Plan," the "Class B Plan" and the "Class C Plan") (together, the
"Plans").
Class A Plan
Pursuant to the Class A Plan the Fund may reimburse PFD for its
expenditures in financing any activity primarily intended to result in the sale
of the Class A shares of the Fund. Certain categories of such expenditures have
been approved by the Board of Trustees and are set forth in the Prospectus. See
"Distribution Plans" in the Prospectus. The expenses of the Fund pursuant to the
Class A Plan are accrued on a fiscal year basis and may not exceed the annual
rate of 0.25% of the Fund's average annual net assets attributable to Class A
shares.
Class B Plan
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The Class B Plan provides that the Fund shall pay PFD, as the Fund's
distributor for its Class B shares, a daily distribution fee equal on an annual
basis to 0.75% of the Fund's average daily net assets attributable to Class B
shares and will pay PFD a service fee equal to 0.25% of the Fund's average daily
net assets attributable to Class B shares (which PFD will in turn pay to
securities dealers which enter into a sales agreement with PFD at a rate of up
to 0.25% of the Fund's average daily net assets attributable to Class B shares
owned by investors for whom that securities dealer is the holder or dealer of
record). This service fee is intended to be consideration of personal services
and/or account maintenance services rendered by the dealer with respect to Class
B shares. PFD will advance to dealers the first-year service fee at a rate
equal to 0.25% of the amount invested. As compensation therefor, PFD may retain
the service fee paid by the Fund with respect to such shares for the first year
after purchase. Dealers will become eligible for additional service fees with
respect to such shares commencing in the thirteenth month following purchase.
Dealers may from time to time be required to meet certain other criteria in
order to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class B Plan is
to compensate PFD for its distribution services to the Fund. PFD pays
commissions to dealers as well as expenses of printing prospectuses and reports
used for sales purposes, expenses with respect to the preparation and printing
of sales literature and other distribution related expenses, including, without
limitation, the cost necessary to provide distribution-related services, or
personnel, travel office expenses and equipment. The Class B Plan also provides
that PFD will receive all contingent deferred sales charges ("CDSCs")
attributable to Class B shares. See "Distributions Plans" in the Prospectus.
When a broker-dealer sells Class B shares and elects, with PFD's approval, to
waive its right to receive the commission normally paid, PFD may cause all or a
portion of the distribution fees described above to be paid to that
broker-dealer.
Class C Plan
The Class C Plan provides that the Fund will pay PFD, as the Fund's
distributor for its Class C shares, a distribution fee accrued daily and paid
quarterly, equal on an annual basis to 0.75% of the Fund's average daily net
assets attributable to Class C shares and will pay PFD a service fee equal to
0.25% of the Fund's average daily net assets attributable to Class C shares. PFD
will in turn pay to securities dealers which enter into a sales agreement with
PFD a distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the Fund's average daily net assets attributable to Class C
shares owned by investors for whom that securities dealer is the holder or
dealer of record. The service fee is intended to be in consideration of personal
services and/or account maintenance services rendered by the dealer with respect
to Class C shares. PFD will advance to dealers the first year's service fee at a
rate equal to 0.25% of the amount invested. As compensation therefor, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase.
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<PAGE>
Commencing in the thirteenth month following a purchase of Class C shares,
dealers will become eligible for additional service fees at a rate of up to
0.25% of the current value of the amount invested and additional compensation at
a rate of up to 0.75% of the average net asset value of such shares. Dealers may
from time to time be required to meet certain other criteria in order to receive
service fees. PFD or its affiliates are entitled to retain all service fees
payable under the Class C Plan for which there is no dealer of record or for
which qualification standards have not been met as partial consideration for
personal services and/or account maintenance services performed by PFD or its
affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class C Plan is
to compensate PFD for its distribution services with respect to the Class C
shares of the Fund. PFD pays commissions to dealers as well as expenses of
printing prospectuses and reports used for sales purposes, expenses with respect
to the preparation and printing of sales literature and other distribution-
related expenses, including, without limitation, the cost necessary to provide
distribution-related services, or personnel, travel office expenses and
equipment. The Class C Plan also provides that PFD will receive all CDSCs
attributable to Class C shares. See "Distribution Plans" in the Prospectus. When
a broker-dealer sells Class C shares and elects, with PFD's approval, to waive
its right to receive the commission normally paid, PFD may cause all or a
portion of the distribution fees described above to be paid to that
broker-dealer.
General
In accordance with the terms of each 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 a Plan except to the extent that PFD and certain of
its employees may be deemed to have such an interest as a result of receiving a
portion of the amounts expended under the Plan by the Fund and except to the
extent certain officers may have an interest in PFD's ultimate parent, PGI.
Each Plan was adopted by a majority vote of the Board of Trustees,
including all of the Trustees who are not, and were not at the time they voted,
interested persons of the Fund, as defined in the 1940 Act (none of whom has or
had any direct or indirect financial interest in the operation of the Plan),
cast in person at a meeting called for the purpose of voting on the Plan. In
approving each Plan, the Trustees identified and considered a number of
potential benefits 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 their terms, the Plans remain in
effect from year to year provided such continuance is approved annually by vote
of the Trustees in the manner described above. The Plans may not be amended to
increase materially the
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annual percentage limitation of average net assets which may be spent for the
services described therein without approval of the shareholders of the Fund.
Material amendments of each Plan must also be approved by the Trustees in the
manner described above. The Plans may be terminated at any time, without payment
of any penalty, by vote of the majority of the Trustees who are not interested
persons of the Fund and have no direct or indirect financial interest in the
operations of the Plans, or by a vote of a majority of the outstanding voting
securities of the respective Class of the Fund (as defined in the 1940 Act). A
Plan will automatically terminate in the event of its assignment (as defined in
the 1940 Act).
During the fiscal year ended December 31, 1995, the Fund incurred total
distribution fees pursuant to the Class A 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. During the
fiscal year ended December 31,1996, the Fund incurred total distribution fees
pursuant to the Fund's Class A Plan, Class B Plan, and Class C Plan,
respectively, as follows: $5,192,000, $18,000 and $3,000
Redemptions of each class of shares may be subject to a CDSC. A CDSC of
1.00% may be imposed on redemptions of certain net asset value purchases of
Class A shares within one year of purchase. Class B shares that are redeemed
within 6 years of purchase are subject to a CDSC at declining rates beginning at
4% based on the lower of the cost or market value of the shares being redeemed.
Redemptions of Class C shares within one year of purchase are subject to a CDSC
of 1.00%. During the fiscal year ended December 31, 1996, CDSCs, in the amount
of approximately $5,000 were paid to PFD.
8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, 225 Franklin Street, Boston, Massachusetts 02210,
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.
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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, 1996, 1995 and
1994, the Fund paid or owed total brokerage commissions of approximately
$1,539,000, $1,983,083 and $1,016,736, respectively.
The Fund is managed by PMC, which also serves as investment adviser to
other mutual funds in the Pioneer group and private accounts with investment
objectives similar to those of the Fund. Securities frequently meet the
investment objectives of the Fund, such other mutual funds in the Pioneer group
and such other private accounts. In such cases, the decision to recommend a
purchase to one mutual fund or account rather than the other is based on a
number of factors. The determining factors in most cases are the amount of
securities of the issuer then outstanding, the value of those securities and the
market for them. Other factors considered in the investment recommendations
include other investments which each client presently has in a particular
industry and the availability of investment funds in each client account.
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<PAGE>
It is possible that at times identical securities will be held by more
than one mutual 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. These requirements relate to the sources of the
Fund's income, the diversification of its assets and the distribution of its
income to shareholders. If the Fund meets all such requirements and distributes
to its shareholders, in accordance with the Code's timing requirements, all
investment company taxable income and net capital gain, if any, which it earns,
the Fund will be relieved of the necessity of paying federal income tax.
In order to qualify as a regulated investment company under Subchapter
M, the Fund must, among other things, derive at least 90% of its annual gross
income from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stock, securities or foreign
currencies, or other income (including gains from options) derived with respect
to its business of investing in such stock, securities or currencies (the "90%
income test"), limit its gains from the sale of stock, securities and certain
other positions held for less than three months to less than 30% of its annual
gross income (the "30% test") and satisfy certain annual distribution and
quarterly diversification requirements.
Dividends from investment company taxable income, which includes net
investment income, net short-term capital gain in excess of net long-term
capital loss, and certain net foreign exchange gains, are taxable as ordinary
income, whether received in cash or reinvested in additional shares. Dividends
from net long-term capital gain in excess of net short-term capital loss, if
any, whether received in cash or reinvested in 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.
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Any dividend declared by the Fund in October, November or December as
of a record date in such a month and paid during the following January will be
treated for federal income tax purposes as received by shareholders on December
31 of the calendar year in which it is declared.
Foreign exchange gains and losses realized by the Fund in connection
with certain transactions involving foreign currency-denominated debt
securities, foreign currencies, or payables or receivables denominated in a
foreign currency are subject to Section 988 of the Code, which generally causes
such gains and losses to be treated as ordinary income and losses and may affect
the amount, timing and character of distributions to shareholders. Any
transactions in foreign currency that are not directly related to the Fund's
investments in stock or securities (or its options with respect to stock or
securities) may need to be limited in order to enable the Fund to satisfy the
limitations described in the second paragraph above that are applicable to the
income or gains recognized by a regulated investment company. If the net foreign
exchange loss for a year were to exceed the Fund's investment company taxable
income (computed without regard to such loss), the resulting ordinary loss for
such year would not be deductible by the Fund or its shareholders in future
years.
If the Fund acquires any equity interest (under proposed regulations,
generally including not only stock but also an option to acquire stock) in
certain foreign 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 to a limited extent in debt obligations that are in
the lowest rating categories or are unrated, including debt obligations of
issuers not currently paying interest or who are in default. Investments in debt
obligations that are at risk of or in 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 seek to ensure that it
distributes sufficient income to preserve its status as a regulated investment
company and does not become subject to federal income or excise tax.
If the Fund invests in certain pay-in-kind securities ("PIKs"), zero
coupon securities, deferred interest securities or, in general, any other
securities with original issue discount (or with market discount if the Fund
elects to include market discount in income currently), the Fund must accrue
income on such investments for each taxable year, which generally will be prior
to the receipt of the corresponding cash payments. However, the Fund must
distribute, at least annually, all or substantially all of its net income,
including such accrued income, to shareholders to qualify as a regulated
investment company under the Code and avoid Federal income and excise taxes.
Therefore, the Fund may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash, or may have to leverage itself
by borrowing the cash, to satisfy distribution requirements.
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<PAGE>
For federal income tax purposes, the Fund is permitted to carry forward
a net capital loss for any year to offset its capital gains, if any, during the
eight years following the year of the loss. To the extent subsequent capital
gains are offset by such losses, they would not result in federal income tax
liability to the Fund and therefore are not expected to be distributed as such
to shareholders. As of the end of its most recent taxable year, the Fund had no
capital loss carryforwards.
At the time of an investor's purchase of Fund shares, a portion of the
purchase price may be attributable to realized or unrealized appreciation in the
Fund's portfolio or undistributed taxable income of the Fund. Consequently,
subsequent distributions on these shares from such appreciation or income may be
taxable to such investor even if the net asset value of the investor's shares
is, as a result of the distributions, reduced below the investor's cost for such
shares and the distributions economically represent a return of a portion of the
investment.
Redemptions and exchanges are taxable events. Any loss realized by a
shareholder upon the redemption, exchange or other disposition of shares with a
tax holding period of six months or less will be treated as a long-term capital
loss to the extent of any amounts treated as distributions of long-term capital
gain with respect to such shares.
In addition, if Class A shares redeemed or exchanged have been held for
less than 91 days, (1) in the case of a reinvestment 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
redemptions or other dispositions of shares may be disallowed under "wash sale"
rules in the event of other investments in the Fund (including those made
pursuant to reinvestment of dividends and/or capital gain distributions) within
a period of 61 days beginning 30 days before and ending 30 days after a
redemption or other disposition of shares. In such a case, the disallowed
portion of any loss would be included in the federal tax basis of the shares
acquired in the other investments.
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. The
tax rules applicable to these contracts 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. Certain tax elections may be available that would enable the Fund to
ameliorate some adverse effects of the tax rules described in this paragraph.
The tax rules applicable to options and straddles may affect the amount, timing
and character of the Fund's income and losses and hence of its distributions to
shareholders.
For purposes of the 70% dividends-received deduction generally
available to corporations under the Code, dividends received by the Fund from
U.S. domestic corporations in respect of any share of stock with a tax holding
period of at least 46 days (91 days in the case of certain preferred stock) held
in an unleveraged position and distributed and designated by the Fund may be
treated as qualifying dividends. Any corporate shareholder should consult its
tax advisor regarding the possibility that its tax basis in its shares may be
reduced, for federal income tax purposes, by reason of
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<PAGE>
"extraordinary dividends" received with respect to the shares. In order to
qualify for the deduction, corporate shareholders must meet the minimum holding
period requirement stated above with respect to their Fund shares, taking into
account any holding period reductions from certain hedging or other transactions
or positions that diminish their risk of loss with respect to their Fund shares,
and, if they borrow to acquire Fund shares, they may be denied a portion of the
dividends-received deduction. The entire qualifying dividend, including the
otherwise deductible amount, will be included in determining the excess (if any)
of a corporation's adjusted current earnings over its alternative minimum
taxable income, which may increase a corporation's alternative minimum tax
liability.
The Fund may be subject to withholding and other taxes imposed by
foreign countries, including taxes on interest, dividends and capital gains,
with respect to its investments in those countries. Tax conventions between
certain countries and the U.S. may reduce or eliminate such taxes in some cases.
The Fund does not expect to satisfy the requirements for passing through to its
shareholders their pro rata shares of qualified foreign taxes paid by the Fund,
with the result that shareholders will not include such taxes in their gross
incomes and will not be entitled to a tax deduction or credit for such taxes on
their own tax returns.
Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions, and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their tax
advisers for more information.
Federal law requires that the Fund withhold (as "backup withholding")
31% of reportable payments, including dividends, capital gain dividends and the
proceeds of redemptions (including exchanges) and repurchases to shareholders
who have not complied with Internal Revenue Service ("IRS") regulations. In
order to avoid this withholding requirement, shareholders must certify on their
Account Applications, or on separate IRS Forms W-9, that the Social Security
Number or other Taxpayer Identification Number they provide is their correct
number and that they are not currently subject to backup withholding, or that
they are exempt from backup withholding. The Fund may nevertheless be required
to withhold if it receives notice from the IRS or a broker that the number
provided is incorrect or backup withholding is applicable as a result of
previous underreporting of interest or dividend income.
If, as anticipated, the Fund qualifies as a regulated investment
company under the Code, it will not be required to pay any Massachusetts income,
corporate excise or franchise taxes or any Delaware corporation income tax.
The description of certain federal tax provisions above relates only to
U.S. federal income tax consequences for shareholders who are U.S. persons, i.e.
U.S. citizens or residents or U.S. corporations, partnerships, trusts or
estates, and who are subject to U.S. federal income tax. This description does
not address the special tax rules that may be applicable to particular types of
investors, such as financial institutions, insurance companies, securities
dealers, or tax-exempt or tax-deferred plans, accounts or entities. Investors
other than U.S. persons may be subject to different U.S. tax treatment,
including a possible 30% non-resident alien U.S. withholding tax (or
non-resident alien withholding tax at a lower treaty rate) on amounts treated as
ordinary dividends from the Fund and, unless an effective IRS Form W-8 or
authorized substitute for Form W-8 is on file, to 31% backup withholding on
certain other payments from the Fund. Shareholders should consult their own tax
advisers on these matters and on state, local and other applicable tax laws.
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<PAGE>
11. DESCRIPTION OF SHARES
The Fund's Declaration of Trust permits its Board of Trustees to
authorize the issuance of an unlimited number of full and fractional shares of
beneficial interest (without par value) which may be divided into such separate
series as the Trustees may establish. Currently, the Fund consists of only one
series. The Trustees may establish additional series of shares, and may divide
or combine the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interests. The Declaration of Trust
further authorizes the Trustees to classify or reclassify any series of the
shares into one or more classes. Pursuant thereto, the Trustees have authorized
the issuance of three classes of shares of the Fund, designated Class A, Class B
and Class C shares. Each share of a class represents an equal proportionate
interest in the assets of the Fund allocable to that class. Upon liquidation of
the Fund, shareholders of each class of the Fund are entitled to share pro rata
in the Fund's net assets allocable to such class available for distribution to
shareholders. The Fund reserves the right to create and issue additional series
or classes of shares, in which case the shares of each class of a series would
participate equally in the earnings, dividends and assets of the particular
series.
Shareholders are entitled to one vote for each share held and may vote
in the election of Trustees and on other matters submitted to a meeting of
shareholders. Although Trustees are not elected annually by the shareholders,
shareholders have, under certain circumstances, the right to remove one or more
Trustees.
The shares of each series of the Fund are entitled to vote separately
to approve investment advisory agreements or changes in investment restrictions,
but shareholders of all series vote together in the election and selection of
Trustees and accountants. Shares of all series of the Fund vote together as a
class on matters that affect all series of the Fund in substantially the same
manner. As to matters affecting a single series or class, shares of such series
or class will vote separately. No amendment adversely affecting the rights of
shareholders may be made to the Fund's Declaration of
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<PAGE>
Trust without the affirmative vote of a majority of its shares. Shares have no
preemptive or conversion rights. Shares are fully paid and non-assessable by the
Fund, except as stated below. See "Certain Liabilities."
12. CERTAIN LIABILITIES
The Fund has previously been organized as a Delaware corporation, a
Massachusetts corporation and a Massachusetts business trust and was reorganized
as a Delaware business trust on May 1, 1996, pursuant to an Agreement and Plan
of Reorganization approved by the shareholders of the Fund. As a Delaware
business trust, the Fund's operations are governed by its Declaration of Trust
dated May 1, 1996. A copy of the Fund's Certificate of Trust, also dated May 1,
1996, is on file with the office of the Secretary of State of Delaware.
Generally, Delaware business trust shareholders are not personally liable for
obligations of the Delaware business trust under Delaware law. The Delaware
Business Trust Act (the "Delaware Act") provides that a shareholder of a
Delaware business trust shall be entitled to the same limitation of liability
extended to shareholders of private for-profit corporations. The Fund's
Declaration of Trust expressly provides that the Fund is organized under the
Delaware Act and that the Declaration of Trust is to be governed by Delaware
law. There is nevertheless a remote possibility that a Delaware business trust,
such as the Fund, might become a party to an action in another state whose
courts refused to apply Delaware law, in which case the trust's shareholders
could become subject to personal liability.
To guard against this risk, the Declaration of Trust (i) contains an
express disclaimer of shareholder liability for acts or obligations of the Fund
and provides that notice of such disclaimer may be given in each agreement,
obligation or instrument entered into or executed by the Fund or its Trustees,
(ii) provides for the indemnification out of Fund property of any shareholders
held personally liable for any obligations of the Fund or any series of the Fund
and (iii) provides that the Fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the Fund and
satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss beyond his or her investment because of shareholder liability is
limited to circumstances in which all of the following factors are present: (1)
a court refused to apply Delaware law; (2) the liability arose under tort law
or, if not, no contractual limitation of liability was in effect; and (3) the
Fund itself would be unable to meet its obligations. In light of Delaware law,
the nature of the Fund's business and the nature of its assets, the risk of
personal liability to a Fund shareholder is remote.
The Declaration of Trust further provides that the Fund shall indemnify
each of its Trustees and officers against liabilities and expenses reasonably
incurred by them, in connection with, or arising out of, any action, suit or
proceeding, threatened against or otherwise involving such Trustee or officer,
directly or indirectly, by reason of being or having been a Trustee or officer
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.
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<PAGE>
13. DETERMINATION OF NET ASSET VALUE
The net asset value per share of each class of the Fund is determined
as of the close of regular trading on the New York Stock Exchange (normally 4:00
P.M., Eastern Time) on each day on which the New York Stock Exchange is open for
business. As of the date of this Statement of Additional Information, the New
York Stock Exchange is open for trading every weekday except for the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset
value per share of each class of the Fund is also determined on any other day in
which the level of trading in its portfolio securities is sufficiently high so
that the current net asset value per share might be materially affected by
changes in the value of its portfolio securities. On any day in which no
purchase orders in good order for the shares of the Fund are received and no
shares are tendered for redemption, the net asset value per share is not
determined.
The net asset value per share of each class of the Fund is computed by
taking the amount of the value of all of the Fund's assets attributable to a
class, less the Fund's liabilities attributable to that class, and dividing it
by the number of outstanding shares for the class. Securities which have not
traded on the date of valuation or securities for which sales prices are not
generally reported are valued at the mean between the last bid and asked prices.
Securities for which no market quotations are readily available (including those
the trading of which has been suspended) will be valued at fair value as
determined in good faith by the Board of Trustees, although the actual
computations may be made by persons acting pursuant to the direction of the
Board. The maximum offering price per Class A share is the net asset value per
Class A share, plus the maximum sales charge. Class B and Class C shares are
offered at net asset value without the imposition of an initial sales charge.
14. SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan ("SWP") is designed to provide a
convenient method of receiving fixed payments at regular intervals from shares
of the Fund deposited by the applicant under this SWP. You must deposit or
purchase for deposit with PSC shares of the Fund having a total value of not
less than $10,000. Periodic payments of $50 or more will be deposited monthly or
quarterly directly into a bank account designated by you, or will be sent by
check to you, or any person designated by you. Withdrawals from Class B and
Class C accounts are limited to 10% of the value of the account at the time the
SWP is established. See "Waiver or Reduction of Contingent Deferred Sales
Charge" in the prospectus. Designation of another person to receive the 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.
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<PAGE>
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 are paid by the Fund.
15. LETTER OF INTENT (Class A shares only)
A Letter of Intent (a "Letter") may be established by completing the
Letter of Intent section of the Account Application. When you sign the Account
Application, you agree to irrevocably appoint PSC your attorney-in-fact to
surrender for redemption any or all shares held in escrow with full power of
substitution. A Letter of Intent is not a binding obligation upon the investor
to purchase, or the Fund to sell, the full amount indicated.
If the total purchases, less redemptions, exceed the amount specified
under the Letter of Intent and are in an amount which would qualify for a
further quantity discount, all transactions will be recomputed on the expiration
date of the Letter of Intent to effect the lower sales charge. Any difference in
the sales charge resulting from such recomputation will be either delivered to
you in cash or invested in additional shares at the lower sales charge. The
dealer, by signing the Account Application, agrees to return to PFD, as part of
such retroactive adjustment, the excess of the commission previously reallowed
or paid to the dealer over that which is applicable to the actual amount of the
total purchases under the Letter of Intent.
If the total purchases, less redemptions, are less than the amount
specified under the Letter of Intent, you must remit to PFD any difference
between the sales charge on the amount actually purchased and the amount
originally specified in the Letter of Intent section of the Account Application.
When the difference is paid, the shares held in escrow will be deposited to your
account. If you do not pay the difference in sales charge within 20 days after
written request from PFD or your dealer, PSC, after receiving instructions from
PFD, will redeem the appropriate number of shares held in escrow to realize the
difference and release any excess. See "How to Purchase Fund Shares - Letter of
Intent" in the Prospectus for more information.
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<PAGE>
16. INVESTMENT RESULTS
Quotations, Comparisons, and General Information
From time to time, in advertisements, in sales literature, or in
reports to shareholders, the past performance of the Fund may be illustrated
and/or compared to that of other mutual funds with similar investment
objectives, and to stock or other relevant indices. For example, the total
return of the Fund's classes may be compared to rankings prepared by Lipper
Analytical Services, Inc., a widely recognized independent service which
monitors mutual fund performance; the Standard & Poor's 500 Stock Index ("S&P
500"), an index of unmanaged groups of common stock; or the Dow Jones Industrial
Average, a recognized unmanaged index of common stocks of 30 industrial
companies listed on the New York Stock Exchange; or the Frank Russell Indexes
("Russell 1000," "2000," "2500," "3000") and Wilshire Total Market Value Index
("Wilshire 5000"), recognized unmanaged indexes of broad-based common stocks.
In addition, the performance of the classes of the Fund may be compared
to alternative investment or savings vehicles and/or to indices 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
31
<PAGE>
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 Return
Quotations and Other Performance Quotations
One of the primary methods used to measure the performance of a Class
of the Fund is "total return." "Total return" will normally represent the
percentage change in value of an account, or of a hypothetical investment in a
Class of the Fund, over any period up to the lifetime of that Class of the Fund.
Total return calculations will usually assume the reinvestment of all dividends
and capital gains distributions and will be expressed as a percentage increase
or decrease from an initial value, for the entire period or for one or more
specified periods within the entire period. Total return percentages for periods
of less than one year will usually be annualized; total return percentages for
periods longer than one year will usually be accompanied by total return
percentages for each year within the period and/or the average annual compounded
total return for the period. The income and capital components of a given return
may be separated and portrayed in a variety of ways in order to illustrate their
relative significance. Performance may also be portrayed in terms of cash or
investment values. Past performance cannot guarantee any particular future
result.
The Fund's average annual total return quotations for each of its
classes as that information may appear in the Prospectus, this Statement of
Additional Information or in advertising, are calculated by standard methods
prescribed by the SEC.
Standardized Average Annual Total Return Quotations
Average annual total return quotations for each Class of Fund shares
are computed by finding the average annual compounded rates of return that would
cause a hypothetical investment in the class made on the first day of a
designated period (assuming all dividends and distributions are reinvested) to
equal the ending redeemable value of such hypothetical investment on the last
day of the designated period in accordance with the following formula:
n
P(1+T) = ERV
Where:
P = a hypothetical initial payment of $1,000,
less the maximum sales load of 5.75% for
Class A shares or the deduction of the CDSC
for Class B and Class C shares at the end of
the period.
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<PAGE>
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical
$1,000 initial payment made at the
beginning of the designated period (or
fractional portion thereof)
For purposes of the above computation, it is assumed that all dividends
and distributions made by the Fund are reinvested at net asset value during the
designated period. The average annual total return quotation is determined to
the nearest 1/100 of 1%.
In determining the average annual total return (calculated as provided
above), recurring fees, if any, that are charged to all shareholder accounts of
a particular class of shares are taken into consideration. For any account fees
that vary with the size of the account, the account fee used for purposes of the
above computation is assumed to be the fee that would be charged to the class'
mean account size.
The total returns for Class A, Class B and Class C shares of the Fund
as of December 31, 1996 are as follows:
Average Annual Total Return (%)
----------------------------------------------------------
One Year Five Years Ten Years Commencement*
-------- ---------- --------- -------------
Class A Shares 12.80 13.02 12.04 N/A
Class B Shares N/A N/A N/A 5.92
Class C Shares N/A N/A N/A 7.74
* Commencement was and 7/1/96 for both Class B and Class C shares.
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.
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<PAGE>
In presenting investment results, the Fund may also include references
to certain financial planning concepts, including (a) an investor's need to
evaluate his financial assets and obligations to determine how much to invest;
(b) his need to analyze the objectives of various investments to determine where
to invest; and (c) his need to analyze his time frame for future capital needs
to determine how long to invest. The investor controls these three factors, all
of which affect the use of investments in building assets.
Automated Information Line
FactFone(SM), Pioneer's 24-hour automated information line, allows
shareholders to dial toll-free 1-800-225-4321 and hear recorded fund
information, including:
[bullet] net asset value prices for all Pioneer mutual funds;
[bullet] annualized 30-day yields on Pioneer fixed income funds;
[bullet] annualized 7-day yields and 7-day effective (compound) yields
for Pioneer money market funds; and
[bullet] 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 "FactFone(SM)" in the Prospectus for more information.
All performance numbers communicated through FactFone(SM) represent
past performance, and figures for all quoted fixed income funds include the
applicable maximum sales charge. A shareholder's actual yield and total return
will vary with changing market conditions. The value of Class A, Class B and
Class C shares (except for Pioneer Cash Reserves Fund, which seeks a stable
$1.00 share price) will also vary and may be worth more or less at redemption
than their original cost.
17. FINANCIAL STATEMENTS
The Fund's audited financial statements for the fiscal year
ended December 31, 1996 are included in the Fund's 1996 Annual Report to
Shareholders which is hereby incorporated by reference into this Statement of
Additional Information and attached hereto in reliance upon the report of Arthur
Andersen LLP, independent public accountants, as experts in accounting and
auditing.
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<PAGE>
Pioneer Fund
Class A Shares
Sales Net Asset
Initial Offering Charge Shares Value Initial Net
Date Investment Price Included Purchased Per Share Asset Value
---- ---------- -------- -------- --------- --------- -----------
3/1/28 $10,000 $0.93 5.75% 10,752.688 $0.8800 $9,450
Value of Shares
(Dividends and Capital Gains Reinvested)
From From Cap. Gains From Dividends
Date Investment Reinvested Reinvested Total Value
---- ----------- --------------- --------------- -----------
12/31/87 $198,710 $7,950,978 $5,159,386 $13,309,074
12/31/88 $218,710 $9,400,586 $6,129,240 $15,748,536
12/31/89 $250,322 $11,625,178 $7,556,504 $19,432,004
12/31/90 $202,044 $10,571,298 $6,614,590 $17,387,932
12/31/91 $217,635 $13,443,867 $7,682,794 $21,344,296
12/31/92 $231,291 $15,309,348 $8,705,733 $24,246,372
12/31/93 $249,998 $17,494,468 $9,950,970 $27,695,436
12/31/94 $229,247 $17,627,580 $9,679,349 $27,536,176
12/31/95 $261,936 $22,910,582 $11,700,045 $34,872,563
12/31/96 $286,139 $27,984,422 $13,468,984 $41,742,545
Past performance does not guarantee future results. Return and share
price fluctuate and your shares when redeemed may be worth more or less than
your original purchase.
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<PAGE>
Pioneer Fund
Class B Shares
Sales Net Asset
Initial Offering Charge Shares Value Initial Net
Date Investment Price Included Purchased Per Share Asset Value
---- ---------- -------- -------- --------- --------- -----------
7/1/96 $10,000 $26.40 0% 378.788 $26.4000 $10,000
Value of Shares
(Dividends and Capital Gains Reinvested)
From From Cap. Gains From Dividends
Date Investment Reinvested Reinvested Total Value CDSC
---- ---------- --------------- --------------- ----------- ----
12/31/96 $10,235 $707 $49 $10,591 4.00%
Past performance does not guarantee future results. Return and share
price fluctuate and your shares when redeemed may be worth more or less than
your original purchase.
36
<PAGE>
Pioneer Fund
Class C Shares
Sales Net Asset
Initial Offering Charge Shares Value Initial Net
Date Investment Price Included Purchased Per Share Asset Value
---- ---------- -------- -------- --------- --------- -----------
7/1/96 $10,000 $26.40 0% 378.788 $26.4000 $10,000
Value of Shares
(Dividends and Capital Gains Reinvested)
From From Cap. Gains From Dividends
Date Investment Reinvested Reinvested Total Value CDSC
---- ---------- --------------- --------------- ----------- ----
12/31/96 $10,129 $706 $39 $10,774 1.00%
Past performance does not guarantee future results. Return and share
price fluctuate and your shares when redeemed may be worth more or less than
your original purchase.
37
<PAGE>
APPENDIX A
Description of Bond Ratings(1)
Moody's Investor's Service, Inc.(2)
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat bigger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
- ---------------------------------------------
(1) The ratings indicated herein are believed to be the most recent ratings
available at the date of this Prospectus for the securities listed. Ratings are
generally given to securities at the time of issuance. While the rating agencies
may from time to time revise such ratings, they undertake no obligation to do
so, and the ratings indicated do not necessarily represent ratings which will be
given to these securities on the date of the Fund's fiscal year-end.
(2) Rates bonds of issuers which have $600,000 or more of debt, except bonds of
educational institutions, projects under construction, enterprises without
established earnings records and situations where current financial data is
unavailable.
<PAGE>
Standard & Poor's Ratings Group(3)
AAA: Bonds rated AAA are highest grade obligations. This rating indicates an
extremely strong capacity to pay principal and interest.
AA: Bonds rated AA also qualify as high-quality obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
A: Bonds rated A have a strong capacity to pay principal and interest, although
they are more susceptible to the adverse effects of changes in circumstances and
economic conditions.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
- -------------------------------------------------
(3) Rates all governmental bodies having $1,000,000 or more of debt outstanding,
unless adequate information is not available.
<PAGE>
APPENDIX B
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
The following securities indices are well-known, unmanaged measures of market
performance. Advertisements and sales literature for the Fund may refer to these
indices or may present comparisons between the performance of the Fund and one
or more of the indices. Other indices may be used, if appropriate. The indices
are not available for direct investment. The data presented is not meant to be
indicative of the performance of the Fund, reflects past performance and does
not guarantee future results.
S&P 500
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P Composite Index
includes 500 of the largest stocks (in terms of stock market value) in the
United States; prior to March 1957 it consisted of 90 of the largest stocks.
DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of 30 blue chip stocks.
U.S. SMALL STOCK INDEX
This index is a market value weighted index of the ninth and tenth deciles of
the New York Stock Exchange (NYSE), plus stocks listed on the American Stock
Exchange (AMEX) and over-the-counter (OTC) with the same or less capitalization
as the upper bound of the NYSE ninth decile.
U.S. INFLATION
The Consumer Price Index for All Urban Consumers (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S. Department of Labor, Bureau of Labor Statistics, Washington, DC.
S&P/BARRA INDEXES
The S&P/BARRA Growth and Value Indexes are constructed by dividing the stocks in
the S&P 500 Index according to price-to-book ratios. The Growth Index contains
stocks with higher price-to-book ratios, and the Value Index contains stocks
with lower price-to-book ratios. Both indexes are market capitalization
weighted.
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
LONG-TERM U.S. GOVERNMENT BONDS
The total returns on long-term government bonds from 1977 to 1991 are
constructed with data from The Wall Street Journal. Over 1926-1976, data are
obtained from the Government bond file at the Center for Research in Security
Prices (CRSP), Graduate School of Business, University of Chicago. Each year, a
one-bond portfolio with a term of approximately 20 years and a reasonably
current coupon was used, and whose returns did not reflect potential tax
benefits, impaired negotiability, or special redemption or call privileges.
Where callable bonds had to be used, the term of the bond was assumed to be a
simple average of the maturity and first call dates minus the current date. The
bond was "held" for the calendar year and returns were computed. Total returns
for 1977-1991 are calculated as the change in the flat price or and-interest
price.
INTERMEDIATE-TERM U.S. GOVERNMENT BONDS
Total returns of the intermediate-term government bonds for 1977-1991 are
calculated from The Wall Street Journal prices, using the change in flat price.
Returns from 1934-1986 are obtained from the CRSP Government Bond File.
Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than 5 years, and this bond is "held"
for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934-1942, almost all bonds
with maturities near 5 years were partially or full tax-exempt and were selected
using the rules described above. Personal tax rates were generally low in that
period, so that yields on tax-exempt bonds were similar to yields on taxable
bonds. From 1926-1933, there are few bonds suitable for construction of a series
with a 5-year maturity. For this period, five year bond yield estimates are
used.
MSCI
Morgan Stanley Capital International Indices, developed by the Capital
International S.A., are based on share prices of some 1470 companies listed on
the stock exchanges around the world.
Countries in the MSCI EAFE Portfolio are:
Australia; Austria; Belgium; Denmark; Finland; France; Germany; Hong Kong;
Italy; Japan; Netherlands; N. Zealand; Norway; Singapore/Malaysia; Spain;
Sweden; Switzerland; United Kingdom.
Countries in the MSCI EMERGING MARKET FREE INDEX are: Argentina, Brazil, Chile,
China, Czech Republic, Colombia, Greece, Hungary, India, Indonesia, Israel,
Jordan, Korea Free (at 50%), Malaysia, Mexico Free, Pakistan, Peru, Philippines
Free, Poland, Portugal, South Africa, Sri Lanka, Taiwan, Thailand, Turkey,
Venezuela Free
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
6 MONTH CDs
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
LONG-TERM U.S. CORPORATE BONDS
For 1969-1991, corporate bond total returns are represented by the Salomon
Brothers Long-Term High-Grade Corporate Bond Index. Since most large corporate
bond transactions take place over the counter, a major dealer is the natural
source of these data. The index includes nearly all Aaa- and Aa-rated bonds. If
a bond is downgraded during a particular month, its return for the month is
included in the index before removing the bond from future portfolios.
Over 1926-1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946-1968, Ibbotson
and Sinquefield backdated the Salomon Brothers' index, using Salomon Brothers'
monthly yield data with a methodology similar to that used by Salomon for
1969-1991. Capital appreciation returns were calculated from yields assuming (at
the beginning of each monthly holding period) a 20-year maturity, a bond price
equal to par, and a coupon equal to the beginning-of-period yield. For the
period 1926-1945, the Standard and Poor's monthly High-Grade Corporate Composite
yield data were used, assuming a 4 percent coupon and a 20-year maturity. The
conventional present-value formula for bond price for the beginning and
end-of-month prices was used. (This formula is presented in Ross, Stephen A.,
and Randolph W. Westerfield, Corporate Finance, Times Mirror/Mosby, St. Louis,
1990, p. 97 ["Level-Coupon Bonds"].) The monthly income return was assumed to be
one-twelfth the coupon.
U.S. (30 DAY) TREASURY BILLS
For the U.S. Treasury bill index, data from The Wall Street Journal are used for
1977-1991; the CRSP U.S. Government Bond File is the source until 1976. Each
month a one-bill portfolio containing the shortest-term bill having not less
than one month to maturity is constructed. (The bill's original term to maturity
is not relevant.) To measure holding period returns for the one-bill portfolio,
the bill is priced as of the last trading day of the previous month-end and as
of the last trading day of the current month.
NAREIT-EQUITY INDEX
All of the data is based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMSE and the NASDAQ. The data is
market-value-weighted. Prior to 1987 REITs were added to the index the January
following their listing. Since 1987 Newly formed or listed REITs are added to
the total shares outstanding figure in the month that the shares are issued.
Only common shares issued by the REIT are included in the index. The total
return calculation is based upon the weighing at the beginning of the period.
Only those REITs listed for the entire period are
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
used in the total return calculation. Dividends are included in the month based
upon their payment date. There is no smoothing of income. Liquidating dividends,
whether full or partial, are treated as income.
RUSSELL 2000 SMALL STOCK INDEX
Index of the 2,000 smallest stocks in the Russell 3000 Index (TM); the smallest
company has a market capitalization of approximately $13 million. The Russell
3000 is comprised of the 3,000 largest US companies as determined by market
capitalization representing approximately 98% of the US equity market. The
largest company in the index has a market capitalization of $67 billion. The
Russell Indexes (TM) are reconstituted annually as of June 1st, based on May 31
market capitalization rankings.
WILSHIRE REAL ESTATE SECURITIES INDEX
The Wilshire Real Estate Securities Index is a market capitalization-weighted
index which measures the performance of more than 85 securities.
The index contains performance data on five major categories of property;
office, retail, industrial, apartment and miscellaneous. Additionally, the Index
has real estate portfolio encumbered by 16% third party mortgages. The companies
in the WRESEC are 79% equity and hybrid REIT's and 21% real estate operating
companies. The capitalization is 47% NYSE, 33% AMEX and 20% OTC."
STANDARD & POOR'S MIDCAP 400 INDEX
The Standard and Poor's MidCap 400 Index is a market-value-weighted index. The
performance data for the MidCap 400 Index were calculated by taking the stocks
presently in the MidCap 400 Index and tracking them backwards in time as long as
there were prices reported. No attempt was made to determine what stocks "might
have been" in the MidCap 400 Index five or ten years ago had it existed.
Dividends are reinvested on a monthly basis prior to June 30, 1991, and are
reinvested daily thereafter.
The S&P MidCap 400 Index and the S&P 500 together represent approximately 85% of
the total market capitalization of stocks traded in the United States.
LIPPER BALANCED FUNDS INDEX
Equally-weighted performance indices, adjusted for capital gains distributions
and income dividends of approximately 30 of the largest funds with a primary
objective of conserving principal by maintaining at all times a balanced
portfolio of stocks and bonds. Typically, the stock/bond ratio ranges around
60%/40%.
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
BANK SAVINGS ACCOUNT
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963-1987 and The Wall Street Journal for the years 1988-1994.
Source: Ibbotson Associates
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S&P 500 Dow U.S. Small S&P/ S&P/
Jones Stock U.S. BARRA BARRA
Industrials Index Inflation Growth Value
- --------------------------------------------------------------------------------
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A
Dec 1931 -43.34 -49.03 -49.75 -9.52 N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A
Dec 1933 53.99 73.71 142.87 0.51 N/A N/A
Dec 1934 -1.44 8.07 24.22 2.03 N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A
Dec 1942 20.34 14.12 44.51 9.29 N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S&P 500 Dow U.S. Small S&P/ S&P/
Jones Stock U.S. BARRA BARRA
Industrials Index Inflation Growth Value
- --------------------------------------------------------------------------------
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60
Dec 1994 1.31 5.06 3.11 2.78 3.13 -0.64
Dec 1995 37.43 36.84 34.46 2.74 38.13 36.99
Dec 1996 23.07 28.84 17.62 3.58 23.96 21.99
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Intermediate MSCI Long-
Long-Term -Term U.S. EAFE 6 Term U.S. U.S.
U.S. Gov't Government - Net of MONTH Corporate (30 Day)
Bonds Bonds Taxes CDs Bonds T- Bill
- --------------------------------------------------------------------------------
Dec 1925 N/A N/A N/A N/A N/A N/A
Dec 1926 7.77 5.38 N/A N/A 7.37 3.27
Dec 1927 8.93 4.52 N/A N/A 7.44 3.12
Dec 1928 0.1 0.92 N/A N/A 2.84 3.56
Dec 1929 3.42 6.01 N/A N/A 3.27 4.75
Dec 1930 4.66 6.72 N/A N/A 7.98 2.41
Dec 1931 -5.31 -2.32 N/A N/A -1.85 1.07
Dec 1932 16.84 8.81 N/A N/A 10.82 0.96
Dec 1933 -0.07 1.83 N/A N/A 10.38 0.30
Dec 1934 10.03 9.00 N/A N/A 13.84 0.16
Dec 1935 4.98 7.01 N/A N/A 9.61 0.17
Dec 1936 7.52 3.06 N/A N/A 6.74 0.18
Dec 1937 0.23 1.56 N/A N/A 2.75 0.31
Dec 1938 5.53 6.23 N/A N/A 6.13 -0.02
Dec 1939 5.94 4.52 N/A N/A 3.97 0.02
Dec 1940 6.09 2.96 N/A N/A 3.39 0.00
Dec 1941 0.93 0.50 N/A N/A 2.73 0.06
Dec 1942 3.22 1.94 N/A N/A 2.60 0.27
Dec 1943 2.08 2.81 N/A N/A 2.83 0.35
Dec 1944 2.81 1.80 N/A N/A 4.73 0.33
Dec 1945 10.73 2.22 N/A N/A 4.08 0.33
Dec 1946 -0.10 1.00 N/A N/A 1.72 0.35
Dec 1947 -2.62 0.91 N/A N/A -2.34 0.50
Dec 1948 3.40 1.85 N/A N/A 4.14 0.81
Dec 1949 6.45 2.32 N/A N/A 3.31 1.10
Dec 1950 0.06 0.70 N/A N/A 2.12 1.20
Dec 1951 -3.93 0.36 N/A N/A -2.69 1.49
Dec 1952 1.16 1.63 N/A N/A 3.52 1.66
Dec 1953 3.64 3.23 N/A N/A 3.41 1.82
Dec 1954 7.19 2.68 N/A N/A 5.39 0.86
Dec 1955 -1.29 -0.65 N/A N/A 0.48 1.57
Dec 1956 -5.59 -0.42 N/A N/A -6.81 2.46
Dec 1957 7.46 7.84 N/A N/A 8.71 3.14
Dec 1958 -6.09 -1.29 N/A N/A -2.22 1.54
Dec 1959 -2.26 -0.39 N/A N/A -0.97 2.95
Dec 1960 13.78 11.76 N/A N/A 9.07 2.66
Dec 1961 0.97 1.85 N/A N/A 4.82 2.13
Dec 1962 6.89 5.56 N/A N/A 7.95 2.73
Dec 1963 1.21 1.64 N/A N/A 2.19 3.12
Dec 1964 3.51 4.04 N/A 4.18 4.77 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 3.93
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Intermediate MSCI Long-
Long-Term -Term U.S. EAFE 6 Term U.S. U.S.
U.S. Gov't Government - Net of MONTH Corporate (30 Day)
Bonds Bonds Taxes CDs Bonds T- Bill
- --------------------------------------------------------------------------------
Dec 1966 3.65 4.69 N/A 5.75 0.20 4.76
Dec 1967 -9.18 1.01 N/A 5.48 -4.95 4.21
Dec 1968 -0.26 4.54 N/A 6.44 2.57 5.21
Dec 1969 -5.07 -0.74 N/A 8.71 -8.09 6.58
Dec 1970 12.11 16.86 -11.66 7.06 18.37 6.52
Dec 1971 13.23 8.72 29.59 5.36 11.01 4.39
Dec 1972 5.69 5.16 36.35 5.38 7.26 3.84
Dec 1973 -1.11 4.61 -14.92 8.60 1.14 6.93
Dec 1974 4.35 5.69 -23.16 10.20 -3.06 8.00
Dec 1975 9.20 7.83 35.39 6.51 14.64 5.80
Dec 1976 16.75 12.87 2.54 5.22 18.65 5.08
Dec 1977 -0.69 1.41 18.06 6.12 1.71 5.12
Dec 1978 -1.18 3.49 32.62 10.21 -0.07 7.18
Dec 1979 -1.23 4.09 4.75 11.90 -4.18 10.38
Dec 1980 -3.95 3.91 22.58 12.33 -2.76 11.24
Dec 1981 1.86 9.45 -2.28 15.50 -1.24 14.71
Dec 1982 40.36 29.1 -1.86 12.18 42.56 10.54
Dec 1983 0.65 7.41 23.69 9.65 6.26 8.80
Dec 1984 15.48 14.02 7.38 10.65 16.86 9.85
Dec 1985 30.97 20.33 56.16 7.82 30.09 7.72
Dec 1986 24.53 15.14 69.44 6.30 19.85 6.16
Dec 1987 -2.71 2.90 24.63 6.58 -0.27 5.47
Dec 1988 9.67 6.10 28.27 8.15 10.70 6.35
Dec 1989 18.11 13.29 10.54 8.27 16.23 8.37
Dec 1990 6.18 9.73 -23.45 7.85 6.78 7.81
Dec 1991 19.3 15.46 12.13 4.95 19.89 5.60
Dec 1992 8.05 7.19 -12.17 3.27 9.39 3.51
Dec 1993 18.24 11.24 32.56 2.88 13.19 2.90
Dec 1994 -7.77 -5.14 7.78 5.40 -5.76 3.90
Dec 1995 31.67 16.8 11.21 5.21 26.39 5.60
Dec 1996 -0.93 2.10 6.05 5.21 1.40 5.21
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
RUSSELL LIPPER MSCI EMERGING
2000 WILSHIRE REAL S&P MIDCAP BALANCED MARKETS FREE BANK
NAREIT-EQUITY INDEX ESTATE 400 FUND INDEX SAVINGS ACCOUNT
SECURITIES INDEX INDEX
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 N/A N/A N/A N/A N/A N/A N/A
Dec 1927 N/A N/A N/A N/A N/A N/A N/A
Dec 1928 N/A N/A N/A N/A N/A N/A N/A
Dec 1929 N/A N/A N/A N/A N/A N/A N/A
Dec 1930 N/A N/A N/A N/A N/A N/A 5.30
Dec 1931 N/A N/A N/A N/A N/A N/A 5.10
Dec 1932 N/A N/A N/A N/A N/A N/A 4.10
Dec 1933 N/A N/A N/A N/A N/A N/A 3.40
Dec 1934 N/A N/A N/A N/A N/A N/A 3.50
Dec 1935 N/A N/A N/A N/A N/A N/A 3.10
Dec 1936 N/A N/A N/A N/A N/A N/A 3.20
Dec 1937 N/A N/A N/A N/A N/A N/A 3.50
Dec 1938 N/A N/A N/A N/A N/A N/A 3.50
Dec 1939 N/A N/A N/A N/A N/A N/A 3.40
Dec 1940 N/A N/A N/A N/A N/A N/A 3.30
Dec 1941 N/A N/A N/A N/A N/A N/A 3.10
Dec 1942 N/A N/A N/A N/A N/A N/A 3.00
Dec 1943 N/A N/A N/A N/A N/A N/A 2.90
Dec 1944 N/A N/A N/A N/A N/A N/A 2.80
Dec 1945 N/A N/A N/A N/A N/A N/A 2.50
Dec 1946 N/A N/A N/A N/A N/A N/A 2.20
Dec 1947 N/A N/A N/A N/A N/A N/A 2.30
Dec 1948 N/A N/A N/A N/A N/A N/A 2.30
Dec 1949 N/A N/A N/A N/A N/A N/A 2.40
Dec 1950 N/A N/A N/A N/A N/A N/A 2.50
Dec 1951 N/A N/A N/A N/A N/A N/A 2.60
Dec 1952 N/A N/A N/A N/A N/A N/A 2.70
Dec 1953 N/A N/A N/A N/A N/A N/A 2.80
Dec 1954 N/A N/A N/A N/A N/A N/A 2.90
Dec 1955 N/A N/A N/A N/A N/A N/A 2.90
Dec 1956 N/A N/A N/A N/A N/A N/A 3.00
Dec 1957 N/A N/A N/A N/A N/A N/A 3.30
Dec 1958 N/A N/A N/A N/A N/A N/A 3.38
Dec 1959 N/A N/A N/A N/A N/A N/A 3.53
Dec 1960 N/A N/A N/A N/A 5.77 N/A 3.86
Dec 1961 N/A N/A N/A N/A 20.59 N/A 3.90
Dec 1962 N/A N/A N/A N/A -6.80 N/A 4.08
Dec 1963 N/A N/A N/A N/A 13.10 N/A 4.17
Dec 1964 N/A N/A N/A N/A 12.36 N/A 4.19
Dec 1965 N/A N/A N/A N/A 9.80 N/A 4.23
Dec 1966 N/A N/A N/A N/A -5.86 N/A 4.45
Dec 1967 N/A N/A N/A N/A 15.09 N/A 4.67
Dec 1968 N/A N/A N/A N/A 13.97 N/A 4.68
Dec 1969 N/A N/A N/A N/A -9.01 N/A 4.80
Dec 1970 N/A N/A N/A N/A 5.62 N/A 5.14
Dec 1971 N/A N/A N/A N/A 13.90 N/A 5.30
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
RUSSELL LIPPER MSCI EMERGING
2000 WILSHIRE REAL S&P MIDCAP BALANCED MARKETS FREE BANK
NAREIT-EQUITY INDEX ESTATE 400 FUND INDEX SAVINGS ACCOUNT
SECURITIES INDEX INDEX
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1972 8.01 N/A N/A N/A 11.13 N/A 5.37
Dec 1973 -15.52 N/A N/A N/A -12.24 N/A 5.51
Dec 1974 -21.40 N/A N/A N/A -18.71 N/A 5.96
Dec 1975 19.30 N/A N/A N/A 27.10 N/A 6.21
Dec 1976 47.59 N/A N/A N/A 26.03 N/A 6.23
Dec 1977 22.42 N/A N/A N/A -0.72 N/A 6.39
Dec 1978 10.34 N/A 13.04 N/A 4.80 N/A 6.56
Dec 1979 35.86 43.09 70.81 N/A 14.67 N/A 7.29
Dec 1980 24.37 38.58 22.08 N/A 19.70 N/A 8.78
Dec 1981 6.00 2.03 7.18 N/A 1.86 N/A 10.71
Dec 1982 21.60 24.95 24.47 22.68 30.63 N/A 11.19
Dec 1983 30.64 29.13 27.61 26.10 17.44 N/A 9.71
Dec 1984 20.93 -7.30 20.64 1.18 7.46 N/A 9.92
Dec 1985 19.10 31.05 22.20 35.58 29.83 N/A 9.02
Dec 1986 19.16 5.68 20.30 16.21 18.43 N/A 7.84
Dec 1987 -3.64 -8.77 -7.86 -2.03 4.13 N/A 6.92
Dec 1988 13.49 24.89 24.18 20.87 11.18 40.43 7.20
Dec 1989 8.84 16.24 2.37 35.54 19.70 64.96 7.91
Dec 1990 -15.35 -19.51 -33.46 -5.12 0.66 10.55 7.80
Dec 1991 35.70 46.05 20.03 50.10 25.83 59.91 4.61
Dec 1992 14.59 18.41 7.36 11.91 7.46 11.40 2.89
Dec 1993 19.65 18.91 15.24 13.96 11.95 74.83 2.73
Dec 1994 3.17 -1.82 1.64 -3.57 -2.05 7.32 4.96
Dec 1995 15.27 28.44 13.65 30.94 24.89 5.21 5.24
Dec 1996 35.26 16.53 36.87 19.20 13.01 6.03 4.95
</TABLE>
Source: Lipper
<PAGE>
APPENDIX C
ADDITIONAL PIONEER INFORMATION
The Pioneer group of mutual funds was established in 1928 with the
creation of Pioneer Fund. Pioneer is one of the oldest and most experienced
money managers in the United States.
As of December 31, 1996, PMC employed a professional investment staff
of 53, with a combined average of twelve years' experience in the financial
services industry.
Total assets of all Pioneer mutual funds at December 31, 1996, were
approximately $15.8 billion representing 1,086,554 shareholder accounts, 722,661
non-retirement accounts and 363,893 retirement accounts.
<PAGE>
File Nos. 2-25980
811-1466
PIONEER FUND
FORM N-1A
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, 1996 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
Registration Statement from the 1996 Annual Report to Shareholders dated
December 31, 1996 (filed electronically on February 28, 1997; file no.
811-07613; accession number 0000078713-97-000006).
(b) Exhibits:
1. Agreement and Declaration of Trust*
2. By-Laws*
3. None
4.1 Specimen Class A Share Certificate*
4.2 Specimen Class B Share Certificate*
4.3 Specimen Class C Share Certificate*
5. Form of Management Contract*
6.1 Form of Underwriting Agreement*
6.2 Form of Dealer Sales Agreement*
7. None
8. Form of Custodian Agreement
with Brown Brothers Harriman & Co.*
9.1 Form of Investment Company Service Agreement*
9.2 Form of Agreement and Plan of Reorganization*
C-1
<PAGE>
10. Legal Opinion of Morris, Nichols, Arsht & Tunnell*
11. Consent of Arthur Andersen LLP
12. None
13. Form of Stock Purchase Agreement*
14. None
15.1 Class A Distribution Plan*
15.2 Class B Distribution Plan*
15.3 Class C Distribution Plan*
16. Description of Average Annual Total Return*
17. Financial Data Schedule
18. Multiple Class Plan Pursuant to Rule 18f-3*
19. Powers of Attorney*
- ------------------------
* Previously filed. Incorporated by reference from the exhibits filed
with previous amendments to the Registrant's Registration Statement.
Item 25. Persons Controlled By or Under Common Control with Registrant.
Percent State/Country
of of
Company Owned By Shares Incorporation
- ------- -------- ------ -------------
Pioneering Management Corp. (PMC) PGI 100% DE
Pioneering Services Corp. (PSC) PGI 100% MA
Pioneer Capital Corp. (PCC) PGI 100% MA
Pioneer Fonds Marketing GmbH (GmbH) PGI 100% MA
Pioneer SBIC Corp. (SBIC) PGI 100% MA
Pioneer Associates, Inc. (PAI) PGI 100% MA
Pioneer International Corp. (PInt) PGI 100% MA
Pioneer Plans Corp. (PPC) PGI 100% MA
Pioneer Goldfields Ltd (PGL) PGI 100% MA
Pioneer Investments Corp. (PIC) PGI 100% MA
Pioneer Metals and Technology,
Inc. (PMT) PGI 100% DE
C-2
<PAGE>
Pioneer First Polish Trust Fund
Joint Stock Co. (First Polish) PGI 100% Poland
Teberebie Goldfields Ltd. (TGL) PGI 90% Ghana
Pioneer Funds Distributor, Inc.
(PFD) PMC 100% MA
SBIC's outstanding capital stock PCC 100% MA
THE FUNDS: All are parties to management contracts with PMC.
BUSINESS
FUND TRUST
---- --------
Pioneer International Growth Fund MA
Pioneer Europe Fund MA
Pioneer Emerging Markets Fund DE
Pioneer India Fund DE
Pioneer Growth Trust MA
Pioneer Mid-Cap Fund DE
Pioneer Growth Shares DE
Pioneer Small Company Fund DE
Pioneer Fund MA
Pioneer II MA
Pioneer Real Estate Shares DE
Pioneer Short-Term Income Fund MA
Pioneer America Income Trust MA
Pioneer Bond Fund MA
Pioneer Income Fund DE
Pioneer Intermediate Tax-Free Fund MA
Pioneer Tax-Free Income Fund DE
Pioneer Tax-Free State Series Trust MA
Pioneer Money Market Trust DE
Pioneer Variable Contracts Trust DE
Pioneer Interest Shares DE
OTHER:
[bullet] SBIC is the sole general partner of Pioneer Ventures Limited
Partnership, a Massachusetts limited partnership.
[bullet] Kothatri Pioneer AMC Ltd. (ITI Pioneer) (Indian Corp.), is a joint
venture between PMC and Investment Trust of India Ltd. (ITI) (Indian
Corp.)
[bullet] ITI and PMC own approximately 46% and 49%, respectively, of the total
equity capital of ITI Pioneer.
JOHN F. COGAN, JR.
Owns approximately 14% of the outstanding shares of PGI.
C-3
<PAGE>
TRUSTEE/
ENTITY CHAIRMAN PRESIDENT DIRECTOR OTHER
Pioneer Family of
Mutual Funds X X X
PGL X X X
PGI X X X
PPC X X
PIC X X
Pintl X X
PMT X X
PCC X
PSC X
PMC X X
PFD X X
TGL X X
First Polish X Member of
Supervisory Board
Hale and Dorr LLP Partner
GmbH Chairman of
Supervisory Board
Item 26. Number of Holders of Securities
At March 31, 1997, there were approximately 243,026 holders of the
Registrant's Class A shares, 1,493 holders of the Registrant's Class B shares
and 199 holders of the Registrant's Class C shares.
Item 27. Indemnification
C-4
<PAGE>
Except for the Declaration of Trust dated April 3, 1996,
establishing the Registrant as a Trust under Delaware law, there is no contract,
arrangement or statute under which any director, officer, underwriter or
affiliated person of the Registrant is insured or indemnified. The Declaration
of Trust provides that no Trustee or officer will be indemnified against any
liability to which the Registrant would otherwise be subject by reason of or for
willful misfeasance, bad faith, gross negligence or reckless disregard of such
person's duties.
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 by 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.
Item 28. Business and Other Connections of Investment Adviser
All of the information required by this item is set forth in
the Form ADV, as amended, of Pioneering Management Corporation. The following
sections of such Form ADV are incorporated herein by reference:
(a) Items 1 and 2 of Part 2;
(b) Section IV, Business Background, of each Schedule D.
Item 29. Principal Underwriter
(a) See Item 25 above.
(b) Directors and Officers of PFD:
C-5
<PAGE>
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
- ---- --------------------- ---------------------
John F. Cogan, Jr. Director and Chairman Chairman of the Board,
President and Trustee
Robert L. Butler Director and President None
David D. Tripple Director Executive Vice President
and Trustee
Steven M. Graziano Senior None
Vice President
Stephen W. Long Senior None
Vice President
John W. Drachman Vice President None
Barry G. Knight Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Elizabeth B. Rice Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy L. Supovitz Vice President None
Steven R. Berke Assistant None
Vice President
Mary Sue Hoban Assistant None
Vice President
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
C-6
<PAGE>
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts and records are maintained at the Registrant's
office at 60 State Street, Boston, Massachusetts; contact the Treasurer.
Item 31. Management Services
The Registrant is not a party to any management-related
service contract, except as described in the Prospectus and Statement of
Additional Information.
Item 32. Undertaking
(a) Not applicable.
(b) Not applicable.
(c) The Registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given, a copy of the Registrant's report to shareholders furnished pursuant to
and meeting the requirements of Rule 30d-1 under the Investment Company Act of
1940, as amended, from which the specified information is incorporated by
reference, unless such person currently holds securities of the Registrant and
otherwise has received a copy of such report, in which case the Registrant shall
state in the Prospectus that it will furnish, without charge, a copy of such
report on request, and the name, address and telephone number of the person to
whom such a request should be directed.
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 April 23, 1996 in connection with the reorganization of
Registrant as a Delaware business trust. See Item 27 above.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment No. 64 to
its Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Post-Effective Amendment No. 64 to such
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston and The Commonwealth of Massachusetts, on
the 22nd day of April, 1997.
PIONEER FUND
By: /s/ John F. Cogan, Jr.
----------------------
John F. Cogan, Jr.
Chairman and President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 64 to the Registrant's Registration Statement has
been signed below by the following persons in the capacities and on the date
indicated:
Signature Title
/s/ John F. Cogan, Jr. Chairman of the Board )
- -------------------------- and President )
John F. Cogan, Jr. (Principal Executive )
Officer) )
)
William H. Keough* Chief Financial Officer )
- -------------------------- and Treasurer (Principal )
William H. Keough Financial and Accounting )
Officer) )
)
)
Trustees: )
C-8
<PAGE>
)
)
/s/ John F. Cogan, Jr. )
- -------------------------- )
John F. Cogan, Jr. )
)
Richard H. Egdahl, M.D.* )
- -------------------------- )
Richard H. Egdahl, M.D. )
)
)
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/ John F. Cogan, Jr. Dated: April 22, 1997
----------------------
John F. Cogan, Jr.
Attorney-in-fact
C-9
<PAGE>
Exhibit Index
Exhibit
Number Document Title
- ------ --------------
11. Consent of Arthur Andersen LLP
C-10
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated February 3, 1997 included in Pioneer Fund's 1996 Annual Report (and to all
references to our firm) included in or made a part of the Pioneer Fund
Post-Effective Amendment No. 64 to Registration Statement File No. 2-25980 and
Amendment No. 30 to Registration File No. 811-1466.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
April 25, 1997
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<TABLE> <S> <C>
<ARTICLE> 6
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<NUMBER> 002
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<MULTIPLIER> 1000
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<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 1821349
<INVESTMENTS-AT-VALUE> 2902575
<RECEIVABLES> 8903
<ASSETS-OTHER> 72
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2911550
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4108
<TOTAL-LIABILITIES> 4108
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1825327
<SHARES-COMMON-STOCK> 330856
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 893
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1081222
<NET-ASSETS> 2907442
<DIVIDEND-INCOME> 63238
<INTEREST-INCOME> 921
<OTHER-INCOME> 0
<EXPENSES-NET> (26438)
<NET-INVESTMENT-INCOME> 37721
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<APPREC-INCREASE-CURRENT> 260584
<NET-CHANGE-FROM-OPS> 482379
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (9)
<DISTRIBUTIONS-OF-GAINS> (538)
<DISTRIBUTIONS-OTHER> (17)
<NUMBER-OF-SHARES-SOLD> 325224
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<SHARES-REINVESTED> 19805
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<GROSS-EXPENSE> 26807
<AVERAGE-NET-ASSETS> 585802
<PER-SHARE-NAV-BEGIN> 24.60
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 2.50
<PER-SHARE-DIVIDEND> (0.13)
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<AVG-DEBT-PER-SHARE> 0
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<TABLE> <S> <C>
<ARTICLE> 6
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<SHARES-COMMON-STOCK> 68470
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
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<DIVIDEND-INCOME> 63238
<INTEREST-INCOME> 921
<OTHER-INCOME> 0
<EXPENSES-NET> (26438)
<NET-INVESTMENT-INCOME> 37721
<REALIZED-GAINS-CURRENT> 184074
<APPREC-INCREASE-CURRENT> 260584
<NET-CHANGE-FROM-OPS> 482379
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<DISTRIBUTIONS-OF-INCOME> (1)
<DISTRIBUTIONS-OF-GAINS> (114)
<DISTRIBUTIONS-OTHER> (3)
<NUMBER-OF-SHARES-SOLD> 68824
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<NET-CHANGE-IN-ASSETS> 441344
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<ACCUMULATED-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 26807
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<PER-SHARE-NAV-BEGIN> 26.40
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 2.23
<PER-SHARE-DIVIDEND> (0.10)
<PER-SHARE-DISTRIBUTIONS> (1.82)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 26.74
<EXPENSE-RATIO> 2.11
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
