File Nos. 2-32773
811-1835
As Filed with The Securities and Exchange Commission on January 28, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM NA
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 __X__
Pre-Effective Amendment No. ___
Post-Effective Amendment No. 47 __X__
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 __X__
Amendment No. 30 __X__
(Check appropriate box or boxes)
PIONEER II
(Exact name of registrant as specified in charter)
60 State Street, Boston, Massachusetts 02109
(Address of principal executive office) [Zip Code]
(617) 742 - 7825
Registrant's Telephone Number, including Area Code
Joseph P. Barri, Hale and Dorr LLP, 60 State Street, Boston, MA 02109
(Name and address of agent for service)
__X__ on January 28, 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
September 30, 1996 on or about November 25, 1996.
<PAGE>
PIONEER II
Cross-Reference Sheet Showing Location in Prospectus and
Statement of Additional Information of Information
Required by Items of the Registration Form
Location in Prospectus
or Statement of
Form N-1A Item Number and Caption Additional Information
- --------------------------------- ----------------------
1. Cover Page Prospectus - Cover Page
2. Synopsis Prospectus - Expense
Information
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Prospectus - Investment
Objective and Policies;
Management of the Fund; Fund
Share Alternatives; Share
Price; How to Buy Fund
Shares; How to Sell Fund
Shares; How to Exchange Fund
Shares; The Fund
5. Management of the Fund Prospectus - Management of
the Fund
6. Capital Stock and Other Securities Prospectus Prospectus -
Investment Objective and
Policies; Management of the
Fund; Fund Share
Alternatives; Share Price;
How to Buy Fund Shares; How
to Sell Fund Shares; How to
Exchange Fund Shares;
Dividends, Distributions and
Taxation; The Fund
7. Purchase of Securities Being
Offered Prospectus - 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
<PAGE>
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 - Management of
the Fund; Investment Adviser
15. Control Persons and Principle
Holders of Securities Statement of Additional
Information - Management of
the Fund
16. Investment Advisory and Other
Services Statement of Additional
Information - Management of
the Fund; Investment
Adviser; Underwriting
Agreement and Distribution
Plans; Shareholder
Servicing/Transfer Agent;
Custodian; Principal
Underwriter; Independent
Public Accountants
17. Brokerage Allocation and Other
Practices Statement of Additional
Information - Portfolio
Transactions
18. Capital Stock and Other Securities Statement of Additional
Information - Description of
Shares
19. Purchase, Redemption and Pricing
of Securities Being Offered Statement of Additional
Information - Letter of
Intention; Systematic
Withdrawal Plan;
Determination of Net Asset
Value
<PAGE>
20. Tax Status Statement of Additional
Information - Tax Status and
Dividends
21. Underwriters Statement of Additional
Information - Underwriting
Agreement and Distribution
Plans; Principal Underwriter
22. Calculation of Performance Data Statement of Additional
Information - Investment
Results
23. Financial Statements Financial Statements
<PAGE>
Pioneer II [LOGO]
PIONEER
Class A, Class B and Class C Shares
Prospectus
January 28, 1997
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 provides the information about the Fund that you should
know before investing. Please read and retain it for your future reference. More
information about the Fund is included in the Statement of Additional
Information, also dated January 28, 1997, 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. 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............................ 2
III. INVESTMENT OBJECTIVES AND POLICIES.............. 4
IV. MANAGEMENT OF THE FUND.......................... 6
V. FUND SHARE ALTERNATIVES......................... 7
VI. SHARE PRICE..................................... 8
VII. HOW TO BUY FUND SHARES.......................... 8
VIII HOW TO SELL FUND SHARES ........................ 11
IX. HOW TO EXCHANGE FUND SHARES..................... 12
X. DISTRIBUTION PLANS.............................. 13
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION........... 14
XII. SHAREHOLDER SERVICES............................ 14
Account and Confirmation Statements........... 14
Additional Investments........................ 15
Automatic Investment Plans.................... 15
Financial Reports and Tax Information......... 15
Distribution Options.......................... 15
Directed Dividends............................ 15
Direct Deposit................................ 15
Voluntary Tax Withholding..................... 15
Telephone Transactions and Related Liabilities 15
FactFone(SM).................................. 15
Retirement Plans.............................. 16
Telecommunications Device for the Deaf (TDD).. 16
Systematic Withdrawal Plans................... 16
Reinstatement Privilege (Class A Shares Only). 16
XIII.THE FUND ....................................... 16
XIV. INVESTMENT RESULTS.............................. 17
----------
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 September 30, 1996. Management fees have been restated to
reflect the annualized effective fee rate payable to Pioneering Management
Corporation ("PMC") for the period ended September 30, 1996 under the
performance-based management contract in effect since May 1, 1996. Actual
management fees for Class A shares for the fiscal year ended September 30, 1996
were 0.49%, reflecting a management contract in effect through April 30, 1996.
See "Management of the Fund." For Class B and Class C shares, other expenses and
distribution fees are based on estimated amounts that would have been incurred
if such shares had been outstanding for the entire fiscal year ended September
30, 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 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):3
Management Fee* 0.57% 0.57% 0.57%
12b-1 Fees 0.25% 1.00% 1.00%
Other Expenses (including
accounting and transfer
agent fees, custodian
fees and printing expenses) 0.16% 0.45% 0.44%
------ ------ -----
Total Operating Expenses 0.98% 2.02% 2.01%
====== ====== =====
+ Class B and Class C shares were first offered on July 1, 1996.
1 Purchases of $1,000,000 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 or
international wire transfers of redemption proceeds.
3 Expenses include amounts paid in connection with third party brokerage/
service and certain expense offset arrangements. See "Financial
Highlights."
* 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, with or
without redemption at the end of each time period, assuming a 5% annual return,
reinvestment of all dividends and distributions and that the percentage amounts
listed under "annual operating expenses" remain the same each year.
1 3 5 10
Year Years Years Years
----- ----- ----- -----
Class A shares $ 67 $ 87 $109 $171
Class B shares
- --Assuming complete
redemption at end of period $ 61 $ 93 $129 $208*
- --Assuming no redemption $ 21 $ 63 $109 $208*
Class C shares**
- --Assuming complete redemption
at end of period $ 30 $ 63 $108 $234
- --Assuming no redemption $ 20 $ 63 $108 $234
* 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 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, see "Management of the Fund," "Distribution Plans" and
"How to Buy Fund Shares" in this Prospectus and "Management of the Fund" and
"Principal Underwriter" and "Distribution Plans" in the Statement of Additional
Information. The Fund's payment of a Rule 12b-1 fee may result in long-term
shareholders paying more than the economic equivalent of the maximum sales
charge permitted under the Conduct Rules of the National Association of
Securities Dealers, Inc. ("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 other
publicly available Pioneer mutual funds. See "How to Exchange Fund Shares."
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 September 30, 1996 appears in the Fund's Annual Report which is
incorporated by reference into 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.
2
<PAGE>
PIONEER II
Selected Data for a Class A Share Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
For the Year Ended September 30,
----------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .... $20.66 $19.38 $20.55 $18.86 $18.22
--------- --------- --------- --------- ---------
Increase (decrease) from
investment operations --
Net investment income ................. $0.23 $0.35 $0.36 $0.38 $0.44
Net realized and unrealized gain (loss)
on investments and other foreign
currency transactions .............. 2.10 3.04 1.05 2.85 1.27
--------- --------- --------- --------- ---------
Total increase (decrease) from
investment operations ............. $2.33 $3.39 $1.41 $3.23 $1.71
Distribution to shareholders from--
Net investment income ............... (0.32) (0.30) (0.33) (0.39) (0.47)
Net realized capital gains .......... (1.73) (1.81) (2.25) (1.15) (0.60)
--------- --------- --------- --------- ---------
Net increase (decrease) in
net asset value ....................... $0.28 $1.28 $(1.17) $1.69 $0.64
--------- --------- --------- --------- ---------
Net asset value, end of period .......... $20.94 $20.66 $19.38 $20.55 $18.86
========= ========= ========= ========= =========
Total return* ........................... 12.18% 19.92% 7.37% 18.15% 9.92%
Ratio of net operating expenses to
average net assets .................... 0.92%** 0.93%** 0.90%+ 0.96%+ 0.94%+
Ratio of net investment income to
average net assets .................... 1.13%** 1.85%** 1.59%+ 1.89%+ 2.31%+
Portfolio turnover rate ................. 66% 63% 68% 66% 64%
Average commission rate paid per
exchange listed transaction ........... $0.0424 -- -- -- --
Net assets, end of period
(in thousands) ........................ 5,431,797 5,114,963 4,509,225 4,347,672 3,974,712
Ratios net of expenses paid through
third party brokerage/service and
certain expense offset arrangements:
Net operating expenses .............. 0.90% 0.91% 0.90% 0.95% 0.93%
Net investment income ............... 1.15% 1.87% 1.59% 1.90% 2.32%
1991 1990 1989 1988 1987
--------- ---------- --------- --------- ----------
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .... $15.35 $21.12 $18.29 $24.09 $18.48
--------- ---------- --------- --------- ----------
Increase (decrease) from
investment operations --
Net investment income ................. $0.52 $0.59 $0.65 $0.54 $0.46
Net realized and unrealized gain (loss)
on investments and other foreign
currency transactions .............. 3.16 (3.81) 3.84 (3.86) 6.67
--------- ---------- --------- --------- ----------
Total increase (decrease) from
investment operations ............. $3.68 $(3.22) $4.49 $(3.32) $7.13
Distribution to shareholders from--
Net investment income ............... (0.55) (0.64) (0.62) (0.48) (0.49)
Net realized capital gains .......... (0.26) (1.91) (1.04) (2.00) (1.03)
--------- ---------- --------- --------- ----------
Net increase (decrease) in
net asset value ....................... $2.87 $(5.77) $2.83 $(5.80) $5.61
--------- ---------- --------- --------- ----------
Net asset value, end of period .......... $18.22 $15.35 $21.12 $18.29 $24.09
========= ========== ========= ========= ==========
Total return* ........................... 24.61% (17.16%) 26.55% (12.04%) 41.37%
Ratio of net operating expenses to
average net assets .................... 0.83% 0.75% 0.77% 0.81% 0.75%
Ratio of net investment income to
average net assets .................... 3.02% 3.18% 3.31% 3.06% 2.18%
Portfolio turnover rate ................. 46% 42% 34% 30% 26%
Average commission rate paid per
exchange listed transaction ........... -- -- -- -- --
Net assets, end of period
(in thousands) ........................ 4,039,234 3,588,735 4,411,923 3,724,615 4,456,459
Ratios net of expenses paid through
third party brokerage/service and
certain expense offset arrangements:
Net operating expenses .............. -- -- -- -- --
Net investment income ............... -- -- -- -- --
</TABLE>
Selected Data for a Class B Share Outstanding Throughout Each Period***:
<TABLE>
<CAPTION>
For the period July 1, 1996
through September 30, 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period ................................................................. $ 20.55
Increase (decrease) from investment operations--
Net investment income/loss ......................................................................... $ (0.01)
Net realized and unrealized gain (loss)
on investments and other foreign currency transactions ............................................. 0.35
Total increase (decrease) from investment operations ............................................... $ 0.34
Net increase (decrease) in net asset value ........................................................... $ 0.34
Net asset value, end of period ....................................................................... $ 20.89
Total return* ........................................................................................ 1.65%
Ratio of net operating expenses to average net assets ................................................ 2.03%++**
Ratio of net investment income (loss) to average net assets .......................................... (0.25)%++**
Portfolio turnover rate .............................................................................. 66%
Average commission rate paid per exchange listed transaction ......................................... $ 0.0424
Net assets, end of period (in thousands) ............................................................. $ 864
Ratios net of expenses paid through third party brokerage/service
and certain expense offset arrangements:
Net operating expenses ........................................................................... 2.02%++
Net investment income (loss) ..................................................................... (0.24)%++
</TABLE>
* Assumes initial investment at net asset value at the beginning of each
year, reinvestment of all distributions, and the complete redemption of the
investment at the net asset value at the end of each year and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Ratios include expenses paid through third party brokerage/service and
certain expense offset arrangements.
*** Class B shares were first publicly offered on July 1, 1996.
+ Ratios for 1994, 1993 and 1992 have been modified to comply with certain
provisions of SEC Release No. 33-7197: Payment for Investment Company
Services with Brokerage Commissions. Ratios of net operating expenses and
net investment income to average net assets prior to 1992 have not been
modified as such.
++ Annualized.
+++ Amount may fluctuate from period to period as a result of portfolio
transactions executed in different markets where trading practices and
commission rate structures may vary.
- ----------
3
<PAGE>
Selected Data for a Class C Share Outstanding Throughout Each Period***:
<TABLE>
<CAPTION>
For the period July 1, 1996
through September 30, 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period ................................................................ $ 20.55
Increase (decrease) from investment operations--
Net investment income (loss) ...................................................................... $ (0.01)
Net realized and unrealized gain (loss)
on investments and other foreign currency transactions ............................................ 0.34
Total increase (decrease) from investment operations .............................................. $ 0.33
Net increase (decrease) in net asset value .......................................................... $ 0.33
Net asset value, end of period ...................................................................... $ 20.88
Total return* ....................................................................................... 1.61%
Ratio of net operating expenses to average net assets ............................................... 2.02%**++
Ratio of net investment income (loss) to average net assets ......................................... (0.15)%**++
Portfolio turnover rate ............................................................................. 66%
Average commission rate paid per exchange listed transaction ........................................ $ 0.0424
Net assets, end of period (in thousands) ............................................................ $ 214
Ratios net of expenses paid through third party brokerage/service
and certain expense offset arrangements:
Net operating expenses .......................................................................... 2.01%++
Net investment income (loss) .................................................................... (0.14)%++
- ----------
</TABLE>
* Assumes initial investment at net asset value at the beginning of each
year, reinvestment of all distributions, and the complete redemption of the
investment at the net asset value at the end of each year and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Ratios include expenses paid through third party brokerage/service and
certain expense offset arrangements.
*** Class C shares were first publicly offered on July 1, 1996. Ratios for
1994, 1993 and 1992 have been modified to comply with certain provisions of
SEC Release No. 33-7197: Payment for Investment Company Services with
Brokerage Commissions.
+ Ratios of net operating expenses and net investment income to average net
assets prior to 1992 have not been modified as such.
++ Annualized.
+++ Amount may fluctuate from period to period as a result of portfolio
transactions executed in different markets where trading practices and
commission rate structures may vary.
----------
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. See
"Financial Highlights" for the Fund's actual turnover rate.
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.
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
4
<PAGE>
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 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
United States ("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.
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
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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.
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 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.
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 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"), an indirect wholly-owned
subsidiary of PGI, is the principal underwriter of shares of the Fund.
Mr. David Tripple, President and Chief Investment Officer of PMC and
Executive Vice President of the Fund, has general responsibility for PMC's
investment operations and chairs a committee of PMC's domestic equity managers
which reviews PMC's research and portfolio operations, including those of the
Fund. Mr. Tripple joined PMC in 1974.
The Fund is covered by a team of portfolio managers and analysts which does
research for and oversees the management of several funds with similar
investment objectives. Members of the team meet regularly to discuss holdings,
prospective investments and portfolio composition.
Day-to-day management of the Fund is the responsibility of Mr. Francis J.
Boggan, a Vice President of the Fund and PMC. Mr. Boggan joined PMC in 1991 and
has 16 years of investment experience.
John F. Cogan, Jr., Chairman and President of the Fund, Chairman of PFD,
President and Director of PGI, and Chairman and Director 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, related to its services for
the Fund with the exception of the following, which are to be paid by the Fund:
(a) charges and expenses for fund accounting, pricing and appraisal services and
related overhead, including to the extent such services are performed by
personnel of PMC or its affiliates, office space and facilities and personnel
compensation, training and benefits; (b) the charges and expenses of auditors;
(c) the charges and expenses of any custodian, transfer agent, plan agent,
dividend disbursing agent and registrar appointed by the Fund 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 Fund who are not affiliated with or interested persons of PMC,
the Fund (other than as Trustees), PGI or PFD; (k) the cost of preparing and
printing share certificates; and (l) interest on borrowed money, if any. In
addition to the expenses described above, the Fund shall pay all brokers' and
underwriting commissions
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chargeable to the Fund in connection with securities transactions to which the
Fund is a party.
Orders for the Fund's portfolio securities transactions are placed by PMC,
which strives to obtain the best price and execution for each transaction. In
circumstances where two or more broker-dealers are in a position to offer
comparable prices and execution, consideration may be given to whether the
broker-dealer provides 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.
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 Fund's Class A shares 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.
The Fund's performance is calculated based on the net asset value per share
of the Fund's Class A shares. For purposes of calculating the performance
adjustment, any dividends or capital gains distributions paid by the Fund are
treated as if reinvested in Class A shares at the net asset value per share as
of the record date for payment. The record for the Index is based on change in
value and is adjusted for any cash distributions from the companies whose
securities comprise the Index.
Because the adjustment to the Basic Fee is based on the comparative
performance of the Fund and the record of the Index, the controlling factor is
not whether Fund performance is up or down, but whether it is up or down more or
less than the record of the Index. Moreover, the comparative investment record
of the Fund is based solely on the relevant performance period without regard to
the cumulative performance over a longer or shorter period of time.
From time to time, the Trustees may determine that another securities index
is a more appropriate benchmark than the Index for purposes of evaluating the
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 this 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 rolls 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, allocated to each Class
of shares proportionate to its average net assets, 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.
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% 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
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shares. Class B shares will automatically convert to Class A shares, based on
relative net asset value, eight years after the initial purchase.
Class C Shares. Class C shares are sold without an initial sales charge,
but are subject to a 1% CDSC if they are redeemed within the first year after
purchase. Class C shares are subject to distribution and service fees at a
combined annual rate of up to 1% of the Fund's average daily net assets
attributable to Class C shares. Your entire investment in Class C shares is
available to work for you from the time you make your investment, but the higher
distribution fee paid by Class C shares will cause your Class C shares to have a
higher expense ratio and to pay lower dividends, to the extent dividends are
paid, than Class A shares. Class C shares have no conversion feature.
Selecting a Class of Shares. The decision as to which Class to purchase
depends on the amount you invest, the intended length of the investment and your
personal situation. If you are making an investment that qualifies for reduced
sales charges, you might consider Class A shares. If you prefer not to pay an
initial sales charge on an investment of $250,000 or less and you plan to hold
the investment for at least six years, you might consider Class B shares. If you
prefer not to pay an initial sales charge and you plan to hold your investment
for one to eight years, you may prefer Class C shares.
Investment dealers or their representatives may receive different
compensation depending on which Class of shares they sell. Shares may be
exchanged only for shares of the same Class of another Pioneer mutual fund and
shares acquired in the exchange will continue to be subject to any CDSC
applicable to the shares of the 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.
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 shares 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 SALES
AGREEMENT WITH PFD. IF YOU DO NOT HAVE A SECURITIES BROKER-DEALER, PLEASE CALL
1-800-225-6292. SHARES WILL BE PURCHASED AT A 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 charges or minimum
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
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elect to deliver purchases to PSC by mail. See "Telephone Transactions and
Related Liabilities" for additional information.
Class A Shares
You may buy Class A shares at the public offering price including a sales
charge, as follows:
Sales Charge as a % of Dealer
------------------------- Allowance
Net as a % of
Offering Amount Offering
Amount of Purchase Price Invested Price
- --------------------- -------- -------- ---------
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.50 4.71 4.00
$100,000 but less than $250,000 3.50 3.63 3.00
$250,000 but less than $500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.75
$1,000,000 or more -0- -0- see
below
The schedule of sales charges above is applicable to purchases of Class A
shares of the Fund by (i) an individual, (ii) an individual and his or her
spouse and children under the age of 21 and (iii) a trustee or other fiduciary
of a trust estate or fiduciary account, or related trusts or accounts, including
pension, profit-sharing and other employee benefit trusts qualified under
Sections 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 the then 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. 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 by certain group plans (described below),
subject to a CDSC of 1% 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 Class A sales with respect to
which orders are placed during a particular period. Dealers to whom
substantially the entire sales charge is reallowed may be deemed to be
underwriters under the federal securities laws.
Qualifying for a Reduced Sales Charge. Class A shares of the Fund may be
sold at a reduced or eliminated sales charge to certain group plans ("Group
Plans") under which a sponsoring organization makes recommendations to, permits
group solicitation of, or otherwise facilitates purchases by, its employees,
members or participants. Class A shares of the Fund may be sold at net asset
value without a sales charge to 401(k) retirement plans with 100 or more
participants or at least $500,000 in plan assets. Information about the above
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 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. 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 company providers to
Program participants and (iv) the Program provides for a matching contribution
for each participant contribution. Class A 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.
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
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<PAGE>
same time. For example, a person who signs an LOI agreeing to purchase $50,000
worth of Class A shares would be charged at the 4.50% sales charge rate with
respect to all purchases during the 13-month period of the LOI. 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 your total purchases minus redemptions during the period are less than
the amount specified in your LOI, you will be required to pay the difference
between the sales charges actually paid and the sales charges that would
otherwise have been applied. Your payment must be made to PFD within 20 days
after PFD or your dealer sends you a written request. If PFD does not receive
the required payment, PFD will direct PSC to liquidate sufficient shares from
your escrow account to cover the amount due and release any excess amount to
you. If your total purchases minus redemptions exceed the amount specified by
the LOI and are in an amount that qualifies for a further quantity discount,
sales charges for transactions made in connection with your LOI will be
recalculated as of the date your LOIexpires to effect the lower rate. Any
difference in the sales charge will be delivered to you in cash or invested in
additional Class A shares at the lower sales charge. In this event, your dealer
agrees to return any excess commissions paid. See the Statement of Additional
Information for more information.
Investors who are clients of a broker-dealer with a current sales agreement
with PFD may purchase Class A shares of the Fund at net asset value, without a
sales charge, to the extent that the purchase price is paid out of proceeds from
one or more redemptions by the investor of shares of certain other mutual funds.
In order for a purchase to qualify for this privilege, the investor must
document to the broker-dealer that the redemption occurred within 60 days
immediately preceding the purchase of Class A shares; that the client paid a
sales charge on the original purchase of the shares redeemed; and that the
mutual fund whose shares were redeemed also offers net asset value purchases to
redeeming shareholders of any of the Pioneer mutual funds. Further details may
be obtained from PFD.
Class B Shares
You may buy Class B shares at the net asset value per share next computed
after receipt of a purchase order without the imposition of an initial sales
charge; however, Class B shares redeemed within six years of purchase will be
subject to a CDSC at the rates shown in the table below. The charge will be
assessed on the amount equal to the lesser of the current market value or the
original purchase cost of the shares being redeemed. No CDSC will be imposed on
increases in account value above the initial purchase price, including shares
derived from the reinvestment of dividends or capital gains distributions.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of purchase until the time of redemption of Class B shares. For
the purpose of determining the number of years from the time of any purchase,
all payments during a quarter will be aggregated and deemed to have been made on
the first day of that quarter. In processing redemptions of Class B shares, the
Fund will first redeem shares not subject to any CDSC, and then shares held
longest during the six-year period. As a result, you will pay the lowest
possible CDSC.
The CDSC for Class B shares subject to a CDSC upon redemption will be
determined as follows: Year Since
CDSC as a Percentage of Dollar
Purchase Amount Subject to CDSC
- ----------- -----------------------------------
First 4.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter none
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class B shares, including the payment of
compensation to broker-dealers.
Class B shares will automatically convert into Class A shares at the end of
the calendar quarter that is eight years after the purchase date, except as
noted below. Class B shares acquired by exchange from Class B shares of another
Pioneer mutual fund will convert into Class A shares based on the date of the
initial purchase and the applicable CDSC. 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") which the Fund has obtained, or an opinion of
counsel that such conversions will not constitute taxable events for federal tax
purposes. There can be no assurance that such ruling will continue to be in
effect at the time any particular conversion would normally occur. The
conversion of Class B shares to Class A shares will not occur if such ruling is
not available and, therefore, Class B shares would continue to be subject to
higher expenses than Class A shares for an indeterminate period.
Class C Shares
You may buy Class C shares at the net asset value per share next computed
after receipt of a purchase order without the imposition of an initial sales
charge; however, Class C shares redeemed within one year of purchase will be
subject to a CDSC of 1%. The charge will be assessed on the amount equal to the
lesser of the current market value or the original purchase cost of the shares
being redeemed. No CDSC will be imposed on increases in account value above the
initial purchase price, including shares derived from the reinvestment of
dividends or capital gains distributions. Class C shares do not convert to any
other Class of Fund shares.
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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 70-1/2 may exceed the 10% limit only if the distribution amount is based
on plan assets held by Pioneer); (c) the distribution is from a 401(a) or 401(k)
retirement plan and is a return of excess employee deferrals or employee
contributions or a qualifying hardship distribution as defined by the Code or
results from a termination of employment (limited with respect to a termination
to 10% per year of the value of the plan's assets in the Fund as of the later of
the prior December 31 or the date the account was established unless the plan's
assets are being rolled over to or reinvested in the same class of shares of a
Pioneer mutual fund subject to the CDSC of the shares originally held); (d) the
distribution is from an IRA, 403(b) or employer-sponsored retirement plan and is
to be rolled over to or reinvested in the same class of shares in a Pioneer
mutual fund and which will be subject to the applicable CDSC upon redemption;
(e) the distribution is in the form of a loan to a participant in a plan which
permits loans (each repayment of the loan will constitute a new sale which will
be subject to the applicable CDSC upon redemption); or (f) the distribution is
from a qualified defined contribution plan and represents a participant's
directed transfer (provided that this privilege has been pre-authorized through
a prior agreement with PFD regarding participant directed transfers).
The CDSC on 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 Class B and Class C shares and on any Class A 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. 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 prior to PFD's close of business (usually, 5:30 p.m. Eastern
Time). It is the responsibility of broker-dealers to transmit orders so that
they will be received by PFD prior to PFD's close of business. 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:
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o If you are selling shares from a retirement account, other than an
IRA, you must make your request in writing (exceptfor exchanges to
other Pioneer mutual funds which can be requested by phone or in
writing). Call 1-800-622- 0176 for more information.
o If you are selling shares from a non-retirement or IRA account, 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 applies:
o you wish to sell over $50,000 worth of shares,
o your account registration or address has changed within the last 30
days,
o the check is not being mailed to the address on your account (address
of record),
o the check is not being made out to the account owners, or
o the sale proceeds are being transferred to a Pioneer mutual fund
account with a different registration.
Your request should include your name, the Fund's name, your fund account
number, the Class of shares to be redeemed, the dollar amount or number of
shares to be redeemed, and any other applicable requirements as described below.
Unless instructed otherwise, PSC will send the proceeds of the sale to the
address of record. Fiduciaries and corporations are required to submit
additional documents. For more information, contact PSC at 1- 800-225-6292.
Written requests will not be processed until they are received in good
order by PSC. Good order means that there are no outstanding claims or requests
to hold redemptions on the account and any certificates are endorsed by the
record owner(s) exactly as the shares are registered and the signature(s) are
guaranteed by an eligible guarantor. You should be able to obtain a signature
guarantee from a bank, broker, dealer, credit union (if authorized under state
law), securities exchange or association, clearing agency or savings
association. A notary public cannot provide a signature guarantee. Signature
guarantees are not accepted by facsimile ("fax"). For additional information
about the necessary documentation for redemption by mail, please contact PSC at
1- 800-225-6292.
By Telephone or 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. A maximum of $50,000 per account per day may be
redeemed by telephone or fax and the proceeds may be received by check or by
bank wire or electronic funds transfer. To receive the proceeds by check: the
check must be made payable exactly as the account is registered and the check
must be sent to the address of record which must not have changed in the last 30
days. To receive the proceeds by bank wire or by electronic funds transfer: the
proceeds must be sent to your bank wire address of record which must have been
properly predesignated either on your Account Application or on an Account
Options Form and which must not have changed in the last 30 days. To redeem by
fax, send your redemption request to 1-800-225-4240. You may always elect to
deliver redemption instructions to PSC by mail. See "Telephone Transactions and
Related Liabilities" below. Telephone 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 million or more,
or by participants in a Group Plan which were not subject to an initial sales
charge, may be subject to a CDSC upon redemption. A CDSC is payable to PFD on
these investments in the event of a share redemption within 12 months following
the share purchase, at the rate of 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividend and capital gain distributions) or
the total cost of such shares. Shares subject to the CDSC which are exchanged
into another Pioneer mutual fund will continue to be subject to the CDSC until
the original 12-month period expires. However, no CDSC is payable 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
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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 Fund
out of which you wish to exchange and the name of the Pioneer mutual fund into
which you wish to exchange, your fund account number(s), the Class of shares to
be exchanged and the dollar amount or number of shares to be exchanged. Written
exchange requests must be signed by all record owner(s) exactly as the shares
are registered.
Telephone Exchanges. Your account is automatically authorized to have the
telephone exchange privilege unless you indicate otherwise on your Account
Application or by writing to PSC. Proper account identification will be required
for each telephone exchange. Telephone exchanges may not exceed $500,000 per
account per day. Each telephone exchange request, whether by voice or by
FactFoneSM, will be recorded. YOU ARE STRONGLY URGED TO CONSULT WITH YOUR
FINANCIAL REPRESENTATIVE PRIOR TO REQUESTING A TELEPHONE EXCHANGE. See
"Telephone Transactions and Related Liabilities" below.
Automatic Exchanges. You may automatically exchange shares from one Pioneer
mutual fund account for shares of the same Class in another Pioneer mutual fund
account on a monthly or quarterly basis. The accounts must have identical
registrations and the originating account must have a minimum balance of $5,000.
The exchange will be effective on the day of the month designated on your
Account Application or Account Options Form.
General. Exchanges must be at least $1,000. You may exchange your
investment from one Class of Fund shares at net asset value, without a sales
charge, for shares of the same Class of any other Pioneer mutual fund. Not all
Pioneer mutual funds offer more than one Class of shares and certain funds may
be closed to new investments. 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 a Plan of Distribution for each Class of shares (the "Class A
Plan," the "Class B Plan" and the "Class C Plan") adopted 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. 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
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
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exceed 0.25% of the Fund's average daily net 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 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 a rate up to 0.25%
of the purchase price of such shares and, as compensation therefore, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Commencing in the 13th month following the purchase
of Class B shares, dealers will become eligible for additional annual service
fees of up to 0.25% of the net asset value of such shares.
Commissions of up to 1% of the amount invested in Class C shares,
consisting of 0.75% of the amount invested and a first year's service fee of
0.25% of the amount invested, are paid to broker-dealers who have 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
therefore, PFD may retain the service fee paid by the Fund with respect to such
shares for the first year after purchase. Commencing in the 13th month following
the purchase of Class C shares, dealers will become eligible for additional
annual distribution fees and services fees of up to 0.75% and 0.25%,
respectively, of the 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, twice each year during the months of June and December and to
distribute 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, certain
net foreign exchange gains, and net short-term capital 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 dividends are taxable as described above
whether a shareholder takes them in cash or reinvests them in additional shares
of the Fund. Information as to the federal tax status of dividends and
distributions will be provided to shareholders annually. For further information
on the distribution options available to shareholders, see "Distribution
Options" and "Directed Dividends" below.
Distributions by the Fund of the dividend income it receives from U.S.
domestic corporations 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, if any, 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 the Fund receives notice from the IRS or a
broker that such withholding applies. Please refer to the Account Application
for additional information.
The description above relates only to U.S. federal income tax consequences
for shareholders who are U.S. persons, i.e., U.S. citizens or residents or U.S.
corporations, partnerships, trusts or estates, and who are subject to U.S.
federal income tax. Non-U.S. shareholders and tax-exempt shareholders are
subject to different tax treatment that is not described above. Shareholders
should
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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 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, except
Automatic Investment Plan transactions which are confirmed quarterly. The
Pioneer Combined Account Statement, mailed quarterly, is available to all
shareholders who have more than one Pioneer mutual fund account.
Shareholders whose shares are held in the name of an investment
broker-dealer or other party will not normally have an account with the Fund and
might not be able to utilize some of the services available to shareholders of
record. Examples of services which might not be available are purchases,
exchanges or redemption of shares by mail or telephone, automatic reinvestment
of dividends and capital gains distributions, withdrawal plans, Letters of
Intention, 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 Class 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 also arrange for regular 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 at any time 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 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.
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 United States 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 Fund).
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.
Voluntary Tax Withholding
You may request (in writing) that PSC withhold 28% of the dividends and
capital gains distributions paid from your account (before any reinvestment) and
forward the amount withheld to the IRS as a credit against your federal income
taxes. This option is not available for retirement plan accounts or for accounts
subject to backup withholding.
Telephone Transactions and Related Liabilities
Your account is automatically authorized to have telephone transaction
privileges unless you indicate otherwise on your Account Application or by
writing to PSC. You may purchase, sell or exchange Fund shares by telephone. See
"How to Buy Fund Shares," "How to Sell Fund Shares" and "How to Exchange 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 "FactFoneSM"). You are strongly urged to consult with your
financial representative prior to requesting any telephone transaction.
15
<PAGE>
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 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.
FactFoneSM
FactFoneSM is an automated inquiry and telephone transaction system
available to Pioneer shareholders by dialing 1-800-225-4321. FactFoneSM 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 FactFoneSM 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 FactFoneSM. See "How
to Buy Fund Shares," "How to Exchange Fund Shares," "How to Sell Fund Shares"
and "Telephone Transactions and Related Liabilities." Call PSC for assistance.
Retirement Plans
You should contact the Retirement Plans Department of PSC at 1-800-622-0176
for information relating to retirement plans for business, Simplified Employee
Pension 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.
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.
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 C share accounts are limited to 10% of
the value of the account at the time the SWP is implemented. See "Waiver or
Reduction of Contingent Deferred Sales Charge." Periodic checks of $50 or more
will be sent to you, or any person designated by you, monthly or quarterly and
your periodic redemptions of shares may be taxable to you. Payments can be made
either by check or electronic transfer to a bank account designated by you. If
you direct that withdrawal checks be paid to another person after you have
opened your account, a signature guarantee must accompany your instructions.
Purchases of Class A shares of the Fund at a time when you have a SWP in effect
may result in the payment of unnecessary sales charges and may therefore be
disadvantageous.
You may obtain additional information by calling PSC at 1-800-225-6292 or
by referring to the Statement of Additional Information.
Reinstatement Privilege (Class A Shares Only)
If you redeem all or part of your Class A shares of the Fund you may
reinvest all or part of the redemption proceeds without a sales charge in Class
A shares of the Fund if you send a written request to PSC not more than 90 days
after your shares were redeemed. Your redemption proceeds will be reinvested at
the next determined net asset value of the Class A shares of the Fund in effect
immediately after receipt of the written request for reinstatement. You may
realize a gain or loss for federal income tax purposes as a result of the
redemption, and special tax rules may apply if a reinstatement occurs. In
addition, if a redemption resulted in a loss and an investment is made in shares
of the Fund within 30 days before or after the redemption, you may not be able
to recognize the loss for federal income tax purposes. Subject to the provisions
outlined under "How to Exchange Fund Shares" above, you may also reinvest in
Class A shares of any other Pioneer mutual fund; 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.
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 Massachusetts
corporation on March 18, 1969, and reorganized as a Massachusetts business trust
on February 15, 1985 and 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,
16
<PAGE>
less any applicable CDSC. See "How to Sell Fund Shares." The Fund is not
required, and does not intend 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.
The Fund reserves the right to create and issue additional series of
shares. The Trustees have the authority, without further shareowner approval, to
classify and reclassify the shares of the Fund, or any additional series of the
Fund, into one or more classes. As of the date of this Prospectus, the Trustees
have authorized the issuance of 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 shareowner of the Fund may bring a derivative action on
behalf of the Fund only if the following conditions are met: (a) shareholders
eligible to bring such derivative action under Delaware law who hold at least
10% of the outstanding shares of the Fund, or 10% of the outstanding shares of
the series or class to which such action relates, shall join in the request for
the Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such 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.
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.
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.
17
<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
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
18
<PAGE>
NOTES
19
<PAGE>
[LOGO] PIONEER
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 LLP
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Mass. 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
FactFoneSM
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
0197-3899
(c)Pioneer Funds Distributor, Inc.
<PAGE>
PIONEER II
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
STATEMENT OF ADDITIONAL INFORMATION
Class A, Class B and Class C Shares
JANUARY 28, 1997
This Statement of Additional Information is not a Prospectus, but should be read
in conjunction with the Prospectus (the "Prospectus") dated January 28, 1997 of
Pioneer II (the "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 the
Fund at 60 State Street, Boston, Massachusetts 02109. The most recent Annual
Report to Shareholders is attached to this Statement of Additional Information
and is hereby incorporated in this Statement of Additional Information by
reference.
TABLE OF CONTENTS
Page
1. Investment Policies and Restrictions................................ 2
2. Management of the Fund..............................................10
3. Investment Adviser..................................................14
4. Shareholder Servicing/Transfer Agent................................17
5. Custodian...........................................................17
6. Principal Underwriter...............................................18
7. Distribution Plans..................................................18
8. Independent Public Accountants......................................21
9. Portfolio Transactions..............................................21
10. Tax Status..........................................................22
11. Description of Shares...............................................27
12. Certain Liabilities.................................................28
13. Determination of Net Asset Value....................................29
14. Systematic Withdrawal Plan..........................................29
15. Letter of Intention.................................................30
16. Investment Results..................................................30
17. Financial Statements................................................34
Appendix A..........................................................35
Appendix B..........................................................52
--------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A
PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
<PAGE>
1. INVESTMENT POLICIES AND RESTRICTIONS
The Fund's current prospectus (the "Prospectus") presents the investment
objectives 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.
SECURITIES INDEX OPTIONS
The Fund may purchase call and put options on securities indices for the purpose
of hedging against the risk of unfavorable price movements adversely affecting
the value of the Fund's securities or securities the Fund intends to buy.
Securities index options will not be used for speculative purposes.
Currently, options on stock indices are traded only on national securities
exchanges. A securities index fluctuates with changes in the market values of
the securities included in the index. For example, some stock index options are
based on a broad market index such as the S&P 500 or the Value Line Composite
Index, or a narrower market index such as the S&P 100. Indices may also be based
on an industry or market segment such as the AMEX Oil and Gas Index or the
Computer and Business Equipment Index. Options on stock indices are currently
traded on the Chicago Board Options Exchange, the New York Stock Exchange and
the American Stock Exchange.
The Fund may purchase put options on securities indices in order to hedge
against an anticipated decline in securities prices that might adversely affect
the value of the Fund's portfolio securities. If the Fund purchases a put option
on a securities index, the amount of the payment it would receive upon
exercising the option would depend on the extent of any decline in the level of
the securities index below the exercise price. Such payments would tend to
offset a decline in the value of the Fund's portfolio securities. However, if
the level of the securities index increases and remains above the exercise price
while the put option is outstanding, the Fund will not be able to profitably
exercise the option and will lose the amount of the premium and any transaction
costs. Such loss may be partially offset by an increase in the value of the
Fund's portfolio securities.
The Fund may purchase call options on securities indices in order to remain
fully invested in the stock market or to lock in a favorable price on securities
that it intends to buy in the future. If the Fund purchases a call option on a
securities index, the amount of the payment it receives upon
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<PAGE>
exercising the option depends on the extent of any increase in the level of the
securities index above the exercise price. Such payments would in effect allow
the Fund to benefit from securities market appreciation even though it may not
have had sufficient cash to purchase the underlying securities. Such payments
may also offset increases in the price of securities that the Fund intends to
purchase. If, however, the level of the securities index declines and remains
below the exercise price while the call option is outstanding, the Fund will not
be able to exercise the option profitably and will lose the amount of the
premium and transaction costs. Such loss may be partially offset by a reduction
in the price the Fund pays to buy additional securities for its portfolio.
The Fund may sell the securities index option it has purchased or write a
similar offsetting securities index option in order to close out a position in a
securities index option which it has purchased. These closing sale transactions
enable the Fund immediately to realize gains or minimize losses on its options
positions. All securities index options purchased by the Fund will be listed and
traded on an exchange. However, there is no assurance that a liquid secondary
market on an options exchange will exist for any particular option, or at any
particular time, and for some options no secondary market may exist. In
addition, securities index prices may be distorted by interruptions in the
trading of securities of certain companies or of issuers in certain industries,
or by restrictions that may be imposed by an exchange on opening or closing
transactions, or both, which could disrupt trading in options on such indices
and preclude the Fund from closing out its options positions. If the Fund is
unable to effect a closing sale transaction with respect to options that it has
purchased, it would have to exercise the options in order to realize any profit.
The hours of trading for options may not conform to the hours during which the
underlying securities are traded. To the extent that the options markets close
before the markets for the underlying securities, significant price and rate
movements can take place in the underlying markets that cannot be reflected in
the options markets. The purchase of options is a highly specialized activity
which involves investment techniques and risks different from those associated
with ordinary portfolio securities transactions. Personnel of the Fund's
investment adviser have considerable experience in options transactions.
In addition to the risks of imperfect correlation between the Fund's portfolio
and the index underlying the option, the purchase of securities index options
involves the risk that the premium and transaction costs paid by the Fund in
purchasing an option will be lost. This could occur as a result of unanticipated
movements in prices of the securities comprising the securities index on which
the option is based.
INVESTMENTS IN EMERGING MARKETS
The Fund may invest up to 5% of its net assets in securities of issuers located
in countries with emerging economies or securities markets. Countries with
emerging economies or securities markets include among others: Algeria,
Argentina, Australia, Bangladesh, Brazil, Bulgaria, Chile, China, Columbia,
Czech Republic, Ecuador, Egypt, Ghana, Greece, Hong Kong, Hungary, India,
Indonesia, Israel, Jamaica, Jordan, Kenya, Korea, Kuwait, Malaysia, Mexico,
Morocco,
-3-
<PAGE>
Nigeria, Pakistan, Peru, the Philippines, Poland, Portugal, Russia, South
Africa, South Korea, Sri Lanka, Taiwan, Thailand, Turkey, Venezuela and
Zimbabwe. Political and economic structures in many of such countries may be
undergoing significant evolution and rapid development, and such countries may
lack the social, political and economic stability characteristic of more
developed countries. As a result, the risks associated with foreign markets
which are described in the Prospectus under the caption "Investment Objectives
and Policies," including the risks of nationalization or expropriation of
assets, may be heightened. In addition, unanticipated political or social
developments may affect the values of the Fund's investments and the
availability to the Fund of additional investments in such countries. The small
size and inexperience of the securities markets in certain of such countries and
the limited volume of trading in securities in those countries may make the
Fund's investments in such countries less liquid and more volatile than
investments in countries with more developed securities markets (such as Japan
or most Western European countries).
FORWARD FOREIGN CURRENCY TRANSACTIONS
The foreign currency transactions of the Fund may be conducted on a spot (i.e.,
cash) basis at the spot rate for purchasing or selling currency prevailing in
the foreign exchange market. The Fund also has authority to purchase and/or
write forward foreign currency exchange contracts involving currencies of the
different countries in which it will invest as a hedge against possible
variations in the foreign exchange rates between these currencies and the U.S.
Dollar. This is accomplished through contractual agreements to purchase or sell
a specified currency at a specified future date and price set at the time of the
contract. The Fund's transactions in forward foreign currency contracts will be
limited to hedging either specific transactions or portfolio positions.
Transaction hedging is the purchase or sale of forward foreign currency
contracts with respect to specific receivables or payables of the Fund accruing
in connection with the purchase and sale of its portfolio securities denominated
in foreign currencies. Portfolio hedging is the use of forward foreign currency
contracts to offset portfolio security positions denominated or quoted in such
foreign currencies. There is no guarantee that the Fund will be engaged in
hedging activities when adverse exchange rate movements occur. The Fund will not
attempt to hedge all of its foreign portfolio positions and will enter into such
transactions only to the extent, if any, deemed appropriate by the Fund's
investment adviser. The Fund will not enter into speculative forward foreign
currency contracts.
If the Fund enters into a forward contract to purchase foreign currency, its
custodian bank will segregate cash or high grade liquid debt securities in a
separate account of the Fund in an amount equal to the value of the Fund's total
assets committed to the consummation of such forward contract. Those assets will
be valued at market daily and if the value of the assets in the separate account
declines, additional cash or securities will be placed in the account so that
the value of the account will equal the amount of the Fund's commitment with
respect to such contracts.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions limit the opportunity for
gain if the value of the hedged currency should rise. Moreover, it may not be
possible for the Fund to hedge against a devaluation that is so generally
anticipated that
-4-
<PAGE>
the Fund is not able to contract to sell the currency at a price above the
devaluation level it anticipates.
The cost to the Fund of engaging in foreign currency transactions varies with
such factors as the currency involved, the size of the contract, the length of
the contract period and the market conditions then prevailing. Since
transactions in foreign currency and forward contracts are usually conducted on
a principal basis, no fees or commissions are involved. The Fund may close out a
forward position in a currency by selling the forward contract or entering into
an offsetting forward contract.
OPTIONS ON FOREIGN CURRENCIES
The Fund may purchase and write options on foreign currencies for hedging
purposes in a manner similar to that of transactions in forward contracts. For
example, a decline in the dollar value of a foreign currency in which portfolio
securities are denominated will reduce the dollar value of such securities, even
if their value in the foreign currency remains constant. In order to protect
against such decreases in the value of portfolio securities, the Fund may
purchase put options on the foreign currency. If the value of the currency
declines, the Fund will have the right to sell such currency for a fixed amount
of dollars which exceeds the market value of such currency. This would result in
a gain that may offset, in whole or in part, the negative effect of currency
depreciation on the value of the Fund's securities denominated in that currency.
Conversely, if a rise in the dollar value of a currency is projected for those
securities to be acquired, thereby increasing the cost of such securities, the
Fund may purchase call options on such currency. If the value of such currency
increases, the purchase of such call options would enable the Fund to purchase
currency for a fixed amount of dollars which is less than the market value of
such currency. Such a purchase would result in a gain that may offset, at least
partially, the effect of any currency related increase in the price of
securities the Fund intends to acquire. As in the case of other types of options
transactions, however, the benefit the Fund derives from purchasing foreign
currency options will be reduced by the amount of the premium and related
transaction costs. In addition, if currency exchange rates do not move in the
direction or to the extent anticipated, the Fund could sustain losses on
transactions in foreign currency options which would deprive it of a portion or
all of the benefits of advantageous changes in such rates.
The Fund may also write options on foreign currencies for hedging purposes. For
example, if the Fund anticipates a decline in the dollar value of foreign
currency denominated securities because of declining exchange rates, it may,
instead of purchasing a put option, write a covered call option on the relevant
currency. If the expected decline occurs, the option will most likely not be
exercised, and the decrease in value of portfolio securities will be offset by
the amount of the premium received by the Fund.
Similarly, the Fund could write a put option on the relevant currency, instead
of purchasing a call option, to hedge against an anticipated increase in the
dollar cost of securities to be acquired. If exchange rates move in the manner
projected, the put option will expire unexercised allowing the Fund to offset
such increased cost up to the amount of the premium. However, as in the case of
-5-
<PAGE>
other types of options transactions, the writing of a foreign currency option
will constitute only a partial hedge up to the amount of the premium, only if
rates move in the expected direction. If unanticipated exchange rate
fluctuations occur, the option may be exercised and the Fund would be required
to purchase or sell the underlying currency at a loss which may not be fully
offset by the amount of the premium. As a result of writing options on foreign
currencies, the Fund also may be required to forego all or a portion of the
benefits which might otherwise have been obtained from favorable movements in
currency exchange rates.
A call option written on foreign currency by the Fund is "covered" if the Fund
owns the underlying foreign currency subject to the call, or if it has an
absolute and immediate right to acquire that foreign currency without additional
cash consideration. A call option is also covered if the Fund holds a call on
the same foreign currency for the same principal amount as the call written
where the exercise price of the call held is (a) equal to or less than the
exercise price of the call written or (b) greater than the exercise price of the
call written if the amount of the difference is maintained by the Fund in cash
and high grade liquid debt securities in a segregated account with its
custodian.
The Fund may close out its position in a currency option by either selling the
option it has purchased or entering into an offsetting option.
LENDING OF PORTFOLIO SECURITIES
The Fund may lend portfolio securities to member firms of the New York Stock
Exchange, under agreements which would require that the loans be secured
continuously by collateral in cash, cash equivalents or United States ("U.S.")
Treasury Bills maintained on a current basis at an amount at least equal to the
market value of the securities loaned. The Fund would continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities
loaned as well as the benefit of any increase in the market value of the
securities loaned and would also receive compensation based on investment of the
collateral. The Fund would not, however, have the right to vote any securities
having voting rights during the existence of the loan, but would call the loan
in anticipation of an important vote to be taken among holders of the securities
or of the giving or withholding of their consent on a material matter affecting
the investment.
As with other extensions of credit there are risks of delay in recovery or even
loss of rights in the collateral should the borrower of the securities fail
financially. The Fund will only lend portfolio securities to firms which have
been approved in advance by the Fund's Board of Trustees, which will monitor the
creditworthiness of any such firms. At no time would the value of the securities
loaned 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
the Fund's net assets and, while it reserves the right to do so, the Fund has no
present intention of lending portfolio securities with any such value during the
coming year.
-6-
<PAGE>
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 Investment Company Act of 1940, as amended (the "1940 Act") of the Fund's
outstanding voting securities. The Fund may not:
(1)......Issue senior securities, except as permitted by the Fund's
borrowing, lending and commodity restrictions, and for purposes of this
restriction, the issuance of shares of beneficial interest in multiple classes
or series, the purchase or sale of options, futures contracts and options on
futures contracts, forward commitments, forward foreign exchange contracts,
repurchase agreements, fully covered reverse repurchase agreements, dollar
rolls, swaps and any other financial transaction entered into pursuant to the
Fund's investment policies as described in the Prospectus and this Statement of
Additional Information and in accordance with applicable SEC pronouncements, as
well as the pledge, mortgage or hypothecation of the Fund's assets within the
meaning of the Fund's fundamental investment restriction regarding pledging, are
not deemed to be senior securities.
(2)......Borrow money, except from banks as a temporary measure to
facilitate the meeting of redemption requests or for extraordinary or emergency
purposes and except pursuant to reverse repurchase agreements or dollar rolls,
in all cases in amounts not exceeding 10% of the Fund's total assets (including
the amount borrowed) taken at market value.
(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 be 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.
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(8)......Invest in real estate, commodities or commodity contracts,
except that the Fund may invest in financial futures contracts and related
options and in any other financial instruments which may be deemed to be
commodities or commodity contracts in which the Fund is not prohibited from
investing by the Commodity Exchange Act and the rules and regulations
thereunder.
(9)......Purchase securities on "margin" or effect " short sales" of
securities.
(10).....Purchase securities for the purpose of controlling management
of other companies.
(11).....Acquire the securities of any other domestic or foreign
investment company or investment fund (except in connection with a plan of
merger or consolidation with or acquisition of substantially all the assets of
such other investment company); provided, however, that nothing herein contained
shall prevent the Fund from investing in the securities issued by a real estate
investment trust, provided that such trust shall not be permitted to invest in
real estate or interests in real estate other than mortgages or other security
interests.
It is the fundamental policy of the Fund not to concentrate its investments in
securities of companies in any particular industry. In the opinion of the
Securities and Exchange Commission (the "SEC"), investments are concentrated in
a particular industry if such investments aggregate 25% or more of the Fund's
total assets. The Fund's policy does not apply to investments in U.S. government
securities.
The Fund currently does not intend to borrow money from banks, 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 current fiscal
year.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS.
The following restrictions have been designated as non-fundamental and may be
changed by a vote of the Fund's Board of Trustees without approval of
shareholders.
The Fund may not:
(1)......purchase or retain the securities of any company if those
officers and Trustees of the Fund, or its adviser or principal underwriter,
owning individually more than one-half of 1% of the securities of such company,
together own more than 5% of the securities of such company; or
(2)......invest no more than 15% of its net assets in the aggregate of
(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
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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.
In addition, in connection with the offering of its shares in various
states and foreign countries, the Fund has agreed not to: (1) invest in puts,
calls, straddles, spreads, or any combination thereof other than the purchase
and sale of put and call options on currencies and the purchase of put and call
options on securities indices, or in oil, gas or other mineral leases or
exploration or development programs; (2) invest more than 5% of its total assets
in equity securities of any issuer which are not readily marketable, i.e.,
securities for which a bona fide market does not exist at the time of purchase
or subsequent valuation; (3) pledge, mortgage, hypothecate or otherwise encumber
its assets; (4) invest more than 5% of its total assets in warrants, valued at
the lower of cost or market, or more than 2% of its total assets in warrants, so
valued, which are not listed on either the New York or American Stock Exchanges;
and (5) invest in real estate limited partnerships. These restrictions may not
be changed without the approval of the regulatory agencies in such states or
foreign countries.
OTHER POLICIES AND RISKS
The Fund expects that its investments in foreign securities will range from 10%
to 25% of its assets. However, the Fund reserves the right to reduce or
eliminate its holdings of foreign securities whenever management believes such
action to be in the best interests of the shareholders.
The Fund is managed by Pioneering Management Corporation ("PMC") which also
serves as investment adviser to other Pioneer mutual funds and private accounts
with investment objectives identical or similar to those of the Fund. Securities
frequently meet the investment objectives of the Fund, the other Pioneer mutual
funds and such private accounts. In such cases, the decision to recommend a
purchase to one fund or account rather than another is based on a number of
factors. The determining factors in most cases are the amount of securities of
the issuer then outstanding, the value of those securities and the market for
them. Other factors considered in the investment recommendations include other
investments which each fund presently has in a particular industry and the
availability of investment funds in each fund or account.
It is possible that at times identical securities will be held by more than one
fund and/or account. However, positions in the same issue may vary and the
length of time that any fund or account may choose to hold its investment in the
same issue may likewise vary. To the extent that more than one of the Pioneer
mutual funds 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 fund or account, the resulting
participation in volume
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transactions could produce better executions for the Fund. In the event more
than one account purchases or sells the same security on a given date, the
purchases and sales will normally be made as nearly as practicable on a pro rata
basis in proportion to the amounts desired to be purchased or sold by each.
Although the other Pioneer mutual funds may have the same or similar 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 those of the Fund.
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 or the equivalent. Debt securities rated "BBB" may have speculative
characteristics and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments. Debt securities rated lower than "BBB" are speculative investments and
the yields on these bonds will fluctuate over time. If the rating of a debt
security is reduced below investment grade ("BBB"), PMC will consider whatever
action is appropriate, consistent with the Fund's investment objectives and
policies.
2. MANAGEMENT OF THE FUND
The Fund's Board of Trustees provides broad supervision over the affairs of the
Fund. The officers of the Fund are responsible for the Fund's operations. The
Trustees and executive officers of the Fund are listed below, together with
their principal occupations during the past five years. An asterisk indicates
those Trustees who are interested persons of the Fund within the meaning of the
1940 Act.
JOHN F. COGAN, JR.*, CHAIRMAN OF THE BOARD, PRESIDENT AND TRUSTEE, DOB: JUNE
1926
President, Chief Executive Officer and a Director of The Pioneer Group, Inc.
("PGI"); Chairman and a Director of 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"), 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
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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, between 1991 and 1994;
Professor of Operations Management and Management of Technology, Boston
University School of Management ("BUSM"), between 1989 and 1993 and Trustee of
all of the Pioneer mutual funds except Pioneer Variable Contracts Trust.
JOHN W. KENDRICK, TRUSTEE, DOB: JULY 1917
6363 Waterway Drive, Falls Church, VA 22044
Professor Emeritus and Adjunct Scholar, George Washington University; Economic
Consultant and Director, American Productivity and Quality Center; American
Enterprise Institute and Trustee of all of the Pioneer mutual funds, except
Pioneer Variable Contracts Trust.
MARGUERITE A. PIRET, TRUSTEE, DOB: MAY 1948
One Boston Place, Suite 2635, Boston, MA 02108
President, Newbury, Piret & Company, Inc. (merchant banking firm) and Trustee of
all of the Pioneer mutual funds.
DAVID D. TRIPPLE*, TRUSTEE AND EXECUTIVE VICE PRESIDENT, DOB: FEBRUARY 1944
Executive Vice President and a Director of PGI; President, Chief Investment
Officer and a Director of PMC, Director of PFD, PCC, PIC, PIntl, First Russia,
Omega and Pioneer SBIC Corporation and Executive Vice President and Trustee of
all of the Pioneer mutual funds.
STEPHEN K. WEST, TRUSTEE, DOB: SEPTEMBER 1928
125 Broad Street, New York, New York 10004
Partner, Sullivan & Cromwell (law firm); Trustee, The Winthrop Focus Funds
(mutual funds) and Trustee of all of the Pioneer mutual funds except Pioneer
Variable Contracts Trust.
JOHN WINTHROP, TRUSTEE, DOB: JUNE 1936
One North Adgers Wharf, Charleston, South Carolina 29401
President, John Winthrop & Co., Inc. (a 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.
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WILLIAM H. KEOUGH, TREASURER, DOB: APRIL 1937
Senior Vice President, Chief Financial Officer and Treasurer of PGI and
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 and Compliance of PMC since May 1994, Manager of
Auditing, Compliance and Business Analysis for PGI prior to May 1994 and
Assistant Treasurer of all of the Pioneer mutual funds.
ROBERT P. NAULT, ASSISTANT SECRETARY, DOB: MARCH 1964
General Counsel and Assistant Secretary of PGI since 1995; Assistant Secretary
of PMC, PIntl, PGL, First Russia, Omega and all of the Pioneer mutual funds;
Assistant Clerk of PFD and PSC and formerly of Hale and Dorr LLP (counsel to the
Fund) where he most recently served as junior partner; and Assistant Secretary
of all of the Pioneer mutual funds since 1995.
FRANCIS J. BOGGAN, VICE PRESIDENT, DOB: JULY 1957
Vice President of PMC.
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 private
accounts.
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
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Pioneer Capital Growth Fund PMC PFD
Pioneer Mid-Cap Fund PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer 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 1
Pioneer Variable Contracts Trust PMC 2
1 This fund is a closed-end fund.
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.
PMC, the Fund's investment adviser, also manages the investments of certain
institutional private 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, in the
aggregate, less than 1% of the outstanding securities of the Fund. As of
December 31, 1996, to the knowledge of the Fund, no person owned more than 5% of
the outstanding Class A or Class B shares of the Fund. As of December 31, 1996,
the following persons or entities owned more than 5% of the Fund's outstanding
Class C shares: PFD, 17.90% (3,997.107 shares) Gertrude E. Bobes (403(b)), 600
Cranhill Drive, Brookdale Farms, Wilmington, DE 14.19% (3,169.723 shares);
Steven J. Davidson, 8060 Spencer Way, Pasadena, TX 11.23% (2,507.703 shares);
ITS Customers, Mutual Fund Administration, Third Floor, Jacksonville, FL 9.33%
(2,084 shares); North Harris College (Optional Retirement Program), 7.81%
(1,743.618 shares); and Robert D. McGlashen, Jr. 406 Cluster Avenue, Glen Olden,
PA 6.87% (1,533.903 shares).
Compensation of Officers and Trustees
The Fund pays no salaries or compensation to any of its officers, however, the
Fund pays an annual trustees' fee to each Trustee who is not affiliated with
PGI, PMC, PFD or PSC consisting of two components: (a) a base fee of $500 and
(b) a variable fee, calculated on the basis of the average net assets of the
Fund. In addition, the Fund will pay a per meeting fee of $100 to each
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Trustee who is not affiliated with PGI, PMC, PFD or PSC. The Fund will also 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 trustees' fee, except for the Audit Committee Chair who will receive an
annual trustees' fee equal to 20% of the aggregate annual trustees' 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 trustees' fee, except for the Committee Chair who will receive an annual
trustees' fee equal to 10% of the annual trustees' 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. Any such fees and expenses paid to
affiliates or interested persons of PGI, PMC, PFD or PSC were reimbursed to the
Fund under its management contract.
The following table sets forth certain information with respect to the
compensation of each Trustee of the Fund:
Pension or Total
Aggregate Compensation from Fund
Compensation and all other Pioneer
Name of Trustee from the Fund* Mutual Funds**
--------------- -------------- --------------
John F. Cogan, Jr. $ 500.00 $ 11,083
Richard H. Egdahl, M.D. 8,057 59,858
Margaret B.W. Graham 8,057 59,858
John W. Kendrick 8,057 59,858
Marguerite A. Piret 13,569 79,842
David D. Tripple 500.00 11, 083
Stephen K. West 9,586 67,850
John Winthop 9,981 66,442
Total 58,307 417,052
* As of September 30, 1996, the Fund's fiscal year end.
** As of December 31, 1996, the calendar year for all Pioneer mutual funds.
3. INVESTMENT ADVISER
The Fund has contracted with PMC, 60 State Street, Boston, Massachusetts, to act
as its investment adviser. The Management contract expires initially on May 31,
1997, but it is renewable annually after such date by the vote of a majority of
the Board of Trustees of the Fund (including a majority of the Board of Trustees
who are not parties to the contract or interested persons of any such parties)
cast in person at a meeting called for the purpose of voting on such renewal.
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
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securities and the giving of sixty days' written notice. The management contract
was approved by the shareholders of the Fund on April 30, 1996.
Effective May 1, 1996, as compensation for its management services and expenses
incurred, and certain expenses which PMC incurs on behalf of the Fund, the Fund
pays PMC a basic fee of 0.60% of the Fund's average daily net assets (the "Basic
Fee"). An appropriate percentage of this rate (based upon the number of days in
the current month) of this annual Basic Fee is applied to the Fund's average net
assets for the current month, giving a dollar amount which is the monthly fee.
Prior to May 1, 1996, as compensation for its management services and expenses
incurred, PMC is entitled to a management fee at the rate of 0.50% per annum of
the Fund's average daily net assets up to $250,000,000, 0.48% of the next
$50,000,000, and 0.45% of any excess over $300,000,000. The fee was normally
computed daily and paid monthly.
During its fiscal years ended September 30, 1994, 1995 and 1996, the Fund paid
total management fees to PMC of approximately $20,186,000, $21,051,000 and
$26,108,705, respectively.
PERFORMANCE FEE ADJUSTMENT
The Basic Fee is subject to an upward or downward adjustment, depending on
whether and to what extent, the investment performance of the Fund for the
performance period exceeds, or is exceeded by, the record of the index
determined by the Fund to be 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 Fund's average net
assets for the entire performance period, giving a dollar amount that is added
to (or subtracted from) the Basic Fee.
The Fund's performance is calculated based on 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 in Fund shares at the net asset value as of the record date for
payment. The record for the Index is based on change in value and is adjusted
for any cash distributions from the companies whose securities 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 Class A shares of the
Fund and the level of the Index were $10 and 100, respectively, on the first day
of the performance period.
Investment Performance * Cumulative Change
First Day End of Period Absolute Percentage Points
Fund $ 10 $ 13 +$ 3 + 30%
Index 100 123 + 23 + 23%
* Reflects performance at net asset value. Any dividends or capital gains
distributions paid by the Fund are treated as if reinvested in shares of the
Fund at net asset value as of the payment date and any dividends paid on
securities which comprise the Index are treated as if reinvested on the
ex-dividend date.
The difference in relative performance for the performance period is +7
percentage points. Accordingly, the annualized management fee rate for the last
month of the performance period would be calculated as follows: An appropriate
percentage (based upon the number of days in the current month) of the Basic Fee
of 0.60% would be applied to the Fund's Class A shares 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 performance 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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The Fund's current management contract with PMC became effective May 1, 1996.
Under the terms of the contract, beginning on May 1, 1996, the Fund will pay
management fees at a rate equal to the Basic Fee plus or minus the amount of the
performance adjustment for the current month and the preceding 35 months. At the
end of each succeeding month, the performance period will roll forward one month
so that it is always a 36-month period consisting of the current month and the
prior 35 months as described above. If including the 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, allocated in proportion to the
average daily net assets for each class of shares, is normally paid monthly.
4. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with PSC, 60 State Street, Boston, Massachusetts, to act
as dividend disbursing agent and transfer agent for the Fund. 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 ninety days' written notice.
Under the terms of its contract with the Fund, PSC services shareholder
accounts, and its duties include: (i) processing sales, redemptions and
exchanges of shares of the Fund; (ii) distributing dividends and capital gains
associated with Fund portfolio accounts; and (iii) maintaining account records
and responding to routine 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 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 regarding shareholder records, specific
transaction processing and services. Any such payments by the Fund would be in
lieu of the per account fee which would otherwise be paid by the Fund to PSC.
5. CUSTODIAN
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts 02109 (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
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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
entered into its most recent Underwriting Agreement with PFD, effective May 1,
1996. The Trustees who are not, and were not at the time they voted, interested
persons of the Fund, as defined in the 1940 Act, approved the Underwriting
Agreement. The Underwriting Agreement will continue from year to year if
annually approved by the Trustees in conjunction with the continuance of the
Plan (as defined below). The Underwriting Agreement provides that PFD will bear
the distribution expenses not borne by the Fund. During the fiscal years ending
September 30, 1994, 1995 and 1996, net underwriting commissions retained by PFD
in connection with its offering of Fund shares were approximately $1,982,000,
$1,498,000 and $1,578,000, respectively. Commissions reallowed to dealers for
the same years were approximately $13,259,000, $10,054,000 and $12,325,000,
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 and state securities law.
The Fund and PFD have agreed to indemnify each other against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
Under the Underwriting Agreement, PFD will use its best efforts in rendering
services to the Fund.
The Fund will not generally issue Fund shares for consideration other than cash.
At the Fund's sole discretion, however, it may issue Fund shares for
consideration other than cash in connection with an acquisition of portfolio
securities or a merger or other reorganization.
7. DISTRIBUTION PLANS
The Fund has adopted a plan of distribution pursuant to Rule 12b-1 promulgated
by the SEC 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
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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 daily
net assets attributable to Class A shares.
CLASS B PLAN
The Class B Plan provides that the Fund shall pay PFD, as the Fund's distributor
for its Class B shares, a daily distribution fee equal on an annual basis to
0.75% of the Fund's average daily net assets attributable to Class B shares and
will pay PFD a service fee equal to 0.25% of the Fund's average daily net assets
attributable to Class B shares (which PFD will in turn pay to securities dealers
which enter into a sales agreement with PFD at a rate of up to 0.25% of the
Fund's average daily net assets attributable to Class B shares owned by
investors for whom that securities dealer is the holder or dealer of record).
This service fee is intended to be consideration of personal services and/or
account maintenance services rendered by the dealer with respect to Class B
shares. PFD will advance to dealers the first- year service fee at a rate equal
to 0.25% of the amount invested. As compensation therefor, PFD may retain the
service fee paid by the Fund with respect to such shares for the first year
after purchase. Dealers will become eligible for additional service fees with
respect to such shares commencing in the thirteenth month following purchase.
Dealers may from time to time be required to meet certain other criteria in
order to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class B Plan is to
compensate PFD for its distribution services to the Fund. PFD pays commissions
to dealers as well as expenses of printing prospectuses and reports used for
sales purposes, expenses with respect to the preparation and printing of sales
literature and other distribution related expenses, including, without
limitation, the cost necessary to provide distribution- related services, or
personnel, travel office expenses and equipment. The Class B Plan also provides
that PFD will receive all contingent deferred sales charges ("CDSCs")
attributable to Class B shares. (See "Distributions Plans" in the Prospectus.)
When the broker-dealer effecting the sale of shares waives its right to receive
commissions on such sales, PFD may cause 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
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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. Commencing
in the thirteenth month following a purchase of Class C shares, dealers will
become eligible for additional service fees at a rate of up to 0.25% of the
current value of the amount invested and additional compensation at a rate of up
to 0.75% of the average net asset value of such shares. Dealers may from time to
time be required to meet certain other criteria in order to receive service
fees. PFD or its affiliates are entitled to retain all service fees payable
under the Class C Plan for which there is no dealer of record or for which
qualification standards have not been met as partial consideration for personal
services and/or account maintenance services performed by PFD or its affiliates
for shareholder accounts.
The purpose of distribution payments to PFD under the Class C Plan is to
compensate PFD for its distribution services with respect to the Class C shares
of the Fund. PFD pays commissions to dealers as well as expenses of printing
prospectuses and reports used for sales purposes, expenses with respect to the
preparation and printing of sales literature and other distribution-related
expenses, including, without limitation, the cost necessary to provide
distribution-related services, or personnel, travel office expenses and
equipment. The Class C Plan also provides that PFD will receive all CDSCs
attributable to Class C shares. (See "Distributions Plans" in the Prospectus.)
GENERAL
In accordance with the terms of the Plan, PFD provides to the Fund for review by
the Trustees a quarterly written report of the amounts expended under the Plan
and the purpose for which such expenditures were made.
No interested person of the Fund, nor any Trustee of the Fund who is not an
interested person of the Fund, has any direct or indirect financial interest in
the operation of the Plan except to the extent that PFD and certain of its
employees may be deemed to have such an interest as a result of receiving a
portion of the amounts expended under the Plan by the Fund and except to the
extent certain officers may have an interest in PFD's ultimate parent, PGI.
Each Plan was adopted by a majority vote of the Board of Trustees, including all
of the Trustees who are not, and were not at the time they voted, interested
persons of the Fund, as defined in the 1940 Act (none of whom 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
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benefit the Fund and its current and future shareholders. Under its terms, each
Plan remains in effect from year to year provided such continuance is approved
annually by vote of the Trustees in the manner described above. 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 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 Fund (as defined in the
1940 Act). A Plan will automatically terminate in the event of its assignment
(as defined in the 1940 Act). In the Trustees' quarterly review of the Plan,
they will consider its continued appropriateness and the level of compensation
it provides.
During the fiscal year ended September 30, 1996, the Fund paid total
distribution fees pursuant to the Class A Plan of approximately $10,059,000.
Distribution fees were paid by the Fund to PFD in reimbursement of expenses
related to servicing of shareholder accounts and to compensating dealers and
sales personnel. Class B and Class C shares were first offered on July 1, 1996.
8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, One International Place, Boston, Massachusetts 02110, is
the Fund's independent public accountants, providing audit services, tax return
review, and assistance and consultation with respect to the preparation of
filings with the SEC.
9. PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on behalf
of the Fund by PMC pursuant to authority contained in the 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.
PMC may select dealers which provide brokerage and/or research services to the
Fund and/or other investment companies managed by PMC. Consistent with Section
28(e) of the Securities Exchange Act of 1934, as amended, the Fund may pay
commissions to such broker-dealers in an amount greater than the amount another
firm might charge as compensation for such services 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. Such services may include advice concerning the value of securities; the
advisability of investing in, purchasing or selling securities; the availability
of securities or the purchasers or sellers of
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securities; providing stock price quotation services; furnishing analyses,
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 broker-dealers who provide such services
on a regular basis. However, because it is anticipated that many transactions on
behalf of the Fund and other investment companies managed by PMC are placed with
broker-dealers (including broker-dealers on the listing) without regard to the
furnishing of such services, it is not possible to estimate the proportion of
such transactions directed to such broker-dealers solely because such services
were provided. Management believes that no exact dollar value can be calculated
for such services.
The research received from broker-dealers may be useful to PMC in rendering
investment management services to the Fund as well as other investment companies
managed by PMC, although not all of such research may be useful to the Fund.
Conversely, such information provided by brokers or dealers who have executed
transaction orders on behalf of such other PMC clients may be useful to PMC in
carrying out its obligations to the Fund. The receipt of such research has not
reduced PMC's normal independent research activities; however, it enables PMC to
avoid the additional expenses which might otherwise be incurred if it were to
attempt to develop comparable information through its own staff.
Pursuant to certain directed brokerage arrangements with third party
broker-dealers, such broker-dealers may pay certain of the Fund's custody
expenses. See "Financial Highlights" in the Prospectus.
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 September 30, 1994, 1995 and 1996, the Fund paid
or owed aggregate brokerage commissions of approximately $15,295,000,
$11,552,000 and $9,250,000, respectively.
10. 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,
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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 and forward contracts) 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 include 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.
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
transactions involving foreign currency-denominated debt securities, certain
options relating to foreign currency, foreign currency forward contracts,
foreign currencies, or payables or receivables denominated in a foreign currency
are subject to Section 988 of the Code, which generally causes such gains and
losses to be treated as ordinary income and losses and may affect the amount,
timing and character of distributions to shareholders. Any such transactions
that are not directly related to the Fund's investments in stock or securities
(or its options contracts with respect to stock or securities) may need to be
limited in order to enable the Fund to satisfy the 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
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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
lower rating categories. Investments in debt obligations that are at risk of
default present special tax issues for the Fund. Tax rules are not entirely
clear about issues such as when the Fund may cease to accrue interest, original
issue discount, or market discount, when and to what extent deductions may be
taken for bad debts or worthless securities, how payments received on
obligations in default should be allocated between principal and income, and
whether exchanges of debt obligations in a workout context are taxable. These
and other issues will be addressed by the Fund, in the event it invests in such
securities, in order to 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.
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.
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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 or purchased by the Fund on certain securities, indices and
foreign currencies, as well as certain foreign currency forward contracts, may
cause the Fund to recognize gains or losses from marking-to-market at the end of
its taxable year even though such options may not have lapsed, been closed out,
or exercised or such forward contracts may not have been performed or closed
out. 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. Certain options and forward contracts relating to foreign currency may be
subject to Section 988, as described above, and may accordingly produce ordinary
income or loss. Losses on certain options or forward contracts and/or offsetting
positions (portfolio securities or other positions with respect to which the
Fund's risk of loss is substantially diminished by one or more options or
forward contracts) may also be deferred under the tax straddle rules of the
Code, which may also affect the characterization of capital gains or losses from
straddle positions and certain successor positions as long-term or short-term.
Certain tax elections may be available that would enable the Fund to ameliorate
some adverse effects of the tax rules described in this paragraph. The tax rules
applicable to options, forward contracts and straddles may affect the amount,
timing and character of the Fund's income and losses and hence of its
distributions to shareholders.
For purposes of the 70% dividends-received deduction generally available to
corporations under the Code, dividends received by the Fund from U.S. domestic
corporations in respect of any share of stock with a tax holding period of at
least 46 days (91 days in the case of certain preferred stock) held in an
unleveraged position and distributed and
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designated by the Fund may be treated as qualifying dividends. Any corporate
shareholder should consult its tax advisor regarding the possibility that its
tax basis in its shares may be reduced, for federal income tax purposes, by
reason of "extraordinary dividends" received with respect to the shares. 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
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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.
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 which may be divided into such separate series as the Trustees may
establish. Currently the Fund consists of only one series. The Trustees may,
however, establish additional series of shares in the future, and may divide or
combine the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interests in the Fund. The Declaration 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 meetings 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 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."
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12. CERTAIN LIABILITIES
The Fund was originally organized as 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 April 26, 1996. A copy of the Fund's Certificate of
Trust, 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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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 (currently 4:00 PM,
Eastern Time) on each day on which the New York Stock Exchange is open for
trading. 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, President's 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, 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. The applicant must deposit or
purchase for deposit with PSC shares of the Fund having a total value of not
less than $10,000. Periodic payments of $50 or more will be deposited monthly or
quarterly directly into a bank account designated by the applicant, or will be
sent by check to the applicant, or any person designated by the applicant. Class
B accounts must meet the minimum initial investment requirement prior to
establishing a SWP. Withdrawals from Class B 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.
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
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<PAGE>
dividend income reinvested in the SWP account, such redemptions will reduce and
may ultimately exhaust the number of shares deposited in the SWP account.
Redemptions are taxable transactions. 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.
SWP may be terminated at any time (1) by written notice to PSC or from PSC to
the shareholder; (2) upon receipt by PSC of appropriate evidence of the
shareholder's death; or (3) when all shares under the SWP have been redeemed.
15. LETTER OF INTENTION
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 Intention 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 Intention 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 Intention.
If the total purchases, less redemptions, are less than the amount specified
under the Letter of Intention, 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 Intention 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 Buy Fund Shares - Letter of Intent" in the Prospectus for more
information.
16. INVESTMENT RESULTS
QUOTATIONS, COMPARISONS AND GENERAL INFORMATION
From time to time, in advertisements, in sales literature, or in reports to
shareholders the past performance of the Fund may be illustrated and/or compared
with that of other mutual funds with
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<PAGE>
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; 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") or the Wilshire Total Market
Value Index ("Wilshire 5000"), recognized unmanaged indexes of broad-based
common stocks. In addition, the performance of the Fund may be compared to
alternative investment or savings vehicles and/or to indexes or indicators of
economic activity, e.g., inflation or interest rates. Performance rankings and
listings reported in newspapers or national business and financial publications,
such as Barron's, Business Week, Consumers Digest, Consumer Reports, Financial
World, Forbes, Fortune, Investors Business Daily, Kiplinger's Personal Finance
Magazine, Money Magazine, New York Times, Smart Money, USA Today, U.S. News and
World Report, The Wall Street Journal, and Worth may also be cited (if the Fund
is listed in any such publication) or used for comparison, as well as
performance listings and rankings from various other sources including Bloomberg
Financial Markets, CDA/Weisenberger Investment Companies Service, Donoghue's
Mutual Fund Almanac, Investment Company Data, Inc., Johnson's Charts, Kanon
Bloch Carre and Co., Lipper Analytical Services, Inc., Micropal, Inc.,
Morningstar, Inc., Schabacker Investment Management and Towers Data Systems,
Inc.
In addition, from time to time quotations from articles from financial
publications such as those listed above may be used in advertisements, in sales
literature, or in reports to shareholders of the Fund.
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 by the average annual compounded total return
for the period. The income and capital components of a given return may be
separated and portrayed in a variety of ways in order to illustrate their
relative significance. Performance may also be portrayed in terms of cash or
investment values, without percentages. Past performance cannot guarantee any
particular future result.
The Fund's average annual total return quotations for each of its classes as
that information may appear in the Prospectus, this Statement of Additional
Information or in advertising are calculated by standard methods prescribed by
the SEC.
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<PAGE>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS
Average annual total return quotations for each Class of Fund shares are
computed by finding the average annual compounded rates of return that would
cause a hypothetical investment in the class made on the first day of a
designated period (assuming all dividends and distributions are reinvested) to
equal the ending redeemable value of such hypothetical investment on the last
day of the designated period in accordance with the following formula:
P(1+T)n = ERV
Where:
P = a hypothetical initial payment of $1,000,
less the maximum sales load of 5.75% for
Class A shares or the deduction of the CDSC
for Class B and Class C shares at the end of
the period.
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical
$1,000 initial payment made at the beginning
of the designated period (or fractional
portion thereof)
For purposes of the above computation, it is assumed that all dividends and
distributions made by the Fund are reinvested at net asset value during the
designated period. The average annual total return quotation is determined to
the nearest 1/100 of 1%.
In determining the average annual total return (calculated as provided above),
recurring fees, if any, that are charged to all shareholder accounts of a
particular Class are taken into consideration. For any account fees that vary
with the size of the account, the account fee used for purposes of the above
computation is assumed to be the fee that would be charged to the Class' mean
account size.
The average annual compounded total returns of the Fund as of September 30, 1996
are reflected in the table below:
Average Annual Total Return (%)
CLASS A
1 Year 5 Year 10 Year Life Commencement
------ ------ ------- ---- ------------
5.73 12.07 11.12 14.31 9/30/69
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<PAGE>
Cumulative Total Returns (%)
CLASS B
Life Commencement
-2.35 7/1/96
CLASS C
Life Commencement
0.61 7/1/96
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 1969 until the present. The Fund may also 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 1969
until the present is set forth below.
In presenting investment results, the Fund may also include references to
certain financial planning concepts, including (a) an investor's need to
evaluate his financial assets and obligations to determine how much to invest;
(b) his need to analyze the objectives of various investments to determine where
to invest; and (c) his need to analyze his time frame for future capital needs
to determine how long to invest. The investor controls these three factors, all
of which affect the use of investments in building assets.
AUTOMATED INFORMATION LINE
FactFoneSM, Pioneer's 24-hour automated information line, allows shareholders to
dial toll-free 1-800-225-4321 and hear recorded fund information, including:
o net asset value prices for all Pioneer mutual funds;
o annualized 30-day yields on Pioneer's bond funds;
o annualized 7-day yields and 7-day effective (compound) yields
for Pioneer's money market funds; and
o dividends and capital gains distributions on all Pioneer
mutual funds.
Yields are calculated in accordance with standard formulas mandated by the SEC.
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<PAGE>
In addition, by using a personal identification number ("PIN"), shareholders may
enter purchases, exchanges and redemptions, access their account balance and
last three transactions and may order a duplicate statement. See "FactFoneSM" in
the Prospectus for more information.
All performance numbers communicated through FactFoneSM represent past
performance; figures for all quoted bond funds include the maximum applicable
sales charge. A shareholder's actual yield and total return will vary with
changing market conditions. The value of Class A, Class B and Class C shares
(except for Pioneer money market funds, which seek a stable $1.00 share price)
will also vary, and they 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 September 30,
1996 are included in the Fund's Annual Report to Shareholders, which report is
incorporated by reference into and attached to this Statement of Additional
Information. The Fund's Annual Report to Shareholders is so incorporated and
attached in reliance upon the report of Arthur Andersen LLP, independent public
accountants, as experts in accounting and auditing.
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<PAGE>
APPENDIX A
DESCRIPTION OF BOND RATINGS1
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 believe 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.
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<PAGE>
PIONEER II
CLASS A SHARES
<TABLE>
<CAPTION>
INITIAL OFFERING SALES CHARGE SHARES NET ASSET INITIAL NET
DATE INVESTMENT PRICE INCLUDED PURCHASED VALUE ASSET
Per Share Value
<S> <C> <C> <C> <C> <C> <C>
9/30/69 $10,000 $5.31 5.75% 1,883.239 $5.00 $9,425
VALUE OF SHARES
Dividends and Capital Gains Reinvested
FROM INVESTMENT FROM CAPITAL FROM DIVIDENDS TOTAL
DATE GAINS REINVESTED REINVESTED VALUE
<S> <C> <C> <C> <C>
12/31/69 $8,842 $0 $0 $8,842
12/31/70 $8,051 $0 $163 $8,214
12/31/71 $9,500 $385 $355 $10,240
12/31/72 $9,708 $2,199 $510 $12,417
12/31/73 $8,559 $2,177 $616 $11,352
12/31/74 $6,252 $1,990 $607 $8,849
12/31/75 $9,021 $3,129 $1,120 $13,270
12/31/76 $13,616 $5,712 $2,045 $21,373
12/31/77 $15,903 $7,532 $2,960 $26,395
12/31/78 $16,309 $10,027 $3,889 $30,225
12/31/79 $19,623 $14,350 $6,047 $40,020
12/31/80 $23,333 $19,059 $9,037 $51,429
12/31/81 $22,788 $22,247 $10,820 $55,855
12/31/82 $25,725 $28,010 $15,010 $68,745
12/31/83 $30,640 $37,959 $20,820 $89,419
12/31/84 $27,909 $36,527 $22,120 $86,556
12/31/85 $33,033 $50,984 $29,727 $113,744
12/31/86 $34,163 $59,663 $34,106 $127,932
12/31/87 $29,473 $65,731 $32,289 $127,493
12/31/88 $32,788 $81,884 $40,573 $155,245
12/31/89 $35,217 $105,331 $49,177 $189,725
12/31/90 $29,435 $90,721 $46,749 $166,905
12/31/91 $34,783 $114,167 $60,936 $209,886
12/31/92 $34,972 $128,226 $66,364 $229,562
12/31/93 $36,422 $162,514 $74,033 $272,969
12/31/94 $31,845 $167,857 $68,549 $268,251
12/31/95 $36,648 $221,052 $83,393 $341,093
12/31/96 $40,546 $279,042 $96,521 $416,109
</TABLE>
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<PAGE>
PIONEER II
CLASS B SHARES
<TABLE>
<CAPTION>
INITIAL OFFERING SALES CHARGE SHARES NET ASSET INITIAL NET
DATE INVESTMENT PRICE INCLUDED PURCHASED VALUE ASSET
PER SHARE VALUE
<S> <C> <C> <C> <C> <C> <C>
7/31/96 $10,000 $20.55 4.00% 486.618 $20.55 $10,000
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
FROM INVESTMENT FROM CAPITAL FROM DIVIDENDS TOTAL
DATE GAINS REINVESTED REINVESTED CDSC VALUE
<S> <C> <C> <C> <C> <C>
12/31/96 $10,394 $949 $60 $400 $11,003
</TABLE>
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<PAGE>
PIONEER II
CLASS C SHARES
<TABLE>
<CAPTION>
INITIAL OFFERING SALES CHARGE SHARES NET ASSET INITIAL NET
DATE INVESTMENT PRICE INCLUDED PURCHASED VALUE ASSET
PER SHARE VALUE
<S> <C> <C> <C> <C> <C> <C>
7/31/96 $10,000 $20.55 1.00% 486.618 $20.55 $10,000
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
FROM INVESTMENT FROM CAPITAL FROM DIVIDENDS TOTAL
DATE GAINS REINVESTED REINVESTED CDSC VALUE
<S> <C> <C> <C> <C> <C>
12/31/96 $10,409 $949 $42 $100 $11,300
</TABLE>
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<PAGE>
WORST CASE/BEST CASE INVESTMENT SCENARIOS
$5000 Yearly Investments in Pioneer II from January 1,1977
The table below shows the year-by-year valuation of an annual additional
investment of $5,000. The Worst Case scenario assumes the investment was made on
the day that the Dow Jones Industrial Average ("DJIA") was at its yearly high.
The Best Case scenario assumes that the investment was made on the day that DJIA
was at its yearly low. Both scenarios assume reinvestment of all dividends and
capital gains without sales charge. The DJIA is a recognized unmanaged index of
common stocks of 30 industrial companies listed on the New York Stock Exchange.
<TABLE>
<CAPTION>
WORST CASE BEST CASE
(PURCHASE AT YEARLY DJIA HIGHS) (PURCHASE AT YEARLY DJIA HIGHS)
Cumulative Value on Cumulative Value on
Year High Date Investment 12/31 Year Low Date Investment 12/31
---- --------- ---------- ----- ---- -------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
1977 1/3/77 $5,000 $5,222 1977 11/2/77 $5,000 $4,650
1978 9/8/78 10,000 9,749 1978 2/28/78 10,000 10,234
1979 10/5/79 15,000 17,211 1979 11/7/79 15,000 18,415
1980 11/20/80 20,000 26,411 1980 4/21/80 20,000 29,850
1981 4/27/81 25,000 32,995 1981 9/25/81 25,000 37,194
1982 12/27/82 30,000 45,059 1982 8/12/82 30,000 51,873
1983 11/29/83 35,000 63,115 1983 1/3/83 35,000 73,373
1984 1/6/84 40,000 65,359 1984 7/24/84 40,000 76,249
1985 12/16/85 45,000 90,421 1985 1/4/85 45,000 106,166
1986 12/2/86 50,000 106,105 1986 1/22/86 50,000 124,628
1987 8/25/87 55,000 109,080 1987 10/19/87 55,000 128,820
1988 10/21/88 60,000 137,369 1988 1/20/88 60,000 157,421
1989 10/9/89 65,000 172,360 1989 1/3/89 65,000 198,044
1990 7/16/90 70,000 155,599 1990 10/11/90 70,000 179,230
1991 12/31/91 75,000 200,373 1991 1/9/91 75,000 231,516
1992 6/1/92 80,000 224,086 1992 10/9/92 80,000 258,420
1993 12/29/93 85,000 271,227 1993 1/20/93 85,000 312,926
1994 1/31/94 90,000 271,090 1994 4/4/94 90,000 312,577
1995 12/13/95 95,000 349,606 1995 1/30/95 95,000 403,620
1996 12/30/96 100,000 431,354 1996 1/10/96 100,000 498,497
<S> <C> <C>
Annual Growth Rate: 13.14 % 14.38 %
(Internal Rate of Return)
</TABLE>
The valuation columns in the table include the effect of sales charges on these
yearly investments. Sales charges have been reduced, as appropriate, to reflect
the rate applicable to the value of the total account, according to the schedule
in the Fund's prospectus. The figures shown above should not be considered as
representative of future returns. Income taxes have not been considered.
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<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
The following securities indices are well-known, unmanaged measures of market
performance. Advertisements and sales literature for the Fund may refer to these
indices or may present comparisons between the performance of the Fund and one
or more of the indices. Other indices may 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.
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<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
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<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
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<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%.
-43-
<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
-44-
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Dow S&P/ S&P/
S&P Jones U.S. Small BARRA BARRA
500 Industrial Stock U.S. 500 500
Index Average 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
-45-
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Dow S&P/ S&P/
S&P Jones U.S. Small BARRA BARRA
500 Industrial Stock U.S. 500 500
Index Average 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
-46-
<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
-47-
<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
-48-
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
LIPPER MSCI EMERGING
RUSSELL 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
</TABLE>
-49-
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
LIPPER MSCI EMERGING
RUSSELL 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
Source: Lipper
</TABLE>
-50-
<PAGE>
GROWTH INCOME FUND INDEX
ANNUAL TOTAL RETURN (% CHANGE)
12/31/60 2.91
12/31/61 26.17
12/31/62 -11.88
12/31/63 19.11
12/31/64 15.21
12/31/65 18.99
12/31/66 -6.17
12/31/67 27.51
12/31/68 15.53
12/31/69 -11.78
12/31/70 1.09
12/31/71 13.78
12/31/72 12.85
12/31/73 -14.25
12/31/74 -20.87
12/31/75 34.63
12/31/76 25.67
12/31/77 -3.64
12/31/78 7.99
12/31/79 23.89
12/31/80 28.30
12/31/81 -1.38
12/31/82 24.13
12/31/83 22.77
12/31/84 4.30
12/31/85 28.56
12/31/86 17.64
12/31/87 2.62
12/31/88 18.37
12/31/89 23.77
12/31/90 -6.00
12/31/91 27.62
12/31/92 9.63
12/31/93 14.62
12/31/94 -0.68
12/31/95 31.00
3/31/96 5.74
12/31/96 20.69
Investment Objective - A fund which combines a growth of
earnings orientation and an income requirement for
level and/or rising dividends.
-51-
<PAGE>
APPENDIX B
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 12 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.
-52-
<PAGE>
PIONEER II
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
September 30, 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 for the year ended September 30, 1996
(filed electronically on November 22, 1996 File Nos. 2-32773 &
811-1835; accession number 0000078758-96-000030).
(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*
10. Legal Opinion of Morris, Nichols, Arsht & Tunnell*
<PAGE>
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 Schedules
18. Multiple Class Plan Pursuant to Rule 18f-3*
19. Powers of Attorney*
- ------------------------
* Previously filed. Incorporated by reference from the exhibits filed
with the Registration Statement (File No. 2-32773), as amended, of the
Registrant.
Item 25. Persons Controlled By or Under
Common Control With Registrant
State/County of
Owned By Percent Incorporation
Company of Shares
Pioneering Management Corp. (PMC) PGI 100% DE
Pioneering Services Corp. (PSC) PGI 100% MA
Pioneer Capital Corp. (PCC) PGI 100% MA
Pioneer Funds Marketing GmbH (GmbH) PGI 100% MA
Pioneer SBIC Corp. (SBIC) PGI 100% MA
Pioneer Associates, Inc. (PAI) PGI 100% MA
<PAGE>
Pioneer International Corp. (PInt) PGI 100% MA
Pioneer Plans Corp. (PCC) 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
Pioneer First Polish Trust Fund PGI 100% Poland
(Joint Stock Co. First Polish)
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 World Equity Fund DE
Pioneer Europe Fund MA
Pioneer Emerging Markets Fund DE
Pioneer India Fund DE
Pioneer Growth Trust MA
Pioneer Mid-Cap Fund DE
Pioneer Growth Shares DE
Pioneer Small Company Fund DE
Pioneer Fund 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 Balanced Fund DE
Pioneer Intermediate Tax-Free Fund MA
Pioneer Tax-Free Income Fund DE
Pioneer Money Market Trust DE
Pioneer Variable Contracts Trust DE
Pioneer Interest Shares, Inc. DE
OTHER:
o SBIC is the sole general partner of Pioneer Ventures Limited Partnership, a
Massachusetts limited partnership.
o ITI Pioneer AMC Ltd. (ITI Pioneer) (Indian Corp.), is a joint venture
between PMC and Investment Trust of India Ltd. (ITI) (Indian Corp.)
o ITI and PMC own approximately 54% and 45%, respectively, of the total
equity capital of ITI Pioneer.
JOHN F. COGAN, JR.
Owns approximately 14% of the outstanding shares of PGI.
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
<PAGE>
Item 26. Number of Holders of Securities
The following table sets forth the approximate number of record holders
of each class of securities of the Registrant as of December 31, 1996:
Class A Class B Class C
Number of Record Holders: 374,650 442 65
Item 27. Indemnification
Except for the Declaration of Trust dated April 26, 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.
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:
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
<PAGE>
Steven M. Graziano Senior Vice President None
Stephen W. Long Senior Vice President None
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 Rice Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy L. Supovitz Vice President None
Mary Kleeman Vice President None
Steven R. Berke Assistant Vice President None
Mary Sue Hoban Assistant Vice President None
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
(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.
<PAGE>
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 30, 1996 in connection with the reorganization of
Registrant as a Delaware business trust. See Item 27 above.
<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. 46 to
its Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Post-Effective Amendment No. 47 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 24th day of January, 1997.
PIONEER II
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. 47 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
John F. Cogan, Jr. ) and President
) (Principal
Executive Officer)
William H. Keough* ) Chief Financial Officer
William H. Keough ) and Treasurer (Principal
) Financial and Accounting Officer)
Trustees:
)
John F. Cogan, Jr. )
)
Richard H. Egdahl, M.D.* )
Richard H. Egdahl, M.D. )
)
<PAGE>
Margaret B.W. Graham* )
Margaret B.W. Graham )
John W. Kendrick* )
John W. Kendrick )
Marguerite A. Piret* )
Marguerite A. Piret )
David D. Tripple* )
David D. Tripple )
Stephen K. West* )
Stephen K. West
John Winthrop* )
John Winthrop )
*By: Dated: January 24, 1997
/s/John F. Cogan, Jr.
John F. Cogan, Jr.
Attorney-in-fact
<PAGE>
Exhibit Index
Exhibit
Number Document Title
11. Consent of Arthur Andersen LLP
17. Financial Data Schedules
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated October 31, 1996
for Pioneer II and to all references to our firm included in or made a part of
Post-Effective Amendment No. 47 and Amendment No. 30 to registration statement
File Nos. 2-32773 and 811-1835, respectively.
/s/ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 23, 1997
[ARTICLE] 6
[CIK] 0000078758
[NAME] PIONEER II
[SERIES]
[NUMBER] 001
[NAME] PIONEER II CLASS A
[MULTIPLIER] 1,000
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] SEP-30-1996
[PERIOD-END] SEP-30-1996
[INVESTMENTS-AT-COST] 4561540
[INVESTMENTS-AT-VALUE] 5443705
[RECEIVABLES] 29703
[ASSETS-OTHER] 119
[OTHER-ITEMS-ASSETS] 760
[TOTAL-ASSETS] 5474287
[PAYABLE-FOR-SECURITIES] 27380
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 14032
[TOTAL-LIABILITIES] 41412
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 4048846
[SHARES-COMMON-STOCK] 259442
[SHARES-COMMON-PRIOR] 247541
[ACCUMULATED-NII-CURRENT] 15395
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 486508
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 882126
[NET-ASSETS] 5432875
[DIVIDEND-INCOME] 103560
[INTEREST-INCOME] 4800
[OTHER-INCOME] 0
[EXPENSES-NET] (47533)
[NET-INVESTMENT-INCOME] 60827
[REALIZED-GAINS-CURRENT] 570164
[APPREC-INCREASE-CURRENT] (25695)
[NET-CHANGE-FROM-OPS] 605296
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (81721)
[DISTRIBUTIONS-OF-GAINS] (424185)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 16110
[NUMBER-OF-SHARES-REDEEMED] 29020
[SHARES-REINVESTED] 24811
[NET-CHANGE-IN-ASSETS] 317912
[ACCUMULATED-NII-PRIOR] 36402
[ACCUMULATED-GAINS-PRIOR] 340416
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 26109
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 48509
[AVERAGE-NET-ASSETS] 5275259
[PER-SHARE-NAV-BEGIN] 20.66
[PER-SHARE-NII] 0.23
[PER-SHARE-GAIN-APPREC] 2.10
[PER-SHARE-DIVIDEND] (0.32)
[PER-SHARE-DISTRIBUTIONS] (1.73)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 20.94
[EXPENSE-RATIO] 0.92
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<PAGE>
[ARTICLE] 6
[CIK] 0000078758
[NAME] PIONEER II
[SERIES]
[NUMBER] 002
[NAME] PIONEER II CLASS B
[MULTIPLIER] 1,000
[PERIOD-TYPE] OTHER
[FISCAL-YEAR-END] SEP-30-1996
[PERIOD-END] SEP-30-1996
[INVESTMENTS-AT-COST] 4561540
[INVESTMENTS-AT-VALUE] 5443705
[RECEIVABLES] 29703
[ASSETS-OTHER] 119
[OTHER-ITEMS-ASSETS] 760
[TOTAL-ASSETS] 5474287
[PAYABLE-FOR-SECURITIES] 27380
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 14032
[TOTAL-LIABILITIES] 41412
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 4048846
[SHARES-COMMON-STOCK] 41
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 15395
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 486508
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 882126
[NET-ASSETS] 5432875
[DIVIDEND-INCOME] 103560
[INTEREST-INCOME] 4800
[OTHER-INCOME] 0
[EXPENSES-NET] (47533)
[NET-INVESTMENT-INCOME] 60827
[REALIZED-GAINS-CURRENT] 570164
[APPREC-INCREASE-CURRENT] (25695)
[NET-CHANGE-FROM-OPS] 605296
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 41
[NUMBER-OF-SHARES-REDEEMED] 0
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 317912
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 26109
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 48509
[AVERAGE-NET-ASSETS] 355
[PER-SHARE-NAV-BEGIN] 20.55
[PER-SHARE-NII] (0.01)
[PER-SHARE-GAIN-APPREC] 0.35
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 20.89
[EXPENSE-RATIO] 2.03
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<PAGE>
[ARTICLE] 6
[CIK] 0000078758
[NAME] PIONEER II
[SERIES]
[NUMBER] 003
[NAME] PIONEER II CLASS C
[MULTIPLIER] 1,000
[PERIOD-TYPE] OTHER
[FISCAL-YEAR-END] SEP-30-1996
[PERIOD-END] SEP-30-1996
[INVESTMENTS-AT-COST] 4561540
[INVESTMENTS-AT-VALUE] 5443705
[RECEIVABLES] 29703
[ASSETS-OTHER] 119
[OTHER-ITEMS-ASSETS] 760
[TOTAL-ASSETS] 5474287
[PAYABLE-FOR-SECURITIES] 27380
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 14032
[TOTAL-LIABILITIES] 41412
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 4048846
[SHARES-COMMON-STOCK] 10
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 15395
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 486508
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 882126
[NET-ASSETS] 5432875
[DIVIDEND-INCOME] 103560
[INTEREST-INCOME] 4800
[OTHER-INCOME] 0
[EXPENSES-NET] (47533)
[NET-INVESTMENT-INCOME] 60827
[REALIZED-GAINS-CURRENT] 570164
[APPREC-INCREASE-CURRENT] (25695)
[NET-CHANGE-FROM-OPS] 605296
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 10
[NUMBER-OF-SHARES-REDEEMED] 0
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 317912
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 26109
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 48509
[AVERAGE-NET-ASSETS] 151
[PER-SHARE-NAV-BEGIN] 20.55
[PER-SHARE-NII] (0.01)
[PER-SHARE-GAIN-APPREC] 0.34
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 20.88
[EXPENSE-RATIO] 2.02
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
