April 3, 1995
SUPPLEMENT
to the prospectuses for:
Pioneer II January 27, 1995
Pioneer Three January 27, 1995
Pioneer Capital Growth Fund February 24, 1995
Pioneer Equity-Income Fund February 24, 1995
Pioneer Gold Shares February 24, 1995
Pioneer Europe Fund February 28, 1995
Pioneer Bond Fund October 28, 1994
Pioneer California Double Tax-Free Fund January 27, 1995
Pioneer Massachusetts Double Tax-Free Fund January 27, 1995
Pioneer New York Triple Tax-Free Fund January 27, 1995
How to Buy Fund Shares
In addition to the exceptions listed in each Fund's prospectus, Class A shares
of a Fund may be sold at net asset value per share without a sales charge to
Optional Retirement Program participants if (i) the employer has authorized a
limited number of investment company providers for the Program, (ii) all
authorized investment company providers offer their shares to Program
participants at net asset value, (iii) the employer has agreed in writing to
actively promote the authorized investment company providers to Program
participants and (iv) the Program provides for a matching contribution for each
participant contribution.
0495-2419
(c) Pioneer Funds Distributor, Inc.
<PAGE>
[LOGO]
Pioneer II
Prospectus
January 27, 1995
The investment objectives of Pioneer II (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 in
securities whose prices reflect a premium resulting from their current market
popularity. Pioneer II follows a policy of investing a portion of its assets,
not to exceed 25%, in foreign 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. Investments in securities issued by foreign companies or governments
entail risks in addition to those customarily associated with investing in U.S.
securities. The Fund is intended for investors who can accept the risks
associated with its investments and may not be suitable for all investors. See
"Investment Objectives and Policies" for a discussion of these risks.
This Prospectus (Part A of the Registration Statement) provides 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 Part B, the Statement of Additional Information, also dated
January 27, 1995, which is incorporated into this Prospectus by reference. A
copy of the Statement of Additional Information and the Fund's most recent
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.
TABLE OF CONTENTS PAGE
- -----------------------------------------------------------
I. EXPENSE INFORMATION............................. 2
II. FINANCIAL HIGHLIGHTS............................ 3
III. INVESTMENT OBJECTIVES AND POLICIES.............. 3
IV. MANAGEMENT OF THE FUND.......................... 5
V. DISTRIBUTION PLAN............................... 6
VI. INFORMATION ABOUT FUND SHARES................... 6
How to Purchase Shares........................ 6
Net Asset Value and Pricing of Orders......... 7
Dividends, Distributions and Taxation......... 8
Redemptions and Repurchases................... 8
Redemption of Small Accounts.................. 9
Description of Shares and Voting Rights....... 10
VII. SHAREHOLDER SERVICES............................ 10
Account and Confirmation Statements........... 10
Additional Investments........................ 10
Automatic Investment Plans.................... 10
Financial Reports and Tax Information......... 10
Distribution Options.......................... 10
Directed Dividends............................ 10
Direct Deposit................................ 10
Voluntary Tax Withholding..................... 11
Exchange Privilege............................ 11
Telephone Transactions and
Related Liabilities .......................... 11
Retirement Plans.............................. 11
Telecommunications Device for the Deaf (TDD).. 11
Systematic Withdrawal Plans................... 11
Reinstatement Privilege....................... 12
VIII INVESTMENT RESULTS ........................... 12
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
I. EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses that
you, as a shareholder, will bear directly or indirectly when you invest in the
Fund. The information in the table below is an estimate based on actual expenses
for the year ended September 30, 1994 expressed as a percentage of the average
net assets of the Fund.
Shareholder Transaction Expenses:
Maximum Sales Charge on Purchases 1......... 5.75%
Maximum Sales Charge on Reinvestment
of Dividends.............................. none
Deferred Sales Charge 1..................... none
Redemption Fee 2............................ none
Exchange Fee................................ none
Annual Operating Expenses (as a
percentage of net assets):
Management Fee.............................. 0.45%
12b-1 Fees.................................. 0.17%
Other Expenses (including shareholder
accounting and transfer agent fees,
custodian fees and printing expenses)....... 0.28%
------
Total Operating Expenses...................... 0.90%
======
- ----------
1 Purchases of $1,000,000 or more and certain purchases by participants in a
"Group Plan" (as described under "How to Purchase Shares") are not subject to an
initial sales charge. A contingent deferred sales charge of 1% may, however, be
charged on redemptions by such accounts of shares held less than one year, as
further described under "Redemptions and Repurchases."
2 Separate fees (currently $10 and $20, respectively) apply to domestic or
international bank wire transfers of redemption proceeds.
Example:
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and redemption at the end of each time period:
One Year Three Years Five Years Ten Years
---------- ------------- ------------ -----------
$66 $84 $104 $161
- ----------
These are cumulative totals; the average fees and expenses paid over a
10-year period would be approximately $16.10 per year.
The example above assumes reinvestment of all dividends and distributions and
that the percentage amounts listed under "Annual Operating Expenses" remain the
same each year.
The example is designed for information 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, including information regarding the basis upon which
management fees and 12b-1 fees are paid, see "Management of the Fund,"
"Distribution Plan" and "How to Purchase Shares" in this Prospectus and
"Management of the Fund" and "Principal Underwriter" and "Distribution Plan" in
the Statement of Additional Information. The Fund's payment of a Rule 12b-1 fee
may result in long-term shareholders indirectly paying more than the economic
equivalent of the maximum sales charge permitted under the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
The maximum sales charge is reduced on purchases of specified amounts and the
value of shares owned in other Pioneer mutual funds is taken into account in
determining the applicable sales charge. See "How to Purchase Shares." No sales
charge is applied to exchanges of shares of other publicly available mutual
funds in the Pioneer complex. See "Exchange Privilege."
2
<PAGE>
II. FINANCIAL HIGHLIGHTS
The following information has been derived from financial statements which
have been audited by Arthur Andersen LLP, independent public accountants, in
connection with their examination of the Fund's financial statements. Arthur
Andersen LLP's report on the Fund's financial statements as of September 30,
1994 appears in the Fund's Annual Report which is incorporated by reference in
the Statement of Additional Information. 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 II--For A Share Outstanding Throughout Each Year
<TABLE>
<CAPTION>
For the Year Ended September 30,
------------------------------------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ..................... $20.55 $18.86 $18.22 $15.35 $21.12
------ ------ ------ ------ ------
Income from investment
operations --
Net investment income ................... $ 0.36 $ 0.38 $ 0.44 $ 0.52 $ 0.59
Net realized and
unrealized gain (loss)
on investments, forward
foreign currency contracts
and other foreign currency
related transactions .................. 1.05 2.85 1.27 3.16 (3.81)
------ ------ ------ ------ ------
Total income (loss) from
investment operations ............... $ 1.41 $ 3.23 $ 1.71 $ 3.68 $(3.22)
Distribution to shareholders
from--
Net investment income ................... (0.33) (0.39) (0.47) (0.55) (0.64)
Net realized capital gains .............. (2.25) (1.15) (0.60) (0.26) (1.91)
------ ------ ------ ------ ------
Net increase (decrease) in
net asset value ......................... $(1.17) $ 1.69 $ 0.64 $ 2.87 $(5.77)
------ ------ ------ ------ ------
Net asset value,
end of period ............................ $19.38 $20.55 $18.86 $18.22 $15.35
====== ====== ====== ====== ======
Total return* ............................. 7.37% 18.15% 9.92% 24.61% (17.16%)
Ratio of net operating
expenses to average
net assets .............................. 0.90%** 0.95%** 0.93%** 0.83%
0.75%
Ratio of net investment
income to average
net assets .............................. 1.59%** 1.90%** 2.32%** 3.02%
3.18%
Portfolio turnover rate ................... 68% 66% 64% 46%
42%
Net assets end of period
(in thousands) .......................... 4,509,225 4,347,672 3,974,712 4,039,234 3,588,735
</TABLE>
Pioneer II--For A Share Outstanding Throughout Each Year (Continued)
<TABLE>
<CAPTION>
For the Year Ended September 30,
------------------------------------------------------------------
1989 1988 1987 1986 1985
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ................... $18.29 $24.09 $18.48 $16.65 $15.11
------ ------ ------ ------ ------
Income from investment
operations --
Net investment income ................. $0.65 $0.54 $0.46 $0.43 $0.47
Net realized and
unrealized gain (loss)
on investments, forward
foreign currency contracts
and other foreign currency
related transactions ................ 3.84 (3.86) 6.67 3.07 1.97
------ ------ ------ ------ ------
Total income (loss) from
investment operations ............. $4.49 $(3.32) $7.13 $3.50 $2.44
Distribution to shareholders
from--
Net investment income ................. (0.62) (0.48) (0.49) (0.52) (0.56)
Net realized capital gains ............ (1.04) (2.00) (1.03) (1.15) (0.34)
------ ------ ------ ------ ------
Net increase (decrease) in
net asset value ....................... $2.83 $(5.80) $5.61 $1.83 $1.54
------ ------ ------ ------ ------
Net asset value,
end of period .......................... $21.12 $18.29 $24.09 $18.48 $16.65
====== ====== ====== ====== ======
Total return*.................. 26.55% (12.04%) 41.37% 22.77%
(16.96%)
Ratio of net operating
expenses to average
net assets ............................ 0.77% 0.81% 0.75% 0.72% 0.68%
Ratio of net investment
income to average
net assets ............................ 3.31% 3.06% 2.18% 2.43% 3.07%
Portfolio turnover rate ................. 34% 30% 26% 29% 18%
Net assets end of period
(in thousands) ........................ 4,411,923 3,724,615 4,456,459 2,841,545 1,875,393
<FN>
*Assumes initial investment at net asset value at the beginning of each period, reinvestment of all dividends and
distributions,
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.
**The ratios of operating expenses and net investment income to average net assets are net of custodian fees paid by
certain third
party broker/dealers. Assuming no payment by brokers of custodian fees, ratios of operating expenses and net investment
income to
average net assets for the years ended September 30, 1994, 1993 and 1992 would have been:
</FN>
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended September 30,
------------------------------------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Ratio of net operating expenses
to average net assets....... 0.90% 0.96% 0.94% -- --
Ratio of net investment income
to average net assets........ 1.59% 1.89% 2.31% -- --
<CAPTION>
For the Year Ended September 30,
------------------------------------------------------------------
1989 1988 1987 1986 1985
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Ratio of net operating expenses
to average net assets....... -- -- -- -- --
Ratio of net investment income
to average net assets........ -- -- -- -- --
</TABLE>
- --------------------------------------------------------------------------------
III. INVESTMENT OBJECTIVES AND POLICIES
The 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 in securities whose prices reflect a
premium resulting from their current market popularity. As all investments are
subject to inherent market risks and fluctuations in value due to earnings,
economic conditions and other factors, the Fund, of course, cannot give
assurance that its investment objectives will be achieved.
The major portion of the Fund's assets will be invested in equity securities,
including common and preferred stocks and securities convertible into common or
preferred stocks. Assets of the Fund will be substantially fully invested at all
times and, by this means, management intends to avoid speculating upon broad
changes in the level of the market.
In general, the largest portion of the Fund's portfolio, at any time, will
consist of securities which have yielded their holders an interest or dividend
return within the preceding twelve months; but non-income-producing securities
may be held for anticipated increases in value.
It is the policy of the Fund not to engage in trading for short-term profits
and the Fund intends to limit its portfolio turnover to the extent practicable.
Nevertheless, changes in the portfolio will be made promptly when determined to
be advisable by reason of developments not foreseen at the time of the
investment decision, and usually without reference to the length of time a
security has been held. Accordingly, portfolio turnover rate will not be
considered a limiting factor in the execution of investment decisions.
The Fund may purchase put and call options on securities indices to manage
cash flow and to attempt to remain fully invested in the stock market, instead
of or in addition to buying and selling stocks. The Fund may also purchase these
options in order to hedge against risks of market-wide price fluctuations.
3
<PAGE>
Options on securities indices are similar to options on securities except that
the delivery requirements are different. Unlike a securities option, which gives
the holder the right to purchase or sell a specified security at a specified
price, an option on a securities index gives the holder the right to receive a
cash "exercise settlement amount" equal to (i) the difference between the
exercise price of the option and the value of the underlying securities index on
the exercise date, (ii) multiplied by a fixed "index multiplier." In exchange
for undertaking the obligation to make such a cash payment, the writer of the
securities index option receives a premium.
Gains or losses on the Fund's transactions in securities index options depend
on price movements in the securities market generally (or, for narrow market
indices, in a particular industry or segment of the market) rather than the
price movement of individual securities held by the Fund. The effectiveness of
hedging through the purchase of stock index options will depend upon the extent
to which price movements in the portion of the securities portfolio being hedged
correlate with the price movements in the selected stock index. Perfect
correlation may not be possible because the securities held or to be acquired by
the Fund may not exactly match the composition of the stock index on which
options are written. If the forecasts of the Fund's investment adviser regarding
movements in securities prices are incorrect, the Fund's investment results may
have been better without the hedge. A more thorough description of these
investment practices and their associated risks is contained in the Fund's
Statement of Additional Information.
The Fund may sell a securities index option it has purchased or write a
similar option prior to the expiration of the purchased option in order to close
out its position in a securities index option which it has purchased. The Fund
may also allow options to expire unexercised, which would result in the loss of
the premium paid. There is no assurance that a liquid secondary market will
exist for any particular option at any particular time, and the Fund may
therefore be unable to effect closing transactions on, or sell, options it has
purchased. The Fund will not invest more than 20% of its net assets in premiums
on index put and call options.
The Fund may enter into repurchase agreements with banks, generally not
exceeding seven days. Such repurchase agreements will be fully collateralized
with U.S. Treasury and/or U.S. government agency obligations with a market value
of not less than 100% of the obligations, 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 also invest a portion of its portfolio in temporary cash
investments including finance company obligations, corporate commercial paper
and other short-term commercial obligations, in each case rated or issued by
companies with similar securities outstanding that are rated Prime-1 or Aa or
better by Moody's Investors Service or A-1 or AA or better by Standard & Poor's
Ratings Group or, if unrated, of comparable quality as determined by the Fund's
investment adviser.
The objectives and policies described above may not be changed without
shareholder approval. Other investment policies and restrictions on investment
are described in the Statement of Additional Information, including a policy on
lending portfolio securities. Among these other investment policies and
restrictions on investments, the Fund follows a practice of generally investing
between 10% and 25% of its assets in foreign securities. The Fund may invest up
to 5% of its net assets in securities of issuers located in countries with
emerging economies or securities markets. See "Investments in Emerging Markets"
in the Statement of Additional Information. In addition, no more than 5% of the
Fund's net assets may be invested in debt securities, including convertible
securities, which are rated below investment grade or the equivalent.
Investing in securities of foreign companies and countries involves certain
considerations and risks which are not typically associated with investing 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. Interest and dividends paid by foreign issuers and, in some
cases, gains realized upon the sale of foreign securities may be subject to
withholding and other foreign taxes which may decrease the net return on such
investments as compared to the Fund's net return from securities issued 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. 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. Each of these risks may be heightened
in the case of investments in emerging markets. See "Investment Policies and
Restrictions" in the Statement of Additional Information.
The Fund has the ability to hold a portion of its assets in foreign
currencies and to enter into forward foreign currency contracts to facilitate
settlement of foreign securities transactions or to protect against changes in
foreign currency exchange rates. A forward foreign currency contract involves an
obligation to purchase or sell a specific currency on a future date, at a price
set at the time of the contract. The Fund might sell a foreign currency on
either a spot or forward basis to hedge against an anticipated decline in the
dollar value of securities in its portfolio or securities it intends or has
contracted to sell or to preserve the U.S. dollar value of dividends, interest
or other amounts it expects to receive. Although this strategy could minimize
the risk of loss due to a decline in the value of the hedged foreign currency,
it could also limit any potential gain which might result from an increase in
the value of the currency. Alternatively, the Fund might purchase a foreign
currency or enter into a forward purchase contract for the currency to preserve
the U.S. dollar price of securities it is authorized to purchase or has
contracted to purchase.
4
<PAGE>
The Fund may also engage in cross-hedging by using forward contracts in one
currency to hedge against fluctuations in the value of securities denominated in
a different currency (including the U.S. dollar), if the Fund's investment
adviser determines that there is a pattern of correlation between the two
currencies. Cross-hedging may also include entering into a forward transaction
involving two foreign currencies, using one foreign currency as a proxy for the
U.S. dollar to hedge against variations in the other foreign currency if the
investment adviser determines that there is a pattern of correlation between the
proxy currency and the U.S. dollar.
If the Fund enters into a forward contract to buy foreign currency for any
purpose, the Fund will be required to place cash or liquid, high grade debt
securities in a segregated account with the Fund's custodian in an amount equal
to the value of the Fund's total assets committed to the consummation of the
forward contract. The Fund may enter into forward currency contracts having an
intrinsic value of up to 30% of its net assets.
The Fund may purchase and write put and call options on foreign currencies
for the purpose of protecting against declines in the dollar value of foreign
portfolio securities and against increases in the U.S. dollar cost of foreign
securities to be acquired. The Fund may also use options on currency to
cross-hedge, which involves writing or purchasing options on one currency to
hedge against changes in exchange rates of a different currency (including the
U.S. dollar) with a pattern of correlation. Cross-hedging may also include using
a foreign currency as a proxy for the U.S. dollar if the investment adviser
determines that there is a pattern of correlation between that currency and the
U.S. dollar. The writing of an option on foreign currency will constitute only a
partial hedge, up to the amount of the premium received, and the Fund could be
required to purchase or sell foreign currencies at disadvantageous exchange
rates, thereby incurring losses. The purchase of an option on a foreign currency
may constitute an effective hedge against exchange rate fluctuations. However,
in the event of unanticipated rate movements adverse to the Fund's option
position, the Fund may forfeit the entire amount of the premium plus related
transaction costs. Options on foreign currencies to be written or purchased by
the Fund will be traded on U.S. or foreign exchanges or over-the-counter.
Options on foreign currencies which are traded in the over-the-counter market
may be considered illiquid securities and there can be no assurance that a
liquid secondary market will exist at any particular time for any particular
option. The Fund may not invest more than 10% of its net assets in premiums on
purchased currency options. See "Other Policies and Risks" in the Statement of
Additional Information.
The Fund's transactions in options on securities indices, currencies, options
on currencies and forward foreign currency contracts may be limited by the
requirements for qualification of the Fund as a regulated investment company for
tax purposes. See "Tax Status" in the Statement of Additional Information.
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, 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 and general background of
each Trustee and executive officer of the Fund.
The Fund is managed under a contract with PMC. PMC serves as investment
adviser to the Fund and is responsible for the overall management of the Fund's
business affairs, subject only to the authority of the Board of Trustees. PMC is
a wholly-owned subsidiary of The Pioneer Group, Inc. ("PGI"), a Delaware
corporation. Pioneer Funds Distributor, Inc. ("PFD"), a wholly-owned subsidiary
of PGI, is the principal underwriter of shares of the Fund.
All portfolios managed by PMC, including this Fund, are overseen by an
Investment Committee (the "Committee"), which consists of PMC's most senior
investment professionals. The Committee is chaired by Mr. David Tripple, PMC's
President and Chief Investment Officer and Executive Vice President of each of
the Pioneer mutual funds. Mr. Tripple joined PMC in 1974 and has had general
responsibility for PMC's investment operations and specific portfolio
assignments for more than the last five years. Primary responsibility for the
day-to-day management of the domestic portion of the Fund, the bulk of the
Fund's assets, resides with Francis J. Boggan, Vice President of the Fund and
PMC. Mr. Boggan joined PMC in 1991. Prior to joining PMC, Mr. Boggan was
Director of Equity Investments at Farmers Group, Inc. Mr. Tripple, who has been
involved in the management of the Fund as sole or Senior Portfolio Manager for
the Fund from 1981 to December 31, 1994, is responsible for the day-to-day
management of the international portion of the Fund, which, as a matter of
general policy, may range from 10% to 25% of the Fund's total assets.
In addition to the Fund, PMC also manages and serves as the investment
adviser for other mutual funds and is an investment adviser to certain other
institutional accounts. PMC's and PFD's executive offices are located at 60
State Street, Boston, Massachusetts 02109.
Under the terms of its contract with the Fund, PMC assists in the management
of the Fund and is authorized in its discretion to buy and sell securities for
the account of the Fund, subject to the right of the Fund's Trustees to
disapprove any such purchase or sale. PMC pays all the expenses, including
executive salaries, and the rental of office space, related to its services for
the Fund with the exception of the following, which are to be paid by the Fund:
(a) taxes and other governmental charges, if any; (b) interest on borrowed
money, if any; (c) legal fees and expenses; (d) auditing fees; (e) insurance
premiums; (f) dues and fees for membership in trade associations; (g) fees and
expenses of registering and maintaining registrations by the Fund of its shares
with the Securities and Exchange Commission, individual states, territories and
foreign jurisdictions and of preparing reports to government agencies; (h) fees
and expenses of Trustees not affiliated with or interested persons of PMC; (i)
fees and expenses of the custodians, dividend disbursing agent, transfer agent
and registrar; (j) issue and transfer taxes chargeable to the Fund in connection
with securities transactions to which the Fund is a party; (k) costs of reports
to shareholders, shareholders' meetings and Trustees' meetings; (l) the cost of
certificates representing shares of the Fund; (m) bookkeeping and appraisal
5
<PAGE>
charges; and (n) distribution fees in accordance with the Plan of Distribution
described below. The Fund also pays all brokerage commissions 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 investment research or brokerage services or sells shares
of any Pioneer mutual fund. See the Statement of Additional Information for a
further description of PMC's brokerage allocation practices.
As compensation for its management services and certain expenses which PMC
incurs, PMC is 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 is normally computed
daily and paid monthly. During the fiscal year ended September 30, 1994, the
Fund incurred expenses of approximately $40,133,000, including management fees
paid to PMC of approximately $20,186,000.
John F. Cogan, Jr., Chairman and President of the Fund, Chairman of PFD, and
President and a Director of PGI and PMC, owned approximately 15% of the
outstanding capital stock of PGI as of the date of this Prospectus.
V. DISTRIBUTION PLAN
The Fund has adopted a Plan of Distribution (the "Plan"), effective November
1, 1991, in accordance with Rule 12b-1 under the 1940 Act pursuant to which
certain distribution fees are paid to PFD. As required by Rule 12b-1, the Plan
was approved by a majority of the outstanding shares held by the shareholders of
the Fund and by the Trustees, including a majority of the Trustees who are not
"interested persons" of the Fund.
Pursuant to the Plan, the Fund reimburses PFD for its actual expenditures to
finance any activity primarily intended to result in the sale of Fund shares or
to provide services to Fund shareholders, provided the categories of expenses
for which reimbursement is made are approved by the Fund's Board of Trustees. As
of the date of this Prospectus, the Board of Trustees has approved the following
categories of expenses for the Fund: (i) a service fee to be paid to qualified
broker-dealers in an amount not to exceed 0.25% per annum of the Fund's daily
net assets; (ii) reimbursement to PFD for its expenditures for broker-dealer
commissions and employee compensation on certain sales of the Fund's shares with
no initial sales charge (See "How to Purchase Shares"); and (iii) reimbursement
to PFD for expenses incurred in providing services to shareholders and
supporting broker-dealers and other organizations (such as banks and trust
companies) in their efforts to provide such services. Banks are currently
prohibited under the Glass-Steagall Act from providing certain underwriting or
distribution services. If a bank was prohibited from acting in any capacity or
providing any of the described services, management would consider what action,
if any, would be appropriate.
Expenditures of the Fund pursuant to the Plan are accrued daily and may not
exceed 0.25% of average daily net assets. Distribution expenses of PFD are
expected to substantially exceed the distribution fees paid by the Fund in a
given year. The Plan does not provide for the carryover of reimbursable expenses
beyond 12 months from the time the Fund is first invoiced for an expense. The
limited carryover provision in the Plan may result in an expense invoiced to the
Fund in one fiscal year being paid in the subsequent fiscal year and thus being
treated for purposes of calculating the maximum expenditures of the Fund as
having been incurred in the subsequent fiscal year. In the event of termination
or non-continuance of the Plan, the Fund has twelve 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 daily net assets during such period. The Plan may not be
amended to increase materially the annual percentage limitation of average net
assets which may be spent for the services described therein without approval of
the shareholders of the Fund.
VI. INFORMATION ABOUT FUND SHARES
How to Purchase Shares
You may purchase shares of the Fund at the public offering price from any
securities broker-dealer having a sales agreement with PFD. The minimum initial
investment is $50. Separate minimum investment requirements apply to retirement
plans and to telephone and wire orders placed by broker-dealers; no sales
charges or minimum requirements apply to the reinvestment of dividends or
capital gains distributions.
The Fund has a minimum account requirement of $500. As a new purchaser, you
will be given at least 24 months from your initial purchase to increase the
value of the account to $500. See "Redemptions and Repurchases."
The public offering price is the net asset value per share next computed
after receipt of a purchase order, plus a sales charge as follows:
Sales Charge
as a % of Dealer
----------------- Allowance
Net as a % of
Offering Amount Offering
Amount of Purchase Price Invested Price
------------------ ------- -------- -------
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.50 4.71 4.00
$100,000 but less than $250,000 3.50 3.63 3.00
$250,000 but less than $500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.75
$1,000,000 or more -0- -0- see
below
No sales charge is payable at the time of purchase on investments of
$1,000,000 or more, but for such investments a contingent deferred sales charge
("CDSC") of 1% is imposed in the event of certain redemption transactions within
one year of purchase. See "Redemptions and Repurchases" below. PFD may, in its
discretion, pay a commission to broker-dealers who initiate and are responsible
for such purchases as follows: 1% on the first $1 million invested; 0.50% on the
next $4 million; and 0.10% on the excess over $5 million. These commissions
shall not be payable if the purchaser is affiliated with the broker-dealer or if
the purchase represents the reinvestment of a redemption made during the
previous 12 calendar months. Broker-dealers who receive a commission in
connection with purchases at net asset value by 401(a) or 401(k) retirement
6
<PAGE>
plans with 1,000 or more eligible participants or with at least $10 million in
plan assets will be required to return any commission paid or a pro rata portion
thereof if the retirement plan redeems its shares within 12 months of purchase.
See also "Redemptions and Repurchases." In connection with PGI's acquisition of
Mutual of Omaha Fund Management Company and contingent upon the achievement of
certain sales objectives, PFD pays to Mutual of Omaha Investor Services, Inc.
50% of PFD's retention of any sales commission on sales of the Funds' shares
through such dealer. Shares sold outside the U.S. to persons who are not U.S.
citizens may be subject to different sales charges, CDSCs and dealer
compensation arrangements in accordance with local laws and business practices.
The schedule of sales charges above is applicable to purchases of shares of
the Fund by (i) an individual, (ii) an individual, his or her spouse and
children under the age of 21 and (iii) a trustee or other fiduciary of a trust
estate or fiduciary account, or related trusts or accounts, including pension,
profit-sharing and other employee benefit trusts qualified under Sections 401 or
408 of the Internal Revenue Code of 1986, although more than one beneficiary is
involved.
The sales charge applicable to a current purchase of shares of the Fund by a
person listed above is determined by adding the value of shares to be purchased
to the aggregate value (at current offering price) of shares of any of the
Pioneer mutual funds previously purchased and then owned, provided PFD is
notified by such person or his or her broker-dealer each time a purchase is made
which would so qualify. (Pioneer mutual funds include all mutual funds for which
PFD serves as principal underwriter.) For example, a person investing $5,000 in
the Fund who currently owns shares of the Pioneer funds with a value of $45,000
would pay a sales charge of 4.50% of the offering price on the new investment.
Sales charges may also be reduced through an agreement to purchase a
specified quantity of shares over a designated thirteen-month period by
completing the "Letter of Intention" section of the Account Application.
Information about the Letter of Intention procedure, including its terms, is
contained in the Account Application as well as in the Statement of Additional
Information.
Shares of the Fund may be sold at a reduced or eliminated sales charge to
certain group plans ("Group Plans") under which a sponsoring organization makes
recommendations to, permits group solicitation of, or otherwise facilitates
purchases by, its employees, members or participants. Information about such
arrangements is available from PFD.
Shares of the Fund may also be sold at net asset value per share without a
sales charge to: (a) current or former Trustees and officers of the Fund and
employees and partners 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 and
may not be resold except through redemption or repurchase by or on behalf of the
Fund. The availability of this privilege depends upon the receipt by PFD of
written notification of eligibility. Shares may also be sold at net asset value
without a sales charge in connection with certain reorganization, liquidation,
or acquisition transactions involving other investment companies or personal
holding companies.
Investors who are clients of a broker-dealer with a current sales agreement
with PFD may purchase shares of the Fund at net asset value, without a sales
charge, to the extent that the purchase price is paid out of proceeds from one
or more redemptions by the investor of shares of certain other mutual funds. In
order for a purchase to qualify for this privilege, the investor must document
to the broker-dealer that the redemption occurred within 60 days immediately
preceding the purchase of shares of the Fund; that the client paid a sales
charge on the original purchase of the shares redeemed; and that the mutual fund
whose shares were redeemed also offers net asset value purchases to redeeming
shareholders of any of the Pioneer family of mutual funds. Further details may
be obtained from PFD.
Net Asset Value And Pricing Of Orders
Shares of the Fund are sold at the public offering price, which is the net
asset value per share plus the applicable sales charge. Net asset value per
share of the Fund is determined by dividing the value of its assets, less
liabilities, by the number of shares outstanding. The net asset value is
computed once daily, on each day the New York Stock Exchange (the "Exchange") is
open, as of the close of regular trading on the Exchange.
Securities are valued at the last sale price on the principal exchange or
market where they are traded. Securities which have not traded on the date of
valuation or securities for which sales prices are not generally reported are
valued at the mean between the last bid and asked prices. Securities quoted in
foreign currencies are converted to U.S. dollars utilizing foreign exchange
rates employed by the Fund's independent pricing services. Generally, trading in
foreign securities is substantially completed each day at various times prior to
the close of regular trading hours on 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 regular trading hours on the Exchange.
Occasionally, events which affect the values of such securities and such
exchange rates may occur between the times at which they are determined and the
close of regular trading hours on the Exchange and will therefore not be
reflected in the computation of the Fund's net asset value. If events materially
affecting the value of such securities occur during such period, then these
securities are valued at their fair value as determined in good faith by the
Trustees. All assets of the Fund for which there is no other readily available
valuation method are valued at their fair value as determined in good faith by
the Trustees.
An order for shares received by a broker-dealer prior to the the close of
regular trading on the Exchange (currently 4:00 p.m. Eastern Time) is confirmed
7
<PAGE>
at the redemption price determined at the close of regular trading on the
Exchange on the day the order is received, provided the order is received by PFD
prior to PFD's close of business. It is the responsibility of broker-dealers to
transmit orders so that they will be received by PFD prior to its close of
business. An order received by a broker-dealer following the close of regular
trading on the Exchange will be confirmed at the redemption price as of the
close of regular trading on the Exchange on the next trading day.
The Fund reserves the right in its sole discretion to withdraw all or any
part of the offering of shares when, in the judgment of the Fund's management,
such withdrawal is in the best interest of the Fund. An order to purchase shares
is not binding on, and may be rejected by, PFD until it has been confirmed in
writing by PFD and payment has been received.
Dividends, Distributions and Taxation
The Fund has elected to be treated, has qualified, and intends to qualify
each year as a "regulated investment company" under the Internal Revenue Code of
1986, as amended (the "Code"), so that it will not pay federal income taxes on
income and capital gains distributed to shareholders at least annually.
Under the Code, the Fund will be subject to a nondeductible 4% excise tax on
a portion of its undistributed income and capital gains if it fails to meet
certain distribution requirements with respect to each year. The Fund intends to
make distributions in a timely manner and accordingly does not expect to be
subject to the excise tax.
The Fund's policy is to pay to shareholders dividends from net investment
income, if any, twice each year during the months of June and December and to
distribute net realized capital gains, if any, in December. Distributions from
short-term capital gains, if any, may be paid with such dividends; distributions
of dividends and capital gains may also be made at such times as may be
necessary to avoid federal income or excise tax. Dividends from the Fund's net
investment income, certain net foreign exchange gains, and net short-term
capital gains are taxable as ordinary income and dividends from the Fund's net
long-term capital gains are taxable as long-term capital gains.
Unless shareholders specify otherwise, all distributions will be
automatically reinvested in additional full and fractional shares of the Fund.
For federal income tax purposes, all dividends are taxable as described above
whether a shareholder takes them in cash or reinvests them in additional shares
of the Fund. Information as to the federal tax status of dividends and
distributions will be provided annually.
Dividends and other distributions and the proceeds of redemptions, exchanges
or repurchases of Fund shares paid to individuals and other non-exempt payees
will be subject to a 31% backup withholding of federal income tax if the Fund is
not provided with the shareholder's correct taxpayer identification number and
certification that the number is correct and the shareholder is not subject to
such backup withholding or the Fund receives notice from the IRS or a broker
that such withholding applies. Please refer to the Account Application for
additional information.
The description above relates only to U.S. federal income tax consequences
for shareholders who are U.S. persons, i.e., U.S. citizens or residents or U.S.
corporations, partnerships, trusts or estates and who are subject to U.S.
federal income tax. Shareholders should consult their own tax advisors regarding
state, local and other applicable tax laws.
Redemptions and Repurchases
Redemptions by Mail. As a shareholder, you have the right to offer your
shares for redemption by delivering to Pioneering Services Corporation ("PSC") a
written request for redemption, signed by all registered owners, in proper form
and, if applicable, your share certificates properly endorsed and in good order
for transfer. Redemptions will be made in cash less any applicable CDSC at the
net asset value per share next determined following receipt by PSC of all
necessary documents.
Good order means that the certificates must be endorsed by the record
owner(s) exactly as the shares are registered and the signature(s) must be
guaranteed by any of the following eligible guarantor institutions: (i) all
brokers, dealers, municipal securities dealers and/or brokers, and government
securities dealers and/or brokers who are members of a clearing agency or whose
net capital exceeds $100,000; (ii) all banks; (iii) all credit unions; (iv) all
savings associations, including all savings and loan associations; (v) all
national securities exchanges, registered securities associations, and all
clearing agencies; and (vi) all trust companies. In addition, in some cases
(involving fiduciary or corporate transactions), good order may require the
furnishing of additional documents. Signature guarantees may be waived for
redemption requests of $50,000 or less, provided that the record holder executes
the redemption request, payment is directed to the record holder at the address
of record and the address was not changed in the prior 30 days. You cannot
provide a signature guarantee by facsimile ("fax"). Payment normally will be
made within seven days after receipt of the aforementioned documents. The Fund
reserves the right to withhold payment until checks received in payment of
shares purchased have cleared, which may take up to 15 calendar days from the
purchase date. For additional information about the necessary documentation for
redemption by mail, please contact PSC at 1-800-225-6292.
Redemptions by Telephone or Fax. Your account is automatically authorized to
have the telephone redemption privilege unless you indicated otherwise on your
Account Application or by writing to PSC. Proper account identification will be
required for each telephone redemption. The telephone redemption option is not
available to retirement plan accounts. A maximum of $50,000 may be redeemed by
telephone or fax and the proceeds may be received by check or by bank wire. 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:
the wire must be sent to the bank wire 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.
8
<PAGE>
Additional Conditions of Redemption. For the convenience of shareholders, the
Fund has authorized PFD to act as its agent in the repurchase of shares of the
Fund. Offers to sell shares to the Fund may be communicated to PFD by wire or
telephone by broker-dealers for their customers. The Fund's practice will be to
repurchase shares offered to it at the net asset value per share determined as
of the close of regular trading on the Exchange on the day the offer for
repurchase is received and accepted by the broker-dealer if the offer is
received by PFD before the close of business on that day.
A broker-dealer which receives an offer for repurchase is responsible for the
prompt transmittal of such offer to PFD. Payment of the repurchase proceeds will
be made in cash to the broker-dealer placing the order. Except for certain large
accounts subject to a contingent deferred sales charge (as described below),
neither the Fund nor PFD charges any fee or commission upon such repurchase
which is then settled as an ordinary transaction with the broker-dealer (which
may charge the shareholder for this service) delivering the shares repurchased.
Payment will be made within seven days of the receipt by PSC of valid
instructions, including validly endorsed certificates, if appropriate, in good
order as described above.
The net asset value per share received upon redemption or repurchase may be
more or less than the cost of shares to an investor, depending upon the market
value of the portfolio at the time of redemption or repurchase. Redemptions and
repurchases are taxable transactions.
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 Securities and Exchange Commission (the "SEC"),
by order, so permits.
Purchases of $1,000,000 or more, and purchases by participants in a Group
Plan which have not been subject to a sales charge, may be subject to a
contingent deferred sales charge ("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. In determining whether a CDSC
is payable, and, if so, the amount of the charge, it is assumed that shares
purchased with reinvested dividend and capital gain distributions and then such
other shares which are held the longest will be the first redeemed. Shares
subject to the CDSC which are exchanged into another Pioneer fund will continue
to be subject to the CDSC until the original 12-month period expires. However,
no CDSCis payable with respect to purchases of shares by 401(a) or 401(k)
retirement plans with 1,000 or more eligible participants or with at least $10
million in plan assets.
Waiver or Reduction of Contingent Deferred Sales Charge. The CDSC on any
shares subject to a CDSC may be waived or reduced for non-retirement accounts
if: (a) the redemption results from the death of all registered owners of an
account (in the case of UGMAs, UTMAs and trust accounts, waiver applies upon the
death of all beneficial owners) or a total and permanent disability (as defined
in Section 72 of the Code) of all registered owners occurring after the purchase
of the shares being redeemed or (b) the redemption is made in connection with a
Systematic Withdrawal Plan (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 any shares subject to a CDSC may be waived or reduced for
retirement plan accounts if: (a) the redemption results from the death or a
total and permanent disability (as defined in Section 72 of the Code) occurring
after the purchase of the shares being redeemed of a shareholder or participant
in an employer-sponsored retirement plan; (b) the distribution is to a
participant in an IRA, 403(b) or employer-sponsored retirement plan, is part of
a series of substantially equal payments made over the life expectancy of the
participant or the joint life expectancy of the participant and his or her
beneficiary or as scheduled periodic payments to a participant (limited in any
year to 10% of the value of the participant's account at the time the
distribution amount is established; a required minimum distribution due to the
participant's attainment of age 701/2 may exceed the 10% limit only if the
distribution amount is based on plan assets held by Pioneer); (c) the
distribution is from a 401(a) or 401(k) retirement plan and is a return of
excess employee deferrals or employee contributions or a qualifying hardship
distribution as defined by the Code or results from a termination of employment
(limited with respect to a termination to 10% per year of the value of the
plan's assets in the Fund as of the later of the prior December 31 or the date
the account was established unless the plan's assets are being rolled over to or
reinvested in the same class of shares of a Pioneer mutual fund subject to the
CDSC of the shares originally held); (d) the distribution is from an IRA, 403(b)
or employer-sponsored retirement plan and is to be rolled over to or reinvested
in the same class of shares in a Pioneer mutual fund and which will be subject
to the applicable CDSC upon redemption; (e) the distribution is in the form of a
loan to a participant in a plan which permits loans (each repayment of the loan
will constitute a new sale which will be subject to the applicable CDSC upon
redemption); or (f) the distribution is from a qualified defined contribution
plan and represents a participant's directed transfer (provided that this
privilege has been pre-authorized through a prior agreement with PFD regarding
participant directed transfers).
The CDSC on any shares subject to a CDSC may be waived or reduced for either
non-retirement or retirement plan accounts if: (a) the redemption is made by any
state, county, or city, or any instrumentality, department, authority, or agency
thereof, which is prohibited by applicable laws from paying a CDSC in connection
with the acquisition of shares of any registered investment management company;
or (b) the redemption is made pursuant to the Fund's right to liquidate or
involuntarily redeem shares in a shareholder's account.
Redemption of Small Accounts
A new shareholder has a minimum of 24 months (including the six months
following the mailing of the notice described below) to increase the value of
his/her account to $500 or more. If you hold shares of the Fund in an account
with a net asset value of less than $500 due to redemptions or exchanges or
failure to meet the initial minimum account requirement set forth above, the
9
<PAGE>
Fund may redeem the shares held in this account at net asset value if you have
not increased the net asset value of the account to at least $500 within six
months of notice by the Fund to you of the Fund's intention to redeem the
shares.
Description of Shares and Voting Rights
The Fund is an open-end diversified management investment company (commonly
referred to as a mutual fund) organized as a Massachusetts corporation on March
18, 1969, and reorganized as a Massachusetts business trust on February 15,
1985.
The Fund has authorized an unlimited number of shares of beneficial interest
and the Trustees are authorized to create additional series of the Fund. The
Fund is not required to hold annual meetings, although special meetings may be
called for the purposes of electing or removing Trustees, changing fundamental
investment restrictions or approving a management contract. Each share
represents an equal proportionate interest in the Fund with each other share.
Each share has equal rights as to voting, redemption, dividends and liquidation.
Shares will remain on deposit with PSC and certificates will not be issued
unless requested. Certificates for fractional shares will not be issued. The
Fund reserves the right to charge a fee for the issuance of certificates.
The Fund will recognize stock certificates representing shares of Pioneer II,
Inc. issued prior to its reorganization as a Massachusetts business trust as
evidence of ownership of an equivalent number of shares of beneficial interest.
Any shareholder desiring to surrender a stock certificate to the Fund for a
share certificate representing an equivalent number of shares of beneficial
interest may do so by making a written request for such exchange to PSC. Such
request must be accompanied by the surrendered stock certificate which must be
endorsed on the back exactly in the manner as such certificate is registered.
VII. SHAREHOLDER SERVICES
PSC is the shareholder services and transfer agent for shares of the Fund.
PSC, a Massachusetts corporation, is a wholly-owned subsidiary of PGI. PSC's
offices are located at 60 State Street, Boston, Massachusetts 02109, and
inquiries to PSC should be mailed to Shareholder Services, Pioneering Services
Corporation, P.O. Box 9014, Boston, Massachusetts 02205-9014. Brown Brothers
Harriman & Co. (the "Custodian") serves as custodian of the Fund's securities.
The principal business address of the Custodian's Mutual Fund Division 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. The
Pioneer Combined Account Statement, mailed quarterly, is available to all
shareholders who have more than one Pioneer account.
Shareholders whose shares are held in the name of an investment broker-dealer
or other party will not normally have an account with the Fund and might not be
able to utilize some of the services available to shareholders of record.
Examples of services which might not be available are investment or redemption
of shares by mail, automatic reinvestment of dividends and capital gains
distributions, withdrawal plans, Letters of Intention, Rights of Accumulation,
telephone exchanges and redemptions and newsletters.
Additional Investments
You may add to your account by sending a check ($50 minimum) to PSC (account
number should be clearly indicated). The bottom portion of a confirmation
statement may be used as a remittance slip to make additional investments.
Additions to your account, whether by check or through a Pioneer Investomatic
Plan, are invested in full and fractional shares of the Fund at the 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 also arrange for regular investments of $50 or more through
government/military allotments or through a Pioneer Investomatic Plan. A Pioneer
Investomatic Plan provides for a monthly or quarterly investment by means of a
preauthorized draft drawn on a checking account. Pioneer Investomatic Plan
investments are voluntary, and you may discontinue the plan at any time without
penalty upon 30 days written notice to PSC. PSC acts as agent for the purchaser,
the broker-dealer and PGI 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 new account application.
Two other options available are (a) dividends in cash and capital gains
distributions in additional shares; and (b) all dividends and distributions in
cash. These two options are not available, however, for retirement plans or 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.
Directed Dividends
You may elect (in writing) to have the dividends paid by one Pioneer fund
account invested in a second Pioneer fund account. The value of this second
account must be at least $1,000 ($500 for Pioneer Fund or Pioneer II). Invested
dividends may be in any amount, and there are no fees or charges for this
service. This option is not currently available for retirement plan accounts.
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 NOWbank 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.
10
<PAGE>
Voluntary Tax Withholding
You may request (in writing) that PSC withhold 28% of the dividends and
capital gains distributions paid from your account (before any reinvestment) and
forward the amount withheld to the Internal Revenue Service as a credit against
your federal income taxes. This option is not available for retirement plan
accounts or for accounts subject to backup withholding.
Exchange Privilege
You may exchange your shares of the Fund at net asset value, without a sales
charge, for shares of other Pioneer funds which do not offer different classes
of shares or for the Class A shares of those Pioneer funds that offer more than
one class of shares. There are currently no fees or sales charges on such an
exchange.
Exchanges must be at least $1,000. A new Pioneer account opened through an
exchange must have a registration identical to that on the original account. PSC
will process exchanges only after receiving an exchange request in proper form.
An exchange of shares may be made only in states where legally permitted.
Written Exchanges. If the exchange request is in writing, it must be
signed by all record owner(s) exactly as the shares are registered. If your
original account includes an Investomatic or Systematic Withdrawal Plan and
you open a new account by exchange, you should specify whether the plans
should continue in your new account or remain with your original account.
Telephone Exchanges. Your account is automatically authorized to have
the telephone exchange privilege unless you indicated otherwise on your
Account Application or by writing to the Fund. Proper account
identification will be required for each telephone exchange. Telephone
exchange requests may not exceed $500,000 per account per day, and all
telephone exchange requests will be recorded.
Automatic Exchange. You may automatically exchange shares from one
Pioneer account to another Pioneer account on a regular schedule, either
monthly or quarterly. The accounts must have identical registrations and
the originating account must have a minimum balance of $5,000. The exchange
will occur on the 18th day of each month.
If an exchange request is received by PSC before 4:00 p.m. Eastern Time, the
exchange usually will occur on that day if the requirements above have been met.
If the exchange request is received after 4:00 p.m. Eastern Time, the exchange
will usually occur on the following business day.
You should consider the differences in objectives and policies of the funds,
as described in each fund's current prospectus, before making any exchange. For
federal and (generally) state income tax purposes, an exchange represents a sale
of the shares exchanged and a purchase of shares in another fund. Therefore, an
exchange could result in a gain or loss on the shares sold, depending on the tax
basis of these shares and the timing of the transaction, and special tax rules
may apply.
To prevent abuse of the exchange privilege to the detriment of other Fund
shareholders, the Fund and PFD reserve the right to limit the number and/or
frequency of exchanges and/or to charge a fee for exchanges.
Telephone Transactions and Related Liabilities
Your account is automatically authorized to have telephone transaction
privileges unless you indicated otherwise on your Account Application or by
writing to PSC. You may sell or exchange your Fund shares by telephone by
calling 1-800-225-6292 between 8:00 a.m. and 8:00 p.m. Eastern Time on weekdays.
See "Net Asset Value and Pricing of Orders" for more information. To confirm
that each transaction instruction received by telephone is genuine, the Fund
will record each telephone transaction, require the caller to provide the
personal identification number (PIN) for the account and send you a written
confirmation of each telephone transaction. Different procedures may apply to
accounts that are held in the name of an institution or in the name of an
investment broker-dealer or other third-party. If reasonable procedures, such as
those described above, are not followed, the Fund may be liable for any loss due
to unauthorized or fraudulent instructions. The Fund may implement other
procedures from time to time. In all other cases, neither the Fund, PSC nor PFD
will be responsible for the authenticity of instructions received by telephone,
therefore, you bear the risk of loss for unauthorized or fraudulent telephone
transactions.
During times of economic turmoil or market volatility or as a result of
severe weather or a natural disaster, it may be difficult to contact the Fund by
telephone to institute a redemption or exchange. You should communicate with the
Fund in writing if you are unable to reach the Fund by telephone.
Retirement Plans
You should contact the Retirement Plans Department of PSC at 1-800-622-0176
for information relating to retirement plans for business, Simplified Employee
Pension Plans, Individual Retirement Accounts (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 Pioneer Mutual Funds Account Application accompanying this
Prospectus should not be used to establish any of these plans. Separate
applications are required.
Telecommunications Device for the Deaf (TDD)
If you have a hearing disability and you own TDD keyboard equipment, you can
call our TDD number toll-free at 1-800-225-1997, weekdays from 8:30 a.m. to 5:30
p.m. Eastern Time, to contact our telephone representatives with questions about
your account.
Systematic Withdrawal Plans
If your account has a total value of at least $10,000 you may establish a
Systematic Withdrawal Plan providing for fixed payments at regular intervals.
Periodic checks of $50 or more will be sent to you, or any person designated by
you, monthly or quarterly and your periodic redemptions of shares may be taxable
to you. 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 Systematic Withdrawal Plan 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.
11
<PAGE>
Reinstatement Privilege
If you redeem all or part of your shares of the Fund you may reinvest all or
part of the redemption proceeds without a sales commission in shares of the Fund
if you send a written request to PSC not more than 90 days after your shares
were redeemed. Your redemption proceeds will be reinvested at the next
determined net asset value of the shares of the Fund in effect immediately after
receipt of the written request for reinstatement. You may realize a gain or loss
for federal income tax purposes as a result of the redemption, and special tax
rules may apply if a reinvestment occurs. Subject to the provisions outlined
under "Exchange Privilege" above, you may also reinvest in shares of certain
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 completing an Account Options
Form, which you may request by calling 1-800-225-6292.
VIII. INVESTMENT RESULTS
The Fund may include in advertisements, and furnish to existing or
prospective shareholders, information concerning the average annual total return
on an investment in the Fund for a designated period of time. Whenever this
information is provided, it includes a standardized calculation of average
annual total return computed by determining the average annual compounded rate
of return that would cause a hypothetical investment (after deduction of the
maximum sales charge) made on the first day of the designated period (assuming
all dividends and distributions are reinvested) to equal the resulting net asset
value of such hypothetical investment on the last day of the designated period.
The periods illustrated would normally include one, five and ten years. These
standardized calculations do not reflect the impact of federal or state income
taxes.
The computation method above is prescribed for advertising and other
communications subject to SEC Rule 482. Communications not subject to this rule
may contain one or more additional measures and assumptions, including but not
limited to historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share values;
or any graphic illustration of such data. These data may cover any period of the
Fund's existence and may or may not include the impact of sales charges, taxes
or other factors.
Investment results of the Fund may also be compared to other investments or
savings vehicles and/or to unmanaged market indexes, indicators of economic
activity or averages of mutual funds results. Rankings or listings by magazines,
newspapers or independent statistical or rating services, such as Lipper
Analytical Services, Inc., may also be referenced.
The Fund's investment results will vary from time to time depending on market
conditions, the composition of the Fund's portfolios and operating expenses of
the Fund. Therefore, any prior investment results of the Fund should not be
considered representative of what an investment in the Fund may earn in any
future period. These factors and possible differences in the methods used in
calculating investment results should be considered when comparing performance
information regarding the Fund to information published for other investment
companies, investment vehicles and unmanaged indexes. The Fund's investment
results should also be considered relative to the risks associated with the
Fund's investment objectives and policies.
For further information about the calculation methods and uses of the Fund's
investment results, see the Statement of Additional Information.
12
<PAGE>
NOTES
13
<PAGE>
NOTES
14
<PAGE>
THE PIONEER FAMILY OF MUTUAL FUNDS
Growth Funds
Pioneer Capital Growth Fund
Pioneer Growth Shares
Pioneer International Growth Fund
Pioneer Europe Fund
Pioneer Emerging Markets Fund
Growth and Income Funds
Pioneer Three
Pioneer II
Pioneer Fund
Pioneer Equity-Income Fund
Pioneer Winthrop Real Estate Investment Fund
Income Funds
Pioneer Income Fund
Pioneer Bond Fund
Pioneer America Income Trust
Pioneer Tax-Free Income Fund
Pioneer California Double Tax-Free Fund
Pioneer Massachusetts Double Tax-Free Fund
Pioneer New York Triple Tax-Free Fund
Pioneer Intermediate Tax-Free Fund
Pioneer Short-Term Income Trust
Specialized Growth Funds
Pioneer Gold Shares
Pioneer India Fund
Money Market Funds
Pioneer Cash Reserves Fund
Pioneer U.S. Government Money Fund
Pioneer Tax-Free Money Fund
15
<PAGE>
Pioneer II
60 State Street
Boston, Massachusetts 02109
OFFICERS
JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
FRANCIS J. BOGGAN, Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
INVESTMENT ADVISER
PIONEERING MANAGEMENT CORPORATION
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Mass. 02109
Telephone: (617) 742-7825
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
Automated fund yields, 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
0395-2212-1
(C)Pioneer Funds Distributor, Inc.
