As filed with the Securities and Exchange Commission on April 28, 2000
File No. 33-20795
811-05516
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
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Pre-Effective Amendment No. ___ / /
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Post-Effective Amendment No. 16 / X /
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
/ X /
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Amendment No. 17 / X /
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(Check appropriate box or boxes)
PIONEER AMERICA INCOME TRUST
(Exact Name of Registrant as Specified in Charter)
60 State Street, Boston, Massachusetts 02109
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 742-7825
Joseph P. Barri, Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
___ immediately upon filing pursuant to paragraph (b)
X on May 1, 2000 pursuant to paragraph (b)
---
___ 60 days after filing pursuant to paragraph (a)(1)
___ on [date] pursuant to paragraph(a)(1)
___ 75 days after filing pursuant to paragraph (a)(2)
___ on [date] pursuant to paragraph (a)(2)of Rule 485.
If appropriate, check the following box:
___This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
[Pioneer logo]
P i o n e e r
America Income Trust
Class A, Class B and Class C Shares
Prospectus, May 1, 2000
Contents
Basic information about the fund 1
Management 7
Buying, exchanging and selling shares 9
Dividends, capital gains and taxes 27
Financial highlights 28
Neither the Securities and Exchange Commission nor any state securities agency
has approved the fund's shares or determined whether this prospectus is accurate
or complete. Any representation to the contrary is a crime.
<PAGE>
Basic information about the fund
Investment objective
As high a level of current income as is consistent with preservation of capital
and prudent investment risk.
Principal investment strategies
The fund invests exclusively in securities that are backed by the full faith and
credit of the U.S. government, and repurchase agreements and "when-issued"
commitments with respect to these securities. These securities include:
[] U.S. Treasury obligations, which differ only in their interest rates,
maturities and times of issuance, including U.S. Treasury bills (maturities
of one year or less), U.S. Treasury notes (maturities of one to 10 years),
and U.S. Treasury bonds (generally maturities greater than 10 years)
[] Obligations issued by or guaranteed as to principal and interest by the
U.S. Treasury and certain agencies and instrumentalities of the U.S.
government, such as Government National Mortgage Association (GNMA)
certificates and Federal Housing Administration (FHA) debentures, for which
the U.S. Treasury unconditionally guarantees payment of principal and
interest
The fund's investments may have all types of interest rate payment and reset
terms, including fixed rate, adjustable rate, zero coupon, contingent, deferred,
payment-in-kind and auction rate features. The fund may invest in securities of
any maturity. Although the average dollar weighted maturity of the fund's
portfolio may vary significantly, it generally will not exceed 20 years.
Pioneer Investment Management, Inc., the fund's investment adviser, considers
both broad economic factors and issuer specific factors in selecting a portfolio
designed to achieve the fund's investment objective. In assessing the
appropriate maturity and sector weighting of the fund's portfolio, Pioneer
considers a variety of factors that are expected to influence economic activity
and interest rates. These factors include fundamental economic indicators, such
as the rates of economic growth and inflation, Federal Reserve monetary policy
and the relative value of the U.S. dollar compared to other currencies. Once
Pioneer determines the preferable portfolio characteristics, Pioneer selects
individual securities based upon the terms of the securities (such as yields
compared to U.S. Treasuries or comparable issues and sector diversification.
In making portfolio decisions, Pioneer relies on the knowledge, experience and
judgment of its staff who have access to a wide variety of research.
- ---------------------------Magnifying Glass graphic-----------------------------
Information for federal credit unions
The fund may only invest in securities and engage in transactions in securities
to the extent that they are legal under applicable Federal law, as of
January 1, 2000, for federal credit unions.
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An investment in the fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.
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Contact your investment professional to discuss how the fund fits into your
portfolio.
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1
<PAGE>
Principal risks of investing in the fund
Even though the fund seeks a high level of current income and preservation of
capital, you could lose money on your investment or not make as much as if you
invested elsewhere if:
[] Interest rates go up causing the value of the fund's investments to decline
[] During periods of declining interest rates, the issuer of a security may
exercise its option to prepay principal earlier than scheduled, forcing the
fund to reinvest in lower yielding securities. This is known as call or
prepayment risk
[] During periods of rising interest rates, the average life of certain types
of securities may be extended because of slower than expected principal
payments. This may lock in a below market interest rate, increase the
security's duration and reduce the value of the security. This is known as
extension risk
[] Pioneer's judgment about the attractiveness, relative value or potential
appreciation of a particular sector, security or investment strategy proves
to be incorrect
To the extent the fund invests significantly in mortgage-backed securities, its
exposure to prepayment and extension risks may be greater than other investments
in fixed income securities. Mortgage derivatives held by the fund may have
especially volatile prices and may have a disproportionate effect on the fund's
share price.
Although mortgage pools issued by U.S. agencies are guaranteed with respect to
payments of principal and interest, such guarantee does not apply to losses
resulting from declines in the market value of such securities.
2
<PAGE>
Basic information about the fund
The fund's past performance
The bar chart and table indicate the risks of investing in the fund by showing
how the fund has performed in the past. The fund's performance varies from year
to year
The fund's past performance does not necessarily indicate how it will perform in
the future. As a shareowner, you may lose or make money on your investment.
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Fund performance
The chart shows the performance of the fund's Class A shares for each of the
past 10 calendar years. Class B and Class C shares have different performance.
The chart does not reflect any Class A sales charge you may pay when you buy or
sell fund shares. Any sales charge will reduce your return.
The fund's highest calendar quarterly return was 4.72% (3/31/95 to 6/30/95) The
fund's lowest calendar quarterly return was -3.14% (12/31/93 to 3/31/94)
For the calendar quarter ended March 31, 2000 the fund's total return was 2.84%
Annual return Class A shares
(Year ended December 31)
[Begin Bar Chart]
'90 8.99 '91 12.04 '92 6.78
'93 9.07 '94 -3.97 '95 16.07
'96 2.29 '97 8.51 '98 7.78
'99 -2.52
[End Bar Chart]
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Comparison with Lehman Brothers Government Bond Index
The table shows the average annual total returns for each class of the fund over
time and compares these returns to the returns of the Lehman Brothers Government
Bond Index. This index is a measure of the performance of U.S. Treasury debt,
all publicly issued debt of U.S. government agencies and quasi-federal
corporations, and corporate debt guaranteed by the U.S. government. Unlike the
fund, the index is not managed and does not incur expenses. The table:
[] Reflects sales charges applicable to the class
[] Assumes that you sell your shares at the end of the period
[] Assumes that you reinvest all of your dividends and distributions
Average annual total return (%)
(for periods ended December 31, 1999)
Since Inception
1 Year 5 Years 10 Years Inception Date
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Class A -6.95 5.27 5.85 6.36 6/1/88
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Class B -6.93 5.28 n/a 4.54 4/29/94
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Class C -3.19 n/a n/a 3.15 1/31/96
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Lehman Brothers
Government Bond Index -2.23 7.44 7.48 7.96* --
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* Reflects the return of the index since the inception of Class A shares. The
return of the index since the inception of the Class B shares is 6.61% and
since the inception of the Class C shares is 4.81%.
3
<PAGE>
Fees and expenses
These are the fees and expenses, based on the fund's latest fiscal year, you may
pay if you invest in the fund.
<TABLE>
<CAPTION>
Shareowner fees
paid directly from your investment Class A Class B Class C
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------
Maximum sales charge (load) when you buy shares
as a percentage of offering price 4.5% None None
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Maximum deferred sales charge (load) as a
percentage of offering price or the amount you
receive when you sell shares, whichever is less None(1) 4% 1%
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<CAPTION>
Annual fund operating expenses
paid from the assets of the fund
as a percentage of average daily net assets
Class A Class B Class C
<S> <C> <C> <C>
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Management Fee 0.50% 0.50% 0.50%
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Distribution and Service (12b-1) Fee 0.25% 1.00% 1.00%
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Other Expenses 0.39% 0.41% 0.35%
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Total Annual Fund Operating Expenses 1.14% 1.91% 1.85%
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1 Purchases of $1 million or more and purchases by participants in certain
group plans are not subject to an initial sales charge but may be subject to
a contingent deferred sales charge. See "Buying, exchanging and selling
shares."
2 Pioneer has agreed not to impose all or a portion of its management fee and,
if necessary, to limit other operating expenses of the fund to the extent
required to reduce Class A expenses to 1.00% of the average daily net assets
attributable to Class A shares; the portion of fund expenses attributable to
Class B and Class C shares will be reduced only to the extent such expenses
are reduced for Class A shares. This agreement is voluntary and temporary and
may be revised or terminated at any time. Actual other expenses paid by the
fund and total fund operating expenses for the fiscal year ended December 31,
1999 were:
<CAPTION>
Annual fund operating expenses
paid from the assets of the fund
as a percentage of average daily net assets Class A Class B Class C
<S> <C> <C> <C>
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Management Fee 0.36% 0.36% 0.36%
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Distribution and Service (12b-1) Fee 0.25% 1.00% 1.00%
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Other Expenses 0.39% 0.40% 0.34%
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Total Annual Fund Operating Expenses 1.00% 1.76% 1.70%
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</TABLE>
Example
This example helps you compare the cost of investing in the fund with the cost
of investing in other mutual funds. It assumes that: a) you invest $10,000 in
the fund for the time periods shown, b) you reinvest all dividends and
distributions, c) your investment has a 5% return each year and d) the fund's
operating expenses remain the same.
Although your actual costs may be higher or lower, under these assumptions your
costs would be:
<TABLE>
<CAPTION>
If you sell your shares If you do not sell your shares
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Number of years you own your shares
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1 3 5 10 1 3 5 10
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $561 $796 $1,049 $1,774 $561 $796 $1,049 $1,774
- -------------------------------------------------------------------------------------------------
Class B 594 900 1,232 2,032 194 600 1,032 2,032
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Class C 288 582 1,001 2,169 188 582 1,001 2,169
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</TABLE>
4
<PAGE>
Basic information about the fund
Other investment strategies
As discussed, the fund invests exclusively in securities issued or backed by the
U.S. government, and repurchases agreements and "when-issued" commitments with
respect to these securities.
This section describes additional investments that the fund may make or
strategies that it may pursue to a lesser degree to achieve the fund's goal.
Some of the fund's secondary investment policies also entail risks. To learn
more about these investments and risks, you should obtain and read the statement
of additional information (SAI).
Additional information about U.S. government securities
The fund may invest in mortgage-backed securities issued by agencies or
instrumentalities of the U.S. government. These securities represent direct or
indirect participation in, or are collateralized by and payable from, mortgage
loans secured by real estate. Certain debt instruments may only pay principal at
maturity or may only represent the right to receive payments of principal or
payments of interest on underlying pools of mortgage or government securities,
but not both. The value of these types of instruments may change more
drastically than debt securities that pay both principal and interest during
periods of changing interest rates. Principal only mortgage-backed securities
generally increase in value if interest rates decline, but are also subject to
the risk of prepayment. Interest only instruments generally increase in value in
a rising interest rate environment when fewer of the underlying mortgages are
prepaid.
The fund may invest in mortgage derivatives and structured securities. Because
these securities have imbedded leverage features, small changes in interest or
prepayment rates may cause large and sudden price movements. Mortgage
derivatives can also become illiquid and hard to value in declining markets.
Repurchase agreements
Repurchase agreements are arrangements under which the fund purchases securities
and the seller agrees to repurchase the securities within a specific time and at
a specific price. The repurchase price is generally higher than the fund's
purchase price, with the difference being income to the fund. The other party's
obligations under the repurchase agreement are collateralized with U.S. Treasury
and/or agency obligations with a market value of not less than 100% of the
obligations, valued daily. Repurchase agreements afford the fund an opportunity
to earn income on temporarily available cash at low risk. However, in the event
that the other party to the repurchase agreement defaults on its obligations,
the fund may encounter delay and incur costs before being able to sell the
security. Such a delay may involve loss of interest or a decline in price of the
security. In addition, if the fund is characterized by a court as an unsecured
creditor, it would be at risk of losing some or all of the principal and
interest involved in the transaction.
5
<PAGE>
"When-Issued" securities
The fund may purchase and sell securities, including GNMA certificates, on a
when-issued or delayed delivery basis. These transactions arise when securities
are purchased or sold by the fund with payment and delivery taking place at a
fixed future date. The fund will not earn income on these securities until
delivered. The fund may engage in these transactions when it believes they would
result in a favorable price and yield for the security being purchased or sold.
The market value of when-issued or delayed delivery transactions may increase or
decrease as a result of changes in interest rates. These transactions involve
risk of loss if the value of the underlying security changes unfavorably before
the settlement date. There is also a risk that the other party to the
transaction will default on its obligation to purchase or sell the security,
which may result in the fund missing the opportunity to obtain a favorable price
or yield elsewhere.
Temporary investments
Normally, the fund invests substantially all of its assets to meet its
investment objective. For temporary defensive purposes, the fund may depart from
its principal investment strategies and invest part or all of its assets in
securities with remaining maturities of less than one year or may hold cash or
cash equivalents. During such periods, the fund may not be able to achieve its
investment objective. The fund intends to adopt a defensive strategy only when
Pioneer believes securities in which the fund normally invests have
extraordinary risks due to political or economic factors.
Short-term trading
The fund usually does not trade for short-term profits. The fund will sell an
investment, however, even if it has only been held for a short time, if it no
longer meets the fund's investment criteria. If the fund does a lot of trading,
it may incur additional operating expenses, which would reduce performance, and
could cause shareowners to incur a higher level of taxable income or capital
gains.
6
<PAGE>
Management
Pioneer, the fund's investment adviser,
selects the fund's investments and oversees the fund's operations.
Pioneer Group
The Pioneer Group, Inc. and its subsidiaries are engaged in financial services
businesses in the United States and many foreign countries. As of December 31,
1999, the firm had more than $24 billion in assets under management worldwide
including more than $23 billion in U.S. mutual funds. The firm's U.S. mutual
fund investment history includes creating in 1928 one of the first mutual
funds. John F. Cogan, chairman of the board and president of The Pioneer Group,
Inc., owns approximately 14% of the firm. He is also an officer and director of
each of the Pioneer mutual funds.
Investment adviser
Pioneer manages a family of U.S. and international stock funds, bond funds and
money market funds. Pioneer is a subsidiary of The Pioneer Group, Inc. Its main
office is at 60 State Street, Boston, Massachusetts 02109.
Portfolio manager
Day-to-day management of the fund's portfolio is the responsibility of a team
of fixed income portfolio managers and analysts supervised by Sherman B. Russ
and Kenneth J. Taubes.
Mr. Russ and Mr. Taubes are jointly responsible for overseeing Pioneer's U.S.
and global fixed income team. Mr. Russ is a senior vice president of Pioneer.
He joined Pioneer in 1983 as an assistant portfolio manager and has been an
investment professional since 1962. Mr. Taubes joined Pioneer as a senior vice
president in September 1998 and has been an investment professional since 1986.
Prior to joining Pioneer, Mr. Taubes had served since 1991 as a senior vice
president and senior portfolio manager for several Putnam Investments
institutional accounts and mutual funds.
Mr. Russ, Mr. Taubes and their team operate under the supervision of Theresa A.
Hamacher. Ms. Hamacher is chief investment officer of Pioneer. She joined
Pioneer in 1997 and has been an investment professional since 1984, most
recently as chief investment officer at another investment adviser.
7
<PAGE>
Management fee
The fund pays Pioneer a fee for managing the fund and to cover the cost of
providing certain services to the fund. Pioneer's annual fee is equal to 0.50%
of the fund's average daily net assets. The fee is normally computed daily and
paid monthly.
Distributor and transfer agent
Pioneer Funds Distributor, Inc. is the fund's distributor. Pioneering Services
Corporation is the fund's transfer agent. The fund compensates the distributor
and transfer agent for their services. The distributor and the transfer agent
are subsidiaries of The Pioneer Group, Inc.
8
<PAGE>
Buying, exchanging and selling shares
Net asset value
The fund's net asset value is the value of its portfolio of securities plus any
other assets minus its operating expenses and any other liabilities. The fund
calculates a net asset value for each class of shares every day the New York
Stock Exchange is open when regular trading closes (normally 4:00 p.m. Eastern
time).
The fund generally values its portfolio securities based on market prices or
quotations. When market prices are not available or are considered by Pioneer to
be unreliable, the fund may use an asset's fair value. Fair value is determined
in accordance with procedures approved by the fund's trustees.
You buy or sell shares at the share price. When you buy Class A shares, you pay
an initial sales charge. When you sell Class B or Class C shares, you may pay a
contingent deferred sales charge depending on how long you have owned your
shares.
Choosing a class of shares
The fund offers three classes of shares through this prospectus. Each class has
different sales charges and expenses, allowing you to choose the class that best
meets your needs.
Factors you should consider include:
[] How long you expect to own the shares
[] The expenses paid by each class
[] Whether you qualify for any reduction or waiver of sales charges
Your investment professional can help you determine which class meets your
goals. Your investment firm may receive different compensation depending upon
which class you choose. If you are not a U.S. citizen and are purchasing shares
outside the U.S., you may pay different sales charges under local laws and
business practices.
Distribution plans
The fund has adopted a distribution plan for each class of shares offered
through this prospectus in accordance with Rule 12b-1 under the Investment
Company Act of 1940. Under each plan the fund pays distribution and service fees
to the distributor. Because these fees are an ongoing expense, over time they
increase the cost of your investment and your shares may cost more than shares
that are subject to other types of sales charges.
- ---------------------------[Magnifying Glass graphic]---------------------------
Share price
The net asset value per share calculated on the day of your transaction,
adjusted for any applicable sales charge, is often referred to as the share
price.
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9
<PAGE>
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Comparing classes of shares
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<TABLE>
<CAPTION>
Class A Class B Class C
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Why you might Class A shares may be your best You may prefer Class B shares if You may prefer Class C shares if
prefer each class alternative if you prefer to pay an you do not want to pay an initial you do not wish to pay an initial
initial sales charge and have lower sales charge, or if you plan to sales charge and you would rather
annual expenses, or if you qualify hold your investment for at least pay higher annual expenses over
for any reduction or waiver of the six years. Class B shares are not time.
initial sales charge. recommended if you are investing
$250,000 or more.
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Initial sales Up to 4.50% of the offering price, None None
charge which is reduced or waived for
large purchases and certain types
of investors. At the time of your
purchase, your investment firm may
receive a commission from the
distributor of up to 4% declining
as the size of your investment
increases.
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Contingent None, except in certain Up to 4% is charged if you sell A 1% charge if you sell your
deferred circumstances when the initial your shares. The charge is reduced shares within one year of
sales charges sales charge is waived. over time and not 10 charged after purchase. Your investment firm
six years. Your investment firm may may receive a commission from
receive a commission from the the distributor at the time of
distributor at the time of your your purchase of up to 1%.
purchase of up to 4%.
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Distribution and Up to 0.25% of average. Up to 1% of average Up to 1% of average
service fees daily net assets daily net assets. daily net assets.
- ------------------------------------------------------------------------------------------------------------------------------------
Annual expenses Lower than Class B or Class C. Higher than Class A shares; Higher than Class A shares;
(including Class B shares convert to Class Class C shares do not convert
distribution A shares after eight years. to any other class of shares.
and service fees) You continue to pay higher
annual expenses.
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Exchange Class A shares of other Class B shares of other Class C shares of other
privilege Pioneer mutual funds. Pioneer mutual funds. Pioneer mutual funds.
</TABLE>
10
<PAGE>
Buying, exchanging and selling shares
Sales charges: Class A shares
You pay the offering price when you buy Class A shares unless you qualify to
purchase shares at net asset value. You pay a lower sales charge as the size of
your investment increases. You do not pay a sales charge when you reinvest
dividends or distributions paid by the fund.
Investments of $1 million or more
You do not pay a sales charge when you purchase Class A shares if you are
investing $1 million or more or you are a participant in certain group plans.
However, you pay a deferred sales charge if you sell your Class A shares within
one year of purchase. The sales charge is equal to 1% of your investment or your
sale proceeds, whichever is less.
Reduced sales charges
You may qualify for a reduced Class A sales charge if you own or are purchasing
shares of Pioneer mutual funds. If you or your investment professional notifies
the distributor of your eligibility for a reduced sales charge at the time of
your purchase, the distributor will credit you with the combined value (at the
current offering price) of all your Pioneer mutual fund shares and the shares of
your spouse and the shares of any children under 21. Certain trustees and
fiduciaries may also qualify for a reduced sales charge. For this purpose,
Pioneer mutual funds include any fund for which the distributor is principal
underwriter and, at the distributor's discretion, may include funds organized
outside the U.S. managed by Pioneer.
See "Qualifying for a reduced sales charge" for more information.
- ---------------------------Magnifying Glass graphic-----------------------------
Offering price
The net asset value per share plus any initial sales charge.
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Sales charges for Class A shares
Sales charge as % of
------------------------
Offering Net amount
Amount of purchase price invested
- --------------------------------------------------------------
Less than $100,000 4.50 4.71
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$100,000 but less than $250,000 3.50 3.63
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$250,000 but less than $500,000 2.50 2.56
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$500,000 but less than $1 million 2.00 2.04
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$1 million or more -0- -0-
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11
<PAGE>
Sales charges: Class B shares
You buy Class B shares at net asset value per share without paying an initial
sales charge. However, you will pay a contingent deferred sales charge to the
distributor if you sell your Class B shares within six years of purchase. The
contingent deferred sales charge decreases as the number of years since your
purchase increases.
Contingent deferred sales charge
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On shares sold As a % of
before the dollar amount subject
end of year to the sales charge
- -----------------------------------------
1 4
- -----------------------------------------
2 4
- -----------------------------------------
3 3
- -----------------------------------------
4 3
- -----------------------------------------
5 2
- -----------------------------------------
6 1
- -----------------------------------------
7+ -0-
- -----------------------------------------
Conversion to Class A shares
Class B shares automatically convert into Class A shares. This helps you because
Class A shares pay lower expenses.
Your Class B shares will convert to Class A shares at the beginning of the
calendar month (calendar quarter for shares purchased before October 1, 1998)
that is eight years after the date of purchase except that:
[] Shares purchased by reinvesting dividends and capital gain distributions
will convert to Class A shares at the same time as shares on which the
dividend or distribution was paid
[] Shares purchased by exchanging shares from another fund will convert on the
date that the shares originally acquired would have converted into Class A
shares
Currently, the Internal Revenue Service permits the conversion of shares to take
place without imposing a federal income tax. Conversion may not occur if the
Internal Revenue Service deems it a taxable event for federal tax purposes.
- ---------------------------Magnifying Glass graphic-----------------------------
Contingent deferred sales charge
A sales charge that may be deducted from your sales proceeds.
- --------------------------------------------------------------------------------
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Paying the contingent deferred sales charge (CDSC)
Several rules apply for Class B shares so that you pay the lowest possible CDSC.
[] The CDSC is calculated on the current market value or the original cost of
the shares you are selling, whichever is less
[] You do not pay a CDSC on reinvested dividends or distributions
[] In determining the number of years since your purchase, all purchases are
considered to have been made on the first day of that month (quarter for
shares purchased before October 1, 1998)
[] If you sell only some of your shares, the transfer agent will first sell
your shares that are not subject to any CDSC and then the shares that you
have owned the longest
[] You may qualify for a waiver of the CDSC normally charged. See "Qualifying
for a reduced sales charge"
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12
<PAGE>
Buying, exchanging and selling shares
Sales charges: Class C shares
You buy Class C shares at net asset value per share without paying an initial
sales charge. However, if you sell your Class C shares within one year of
purchase, you will pay to the distributor a contingent deferred sales charge of
1% of the current market value or the original cost of the shares you are
selling, whichever is less.
- ---------------------------Magnifying Glass graphic-----------------------------
Contingent deferred sales charge
A sales charge that may be deducted from your sales proceeds.
- --------------------------------------------------------------------------------
Paying the contingent deferred sales charge (CDSC)
- --------------------------------------------------------------------------------
Several rules apply for Class C shares which result in your paying the lowest
CDSC.
[] The CDSC is calculated on the current market value or the original cost of
the shares you are selling, whichever is less
[] You do not pay a CDSC on reinvested dividends or distributions
[] In determining the amount of time since your purchase, all purchases are
considered to have been made on the first day of that month (quarter for
shares purchased before October 1, 1998)
[] If you sell only some of your shares, the transfer agent will first sell
your shares that are not subject to any CDSC and then the shares that you
purchased most recently
[] You may qualify for a waiver of the CDSC normally charged. See "Qualifying
for a reduced sales charge"
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13
<PAGE>
Qualifying for a reduced sales charge
Initial Class A sales charge waivers
You may purchase Class A shares at net asset value (without a sales charge) or
with a reduced initial sales charge as follows. If you believe you qualify for
any of the waivers discussed below, contact the distributor. You are required to
provide written confirmation of your eligibility. You may not resell these
shares except to or on behalf of the fund.
[] Class A purchases at net asset value are available to:
[] Current or former trustees and officers of the fund;
[] Current or former partners and employees of legal counsel to the fund;
[] Current or former directors, officers, employees or sales representatives
of The Pioneer Group, Inc. and its affiliates;
[] Current or former directors, officers, employees or sales representatives
of any subadviser or a predecessor adviser (or their affiliates) to any
investment company for which Pioneer serves as investment adviser;
[] Current or former officers, partners, employees or registered
representatives of broker-dealers which have entered into sales agreements
with the distributor;
[] Members of the immediate families of any of the persons above;
[] Any trust, custodian, pension, profit sharing or other benefit plan of the
foregoing persons;
[] Insurance company separate accounts;
[] Certain "wrap accounts" for the benefit of clients of financial planners
adhering to standards established by the distributor;
[] Other funds and accounts for which Pioneer or any of its affiliates serve
as investment adviser or manager;
[] In connection with certain reorganization, liquidation or acquisition
transactions involving other investment companies or personal holding
companies;
[] Certain unit investment trusts;
[] Employer-sponsored retirement plans with 100 or more eligible employees or
at least $500,000 in total plan assets;
[] Participants in Optional Retirement Programs if (i) your employer has
authorized a limited number of mutual funds to participate in the program,
(ii) all participating mutual funds sell shares to program participants at
net asset value, (iii) your employer has agreed in writing to actively
promote Pioneer mutual funds to program participants and (iv) the program
provides for a matching contribution for each participant contribution;
[] Participants in an employer-sponsored 403(b) plan or employer-sponsored 457
plan if (i) the employer has made special arrangements for your plan to
operate as a group through a single broker, dealer or financial
intermediary and (ii) all participants in the plan who purchase shares of a
Pioneer mutual fund do so through a single broker, dealer or other
financial intermediary designated by your employer.
14
<PAGE>
Buying, exchanging and selling shares
Class A purchases at a reduced initial sales charge or net asset value are also
available to:
Group Plans if the sponsoring organization
[] recommends purchases of Pioneer mutual funds to,
[] permits solicitation of, or
[] facilitates purchases by
its employees, members or participants.
Letter of intent (Class A)
You can use a letter of intent to qualify for reduced sales charges in two
situations:
[] If you plan to invest at least $100,000 (excluding any reinvestment of
dividends and capital gain distributions) in the fund's Class A shares
during the next 13 months
[] If you include in your letter of intent the value-at the current offering
price- of all of your Class A shares of the fund and all other Pioneer
mutual fund shares held of record in the amount used to determine the
applicable sales charge for the fund shares you plan to buy
Completing a letter of intent does not obligate you to purchase additional
shares, but if you do not buy enough shares to qualify for the projected level
of sales charges by the end of the 13-month period (or when you sell your
shares, if earlier), the distributor will recalculate your sales charge. You
must pay the additional sales charge within 20 days after you are notified of
the recalculation or it will be deducted from your account (or your sale
proceeds). For more information regarding letters of intent, please contact your
investment professional or obtain and read the statement of additional
information.
Reinvestment (Class A)
If you sold shares of another mutual fund within the past 60 days, you may be
able to reinvest the sale proceeds from that fund in Class A shares of the fund
at net asset value without a sales charge.
To qualify:
[] Your investment firm must have a sales agreement with the distributor;
[] You must demonstrate that the amount invested is from the proceeds of the
sale of shares from another mutual fund that occurred within 60 days
immediately preceding your purchase;
[] You paid a sales charge on the original purchase of the shares sold; and
[] The mutual fund whose shares were sold also offers net asset value
purchases to shareowners that sell shares of a Pioneer mutual fund.
15
<PAGE>
Waiver or reduction of contingent deferred sales charges (CDSC)
Class A shares that are subject to a CDSC
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 the distributor 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. However, the
CDSC is waived for redemptions of Class A shares purchased by an
employer-sponsored retirement plan described under Section 401(a), 403(b) or 457
of the Internal Revenue Code that has 1,000 or more eligible employees or at
least $10 million in total plan assets.
Class A, Class B and Class C shares
The distributor may waive or reduce the CDSC for Class A shares that are subject
to a CDSC or for Class B or Class C shares if:
[] The distribution results from the death of all registered account owners or
a participant in an employer-sponsored plan. For UGMAs, UTMAs and trust
accounts, the waiver applies only upon the death of all beneficial owners;
[] You become disabled (within the meaning of Section 72 of the Internal
Revenue Code) occurring after the purchase of the shares being sold. For
UGMAs, UTMAs and trust accounts, the waiver only applies upon the
disability of all beneficial owners;
[] The distribution is made in connection with limited automatic redemptions
as described 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 distribution is from any type of IRA, 403(b) or employer-sponsored plan
described under Section 401(a) or 457 of the Internal Revenue Code and one
of the following applies:
- It is part of a series of substantially equal periodic payments made
over the life expectancy of the participant or the joint life expectancy
of the participant and his or her beneficiary (limited in any year to
10% of the value of the participant's account at the time the
distribution amount is established);
- It is a required minimum distribution due to the attainment of age
70-1/2, in which case the distribution amount may exceed 10% (based
solely on plan assets held in Pioneer mutual funds);
16
<PAGE>
Buying, exchanging and selling shares
- It is rolled over to or reinvested in another Pioneer mutual fund in the
same class of shares, which will be subject to the CDSC of the shares
originally held;
- It is in the form of a loan to a participant in a plan that permits
loans (each repayment will be subject to a CDSC as though a new
purchase);
[] The distribution is to a participant in an employer-sponsored retirement
plan described under Section 401(a) of the Internal Revenue Code or to a
participant in an employer-sponsored 403(b) plan or employer-sponsored 457
plan if (i) the employer has made special arrangements for your plan to
operate as a group through a single broker, dealer or financial
intermediary and (ii) all participants in the plan who purchase shares of a
Pioneer mutual fund do so through a single broker, dealer or other
financial intermediary designated by your employer and is:
- A return of excess employee deferrals or contributions;
- A qualifying hardship distribution as described in the Internal Revenue
Code. For Class B shares, waiver is granted only on payments of up to
10% of total plan assets held by Pioneer for all participants, reduced
by the total of any prior distributions made in that calendar year;
- Due to retirement or termination of employment. For Class B shares,
waiver is granted only on payments of up to 10% of total plan assets
held in a Pioneer mutual fund for all participants, reduced by the total
of any prior distributions made in the same calendar year;
- From a qualified defined contribution plan and represents a
participant's directed transfer, provided that this privilege has been
preauthorized through a prior agreement with the distributor regarding
participant directed transfers (not available to Class B shares);
[] The distribution is made pursuant to the fund's right to liquidate or
involuntarily redeem shares in a shareholder's account;
[] The selling broker elects, with the distributor's approval, to waive
receipt of the commission normally paid at the time of the sale.
17
<PAGE>
Opening your account
If your shares are held in your investment firm's name, the options and services
available to you may be different from those discussed in this prospectus. Ask
your investment professional for more information.
If you invest in the fund through investment professionals or other financial
intermediaries, including wrap programs and fund supermarkets, additional
conditions may apply to your investment in the fund, and the investment
professional or intermediary may charge you a transaction-based or other fee for
its services. These conditions and fees are in addition to those imposed by the
fund and its affiliates. You should ask your investment professional or
financial intermediary about its services and any applicable fees.
Account options
Use your account application to select options and privileges for your account.
You can change your selections at any time by sending a completed account
options form to the transfer agent. You may be required to obtain a signature
guarantee to make certain changes to an existing account.
Call or write to the transfer agent for account applications, account options
forms and other account information:
Pioneering Services Corporation
P.O. Box 9014
Boston, Massachusetts 02205-9014
Telephone 1-800-225-6292
Telephone transaction privileges
If your account is registered in your name, you can buy, exchange or sell fund
shares by telephone. If you do not want your account to have telephone
transaction privileges, you must indicate that choice on your account
application or by writing to the transfer agent.
When you request a telephone transaction the transfer agent will try to confirm
that the request is genuine. The transfer agent records the call, requires the
caller to provide the personal identification number for the account and sends
you a written confirmation. The fund may implement other confirmation procedures
from time to time. Different procedures may apply if you have a non-U.S. account
or if your account is registered in the name of an institution, broker-dealer or
other third party.
- ---------------------------------Phone graphic----------------------------------
By phone
If you want to place your telephone transaction by speaking to a shareowner
services representative, call 1-800-225-6292 between 8:00 a.m. and 9:00 p.m.
Eastern time on any weekday that the New York Stock Exchange is open.
You may use FactFoneSM at any time.
- --------------------------------------------------------------------------------
18
<PAGE>
Buying, exchanging and selling shares
General rules on buying, exchanging and selling your fund shares
Share price
If you place an order with your investment firm before the New York Stock
Exchange closes and your investment firm submits the order to the distributor
prior to the distributor's close of business (usually 5:30 p.m. Eastern time),
your share price will be calculated that day. Otherwise, your share price will
be calculated at the close of the New York Stock Exchange after the distributor
receives your order. Your investment firm is responsible for submitting your
order to the distributor.
Buying
You may buy fund shares from any investment firm that has a sales agreement with
the distributor. If you do not have an investment firm, please call
1-800-225-6292 for information on how to locate an investment professional in
your area.
You can buy fund shares at the offering price. The distributor may reject any
order until it has confirmed the order in writing and received payment. The fund
reserves the right to stop offering any class of shares.
Minimum investment amounts
Your initial investment must be at least $1,000. Additional investments must be
at least $100 for Class A shares and $500 for Class B or Class C shares. You may
qualify for lower initial or subsequent investment minimums if you are opening a
retirement plan account, establishing an automatic investment plan or placing
your trade through your investment firm.
- ------------------------------Question Mark graphic-----------------------------
Consult your investment professional to learn more about buying, exchanging or
selling fund shares.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Retirement plan accounts
You can purchase fund shares through tax-deferred retirement plans for
individuals, businesses and tax-exempt organizations.
Your initial investment for most types of retirement plan accounts must be at
least $250. Additional investments for most types of retirement plans must be at
least $100.
You may not use the account application accompanying this prospectus to
establish a Pioneer retirement plan. You can obtain retirement plan applications
from your investment firm or by calling the Retirement Plans Department at
1-800-622-0176.
- --------------------------------------------------------------------------------
19
<PAGE>
Exchanging
You may exchange your shares for shares of the same class of another Pioneer
mutual fund.
Your exchange request must be for at least $1,000 unless the fund you are
exchanging into has a different minimum. The fund allows you to exchange your
shares at net asset value without charging you either an initial or contingent
deferred sales charge at the time of the exchange. Shares you acquire as part of
an exchange will continue to be subject to any contingent deferred sales charge
that applies to the shares you originally purchased. When you ultimately sell
your shares, the date of your original purchase will determine your contingent
deferred sales charge.
Before you request an exchange, consider each fund's investment objective and
policies as described in the fund's prospectus.
Selling
Your shares will be sold at net asset value per share next calculated after the
fund receives your request in good order.
If the shares you are selling are subject to a deferred sales charge, it will be
deducted from the sale proceeds. The fund generally will send your sale proceeds
by check, bank wire or electronic funds transfer. Normally you will be paid
within seven days. If you recently sent a check to purchase the shares being
sold, the fund may delay payment of the sale proceeds until your check has
cleared. This may take up to 15 calendar days from the purchase date.
If you are selling shares from a non-retirement account or certain IRAs, you may
use any of the methods described below. If you are selling shares from a
retirement account other than an IRA, you must make your request in writing.
- --------------------------------Column graphic----------------------------------
You may have to pay income taxes on a sale or an exchange.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Good order means that:
[] You have provided adequate instructions
[] There are no outstanding claims against your account
[] There are no transaction limitations on your account
[] If you have any fund share certificates, you submit them and they are
signed by each record owner exactly as the shares are registered
[] Your request includes a signature guarantee if you:
- Are selling over $100,000 or exchanging over $500,000 worth of shares
- Changed your account registration or address within the last 30 days
- Instruct the transfer agent to mail the check to an address different
from the one on your account
- Want the check paid to someone other than the account owner(s)
- Are transferring the sale proceeds to a Pioneer mutual fund account with
a different registration
- --------------------------------------------------------------------------------
20
<PAGE>
Buying, exchanging and selling shares
<TABLE>
<CAPTION>
---------------------------------------------- ----------------------------------------------
Buying shares Exchanging shares
---------------------------------------------- ----------------------------------------------
<S> <C> <C>
Through your Normally, your investment firm will send your Normally, your investment firm will send your
investment firm purchase request to the fund's transfer agent. exchange request to the fund's transfer agent.
Consult your investment professional for Consult your investment professional for
more information. Your investment firm may more information about exchanging your
receive a commission from the distributor for your shares.
purchase of fund shares. The distributor or its
affiliates may pay additional compensation, out of
their own assets, to certain investment firms or
their affiliates based on objective criteria
established by the distributor.
---------------------------------------------- ----------------------------------------------
By phone You can use the telephone purchase After you establish your fund account, you can
privilege if you have an existing non-retirement exchange fund shares by phone if:
account or certain IRAs. You can purchase [] You are using the exchange to establish a new
additional fund shares by phone if: account, provided the new account has a
[] You established your bank account of record at registration identical to the original account
least 30 days ago [] The fund into which you are exchanging offers
[] Your bank information has not changed for at the same class of shares
least 30 days [] You are not exchanging more than $500,000
[] You are not purchasing more than $25,000 worth of shares per account per day
worth of shares per account per day [] You can provide the proper account
[] You can provide the proper account identification information
identification information
When you request a telephone purchase, the
transfer agent will electronically debit the amount
of the purchase from your bank account of
record. The transfer agent will purchase fund
shares for the amount of the debit at the offering
price determined after the transfer agent receives
your telephone purchase instruction and good
funds. It usually takes three business days for
the transfer agent to receive notification from your
bank that good funds are available in the amount
of your investment.
---------------------------------------------- ----------------------------------------------
In writing, You can purchase fund shares for an existing You can exchange fund shares by mailing or
by mail fund account by mailing a check to the faxing a letter of instruction to the transfer
or by fax transfer agent. Make your check payable to the agent. You can exchange fund shares directly
fund. Neither initial nor subsequent investments through the fund only if your account is registered
should be made by third party check. Your check in your name. However, you may not fax an
must be in U.S. dollars and drawn on a U.S. exchange request for more than $500,000.
bank. Include in your purchase request the fund's Include in your letter:
name, the account number and the name or [] The name, social security number and
names in the account registration. signature of all registered owners
[] A signature guarantee for each registered
owner if the amount of the exchange is more
than $500,000
[] The name of the fund out of which you are
exchanging and the name of the fund into
which you are exchanging
[] The class of shares you are exchanging
[] The dollar amount or number of shares you are
exchanging
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------ ----------------------------------------------------
Selling shares How to contact us
------------------------------------------------------ ----------------------------------------------------
<S> <C> <C>
Through your Normally, your investment firm will send your By phone [phone graphic]
investment firm request to sell shares to the fund's transfer For information or to request a telephone
agent. Consult your investment professional transaction between 8:00 a.m. and
for more information. The fund has authorized 9:00 p.m. (Eastern time) by speaking
the distributor to act as its agent in the with a shareholder services representative
repurchase of fund shares from qualified call
investment firms. The fund reserves the right to 1-800-225-6292
terminate this procedure at any time. To request a transaction using FactFoneSM call
1-800-225-4321
------------------------------------------------------ Telecommunications Device for the Deaf (TDD)
By phone You may sell up to $100,000 per account 1-800-225-1997
per day. You may sell fund shares held in a
retirement plan account by phone only if your
account is an IRA. You may not sell your shares By mail [envelope graphic]
by phone if you have changed your address (for
checks) or your bank information (for wires and Send your written instructions to:
transfers) in the last 30 days. Pioneering Services Corporation
P.O.Box 9014
You may receive your sale proceeds: Boston, Massachusetts 02205-9014
[] By check, provided the check is made payable
exactly as your account is registered
[] By bank wire or by electronic funds transfer, By fax [fax graphic]
provided the sale proceeds are being sent to
your bank address of record
Fax your exchange and sale requests to:
1-800-225-4240
----------------------------------------------------
----------------------------------------------------
Exchange privilege
You may make up to four exchange
redemptions of $25,000 or more per
account per calendar year.
----------------------------------------------------
In writing, You can sell some or all of your fund shares by The fund and the distributor reserve the right to
by mail writing directly to the fund only if your account refuse any exchange request or restrict, at any
or by fax is registered in your name. Include in your time without notice, the number and/ or frequency
request your name, your social security number, of exchanges to prevent abuses of the exchange
the fund's name, your fund account number, the privilege. Abuses include frequent trading in
class of shares to be sold, the dollar amount or response to short-term market fluctuations and a
number of shares to be sold and any other pattern of trading that appears to be an attempt
applicable requirements as described below. The to "time the market." In addition, the fund and
transfer agent will send the sale proceeds to the distributor reserve the right, at any time
your address of record unless you provide other without notice, to charge a fee for exchanges or
instructions. Your request must be signed by all to modify, limit or suspend the exchange
registered owners and be in good order. privilege. The fund will provide 60 days' notice
The transfer agent will not process your request of material amendments to or termination of the
until it is received in good order. privilege.
You may sell up to $100,000 per account per ----------------------------------------------------
day by fax.
</TABLE>
22
<PAGE>
Buying, exchanging and selling shares
Account options
See the account application form for more details on each of the following
options.
Automatic investment plans
You can make regular periodic investments in the fund by setting up monthly bank
drafts, government allotments, payroll deductions, a Pioneer Investomatic Plan
and other similar automatic investment plans. You may use an automatic
investment plan to establish a Class A share account with a small initial
investment. If you have a Class B or Class C share account and your balance is
at least $1,000, you may establish an automatic investment plan.
Pioneer Investomatic Plan
If you establish a Pioneer Investomatic Plan, the transfer agent will make a
periodic investment in fund shares by means of a preauthorized electronic funds
transfer from your bank account. Your plan investments are voluntary. You may
discontinue your plan at any time or change the plan's dollar amount, frequency
or investment date by calling or writing to the transfer agent. You should allow
up to 30 days for the transfer agent to establish your plan.
Automatic exchanges
You can automatically exchange your fund shares for shares of the same class of
another Pioneer mutual fund. The automatic exchange will begin on the day you
select when you complete the appropriate section of your account application or
an account options form. In order to establish automatic exchange:
[] You must select exchanges on a monthly or quarterly basis
[] Both the originating and receiving accounts must have identical
registrations
[] The originating account must have a minimum balance of $5,000
Distribution options
The fund offers three distribution options. Any fund shares you buy by
reinvesting distributions will be priced at the applicable net asset value per
share.
(1) Unless you indicate another option on your account application, any
dividends and capital gain distributions paid to you by the fund will
automatically be invested in additional fund shares.
(2) You may elect to have the amount of any dividends paid to you in cash and
any capital gain distributions reinvested in additional shares.
(3) You may elect to have the full amount of any dividends and/or capital gain
distributions paid to you in cash.
Options (2) or (3) are not available to retirement plan accounts or accounts
with a current value of less than $500.
If your distribution check is returned to the transfer agent or you do not cash
the check for six months or more, the transfer agent may reinvest the amount of
the check in your account and automatically change the distribution option on
your account to option (1) until you request a different option in writing.
These additional shares will be purchased at the then current net asset value.
23
<PAGE>
Directed dividends
You can invest the dividends paid by one of your Pioneer mutual fund accounts in
a second Pioneer mutual fund account. The value of your second account must be
at least $1,000 ($500 for Pioneer Fund or Pioneer II). You may direct the
investment of any amount of dividends. There are no fees or charges for directed
dividends. If you have a retirement plan account, you may only direct dividends
to accounts with identical registrations.
Systematic withdrawal plans
When you establish a systematic withdrawal plan for your account, the transfer
agent will sell the number of fund shares you specify on a periodic basis and
the proceeds will be paid to you or to any person you select. You must obtain a
signature guarantee to direct payments to another person after you have
established your systematic withdrawal plan. Payments can be made either by
check or by electronic transfer to a bank account you designate.
To establish a systematic withdrawal plan:
[] Your account must have a total value of at least $10,000 when you establish
your plan
[] You must request a periodic withdrawal of at least $50
[] You may not request a periodic withdrawal of more than 10% of the value of
any Class B or Class C share account (valued at the time the plan is
implemented)
Systematic sales of fund shares may be taxable transactions for you. If you
purchase Class A shares while you are making systematic withdrawals from your
account, you may pay unnecessary sales charges.
Direct deposit
If you elect to take dividends or dividends and capital gain distributions in
cash, or if you establish a systematic withdrawal plan, you may choose to have
those cash payments deposited directly into your savings, checking or NOW bank
account.
Voluntary tax withholding
You may have the transfer agent withhold 28% of the dividends and capital gain
distributions paid from your fund account (before any reinvestment) and forward
the amount withheld to the Internal Revenue Service as a credit against your
federal income taxes. Voluntary tax withholding is not available for retirement
plan accounts or for accounts subject to backup withholding.
Reinstatement privilege for Class A shares
You may qualify for the reinstatement privilege if you recently sold all or part
of your Class A shares.
24
<PAGE>
Buying, exchanging and selling shares
Shareowner services
Pioneer website
www.pioneerfunds.com
The website includes a full selection of information on mutual fund investing.
You can also use the website to get:
[] Your current account information
[] Prices, returns and yields of all publicly available Pioneer mutual funds
[] Prospectuses for all the Pioneer mutual funds
FactFoneSM 1-800-225-4321
You can use FactFoneSM to:
[] Obtain current information on your Pioneer mutual fund accounts
[] Inquire about the prices and yields of all publicly available Pioneer
mutual funds
[] Make computer-assisted telephone purchases, exchanges and redemptions for
your fund accounts
[] Request account statements
If you plan to use FactFoneSM to make telephone purchases and redemptions, first
you must activate your personal identification number and establish your bank
account of record. If your account is registered in the name of a broker-dealer
or other third party, you may not be able to use FactFoneSM.
Household delivery of fund documents
With your consent, Pioneer may send a single prospectus and shareholder report
to your residence for you and any other member of your household who has an
account with the fund. If you wish to revoke your consent to this practice, you
may do so by notifying Pioneer, by phone or in writing (see "How to contact
us"). Pioneer will begin mailing separate prospectuses and shareholder reports
to you within 30 days after receiving your notice.
Confirmation statements
The transfer agent maintains an account for each investment firm or individual
shareowner and records all account transactions. You will be sent confirmation
statements showing the details of your transactions as they occur, except
automatic investment plan transactions, which are confirmed quarterly. If you
have more than one Pioneer mutual fund account registered in your name, the
Pioneer combined account statement will be mailed to you each quarter.
Tax information
In January of each year, the fund will mail you information about the tax status
of the dividends and distributions paid to you by the fund.
TDD 1-800-225-1997
If you have a hearing disability and access to TDD keyboard equipment, you can
contact our telephone representatives with questions about your account by
calling our TDD number between 8:30 a.m. and 5:30 p.m. Eastern time any weekday
that the New York Stock Exchange is open.
25
<PAGE>
Shareowner account policies
Signature guarantees and other requirements
You are required to obtain a signature guarantee when you are:
[] Requesting certain types of exchanges or sales of fund shares
[] Redeeming shares for which you hold a share certificate
[] Requesting certain types of changes for your existing account
You can obtain a signature guarantee from most broker-dealers, banks, credit
unions (if authorized under state law) and federal savings and loan
associations. You cannot obtain a signature guarantee from a notary public.
Fiduciaries and corporations are required to submit additional documents to sell
fund shares.
Exchange limitation
The fund's exchange limitation is intended to discourage short-term trading in
fund shares. Short-term trading can increase the expenses incurred by the fund
and make portfolio management less efficient. In determining whether the
exchange redemption limit has been reached, Pioneer may aggregate a series of
exchanges (each valued at less than $25,000) and/or fund accounts that appear to
be under common ownership or control. Pioneer may view accounts for which one
person gives instructions or accounts that act on advice provided by a single
source to be under common control.
The exchange limitation does not apply to automatic exchange transactions or to
exchanges made by participants in employer-sponsored retirement plans qualified
under Section 401 of the Internal Revenue Code. The exchange limitation does not
apply to accounts that have a written exchange agreement with the distributor.
The exchange limitation may not apply to transactions made through an omnibus
account for fund shares.
Minimum account size
The fund requires that you maintain a minimum account value of $500. If you hold
less than the minimum in your account because you have sold or exchanged some of
your shares, the fund will notify you of its intent to sell your shares and
close your account. You may avoid this by increasing the value of your account
to at least the minimum within six months of the notice from the fund.
Telephone access
You may have difficulty contacting the fund by telephone during times of market
volatility or disruption in telephone service. On New York Stock Exchange
holidays or on days when the exchange closes early, the telephone center will
adjust its hours accordingly. If you are unable to reach the fund by telephone,
you should communicate with the fund in writing.
Share certificates
Normally, your shares will remain on deposit with the transfer agent and
certificates will not be issued. If you are legally required to obtain a
certificate, you may request one for your Class A shares only. A fee may be
charged for this service.
Other policies
The fund may suspend transactions in shares when trading on the New York Stock
Exchange is closed or restricted, when an emergency exists that makes it
impracticable for the fund to sell or value its portfolio securities or with the
permission of the Securities and Exchange Commission.
The fund or the distributor may revise, suspend or terminate the account options
and services available to shareowners at any time.
The fund reserves the right to redeem in kind by delivering portfolio securities
to a redeeming shareowner, provided that the fund must pay redemptions in cash
if a shareowner's aggregate redemptions in a 90-day period are less than
$250,000 or 1% of the fund's net assets.
- ---------------------------Magnifying Glass graphic-----------------------------
You may make up to four exchange redemptions of $25,000 or more per account per
calendar year out of the fund. Except as noted, you may make any number of
exchanges of less than $25,000.
- ----------------------------------------------------------------------------
26
<PAGE>
Dividends, capital gains and taxes
Dividends and capital gains
The fund declares a dividend daily. The dividend consists of substantially all
of the fund's net income. You begin to earn dividends on the first business day
following receipt of payment for shares. You continue to earn dividends up to
and including the date of sale. Dividends are normally paid on the last business
day of each month. The fund generally pays any distributions of net short- and
long-term capital gains in November.
The fund may also pay dividends and capital gain distributions at other times if
necessary for the fund to avoid federal income or excise tax. If you invest in
the fund close to the time that the fund makes a distribution,
generally you will pay a higher price per share and you will pay taxes on the
amount of the distribution whether you reinvest the distribution or receive it
as cash.
Taxes
For federal income tax purposes, your distributions from the fund's net
long-term capital gains are considered long-term capital gains and may be
taxable to you at different maximum rates depending upon their source and other
factors. Dividends and short-term capital gain distributions are taxable as
ordinary income. Dividends and distributions are taxable, whether you take
payment in cash or reinvest them to buy additional fund shares. When you sell or
exchange fund shares you will generally recognize a capital gain or capital loss
in an amount equal to the difference between the net amount of sale proceeds
(or, in the case of an exchange, the fair market value of the shares) that you
receive and your tax basis for the shares that you sell or exchange. In January
of each year the fund will mail to you information about your dividends
distributions and any shares you sold in the previous calendar year.
You must provide your social security number or other taxpayer identification
number to the fund along with the certifications required by the Internal
Revenue Service when you open an account. If you do not or if it is otherwise
legally required to do so, the fund will withhold 31% "backup withholding" tax
from your dividends and distributions, sale proceeds and any other payments to
you.
You should ask your own tax adviser about any federal and state tax
considerations, including possible additional withholding taxes for non-U.S.
shareholders. You may also consult the fund's statement of additional
information for a more detailed discussion of federal income tax considerations
that may affect the fund and its shareowners.
- --------------------------------Column graphic----------------------------------
Sales and exchanges may be taxable transactions to shareowners.
- --------------------------------------------------------------------------------
27
<PAGE>
Financial highlights
The financial highlights table helps you understand
the fund's financial performance for the past five years.
Certain information reflects financial results for a single fund share. The
total returns in the table represent the rate that you would have earned on an
investment in the fund (assuming reinvestment of all dividends and
distributions).
This information has been audited by Arthur Andersen LLP, whose report is
included in the fund's annual report along with the fund's financial statements.
The annual report is available upon request.
Pioneer America Income Trust
Class A shares
<TABLE>
<CAPTION>
For the year ended December 31
---------------------------------------------------------------
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.10 $ 9.93 $ 9.77 $ 10.20 $ 9.41
---------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.55 $ 0.58 $ 0.64 $ 0.64 $ 0.68
Net realized and unrealized gain (loss) on investments (0.80) 0.17 0.16 (0.43) 0.79
---------------------------------------------------------------
Net increase (decrease) from investment operations $ (0.25) $ 0.75 $ 0.80 $ 0.21 $ 1.47
---------------------------------------------------------------
Distributions to shareholders:
Net investment income (0.55) (0.58) (0.64) (0.64) (0.68)
Net increase (decrease) in net asset value $ (0.80) $ 0.17 $ 0.16 $ (0.43) $ 0.79
---------------------------------------------------------------
Net asset value, end of period $ 9.30 $ 10.10 $ 9.93 $ 9.77 $ 10.20
===============================================================
Total return* (2.52)% 7.78% 8.51% 2.29% 16.06%
Ratios/Supplemental Data
Ratio of net expenses to average net assets[dag] 1.01% 1.00% 1.02% 1.01% 1.02%
Ratio of net investment income (loss) to average net
assets[dag] 5.63% 5.80% 6.55% 6.51% 6.85%
Portfolio turnover rate 72% 81% 63% 43% 62%
Net assets, end of period (in thousands) $111,262 $128,925 $138,022 $ 145,408 $162,708
Ratios assuming no waiver of management fees and
assumption of expenses by Pioneer and no reduction for
fees paid indirectly:
Net expenses 1.14% 1.10% 1.14% 1.17% 1.22%
Net investment income 5.50% 5.70% 6.43% 6.35% 6.65%
Ratios assuming waiver of management fees and
assumption of expenses by Pioneer
and reduction for fees paid indirectly:
Net expenses 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment income 5.64% 5.80% 6.57% 6.52% 6.87%
</TABLE>
- --------------------------------------------------------------------------------
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sales charges were taken into
account.
[dag] Ratio assuming no reduction for fees paid indirectly.
28
<PAGE>
Financial highlights
Pioneer America Income Trust
Class B shares
<TABLE>
<CAPTION>
For the year ended December 31
-------------------------------------------------------------
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.07 $ 9.90 $ 9.75 $ 10.17 $ 9.40
-------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.47 $ 0.51 $ 0.57 $ 0.57 $ 0.61
Net realized and unrealized gain (loss) on investments (0.79) 0.17 0.15 (0.42) 0.77
-------------------------------------------------------------
Net increase (decrease) from investment operations $ (0.32) $ 0.68 $ 0.72 $ 0.15 $ 1.38
-------------------------------------------------------------
Distributions to shareholders:
Net investment income (0.47) (0.51) (0.57) (0.57) (0.61)
Net increase (decrease) in net asset value $ (0.79) $ 0.17 $ 0.15 $ (0.42) $ 0.77
-------------------------------------------------------------
Net asset value, end of period $ 9.28 $ 10.07 $ 9.90 $ 9.75 $ 10.17
=============================================================
Total return* (3.24)% 7.08% 7.61% 1.59% 15.08%
Ratios/Supplemental Data
Ratio of net expenses to average net assets[dag] 1.78% 1.74% 1.77% 1.75% 1.77%
Ratio of net investment income (loss) to average net
assets[dag] 4.87% 4.99% 5.78% 5.78% 5.92%
Portfolio turnover rate 72% 81% 63% 43% 62%
Net assets, end of period (in thousands) $ 19,695 $ 22,602 $11,935 $ 9,557 $ 6,992
Ratios assuming no waiver of management fees and
assumption of expenses by Pioneer and no reduction for
fees paid indirectly:
Net expenses 1.91% 1.81% 1.90% 1.91% 1.97%
Net investment income 4.74% 4.92% 5.65% 5.62% 5.72%
Ratios assuming waiver of management fees and assumption
of expenses by Pioneer and reduction for fees
paid indirectly:
Net expenses 1.76% 1.72% 1.75% 1.73% 1.72%
Net investment income 4.89% 5.01% 5.80% 5.80% 5.97%
</TABLE>
- --------------------------------------------------------------------------------
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sales charges were taken into
account.
[dag] Ratio assuming no reduction for fees paid indirectly.
29
<PAGE>
Pioneer America Income Trust
Class C shares
<TABLE>
<CAPTION>
January 1,
For the year ended December 31 1996 through
---------------------------------------- December 31
1999 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.07 $ 9.90 $ 9.74 $ 10.16
-------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.47 $ 0.52 $ 0.57 $ 0.52
Net realized and unrealized gain (loss) on investments (0.79) 0.17 0.16 (0.42)
-------------------------------------------------------
Net increase (decrease) from investment operations $ (0.32) $ 0.69 $ 0.73 $ 0.10
-------------------------------------------------------
Distributions to shareholders:
Net investment income (0.47) (0.52) (0.57) (0.52)
Net increase (decrease) in net asset value $ (0.79) $ 0.17 $ 0.16 $ (0.42)
-------------------------------------------------------
Net asset value, end of period $ 9.28 $ 10.07 $ 9.90 $ 9.74
=======================================================
Total return* (3.19)% 7.09% 7.78% 1.04 %
Ratios/Supplemental Data
Ratio of net expenses to average net assets[dag] 1.73% 1.65% 1.73% 1.80%**
Ratio of net investment income (loss) to average net
assets[dag] 4.88% 4.97% 5.74% 5.73%**
Portfolio turnover rate 72% 81% 63% 43%
Net assets, end of period (in thousands) $ 5,632 $ 11,891 $ 3,780 $ 1,306
Ratios assuming no waiver of management fees and
assumption of expenses by Pioneer and no reduction for
fees paid indirectly:
Net expenses 1.85% 1.70% 1.85% 1.95%**
Net investment income 4.76% 4.92% 5.62% 5.58%**
Ratios assuming waiver of management fees
and assumption of expenses by Pioneer
and reduction for fees paid indirectly:
Net expenses 1.70% 1.62% 1.68% 1.76%**
Net investment income 4.91% 5.00% 5.79% 5.77%**
</TABLE>
- --------------------------------------------------------------------------------
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
[dag] Ratio assuming no reduction for fees paid indirectly.
30
<PAGE>
Pioneer
America Income Trust
You can obtain more free information about the fund from your investment firm or
by writing to Pioneering Services Corporation, 60 State Street, Boston,
Massachusetts 02109. You may also call 1-800-225-6292.
Shareowner reports
Annual and semiannual reports to shareowners provide information about the
fund's investments. The annual report discusses market conditions and investment
strategies that significantly affected the fund's performance during its last
fiscal year.
Statement of additional information
The statement of additional information provides more detailed information about
the fund. It is incorporated by reference into this prospectus.
Visit our website
www.pioneerfunds.com
You can also review the fund's shareowner reports, prospectus and statement of
additional information at the Securities and Exchange Commission's Public
Reference Room in Washington, D.C. Call 1-202-942-8090 for information. The
Commission charges a fee for copies. You can get the same information free from
the Commission's EDGAR database on the Internet (http://www.sec.gov). You may
also e-mail requests for these documents to [email protected] or make a request
in writing to the Commission's Public Reference Section, Washington, D.C.
20549-0102.
(Investment Company Act file no. 811-05516)
[Pioneer logo]
Pioneer Funds Distributor, Inc.
60 State Street
Boston, MA 02109
8334-00-0400
www.pioneerfunds.com (Copyright) Pioneer Funds Distributor, Inc.
<PAGE>
PIONEER AMERICA INCOME TRUST
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
Class A, Class B and Class C Shares
May 1, 2000
This statement of additional information is not a prospectus. It should be read
in conjunction with the fund's prospectus, dated May 1, 2000, as supplemented or
revised from time to time. 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. You can also obtain
a copy of the fund's prospectus from our website at: www.pioneerfunds.com. The
fund's financial statements for the fiscal year ended December 31, 1999 are
incorporated into this statement of additional information by reference. The
most recent annual report to shareholders is attached to this statement of
additional information.
TABLE OF CONTENTS
Page
----
1. Fund History..........................................................2
2. Investment Policies, Risks and Restrictions...........................2
3. Management of the Fund................................................9
4. Investment Adviser...................................................13
5. Principal Underwriter and Distribution Plans.........................15
6. Shareholder Servicing/Transfer Agent.................................19
7. Custodian............................................................20
8. Independent Public Accountants.......................................20
9. Portfolio Transactions...............................................20
10. Description of Shares................................................21
11. Sales Charges........................................................23
12. Redeeming Shares.....................................................26
13. Telephone Transactions...............................................28
14. Pricing of Shares....................................................30
15. Tax Status...........................................................32
16. Investment Results...................................................32
17. Financial Statements.................................................35
18. Appendix A - Annual Fee, Expense and Other Information...............36
19. Appendix B - Description of Short-term Debt, Corporate Bond and
Preferred Stock Ratings..............................................40
20. Appendix C - Performance Statistics..................................47
21. Appendix D - Other Pioneer Information...............................63
<PAGE>
1. FUND HISTORY
The fund is a diversified open-end management investment company. The fund was
organized as a Massachusetts business trust on March 17, 1988. Prior to July 1,
1994, the fund was named Pioneer U.S. Government Trust.
2. INVESTMENT POLICIES, RISKS AND RESTRICTIONS
The prospectus present the investment objective and the principal investment
strategies and risks of the fund. This section supplements the disclosure in the
fund's prospectus and provides additional information on the fund's investment
policies or restrictions. Restrictions or policies stated as a maximum
percentage of the fund's assets are only applied immediately after a portfolio
investment to which the policy or restriction is applicable (other than the
limitations on borrowing and illiquid securities). 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 restrictions and policies.
Primary Investments
The fund invests exclusively in securities that are backed by the full faith and
credit of the U.S. government, and repurchase agreements and "when-issued"
commitments with respect to these securities. The fund may only invest in these
securities and engage in transactions in these securities to the extent that
they are legal under applicable Federal law, as of January 1, 1998, for federal
credit unions.
U.S. Government Securities
U.S. government securities in which the fund invests include debt obligations of
varying maturities issued by the U.S. Treasury or issued or guaranteed by an
agency or instrumentality of the U.S. government, including the Federal Housing
Administration, Federal Financing Bank, Farmers Home Administration,
Export-Import Bank of the U.S., Small Business Administration, Government
National Mortgage Association ("GNMA"), General Services Administration, Central
Bank for Cooperatives, Federal Farm Credit Banks, Federal Home Loan Banks,
Federal Home Loan Mortgage Corporation ("FHLMC"), Federal National Mortgage
Association ("FNMA"), Maritime Administration, Tennessee Valley Authority,
District of Columbia Armory Board, Student Loan Marketing Association,
Resolution Trust Corporation and various institutions that previously were or
currently are part of the Farm Credit System (which has been undergoing
reorganization since 1987). Some U.S. government securities, such as U.S.
Treasury bills, Treasury notes and Treasury bonds, which differ only in their
interest rates, maturities and times of issuance, are supported by the full
faith and credit of the United States. Others are supported by: (i) the right of
the issuer to borrow from the U.S. Treasury, such as securities of the Federal
Home Loan Banks; (ii) the discretionary authority of the U.S. government to
purchase the agency's obligations, such as securities of the FNMA; or (iii) only
the credit of the issuer, such as securities of the Student Loan Marketing
Association. No assurance can be given that the U.S. government will provide
financial support in the future to U.S. government agencies, authorities or
instrumentalities that are not supported by the full faith and credit of the
United States. Securities guaranteed as to principal and interest by the U.S.
government, its agencies, authorities or instrumentalities include: (i)
securities for which the payment of principal and interest is backed by an
irrevocable letter of credit issued by the U.S. government or any of its
agencies, authorities or instrumentalities; and (ii) participations in loans
made to
2
<PAGE>
non-U.S. governments or other entities that are so guaranteed. The secondary
market for certain of these participations is limited and, therefore, may be
regarded as illiquid.
U.S. government securities may include zero coupon securities that may be
purchased when yields are attractive and/or to enhance portfolio liquidity. Zero
coupon U.S. government securities are debt obligations that are issued or
purchased at a significant discount from face value. The discount approximates
the total amount of interest the security will accrue and compound over the
period until maturity or the particular interest payment date at a rate of
interest reflecting the market rate of the security at the time of issuance.
Zero coupon U.S. government securities do not require the periodic payment of
interest. These investments benefit the issuer by mitigating its need for cash
to meet debt service, but generally require a higher rate of return to attract
investors who are willing to defer receipt of cash. These investments may
experience greater volatility in market value than U.S. government securities
that make regular payments of interest. The fund accrues income on these
investments for tax and accounting purposes, which is distributable to
shareholders and which, because no cash is received at the time of accrual, may
require the liquidation of other portfolio securities to satisfy the fund's
distribution obligations, in which case the fund will forego the purchase of
additional income producing assets with these funds. Zero coupon U.S. government
securities include STRIPS and CUBES, which are issued by the U.S. Treasury as
component parts of U.S. Treasury bonds and represent scheduled interest and
principal payments on the bonds.
Mortgage-Backed Securities
The fund may invest in mortgage pass-through certificates and multiple-class
pass-through securities, and mortgage derivative securities such as real estate
mortgage investment conduits ("REMIC") pass-through certificates, collateralized
mortgage obligations and stripped mortgage-backed securities ("SMBS"), interest
only mortgage-backed securities and principal only mortgage-backed securities
and other types of "mortgage-backed securities" that may be available in the
future. A mortgage-backed security is an obligation of the issuer backed by a
mortgage or pool of mortgages or a direct interest in an underlying pool of
mortgages. Some mortgage-backed securities, such as collateralized mortgage
obligations (CMOs), make payments of both principal and interest at a variety of
intervals; others make semiannual interest payments at a predetermined rate and
repay principal at maturity (like a typical bond). Mortgage-backed securities
are based on different types of mortgages including those on commercial real
estate or residential properties. Mortgage-backed securities often have stated
maturities of up to thirty years when they are issued, depending upon the length
of the mortgages underlying the securities. In practice, however, unscheduled or
early payments of principal and interest on the underlying mortgages may make
the securities' effective maturity shorter than this, and the prevailing
interest rates may be higher or lower than the current yield of the fund's
portfolio at the time the fund receives the payments for reinvestment.
Mortgage-backed securities may have less potential for capital appreciation than
comparable fixed income securities, due to the likelihood of increased
prepayments of mortgages as interest rates decline. If the fund buys
mortgage-backed securities at a premium, mortgage foreclosures and prepayments
of principal by mortgagors (which may be made at any time without penalty) may
result in some loss of the fund's principal investment to the extent of the
premium paid.
The value of mortgage-backed securities may also change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities markets as a whole. Non-governmental
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
governmental issues.
3
<PAGE>
Guaranteed Mortgage Pass-Through Securities. Guaranteed mortgage pass-through
securities represent participation interests in pools of residential mortgage
loans and are issued by U.S. governmental or private lenders and guaranteed by
the U.S. government or one of its agencies or instrumentalities, including but
not limited to GNMA, FNMA and FHLMC. GNMA certificates are guaranteed by the
full faith and credit of the U.S. government for timely payment of principal and
interest on the certificates. FNMA certificates are guaranteed by FNMA, a
federally chartered and privately owned corporation, for full and timely payment
of principal and interest on the certificates. FHLMC certificates are guaranteed
by FHLMC, a corporate instrumentality of the U.S. government, for timely payment
of interest and the ultimate collection of all principal of the related mortgage
loans.
Multiple-Class Pass-Through Securities and Collateralized Mortgage Obligations.
CMOs and REMIC pass-through or participation certificates may be issued by,
among others, U.S. government agencies and instrumentalities. REMICs are CMO
vehicles that qualify for special tax treatment under the Internal Revenue Code
of 1986, as amended (the "Code") and invest in mortgages principally secured by
interests in real property and other investments permitted by the Code. CMOs and
REMIC certificates are issued in multiple classes and the principal of and
interest on the mortgage assets may be allocated among the several classes of
CMOs or REMIC certificates in various ways. Each class of CMOs or REMIC
certificates, often referred to as a "tranche," is issued at a specific
adjustable or fixed interest rate and must be fully retired no later than its
final distribution date. Generally, interest is paid or accrues on all classes
of CMO or REMIC certificates on a monthly basis.
Typically, CMOs are collateralized by GNMA, FNMA or FHLMC certificates but also
may be collateralized by other mortgage assets such as whole loans or private
mortgage pass-through securities. Debt service on CMOs is provided from payments
of principal and interest on collateral of mortgaged assets and any reinvestment
income thereon.
Stripped Mortgage-Backed Securities. SMBS are multiple-class mortgage-backed
securities that are created when a U.S. government agency or a financial
institution separates the interest and principal components of a mortgage-backed
security and sells them as individual securities. The fund invests in SMBS that
are usually structured with two classes that receive different proportions of
interest and principal distributions on a pool of mortgage assets. A typical
SMBS will have one class receiving some of the interest and most of the
principal, while the other class will receive most of the interest and the
remaining principal. The holder of the "principal-only" security (PO) receives
the principal payments made by the underlying mortgage-backed security, while
the holder of the "interest-only" security (IO) receives interest payments from
the same underlying security. The prices of stripped mortgage-backed securities
may be particularly affected by changes in interest rates. As interest rates
fall, prepayment rates tend to increase, which tends to reduce prices of IOs and
increase prices of POs. Rising interest rates can have the opposite effect.
Although the market for these securities is increasingly liquid, Pioneer
Investment Management, Inc. ("Pioneer"), the fund's investment adviser, may
determine that certain stripped mortgage-backed securities issued by the U.S.
government, its agencies or instrumentalities are not readily marketable. If so,
these securities will be considered illiquid for purposes of the fund's
limitation on investments in illiquid securities. The yields and market risk of
interest only and principal only SMBS, respectively, may be more volatile than
those of other fixed income securities.
The fund also may invest in planned amortization class ("PAC") and target
amortization class ("TAC") CMO bonds which involve less exposure to prepayment,
extension and interest rate risks than other mortgage-backed securities,
provided that prepayment rates remain within expected prepayment ranges or
"collars." To the extent that the prepayment rates remain within these
prepayment ranges, the residual
4
<PAGE>
or support tranches of PAC and TAC CMOs assume the extra prepayment, extension
and interest rate risks associated with the underlying mortgage assets.
Risk Factors Associated with Mortgage-Backed Securities. Investing in
mortgage-backed securities involves certain risks, including the failure of a
counterparty to meet its commitments, adverse interest rate changes and the
effects of prepayments on mortgage cash flows. In addition, investing in the
lowest tranche of CMOs and REMIC certificates involves risks similar to those
associated with investing in equity securities. However, due to adverse tax
consequences under current tax laws, the fund does not intend to acquire
"residual" interests in REMICs. Further, the yield characteristics of
mortgage-backed securities differ from those of traditional fixed income
securities. The major differences typically include more frequent interest and
principal payments (usually monthly), the adjustability of interest rates of the
underlying instrument, and the possibility that prepayments of principal may be
made substantially earlier than their final distribution dates.
Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social and other factors and cannot be
predicted with certainty. Both adjustable rate mortgage loans and fixed rate
mortgage loans may be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of principal
prepayments in an increasing interest rate environment. Under certain interest
rate and prepayment rate scenarios, the fund may fail to recoup fully its
investment in mortgage-backed securities notwithstanding any direct or indirect
governmental, agency or other guarantee. When the fund reinvests amounts
representing payments and unscheduled prepayments of principal, it may obtain a
rate of interest that is lower than the rate on existing adjustable rate
mortgage pass-through securities. Thus, mortgage-backed securities, and
adjustable rate mortgage pass-through securities in particular, may be less
effective than other types of U.S. government securities as a means of "locking
in" interest rates.
Structured Securities
The fund may invest in structured securities. The value of the principal and/or
interest on such securities is determined by reference to changes in the value
of specific currencies, interest rates, commodities, indices or other financial
indicators (the "Reference") or the relative change in two or more References.
The interest rate or the principal amount payable upon maturity or redemption
may be increased or decreased depending upon changes in the Reference. The terms
of the structured securities may provide in certain circumstances that no
principal is due at maturity and, therefor may result in a loss of the fund's
investment. Changes in the interest rate or principal payable at maturity may be
a multiple of the changes in the value of the Reference. Consequently,
structured securities may entail a greater degree of market risk than other
types of fixed income securities.
Asset-Backed Securities
The fund may invest in asset-backed securities, which are securities that
represent a participation in, or are secured by and payable from, a stream of
payments generated by particular assets, most often a pool or pools of similar
assets (e.g., trade receivables). The credit quality of these securities depends
primarily upon the quality of the underlying assets and the level of credit
support and/or enhancement provided.
The underlying assets (e.g., loans) are subject to prepayments which shorten the
securities' weighted average maturity and may lower their return. If the credit
support or enhancement is exhausted, losses or delays in payment may result if
the required payments of principal and interest are not made. The value
5
<PAGE>
of these securities also may change because of changes in the market's
perception of the creditworthiness of the servicing agent for the pool, the
originator of the pool, or the financial institution or trust providing the
credit support or enhancement.
When-Issued and Delayed Delivery Securities
The fund may purchase securities, including U.S. government securities, on a
when-issued basis or may purchase or sell securities for delayed delivery. In
such transactions, delivery of the securities occurs beyond the normal
settlement period, but no payment or delivery is made by the fund prior to the
actual delivery or payment by the other party to the transaction. The fund will
not earn income on these securities until delivered. The purchase of securities
on a when-issued or delayed delivery basis involves the risk that the value of
the securities purchased will decline prior to the settlement date. The sale of
securities for delayed delivery involves the risk that the prices available in
the market on the delivery date may be greater than those obtained in the sale
transaction. When-issued and delayed delivery transactions will be fully
collateralized by segregated liquid assets. See "Asset Segregation."
Illiquid Securities
The fund will not invest more than 15% of its net assets in illiquid and other
securities that are not readily marketable. Repurchase agreements maturing in
more than seven days will be included for purposes of the foregoing limit.
Securities subject to restrictions on resale under the Securities Act of 1933,
as amended (the "1933 Act"), are considered illiquid unless they are eligible
for resale pursuant to Rule 144A or another exemption from the registration
requirements of the 1933 Act and are determined to be liquid by Pioneer. Pioneer
determines the liquidity of Rule 144A and other restricted securities according
to procedures adopted by the Board of Trustees. The Board of Trustees monitors
Pioneer's application of these guidelines and procedures. The inability of the
fund to dispose of illiquid investments readily or at reasonable prices could
impair the fund's ability to raise cash for redemptions or other purposes. If
the fund sold restricted securities other than pursuant to an exception from
registration under the 1933 Act such as Rule 144A, it may be deemed to be acting
as an underwriter and subject to liability under the 1933 Act.
Repurchase Agreements
The fund may enter into repurchase agreements with broker-dealers, member banks
of the Federal Reserve System and other financial institutions. Repurchase
agreements are arrangements under which the fund purchases securities and the
seller agrees to repurchase the securities within a specific time and at a
specific price. The repurchase price is generally higher than the fund's
purchase price, with the difference being income to the fund. The Board of
Trustees reviews and monitors the creditworthiness of any institution which
enters into a repurchase agreement with the fund. The counterparty's obligations
under the repurchase agreement are collateralized with U.S. Treasury and/or
agency obligations with a market value of not less than 100% of the obligations,
valued daily. Collateral is held by the fund's custodian in a segregated,
safekeeping account for the benefit of the fund. Repurchase agreements afford
the fund an opportunity to earn income on temporarily available cash at low
risk. In the event of commencement of bankruptcy or insolvency proceedings with
respect to the seller of the security before repurchase of the security under a
repurchase agreement, the fund may encounter delay and incur costs before being
able to sell the security. Such a delay may involve loss of interest or a
decline in price of the security. If the court characterizes the transaction as
a loan and the fund has not perfected a security interest in the security, the
fund may be required to return the security to the seller's estate and be
treated
6
<PAGE>
as an unsecured creditor of the seller. As an unsecured creditor, the fund would
be at risk of losing some or all of the principal and interest involved in the
transaction.
Asset Segregation
The 1940 Act requires that the fund segregate assets in connection with certain
types of transactions that may have the effect of leveraging the fund's
portfolio. If the fund enters into a transaction requiring segregation, such as
a forward commitment, the custodian or Pioneer will segregate liquid assets in
an amount required to comply with the 1940 Act. Such segregated assets will be
valued at market daily. If the aggregate value of such segregated assets
declines below the aggregate value required to satisfy the 1940 Act, additional
liquid assets will be segregated.
Portfolio Turnover
It is the policy of the fund not to engage in trading for short-term profits
although portfolio turnover rate is not considered a limiting factor in the
execution of investment decisions for the fund. See Appendix A for the fund's
annual portfolio turnover rate.
Investment Restrictions
In compliance with an informal position taken by the staff of the SEC regarding
leverage, the fund will not purchase securities during the coming year at any
time that outstanding borrowings exceed 5% of the fund's total assets.
Fundamental Investment Restrictions. The fund has adopted certain investment
restrictions which may not be changed without the affirmative vote of the
holders of a "majority of the outstanding voting securities" (as defined in the
1940 Act) of the fund. For this purpose, a majority of the outstanding shares of
the fund means the vote of the lesser of:
i. 67% or more of the shares represented at a meeting, if the holders of more
than 50% of the outstanding shares are present in person or by proxy, or
ii. more than 50% of the outstanding shares of the fund.
The fund may not:
(1) Invest its assets, except in U.S. government securities (as described in the
prospectus) and in when-issued commitments and repurchase agreements with
respect to these securities;
(2) Borrow money, except from banks to meet redemptions in amounts not exceeding
33 1/3% (taken at the lower of cost or current value) of its total assets
(including the amount borrowed). The fund does not intend to borrow money during
the coming year, and will do so only as a temporary measure for extraordinary
purposes or to facilitate redemptions. The fund will not purchase securities
while any borrowings are outstanding;
(3) Purchase securities on margin;
(4) Make loans to any person, except by (a) the purchase of a debt obligation in
which the fund is permitted to invest and (b) engaging in repurchase agreements;
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(5) Act as an underwriter, except as it may be deemed to be an underwriter in a
sale of restricted securities; or
(6) Issue senior securities, except as permitted by restrictions nos. 2 and 4
above, 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 and repurchase agreements
entered into in accordance with the fund's investment policies.
Non-Fundamental Investment Restrictions.
(1) Invest in real estate, except that the fund may invest in securities of
issuers that invest in real estate or interests therein, securities that are
secured by real estate or interests therein, securities of real estate
investment trusts and mortgage-backed securities.
In order to qualify as a permissible investment for Federal credit unions, the
fund has agreed to adopt the following additional investment restrictions which
are not fundamental and may be changed by a vote of the fund's Board of Trustees
and without shareholder approval or notification:
(a) The fund may contract for the purchase or sale of a security as long
as the delivery of the security is by regular-way settlement. Regular-way
settlement means delivery of a security from a seller to a buyer within
the time frame that the securities industry has established for that type
of security.
(b) The fund may invest in a variable rate investment, as long as the
index is tied to domestic interest rates and not, for example, to foreign
currencies, foreign interest rates, or domestic or foreign commodity
prices, equity prices, or inflation rates. For these purposes, the U.S.
dollar-denominated London Interbank Offered Rate (LIBOR) is a domestic
interest rate.
(c) The fund may not invest in shares or deposits in a corporate credit
union.
(d) The fund may not invest in a registered investment company or
collective investment fund.
(e) The fund may not invest in municipal securities.
(f) The fund may not invest in any of the following instruments:
(1) Yankee dollar deposits;
(2) Eurodollar deposits;
(3) Banker's acceptances;
(4) Deposit notes; and
(5) Bank notes.
(g) The fund may enter into a repurchase transaction as long as:
(1) The repurchase securities are of the type described in the
prospectus for investment by the fund;
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(2) The fund receives a daily assessment of the market value of the
repurchase securities, including accrued interest, and maintains
adequate margin that reflects a risk assessment of the repurchase
securities and the terms of the transaction; and
(3) The fund has entered into signed contracts with all approved
counterparties.
(h) The fund may not enter into reverse repurchase and collateralized
borrowing transactions.
(i) The fund may not lend portfolio securities.
(j) (1) The fund may trade securities, including engaging in when-issued
trading and pair-off transactions, as long as the fund's investment
adviser can show that it has sufficient resources, knowledge, systems, and
procedures to handle the risks.
(2) The fund must record any security it purchases or sells for
trading purposes at fair value on the trade date. The trade date is
the date the fund commits, orally or in writing, to purchase or sell
a security.
(3) At least monthly, the fund must give its Board of Trustees or
the investment adviser's investment-related committee a written
report listing all purchase and sale transactions of trading
securities and the resulting gain or loss on an individual basis.
(k) The fund may not purchase or sell financial derivatives, such as
futures, options, interest rate swaps, or forward rate agreements.
(l) The fund may not engage in adjusted trading or short sales. Adjusted
trading means any method or transaction used to defer a loss whereby the
fund sells a security to a counterparty at a price above its then-current
market price and simultaneously purchases or commits to purchase from the
counterparty another security at a price above its then-current price.
(m) The fund may not purchase stripped mortgage-backed securities,
residual interests in CMOs/REMICs, mortgage servicing rights, commercial
mortgage related securities, or small business related securities.
(n) The fund may not purchase a zero coupon investment with a maturity
date that is more than 10 years from the settlement date.
3. 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 Pioneer, Pioneer Funds Distributor, Inc.
("PFD"), Pioneer Goldfields Limited, Teberebie
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Goldfields Limited, Closed Joint-Stock Company "Amgun-Forest," Closed
Joint-Stock Company "Udinskoye" and Closed Joint-Stock Company "Tas-Yurjah"
Mining Company; Director of Pioneer Real Estate Advisors, Inc. ("PREA"), Pioneer
Forest, Inc., Pioneer Management (Ireland) Ltd. ("PMIL"), Pioneer First
Investment Fund and Closed Joint-Stock Company "Forest-Starma"; President and
Director of Pioneer International Corp. ("PIntl"), Pioneer First Russia, Inc.
and Pioneer Omega, Inc. ("Pioneer Omega"); Member of the Supervisory Board of
Pioneer Fonds Marketing, GmbH, Pioneer First Polish Investment Fund Joint Stock
Company, S.A. ("Pioneer First Polish"), Pioneer Czech Investment Company, A.S.
("Pioneer Czech") and Pioneer Universal Pension Fund Company; Chairman,
President and Trustee of all of the Pioneer mutual funds; Director of Pioneer
Global Equity Fund Plc, Pioneer Global Bond Fund Plc, Pioneer Euro Reserve Fund
Plc, Pioneer European Equity Fund Plc, Pioneer Emerging Europe Fund Plc, Pioneer
US Real Estate Fund Plc, Pioneer U.S. Growth Fund Plc, Pioneer Diversified
Income Fund Plc and Pioneer America Fund Plc (collectively, the "Irish Funds");
and Of Counsel, Hale and Dorr LLP (counsel to PGI and the fund).
MARY K. BUSH, Trustee, DOB: April 1948
4201 Cathedral Avenue, NW, Washington, DC 20016
President, Bush & Co. (international financial advisory firm); Director and/or
Trustee of Mortgage Guaranty Insurance Corporation, Hoover Institution, March of
Dimes, Wilberforce University, Texaco, Inc., Building One Services Corporation
and R.J. Reynolds Tobacco Holdings, Inc.; Advisory Board Member, Washington
Mutual Investors Fund (registered investment company); and Trustee of all of the
Pioneer mutual funds, except Pioneer Variable Contracts Trust.
RICHARD H. EGDAHL, M.D., Trustee, DOB: December 1926
Boston University Health Policy Institute, 53 Bay State Road, Boston, MA 02215
Alexander Graham Bell Professor of Health Care Entrepreneurship, Boston
University; Professor of Management, Boston University School of Management;
Professor of Public Health, Boston University School of Public Health; Professor
of Surgery, Boston University School of Medicine; University Professor, Boston
University; Director, Boston University Health Policy Institute, Boston
University Program for Health Care Entrepreneurship, Trustee, Boston Medical
Center; 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, The Winthrop Group, Inc. (consulting firm); Manager of
Research Operations, Xerox Palo Alto Research Center, from 1991 to 1994;
formerly Professor of Operations Management and Management of Technology and
Associate Dean, Boston University School of Management; 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, George Washington University; Director, American
Productivity and Quality Center; Economic Consultant; and Trustee of all of the
Pioneer mutual funds, except Pioneer Variable Contracts Trust.
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MARGUERITE A. PIRET, Trustee, DOB: May 1948
One Boston Place, 26th Floor, Boston, MA 02108
President, Newbury, Piret & Company, Inc. (merchant banking firm); Trustee of
Boston Medical Center; Member of the Board of Governors of the Investment
Company Institute; Director, Organogenesis Inc. (tissue engineering company);
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 and a Director of
Pioneer and PFD; Director of Pioneering Services Corporation ("PSC"), PIntl,
PREA, Pioneer Omega, PMIL, Pioneer First Investment Fund and the Irish Funds;
Member of the Supervisory Board of Pioneer First Polish and Pioneer Czech; 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, NY 10004
Of Counsel, Sullivan & Cromwell (law firm); Dresdner Global Strategic Income
Fund, Inc. since May 1997 and The Swiss Helvetia Fund, Inc. since 1995
(investment companies), AMVESCAP PLC (investment managers) since 1997 and ING
American Insurance Holdings, Inc; Trustee, The Winthrop Focus Funds (investment
companies); and Trustee of all of the Pioneer mutual funds.
JOHN WINTHROP, Trustee, DOB: June 1936
One North Adgers Wharf, Charleston, SC 29401
President, John Winthrop & Co., Inc. (private investment firm); Director of NUI
Corp. (energy sales, services and distribution); and Trustee of all of the
Pioneer mutual funds, except Pioneer Variable Contracts Trust.
ERIC W. RECKARD, Treasurer, DOB: June 1956
Executive Vice President, Chief Financial Officer and Treasurer of PGI since
June 1999; Treasurer of Pioneer, PFD, PSC, PIntl, PREA and Pioneer Omega since
June 1999; Vice President-Corporate Finance of PGI from February 1999 to June
1999; Manager of Business Planning and Internal Audit of PGI since September
1996; Manager of Fund Accounting of Pioneer since May 1994; and Treasurer of all
of the Pioneer mutual funds (Assistant Treasurer prior to June 1999).
JOSEPH P. BARRI, Secretary, DOB: August 1946
Corporate Secretary of PGI and most of its subsidiaries; Secretary of all of the
Pioneer mutual funds; and Partner, Hale and Dorr LLP.
VINCENT NAVE, Assistant Treasurer, DOB: June 1945
Vice President-Fund Accounting, Administration and Custody Services of Pioneer
(Manager from September 1996 to February 1999); and Assistant Treasurer of all
of the Pioneer mutual funds since June 1999.
ROBERT P. NAULT, Assistant Secretary, DOB: March 1964
Senior Vice President, General Counsel and Assistant Secretary of PGI since
1995; Assistant Secretary of Pioneer, certain other PGI subsidiaries and all of
the Pioneer mutual funds; and Assistant Clerk of PFD and PSC .
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SHERMAN B. RUSS, Vice President, DOB: July 1937
Senior Vice President of Pioneer; Vice President of Pioneer Bond Fund, Pioneer
Money Market Trust, Pioneer Short-Term Income Trust, Pioneer Tax-Free Income
Fund, Pioneer Strategic Income Fund and Pioneer Interest Shares.
Kenneth J. Taubes, Vice President, DOB: April 1958
Senior Vice President of Pioneer; Vice President of Pioneer Bond Fund, Pioneer
Short-Term Income Trust, Pioneer Strategic Income Fund and Pioneer Interest
Shares.
The business address of all officers is 60 State Street, Boston, Massachusetts
02109.
All of the outstanding capital stock of PFD, Pioneer and PSC is owned, directly
or indirectly, by PGI, a publicly owned Delaware corporation. Pioneer, the
fund's investment adviser, serves as the investment adviser for the Pioneer
mutual funds and manages the investments of certain institutional accounts.
The table below lists all of the U.S.-registered Pioneer mutual funds currently
offered to the public and the investment adviser and principal underwriter for
each fund.
Investment Principal
Fund Name Adviser Underwriter
Pioneer International Growth Fund Pioneer PFD
Pioneer Europe Fund Pioneer PFD
Pioneer World Equity Fund Pioneer PFD
Pioneer Emerging Markets Fund Pioneer PFD
Pioneer Indo-Asia Fund Pioneer PFD
Pioneer Mid-Cap Value Fund Pioneer PFD
Pioneer Mid-Cap Fund Pioneer PFD
Pioneer Growth Shares Pioneer PFD
Pioneer Small Company Fund Pioneer PFD
Pioneer Independence Fund Pioneer Note 1
Pioneer Micro-Cap Fund Pioneer PFD
Pioneer Balanced Fund Pioneer PFD
Pioneer Equity-Income Fund Pioneer PFD
Pioneer Fund Pioneer PFD
Pioneer II Pioneer PFD
Pioneer Real Estate Shares Pioneer PFD
Pioneer Limited Maturity Bond Fund Pioneer PFD
Pioneer America Income Trust Pioneer PFD
Pioneer Bond Fund Pioneer PFD
Pioneer Tax-Free Income Fund Pioneer PFD
Pioneer Cash Reserves Fund Pioneer PFD
Pioneer High Yield Fund Pioneer PFD
Pioneer Tax-Managed Fund Pioneer PFD
Pioneer Science & Technology Fund Pioneer PFD
Pioneer Interest Shares Pioneer Note 2
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Pioneer Variable Contracts Trust Pioneer Note 3
Pioneer Strategic Income Fund Pioneer PFD
Note 1 This fund is available to the general public only through Pioneer
Independence Plans, a systematic investment plan sponsored by PFD.
Note 2 This fund is a closed-end fund.
Note 3 This is a series of 15 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.
Share Ownership
See Appendix A for annual information on the ownership of fund shares by the
Trustees, the fund's officers and owners in excess of 5% of any class of shares
of the fund.
Compensation of Officers and Trustees
The fund pays no salaries or compensation to any of its officers. The fund
compensates each Trustee who is not affiliated with PGI, Pioneer, PFD or PSC
with a base fee, a variable fee calculated on the basis of average net assets of
the fund, per meeting fees, and annual committee participation fees for each
committee member or chairperson that are based on percentages of his or her
aggregate annual fee. See the fee table in Appendix A.
Sales Loads. Current and former Trustees and officers of the fund and other
qualifying persons may purchase the fund's Class A shares without an initial
sales charge.
4. INVESTMENT ADVISER
The fund has contracted with Pioneer to act as its investment adviser. Pioneer
is a wholly owned subsidiary of PGI. PGI is engaged in the financial services
business in the U.S. and other countries. Certain Trustees or officers of the
fund are also directors and/or officers of PGI and its subsidiaries (see
management biographies above).
As the fund's investment adviser, Pioneer provides the fund with investment
research, advice and supervision and furnishes an investment program for the
fund consistent with the fund's investment objective and policies, subject to
the supervision of the fund's Trustees. Pioneer determines what portfolio
securities will be purchased or sold, arranges for the placing of orders for the
purchase or sale of portfolio securities, selects brokers or dealers to place
those orders, maintains books and records with respect to the fund's securities
transactions, and reports to the Trustees on the fund's investments and
performance.
Under the terms of its contract with the fund, Pioneer pays all the operating
expenses, including executive salaries and the rental of office space, relating
to its services for the fund, with the exception of the following, which are 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 Pioneer, or its affiliates, office space and
facilities and personnel compensation, training and benefits;
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(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; (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, state or blue sky securities agencies and non-U.S. countries, including the
preparation of prospectuses and statements of additional information for filing
with the SEC; (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) any 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 Pioneer, 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, the fund
shall pay brokers' and underwriting commissions chargeable to the fund in
connection with securities transactions to which the fund is a party. The
Trustees' approval of and the terms, continuance and termination of the
management contract are governed by the 1940 Act and the Investment Advisers Act
of 1940, as applicable. Pursuant to the management contract, Pioneer will not be
liable for any error of judgment or mistake of law or for any loss sustained by
reason of the adoption of any investment policy or the purchase, sale or
retention of any securities on the recommendation of Pioneer. Pioneer, however,
is not protected against liability by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under the management contract.
Advisory Fee. As compensation for its management services, the fund pays Pioneer
a fee at the annual rate of 0.50% of the fund's average daily net assets. This
fee is computed and accrued daily and paid monthly.
See the table in Appendix A for management fees paid to Pioneer during recently
completed fiscal years.
Administration Agreement. The fund has entered into an administration agreement
with Pioneer pursuant to which certain accounting and legal services which are
expenses payable by the fund under the management contract are performed by
Pioneer and pursuant to which Pioneer is reimbursed for its costs of providing
such services. See Appendix A for fees the fund paid to Pioneer for
administration and related services.
Potential Conflict of Interest. The fund is managed by Pioneer 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 or account 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
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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
Pioneer 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 Pioneer 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 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 account. Although the other
Pioneer mutual funds may have the same or similar investment objectives and
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.
Personal Securities Transactions. The fund, Pioneer and PFD have adopted a code
of ethics under Rule 17j-1 of the 1940 Act which is applicable to officers,
trustees/directors and designated employees. The code permits such persons to
engage in personal securities transactions for their own accounts, including
securities that may be purchased or held by the fund, and is designed to
prescribe means reasonably necessary to prevent conflicts of interest from
arising in connection with personal securities transactions. The code is on
public file with and available from the SEC.
5. PRINCIPAL UNDERWRITER AND DISTRIBUTION PLANS
Principal Underwriter
PFD, 60 State Street, Boston, Massachusetts 02109, is the principal underwriter
for the fund in connection with the continuous offering of its shares. PFD is an
indirect wholly owned subsidiary of PGI.
The fund entered into an underwriting agreement with PFD which provides that PFD
will bear expenses for the distribution of the fund's shares, except for
expenses incurred by PFD for which it is reimbursed or compensated by the fund
under the distribution plans (discussed below). 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 and the laws of certain
non-U.S. countries. Under the underwriting agreement, PFD will use its best
efforts in rendering services to the fund.
See "Class A Share Sales Charges" for the schedule of initial sales charge
reallowed to dealers as a percentage of the offering price of the fund's Class A
shares.
See the tables in Appendix A for commissions retained by PFD and reallowed to
dealers in connection with PFD's offering of the fund's Class A shares during
recently completed fiscal years.
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The fund will not generally issue fund shares for consideration other than cash.
At the fund's sole discretion, however, it may issue fund shares for
consideration other than cash in connection with a bona fide reorganization,
statutory merger or other acquisition of portfolio securities.
The redemption price of shares of beneficial interest of the fund may, at
Pioneer's discretion, be paid in cash or portfolio securities. The fund has,
however, elected to be governed by Rule 18f-1 under the 1940 Act pursuant to
which the fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the fund's net asset value during any 90-day period for any
one shareholder. Should the amount of redemptions by any shareholder exceed such
limitation, the fund will have the option of redeeming the excess in cash or
portfolio securities. In the latter case, the securities are taken at their
value employed in determining the fund's net asset value. A shareholder whose
shares are redeemed in-kind may incur brokerage charges in selling the
securities received in-kind. The selection of such securities will be made in
such manner as the Board of Trustees deems fair and reasonable.
Distribution Plans
The fund has adopted a plan of distribution pursuant to Rule 12b-1 under the
1940 Act with respect to its Class A shares (the "Class A Plan"), a plan of
distribution with respect to its Class B shares (the "Class B Plan") and a plan
of distribution with respect to its Class C shares (the "Class C Plan")
(together, the "Plans"), pursuant to which certain distribution and service fees
are paid to PFD. Because of the Plans, long-term shareholders may pay more than
the economic equivalent of the maximum sales charge permitted by the National
Association of Securities Dealers, Inc. (the "NASD") regarding investment
companies.
Class A Plan. 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 Class A shares or to provide services to holders of Class A shares,
provided the categories of expenses for which reimbursement is made are approved
by the Board of Trustees. The Board of Trustees has approved the following
categories of expenses that may be reimbursed under the Class A Plan: (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; 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. The expenses of the fund pursuant to the Class A Plan are
accrued daily at a rate which may not exceed the annual rate of 0.25% of the
fund's average daily net assets attributable to Class A shares. Distribution
expenses of PFD are expected to substantially exceed the distribution fees paid
by the fund in a given year.
The Class A Plan does not provide for the carryover of reimbursable expenses
beyond 12 months from the time the fund is first invoiced for an expense. The
limited carryover provision in the Class A Plan may result in an expense
invoiced to the fund in one fiscal year being paid in the subsequent fiscal year
and thus being treated for purposes of calculating the maximum expenditures of
the fund as having been incurred in the subsequent fiscal year. In the event of
termination or non-continuance of the Class A Plan, the fund has 12 months to
reimburse any expense which it incurs prior to such termination or
non-continuance, provided that payments by the fund during such 12-month period
shall not exceed 0.25% of the fund's average daily net assets attributable to
Class A shares during such period. See Appendix A for the amount, if any, of
carryover of distribution expenses as of the end of the most recent calendar
year.
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Class B Plan. Commissions on the sale of Class B shares equal to 3.75% of the
amount invested are paid to broker-dealers who have sales agreements with PFD.
PFD may also advance to dealers the first-year service fee payable under the
Class B Plan at a rate up to 0.25% of the purchase price of such shares. As
compensation for such advance of the service fee, PFD may retain the service fee
paid by the fund with respect to such shares for the first year after purchase.
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 in consideration of personal services and/or
account maintenance services rendered by the dealer with respect to Class B
shares. 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. 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 with respect to Class B 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 B Plan also provides that PFD will receive all contingent
deferred sales charges ("CDSCs") attributable to Class B shares. When a
broker-dealer sells Class B 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.
The Class B Plan and underwriting agreement were amended effective September 30,
1998 to permit PFD to sell its right to receive distribution fees under the
Class B Plan and CDSCs to third parties. PFD enters into such transactions to
finance the payment of commissions to brokers at the time of sale and other
distribution-related expenses. In connection with such amendments, the fund has
agreed that the distribution fee will not be terminated or modified (including a
modification by change in the rules relating to the conversion of Class B shares
into Class A shares) with respect to Class B shares (a) issued prior to the date
of any termination or modification or (b) attributable to Class B shares issued
through one or a series of exchanges of shares of another investment company for
which PFD acts as principal underwriter which were initially issued prior to the
date of such termination or modification or (c) issued as a dividend or
distribution upon Class B shares initially issued or attributable to Class B
shares issued prior to the date of any such termination or modification except:
(i) to the extent required by a change in the 1940 Act, the rules or
regulations under the 1940 Act, the Conduct Rules of the NASD or an order of any
court or governmental agency, in each case enacted, issued or promulgated after
September 30, 1998;
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(ii) in connection with a Complete Termination (as defined in the Class B
Plan); or
(iii) on a basis, determined by the Board of Trustees acting in good
faith, so long as from and after the effective date of such modification or
termination: neither the fund, the adviser nor certain affiliates pay, directly
or indirectly, a fee to any person for the provision of personal and account
maintenance services (as such terms are used in the Conduct Rules of the NASD)
to the holders of Class B shares of the fund and the termination or modification
of the distribution fee applies with equal effect to all Class B shares
outstanding from time to time.
The Class B Plan also provides that PFD shall be deemed to have performed all
services required to be performed in order to be entitled to receive the
distribution fee, if any, payable with respect to Class B shares sold through
PFD upon the settlement date of the sale of such Class B shares or in the case
of Class B shares issued through one or a series of exchanges of shares of
another investment company for which PFD acts as principal underwriter or issued
as a dividend or distribution upon Class B shares, on the settlement date of the
first sale on a commission basis of a Class B share from which such Class B
share was derived.
In the amendments to the underwriting agreement, the fund agreed that subsequent
to the issuance of a Class B share, it would not take any action to waive or
change any CDSC (including a change in the rules applicable to conversion of
Class B shares into another class) in respect of such Class B shares, except (i)
as provided in the fund's prospectus or statement of additional information in
effect on September 30, 1998, or (ii) as required by a change in the 1940 Act
and the rules and regulations thereunder, the Conduct Rules of the NASD or any
order of any court or governmental agency enacted, issued or promulgated after
September 30, 1998.
Class C Plan. Commissions on the sale of Class C shares of up to 0.75% of the
amount invested in Class C shares are paid to broker-dealers who have sales
agreements with PFD. PFD may also advance to dealers the first-year service fee
payable under the Class C Plan at a rate up to 0.25% of the purchase price of
such shares. As compensation for such advance of the service fee, PFD may retain
the service fee paid by the fund with respect to such shares for the first year
after purchase.
The Class C Plan provides that the fund will pay PFD, as the fund's distributor
for its Class C shares, a distribution fee accrued daily and paid quarterly,
equal on an annual basis to 0.75% of the fund's average daily net assets
attributable to Class C shares and will pay PFD a service fee equal to 0.25% of
the fund's average daily net assets attributable to Class C shares. PFD will in
turn pay to securities dealers which enter into a sales agreement with PFD a
distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the fund's average daily net assets attributable to Class C
shares owned by investors for whom that securities dealer is the holder or
dealer of record. The service fee is intended to be in consideration of personal
services and/or account maintenance services rendered by the dealer with respect
to Class C shares. PFD will advance to dealers the first-year 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 13th month following the purchase
of Class C shares, dealers will become eligible for additional annual
distribution fees and service fees of up to 0.75% and 0.25%, respectively, of
the 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.
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The purpose of distribution payments to PFD under the Class C Plan is to
compensate PFD for its distribution services with respect to 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. When a broker-dealer sells 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.
General
In accordance with the terms of each Plan, PFD provides to the fund for review
by the Trustees a quarterly written report of the amounts expended under the
Plan and the purposes for which such expenditures were made. In the Trustees'
quarterly review of the Plans, they will consider the continued appropriateness
and the level of reimbursement or compensation the Plans provide.
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 Plans 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 Plans by the fund and except to the
extent certain officers may have an interest in PFD's ultimate parent, PGI.
Each Plan's adoption, terms, continuance and termination are governed by Rule
12b-1 under the 1940 Act. The Board of Trustees believes that there is a
reasonable likelihood that the Plans will benefit the fund and its current and
future shareholders. The Plans 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
affected thereby, and material amendments of the Plans must also be approved by
the Trustees as provided in Rule 12b-1.
See Appendix A for fund expenses under the Class A Plan, Class B Plan and Class
C Plan and CDSCs paid to PFD for the most recently completed fiscal year.
Upon redemption, Class A shares may be subject to a 1% CDSC, Class B shares are
subject to a CDSC at a rate declining from a maximum 4% of the lower of the cost
or market value of the shares and Class C shares may be subject to a 1% CDSC.
6. SHAREHOLDER SERVICING/TRANSFER AGENT
The fund has contracted with PSC, 60 State Street, Boston, Massachusetts 02109,
to act as shareholder servicing and transfer agent for the fund.
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 the fund's portfolio; and (iii) maintaining account records and
responding to shareholder inquiries.
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PSC receives an annual fee of $33.00 for each Class A, Class B and Class C
shareholder account from the fund as compensation for the services described
above. PSC is also reimbursed by the fund for its cash out-of-pocket
expenditures. The fund may compensate entities which have agreed to provide
certain sub-accounting services such as specific transaction processing and
recordkeeping services. Any such payments by the fund would be in lieu of the
per account fee which would otherwise be paid by the fund to PSC.
7. CUSTODIAN
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts 02109, 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.
8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, 225 Franklin Street, Boston, Massachusetts 02110, the
fund's independent public accountants, provides 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 Pioneer pursuant to authority contained in the fund's management
contract. Securities purchased and sold on behalf of the fund normally will be
traded in the over-the counter market on a net basis (i.e. without commission)
through dealers acting for their own account and not as brokers or otherwise
through transactions directly with the issuer of the instrument. The cost of
securities purchased from underwriters includes an underwriter's commission or
concession, and the prices at which securities are purchased and sold from and
to dealers include a dealer's markup or markdown. Pioneer normally seeks to deal
directly with the primary market makers unless, in its opinion, better prices
are available elsewhere. Some securities are purchased and sold on an exchange
or in over-the-counter transactions conducted on an agency basis involving a
commission. Pioneer seeks to obtain the best execution on portfolio trades. The
price of securities and any commission rate paid are always factors, but
frequently not the only factors, in judging best execution. In selecting brokers
or dealers, Pioneer considers 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. Transactions in non-U.S. equity securities are executed by
broker-dealers in non-U.S. countries in which commission rates may not be
negotiable (as such rates are in the U.S.).
Pioneer may select broker-dealers that provide brokerage and/or research
services to the fund and/or other investment companies or other accounts managed
by Pioneer. In addition, consistent with Section 28(e) of the Securities
Exchange Act of 1934, as amended, if Pioneer determines in good faith that the
amount of commissions charged by a broker-dealer is reasonable in relation to
the value of the brokerage and research services provided by such broker, the
fund may pay commissions to such broker-dealer in an amount greater than the
amount another firm may charge. Such services may include advice concerning the
value of securities; the advisability of investing in, purchasing or selling
securities; the
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availability of securities or the purchasers or sellers of securities; providing
stock quotation services, credit rating service information and comparative fund
statistics; furnishing analyses, electronic information services, manuals and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, and performance of accounts and particular investment
decisions; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). Pioneer maintains a
listing of broker-dealers who provide such services on a regular basis. However,
because many transactions on behalf of the fund and other investment companies
or accounts managed by Pioneer 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 dealers solely because such services were provided. Pioneer
believes that no exact dollar value can be calculated for such services.
The research received from broker-dealers may be useful to Pioneer in rendering
investment management services to the fund as well as other investment companies
or other accounts managed by Pioneer, although not all 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 accounts may be
useful to Pioneer in carrying out its obligations to the fund. The receipt of
such research has not reduced Pioneer's normal independent research activities;
however, it enables Pioneer to avoid the additional expenses which might
otherwise be incurred if it were to attempt to develop comparable information
through its own staff.
In circumstances where two or more broker-dealers offer comparable prices and
executions, preference may be given to a broker-dealer which has sold shares of
the fund as well as shares of other investment companies managed by Pioneer.
This policy does not imply a commitment to execute all portfolio transactions
through all broker-dealers that sell shares of the fund.
The Pioneer funds have entered into third-party brokerage and/or expense offset
arrangements to reduce the funds' total operating expenses. Pursuant to
third-party brokerage arrangements, certain of the funds that invest primarily
in U.S. equity securities may incur lower custody fees by directing brokerage to
third-party broker-dealers. Pursuant to expense offset arrangements, the funds
incur lower transfer agency expenses by maintaining their cash balances with the
custodian. See "Financial highlights" in the prospectus.
See the table in Appendix A for aggregate brokerage and underwriting commissions
paid by the fund in connection with its portfolio transactions during recently
completed fiscal years. The Board of Trustees periodically reviews Pioneer's
performance of its responsibilities in connection with the placement of
portfolio transactions on behalf of the fund.
10. DESCRIPTION OF SHARES
As an open-end management 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 next determined net asset value per share less
any applicable CDSC. See "Sales Charges." 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 Class A share
certificates; certificates will not be issued for Class B or Class C shares.
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The fund's Amended and Restated Declaration of Trust dated December 7, 1993 (the
"Declaration") permits the 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 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 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 as Class A shares, Class B shares and Class C
shares. Each share of a class of the fund 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 allocable to that
class of the particular series.
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 and Class B shareholders have exclusive voting rights
with respect to the Rule 12b-1 Plans adopted by holders of those shares in
connection with the distribution of shares.
Shareholders are entitled to one vote for each share held and may vote in the
election of Trustees and on other matters submitted to a meeting of
shareholders. Although Trustees are not elected annually by the shareholders,
shareholders have, under certain circumstances, the right to remove one or more
Trustees. The fund is not required, and does not intend, to hold annual
shareholder meetings although special meetings may be called for the purpose of
electing or removing Trustees, changing fundamental investment restrictions or
approving a management contract.
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 Declaration without the affirmative vote of a
majority of the fund's shares. Shares have no preemptive or conversion rights,
except that under certain circumstances Class B shares may convert to Class A
shares.
As a Massachusetts business trust, the fund's operations are the Declaration, a
copy of which is on file with the Office of the Secretary of State of The
Commonwealth of Massachusetts. Shareholders of a Massachusetts business trust
may, under certain circumstances, be held personally liable for the obligations
of the trust. However, the Declaration contains an express disclaimer of
shareholder liability for acts or obligations of the fund or any series 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.
Moreover, the Declaration 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. The Declaration also 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 would
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be limited to circumstances in which the fund itself will be unable to meet its
obligations. In light of the nature of the fund's business and the nature and
amount of its assets, the possibility of the fund's liabilities exceeding its
assets, and therefore a shareholder's risk of personal liability, is remote.
The Declaration 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 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.
The Declaration provides that any Trustee who is not an "interested person" of
Pioneer shall be considered to be independent for purposes of Massachusetts law
notwithstanding the fact that such Trustees receives compensation for serving as
a trustee of the fund or other investment companies for which Pioneer acts as
investment adviser.
11. SALES CHARGES
The fund continuously offers three classes of shares designated as Class A,
Class B and Class C shares, as described in the prospectus.
Class A Share Sales Charges
You may buy Class A shares at the public offering price, including a sales
charge, as follows:
Sales Charge as a % of
----------------------
Offering Net Amount Dealer
Amount of Purchase Price Invested Reallowance
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 0.00 0.00 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 Code although more than one beneficiary is involved. The sales
charges 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 other Pioneer mutual funds previously purchased and then owned, provided PFD
is notified by such person or his or her broker-dealer each time a purchase is
made which would qualify. Pioneer mutual funds include all mutual funds for
which PFD serves as principal underwriter. At the sole discretion of PFD,
holdings of funds domiciled outside the U.S., but which are managed by
affiliates of Pioneer, may be included for this purpose.
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No sales charge is payable at the time of purchase on investments of $1 million
or more, or for purchases by participants in certain group plans described below
subject to a CDSC of 1% which may be imposed in the event of a redemption of
Class A shares within 12 months of purchase. 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
invested; and 0.25% on the excess over $50 million invested. These commissions
shall not be payable if the purchaser is affiliated with the broker-dealer or if
the purchase represents the reinvestment of a redemption made during the
previous 12 calendar months. Broker-dealers who receive a commission in
connection with 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 commissions paid or a pro
rata portion thereof if the retirement plan redeems its shares within 12 months
of purchase.
Letter of Intent ("LOI"). Reduced sales charges are available for purchases of
$100,000 or more of Class A shares (excluding any reinvestments of dividends and
capital gain distributions) made within a 13-month period pursuant to an LOI
which may be established by completing the Letter of Intent section of the
Account Application. The reduced sales charge will be the charge that would be
applicable to the purchase of the specified amount of Class A shares as if the
shares had all been purchased at the same time. A purchase not made pursuant to
an LOI may be included if the LOI is submitted to PSC within 90 days of such
purchase. You may also obtain the reduced sales charge by including the value
(at current offering price) of all your Class A shares in the fund and all other
Pioneer mutual funds held of record as of the date of your LOI in the amount
used to determine the applicable sales charge for the Class A shares to be
purchased under the LOI. Five percent of your total intended purchase amount
will be held in escrow by PSC, registered in your name, until the terms of the
LOI are fulfilled. 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. An LOI is not a
binding obligation upon the investor to purchase, or the fund to sell, the
amount specified in the LOI.
If the total purchases, less redemptions, exceed the amount specified under the
LOI and are in an amount which would qualify for a further quantity discount,
all transactions will be recomputed on the expiration date of the LOI 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
LOI.
If the total purchases, less redemptions, are less than the amount specified
under the LOI, you must remit to PFD any difference between the sales charge on
the amount actually purchased and the amount originally specified in the LOI.
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.
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
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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 gain 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 after
September 30, 1998, all payments during a month will be aggregated and deemed to
have been made on the first day of that month. For the purpose of determining
the number of years from the time of any purchase made prior to October 1, 1998,
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:
CDSC as a % of Dollar
Year Since 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 0.0
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 beginning
of the calendar month (or the calendar quarter for purchases made prior to
October 1, 1998) 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 (the "IRS") or an opinion of counsel that such
conversions will not constitute taxable events for U.S. federal income tax
purposes. The conversion of Class B shares to Class A shares will not occur if
such ruling or opinion is not available and, therefore, Class B shares would
continue to be subject to higher expenses than Class A shares for an
indeterminate period.
Class C Shares
You may buy Class C shares at net asset value 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
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imposed on increases in account value above the initial purchase price,
including shares derived from the reinvestment of dividends or capital gain
distributions. Class C shares do not convert to any other class of fund shares.
For the purpose of determining the time of any purchase after September 30,
1998, all payments during a month will be aggregated and deemed to have been
made on the first day of that month. For the purpose of determining the time of
any purchase made prior to October 1, 1998, all payments made during a calendar
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.
Additional Payments to Dealers
From time to time, PFD or its affiliates may elect to make payments to dealers
in addition to the commissions described above. 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. 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. PFD will reallow to A.G. Edwards & Sons, Inc. the
entire sales charge for all sales of the fund's Class A shares to IRA accounts
if the order is placed from January 1, 2000 through April 17, 2000. PFD will
reallow to Citicorp Investment Services the entire sales charge for all sales of
the fund's Class A share if the order is placed from March 1, 2000 through June
30, 2000. PFD will reallow to participating broker/dealers the entire sales
charge for all sales of the fund's Class A shares if the order is placed from
March 1, 2000 through June 30, 2000. PFD or its affiliates may elect to pay
dealers an additional commission based on the net asset value of all of the
fund's Class B shares sold by a dealer during a particular period. PFD has
elected to pay dealers an amount equal to 0.50% of the net asset value of the
fund's Class B shares sold from April 1, 2000 through June 30, 2000. In
addition, at its own expense, PFD may elect to pay additional cash or other
incentives to dealers that sell or arrange for the sale of shares of the fund.
Such cash or other incentives may take the form of payment for attendance at
preapproved conferences or seminars, sales or training programs for invited
registered representatives and other employees, payment for travel expenses,
including lodging, incurred by registered representatives and other employees
for such seminars or training programs, seminars for the public, advertising and
preapproved sales campaigns or dealer-sponsored events. PFD may also elect to
make expense reimbursements for special training of a dealer's registered
representatives and other employees in group meetings or to help pay the
expenses of sales contests. PFD will offer such cash and other incentives only
to the extent permitted by applicable law or by a self-regulatory agency such as
the National Association of Securities Dealers, Inc.
12. REDEEMING SHARES
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
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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 for shareholders that are
subject to U.S. federal income tax. The net asset value per share received upon
redemption or repurchase may be more or less than the cost of shares to an
investor, depending on the market value of the portfolio at the time of
redemption or repurchase.
Systematic Withdrawal Plan(s) ("SWP"). A SWP is designed to provide a convenient
method of receiving fixed payments at regular intervals from fund share accounts
having a total value of not less than $10,000. You must also be reinvesting all
dividends and capital gain distributions to use the SWP option.
Periodic payments of $50 or more will be deposited monthly, quarterly,
semiannually or annually 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. Payments can be made either by check or electronic funds transfer
to a bank account designated by you. Class B accounts must meet the minimum
initial investment requirement prior to establishing a SWP. Withdrawals from
Class B and Class C share accounts are limited to 10% of the value of the
account at the time the SWP is established. See "Qualifying for a reduced sales
charge" in the prospectus. If you direct that withdrawal payments be paid to
another person, want to change the bank where payments are sent or designate an
address that is different from the account's address of record after you have
opened your account, a signature guarantee must accompany your instructions.
Withdrawals under the SWP are redemptions that may have tax consequences for
you.
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. SWP redemptions reduce and may ultimately exhaust the number of
shares in your account. In addition, the amounts received by a shareholder
cannot be considered as yield or income on his or her investment because part of
such payments may be a return of his or her investment.
A 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 in the shareholder's account have
been redeemed.
You may obtain additional information by calling PSC at 1-800-225-6292.
Reinstatement Privilege (Class A Shares). If you redeem all or part of your
Class A shares of the fund, you may reinvest all or part of the redemption
proceeds without a sales charge in Class A shares of the fund if you send a
written request to PSC not more than 90 days after your shares were redeemed.
Your redemption proceeds will be reinvested at the next determined net asset
value of the Class A shares of the fund after receipt of the written request for
reinstatement. You may realize a gain or loss for federal income tax purposes as
a result of the redemption, and special tax rules may apply if a reinstatement
occurs. For example, 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 in the prospectus, you may also reinvest in Class A
shares of other Pioneer mutual funds; in this case you must meet the minimum
investment requirements for each fund you enter.
27
<PAGE>
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.
13. TELEPHONE TRANSACTIONS
You may purchase, exchange or sell fund shares by telephone. See the prospectus
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 prerecorded certain bank information (see
"FactFone(SM)"). You are strongly urged to consult with your investment
professional prior to requesting any telephone transaction.
To confirm that each transaction instruction received by telephone is genuine,
the fund will record each telephone transaction, require the caller to provide
the personal identification number ("PIN") for the account and send you a
written confirmation of each telephone transaction. Different procedures may
apply to accounts that are registered to non-U.S. citizens or that are held in
the name of an institution or in the name of an investment broker-dealer or
other third party. If reasonable procedures, such as those described above, are
not followed, the fund may be liable for any loss due to unauthorized or
fraudulent instructions. The fund may implement other procedures from time to
time. In all other cases, neither the fund, PSC 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 purchase, exchange or redemption. You should
communicate with the fund in writing if you are unable to reach the fund by
telephone.
FactFone(SM). FactFone(SM) is an automated inquiry and telephone transaction
system available to Pioneer mutual fund shareholders by dialing 1-800-225-4321.
FactFone(SM) allows shareholder access to current information on Pioneer mutual
fund accounts and to the prices and yields of all publicly available Pioneer
mutual funds. In addition, you may use FactFone(SM) to make computer-assisted
telephone purchases, exchanges or redemptions from your Pioneer mutual fund
accounts, access your account balances and last three transactions and order a
duplicate statement if you have activated your PIN. Telephone purchases or
redemptions require the establishment of a bank account of record. You are
strongly urged to consult with your investment professional prior to requesting
any telephone transaction. Shareholders whose accounts are registered in the
name of a broker-dealer or other third party may not be able to use
FactFone(SM). Call PSC for assistance.
FactFone(SM) allows shareholders to hear the following recorded fund
information:
o net asset value prices for all Pioneer mutual funds;
o annualized 30-day yields on Pioneer's fixed income funds;
o annualized 7-day yields and 7-day effective (compound) yields for
Pioneer's money market fund; and
o dividends and capital gain distributions on all Pioneer mutual funds.
28
<PAGE>
Yields are calculated in accordance with SEC mandated standard formulas.
All performance numbers communicated through FactFone(SM) represent past
performance, and figures 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 and shares (except for
Pioneer Cash Reserves Fund, which seeks to maintain a stable $1.00 share price)
will also vary, and such shares may be worth more or less at redemption than
their original cost.
14. PRICING OF SHARES
The net asset value per share of each class of the fund is determined as of the
close of regular trading on the Exchange (normally 4:00 p.m. Eastern time) on
each day on which the Exchange is open for trading. As of the date of this
statement of additional information, the Exchange is open for trading every
weekday except for the following holidays: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. The net asset value per share of each
class of the fund is also determined on any other day on which the level of
trading in its portfolio securities is sufficiently high that the current net
asset value per share might be materially affected by changes in the value of
its portfolio securities. The fund is not required to determine its net asset
value per share on any day on which no purchase orders in good order for fund
shares are received and no shares are tendered and accepted for redemption.
Ordinarily, investments in debt securities are valued on the basis of
information furnished by a pricing service which utilizes primarily a matrix
system (which reflects such factors as security prices, yields, maturities and
ratings), supplemented by dealer and exchange quotations, to recommend
valuations for normal institutional-sized trading units of debt securities.
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 non-U.S.
currencies are converted to U.S. dollars utilizing non-U.S. exchange rates
employed by the fund's independent pricing services. Generally, trading in
non-U.S. securities is substantially completed each day at various times prior
to the close of regular trading on the Exchange. The values of such securities
used in computing the net asset value of the fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of regular trading on the Exchange. Occasionally, events which
affect the values of such securities and such exchange rates may occur between
the times at which they are determined and the close of regular trading on the
Exchange and will therefore not be reflected in the computation of the fund's
net asset value. If events materially affecting the value of such securities
occur during such period, then these securities may be 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, although the actual
computations may be made by persons acting pursuant to the direction of the
Board of Trustees.
The net asset value per share of each class of the fund is computed by taking
the value of all of the fund's assets attributable to a class, less the fund's
liabilities attributable to that class, and dividing the result by the number of
outstanding shares of that class. For purposes of determining net asset value,
expenses of the classes of the fund are accrued daily and taken into account.
The fund's maximum offering price per Class A share is determined by adding the
maximum sales charge to the net asset value per Class A share. Class B and Class
C shares are offered at net asset value without the imposition of an initial
sales charge (but may be subject to a CDSC).
29
<PAGE>
15. TAX STATUS
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 U.S. federal income tax on income and capital gains distributed
to shareholders . If the fund did not qualify as a regulated investment company,
it would be treated as a U.S. corporation subject to U.S. federal income tax.
Under the Code, the fund will be subject to a nondeductible 4% federal excise
tax on a portion of its undistributed ordinary income and capital gains if it
fails to meet certain distribution requirements with respect to each calendar
year. The fund intends to make distributions in a timely manner and accordingly
does not expect to be subject to the excise tax.
The fund declares a dividend from any net investment income each business day.
Dividends are normally paid on the last business day of the month or shortly
thereafter. The fund generally distributes any net short- and long-term capital
gains in November. Dividends from income and/or capital gains may also be paid
at such other times as may be necessary for the fund to avoid U.S. federal
income or excise 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 gross income for each
taxable year from interest, gains from the sale or other disposition of
securities or certain other income (the "90% income test") and satisfy certain
annual distribution and quarterly diversification requirements. For purposes of
the 90% income test, the character of income earned by certain entities in which
the fund invests that are not treated as corporations (e.g., partnerships or
trusts) for U.S. tax purposes will generally pass through to the fund.
Consequently, the fund may be required to limit its equity investments in such
entities that earn fee income, rental income or other nonqualifying income.
Unless shareholders specify otherwise, all distributions will be automatically
reinvested in additional full and fractional shares of the fund. For U.S.
federal income tax purposes, all dividends are taxable whether a shareholder
takes them in cash or reinvests them in additional shares of the fund. Dividends
from investment company taxable income, which includes net investment income and
net short-term capital gain in excess of net long-term capital loss are taxable
as ordinary income. Dividends from net long-term capital gain in excess of net
short-term capital loss ("net capital gain"), if any, are taxable to the fund's
shareholders as long-term capital gains for U.S. federal income tax purposes
without regard to the length of time the shareholder has held shares of the
fund. The U.S. federal income tax status of all distributions will be reported
to shareholders annually.
Any dividend declared by the fund as of a record date in October, November or
December and paid during the following January will be treated for U.S. federal
income tax purposes as received by shareholders on December 31 of the calendar
year in which it is declared.
If the fund invests in zero coupon securities or, in general, any other
securities with original issue discount (or with market discount if the fund
elects to include market discount in income currently), the fund must accrue
income on such investments 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 U.S. federal income and excise
taxes. Therefore, the fund may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash to satisfy distribution
requirements.
30
<PAGE>
For U.S. 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 U.S. federal income
tax liability to the fund and are not expected to be distributed as such to
shareholders. See Appendix A for the fund's available 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. Consequently, subsequent distributions by the fund with respect to
these shares from such appreciation may be taxable to such investor even if the
net asset value of the investor's shares is, as a result of the distributions,
reduced below the investor's cost for such shares and the distributions
economically represent a return of a portion of the investment.
Redemptions and exchanges are taxable events for shareholders that are subject
to tax. Shareholders should consult their own tax advisers with reference to
their individual circumstances to determine whether any particular transaction
in fund shares is properly treated as a sale for tax purposes, as the following
discussion assumes, and the tax treatment of any gains or losses recognized in
such transactions. 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 in the fund or another mutual
fund at net asset value pursuant to the reinstatement privilege, or (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
reinstatement or 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 generally would be included in the federal tax
basis of the shares acquired in the other investments.
The fund's dividends and distributions will not qualify for any
dividends-received deduction that might otherwise be available for certain
dividends received by shareholders that are corporations.
A state income (and possibly local income and/or intangible property) tax
exemption is generally available to the extent the fund's distributions are
derived from interest on (or, in the case of intangible property taxes, the
value of its assets is attributable to) certain U.S. Government obligations,
provided in some states that certain thresholds for holdings of such obligations
and/or reporting requirements are satisfied. The fund will not seek to satisfy
any threshold or reporting requirements that may apply in particular taxing
jurisdictions, although the fund may in its sole discretion provide relevant
information to shareholders.
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.
31
<PAGE>
Federal law requires that the fund withhold (as "backup withholding") 31% of
reportable payments, including dividends, capital gain distributions and the
proceeds of redemptions and exchanges or repurchases of fund shares, paid to
shareholders who have not complied with 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 continues to qualify as a regulated investment
company under the Code, it will not be required to pay any Massachusetts income,
corporate excise or franchise taxes.
The description of certain federal tax provisions above relates only to U.S.
federal income tax consequences for shareholders who are U.S. persons, i.e.,
U.S. citizens or residents or U.S. corporations, partnerships, trusts or
estates, and who are subject to U.S. federal income tax. This description does
not address the special tax rules that may be applicable to particular types of
investors, such as financial institutions, insurance companies, securities
dealers, or tax-exempt or tax-deferred plans, accounts or entities. Investors
other than U.S. persons may be subject to different U.S. tax treatment,
including a non-resident alien U.S. withholding tax at the rate of 30% or at a
lower treaty rate on amounts treated as ordinary dividends from the fund and,
unless an effective IRS Form W-8, Form W-8BEN or other authorized withholding
certificate 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.
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 similar investment objectives and
to stock or other relevant indices. For example, total return of the fund's
classes may be compared to averages or rankings prepared by Lipper, Inc., a
widely recognized independent service which monitors mutual fund performance;
the Lehman Brothers Government Bond Index, a measure of the performance of
government debt securities; the 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 Exchange; or any other
appropriate index.
In addition, the performance of the classes of the fund may be compared to
alternative investment or savings vehicles and/or to indices or indicators of
economic activity, e.g., inflation or interest rates. The fund may also include
securities industry or comparative performance information generally and in
advertising or materials marketing the fund's shares. 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/Wiesenberger, Donoghue's Mutual Fund Almanac, Ibbotson
Associates, Investment Company Data, Inc., Johnson's Charts, Kanon Bloch Carre
32
<PAGE>
and Co., Lipper, 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.
The fund may also present, from time to time, historical information depicting
the value of a hypothetical account in one or more classes of the fund since
inception.
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.
Standardized Yield Quotations
The yield of a class is computed by dividing the class' net investment income
per share during a base period of 30 days, or one month, by the maximum offering
price per share of the class on the last day of such base period in accordance
with the following formula:
a-b
YIELD = 2[ ( ----- +1)^6-1]
cd
Where:
a = interest earned during the period
b = net expenses accrued for the period
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
For purposes of calculating interest earned on debt obligations as provided in
item "a" above:
(i) The yield to maturity of each obligation held by the fund is computed
based on the market value of the obligation (including actual accrued interest,
if any) at the close of business each day during the 30-day base period, or,
with respect to obligations purchased during the month, the purchase price (plus
actual accrued interest, if any) on settlement date, and with respect to
obligations sold during the month the sale price (plus actual accrued interest,
if any) between the trade and settlement dates.
(ii) The yield to maturity of each obligation is then divided by 360 and
the resulting quotient is multiplied by the market value of the obligation
(including actual accrued interest, if any) to determine the interest income on
the obligation for each day. The yield to maturity calculation has been made on
each obligation during the 30 day base period.
(iii) Interest earned on all debt obligations during the 30-day or one
month period is then totaled.
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<PAGE>
(iv) The maturity of an obligation with a call provision(s) is the next
call date on which the obligation reasonably may be expected to be called or, if
none, the maturity date.
With respect to the treatment of discount and premium on mortgage- or other
receivables-backed obligations which are expected to be subject to monthly
payments of principal and interest ("pay downs"), the fund accounts for gain or
loss attributable to actual monthly pay downs as an increase or decrease to
interest income during the period. In addition, the fund may elect (i) to
amortize the discount or premium remaining on a security, based on the cost of
the security, to the weighted average maturity date, if such information is
available, or to the remaining term of the security, if the weighted average
maturity date is not available, or (ii) not to amortize the remaining discount
or premium on a security.
For purposes of computing yield, interest income is recognized by accruing 1/360
of the stated interest rate of each obligation in the fund's portfolio each day
that the obligation is in the portfolio. Expenses of Class A and Class B accrued
during any base period, if any, pursuant to the respective Distribution Plans
are included among the expenses accrued during the base period.
Standardized Average Annual Total Return 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
gain 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 fund's prospectus, this statement of
additional information or in advertising are calculated by standard methods
prescribed by the SEC.
Average annual total return quotations for each class of 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 $57.50 for Class A shares or the deduction of the
CDSC for Class B and Class C shares at the end of the period
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<PAGE>
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000 initial
payment made at the beginning of the designated period (or
fractional portion thereof)
For purposes of the above computation, it is assumed that all dividends and
distributions made by the fund are reinvested at net asset value during the
designated period. The average annual total return quotation is determined to
the nearest 1/100 of 1%.
In determining the average annual total return (calculated as provided above),
recurring fees, if any, that are charged to all shareholder accounts of a
particular class of shares are taken into consideration. For any account fees
that vary with the size of the account, the account fee used for purposes of the
above computation is assumed to be the fee that would be charged to a class'
mean account size.
See Appendix A for the annual total returns for each class of fund shares as of
the most recently completed fiscal year.
17. FINANCIAL STATEMENTS
The fund's audited financial statements for the fiscal year ended December 31,
1999 from the fund's annual report filed with the SEC on February 25, 2000
(Accession No. 0000831120-00-000003) are incorporated by reference into this
statement of additional information. Those financial statements, including the
financial highlights in the prospectus, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
to the financial statements and are included in reliance upon the authority of
Arthur Andersen LLP as experts in accounting and auditing in giving their
report.
The fund's annual report includes the financial statements referenced above and
is available without charge upon request by calling Shareholder Services at
1-800-225-6292.
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<PAGE>
18. APPENDIX A - ANNUAL FEE, EXPENSE AND OTHER INFORMATION
Portfolio Turnover
The fund's annual portfolio turnover rate was 72% for the fiscal year ended
December 31, 1999.
Share Ownership
As of March 31, 2000, the Trustees and officers of the fund owned beneficially
in the aggregate less than 1% of the outstanding shares of the fund. The
following is a list of the holders of 5% or more of any class of the fund's
outstanding shares as of March 31, 2000:
Record Holder Share Class Number of Shares % of Class
Contra Costa Federal Credit Union Class A 753,240.337 7.10
Attn: Dave Green
1111 Pine Street
Martinez, CA 94553-1702
First Clearing Corporation Class C 52,245.092 9.13
A/C 3629-7070
Delaware Char Guar & TR TTEE
Edward M. Gorski IRA
15637 Chapel Hill
Orland Park, IL 60462-5934
Merrill Lynch, Pierce, Fenner & Class B 141,319.303 8.06
Smith Incorporated Class C 52,245.092 9.13
For the Sole Benefit of its Customers
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
36
<PAGE>
Compensation of Officers and Trustees
The following table sets forth certain information with respect to the
compensation of each Trustee of the fund.
<TABLE>
<CAPTION>
Aggregate Pension or Retirement Total Compensation from
Compensation from Benefits Accrued as the Fund and Other
Name of Trustee Fund* Part of Fund Expenses Pioneer Mutual Funds**
<S> <C> <C> <C>
John F. Cogan, Jr.*** $ 750.00 $0 $ 18,000.00
Mary K. Bush 2,947.75 0 93,500.00
Richard H. Egdahl, M.D 2,947.75 0 95,500.00
Margaret B.W. Graham 3,004.75 0 102,000.00
John W. Kendrick 2,535.00 0 82,500.00
Marguerite A. Piret 3,174.50 0 116,750.00
David D. Tripple*** 750.00 0 18,000.00
Stephen K. West 3,117.50 0 108,250.00
John Winthrop 3,089.00 0 98,400.00
---------- --
$22,316.25 $0 $732,900.00
</TABLE>
* For the fiscal year ended December 31, 1999.
** For the calendar year ended December 31, 1999.
*** Under the management contract, Pioneer reimburses the fund for any
Trustees fees paid by the fund.
Approximate Management Fees the Fund Paid or Owed Pioneer
For the Fiscal Years Ended December 31,
1999 1998 1997
$542,000 $624,000 $557,000
- ------------------
*An expense limitation was in effect during the fiscal years ended December 31,
1999, 1998 and 1997 . In the absence of the expense limitation, the fund would
have paid $738,275, $773,600 and $747,663 in management fees for such periods.
Fees the Fund Paid to Pioneer under the Administration Agreement effective
December 31, 1998
For the Fiscal Year Ended December 30, 1999
$34,629
37
<PAGE>
Carryover of Distribution Expenses
As of December 31, 1999 there was carryover of $80,754 in distribution expenses
under the Class A Plan.
Approximate Net Underwriting Commissions Retained by PFD
For the Fiscal Years Ended December 31,
1999 1998 1997
$28,000 $25,000 $20,000
Approximate Commissions Reallowed to Dealers
For the Fiscal Years Ended December 31,
1999 1998 1997
$320,000 $238,000 $134,000
Fund Expenses under the Distribution Plans
For the Fiscal Year Ended December 31, 1999
Class A Plan Class B Plan Class C Plan
$298,326 $208,892 $74,352
CDSCs
During the fiscal year ended December 31, 1999, CDSCs in the amount of $100,841
were paid to PFD.
Approximate Brokerage and Underwriting Commissions (Portfolio Transactions)
None.
Capital Loss Carryforwards
As of the end of its most recent taxable year, the fund had a capital loss
carryforward of $8,703,136 which will expire between 2002 and 2007 if not used.
38
<PAGE>
Average Annual Total Returns (December 31, 1999)
<TABLE>
<CAPTION>
Average Annual Total Return (%)
Since Inception
Class of Shares One Year Five Years Ten Years Inception Date
<S> <C> <C> <C> <C> <C>
Class A Shares -6.95 5.27 5.85 6.36 6/1/88
Class B Shares -6.93 5.28 N/A 4.54 4/29/94
Class C Shares -3.19 N/A N/A 3.15 1/31/96
</TABLE>
Standardized 30-Day Yield (December 31, 1999)
Class of Shares Yield (%)
Class A 5.67
Class B 5.16
Class C 5.19
Standardized 30-Day Yield (December 31, 1999) (absent expense limitation)
Class of Shares Yield (%)
Class A 5.58
Class B 5.08
Class C 5.11
39
<PAGE>
19. APPENDIX B - DESCRIPTION OF SHORT-TERM DEBT, CORPORATE BOND AND PREFERRED
STOCK RATINGS(1)
Moody's Investors Service, Inc. ("Moody's") Short-Term Prime Rating System
Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually senior debt obligations. These obligations have an original maturity
not exceeding one year, unless explicitly noted.
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:
Prime-1: Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
Leading market positions in well-established industries.
High rates of return on funds employed.
Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Prime-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3: Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
Not Prime: Issuers rated Not Prime do not fall within any of the Prime rating
categories.
Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating on
a bank's ability to repay senior obligations extends only to branches located in
countries which carry a Moody's Sovereign Rating for Bank Deposits. Such branch
obligations are rated at the lower of the bank's rating or Moody's Sovereign
Rating for Bank Deposits for the country in which the branch is located.
- --------
(1) The ratings indicated herein are believed to be the most recent ratings
available at the date of this statement of additional information 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.
40
<PAGE>
When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings do
not incorporate an opinion as to whether payment of the obligation will be
affected by actions of the government controlling the currency of denomination.
In addition, risks associated with bilateral conflicts between an investor's
home country and either the issuer's home country or the country where an
issuer's branch is located are not incorporated into Moody's short-term debt
ratings.
If an issuer represents to Moody's that its short-term debt obligations are
supported by the credit of another entity or entities, then the name or names of
such supporting entity or entities are listed within the parenthesis beneath the
name of the issuer, or there is a footnote referring the reader to another page
for the name or names of the supporting entity or entities. In assigning ratings
to such issuers, Moody's evaluates the financial strength of the affiliated
corporations, commercial banks, insurance companies, foreign governments or
other entities, but only as one factor in the total rating assessment.
Moody's Debt Ratings
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
edged." 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 risk appear somewhat larger than the 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 a 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.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
41
<PAGE>
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's bond ratings, where specified, are applicable to financial contracts,
senior bank obligations and insurance company senior policyholder and claims
obligations with an original maturity in excess of one year. Obligations relying
upon support mechanisms such as letters-of-credit and bonds of indemnity are
excluded unless explicitly rated. Obligations of a branch of a bank are
considered to be domiciled in the country in which the branch is located.
Unless noted as an exception, Moody's rating on a bank's ability to repay senior
obligations extends only to branches located in countries which carry a Moody's
Sovereign Rating for Bank Deposits. Such branch obligations are rated at the
lower of the bank's rating or Moody's Sovereign Rating for the Bank Deposits for
the country in which the branch is located. When the currency in which an
obligation is denominated is not the same as the currency of the country in
which the obligation is domiciled, Moody's ratings do not incorporate an opinion
as to whether payment of the obligation will be affected by the actions of the
government controlling the currency of denomination. In addition, risk
associated with bilateral conflicts between an investor's home country and
either the issuer's home country or the country where an issuer branch is
located are not incorporated into Moody's ratings.
Moody's makes no representation that rated bank obligations or insurance company
obligations are exempt from registration under the 1933 Act or issued in
conformity with any other applicable law or regulation. Nor does Moody's
represent any specific bank or insurance company obligation is legally
enforceable or a valid senior obligation of a rated issuer.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicates that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.
Moody's Preferred Stock Ratings
Because of the fundamental differences between preferred stocks and bonds, a
variation of Moody's familiar bond rating symbols is used in the quality ranking
of preferred stock. The symbols, presented below, are designed to avoid
comparison with bond quality in absolute terms. It should always be borne in
mind that preferred stock occupies a junior position to bonds within a
particular capital structure and that these securities are rated within the
universe of preferred stocks.
aaa: An issue which is rated aaa is considered to be a top-quality preferred
stock. This rating indicates good asset protection and the least risk of
dividend impairment within the universe of preferred stocks.
42
<PAGE>
aa: An issue which is rated aa is considered a high-grade preferred stock. This
rating indicates that there is a reasonable assurance the earnings and asset
protection will remain relatively well maintained in the foreseeable future.
a: An issue which is rated a is considered to be an upper-medium grade preferred
stock. While risks are judged to be somewhat greater then in the aaa and aa
classification, earnings and asset protection are, nevertheless, expected to be
maintained at adequate levels.
baa: An issue which is rated baa is considered to be a medium-grade preferred
stock, neither highly protected nor poorly secured. Earnings and asset
protection appear adequate at present but may be questionable over any great
length of time.
ba: An issue which is rated ba is considered to have speculative elements and
its future cannot be considered well assured. Earnings and asset protection may
be very moderate and not well safeguarded during adverse periods. Uncertainty of
position characterizes preferred stocks in this class.
b: An issue which is rated b generally lacks the characteristics of a desirable
investment. Assurance of dividend payments and maintenance of other terms of the
issue over any long period of time may be small.
caa: An issue which is rated caa is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the future status
of payments.
ca: An issue which is rated ca is speculative in a high degree and is likely to
be in arrears on dividends with little likelihood of eventual payments.
c: This is the lowest rated class of preferred or preference stock. Issues so
rated can thus be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each rating
classification: the modifier 1 indicates that the security ranks in the higher
end of its generic rating category; the modifier 2 indicates a mid-range ranking
and the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
Standard & Poor's Short-Term Issue Credit Ratings
A-1: A short-term obligation rated A-1 is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity to
meet its financial commitment on these obligations is extremely strong.
A-2: A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.
A-3: A short-term obligation rated A-3 exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
43
<PAGE>
B: A short-term obligation rated B is regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
C: A short-term obligation rated C is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.
D: A short-term obligation rated D is in payment default. The D rating category
is used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
Standard & Poor's Long-Term Issue Credit Ratings
Issue credit ratings are based, in varying degrees, on the following
considerations:
Likelihood of payment-capacity and willingness of the obligor to meet its
financial commitment on an obligation in accordance with the terms of the
obligation;
Nature of and provisions of the obligation;
Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization, or other arrangement under the laws
of bankruptcy and other laws affecting creditors' rights.
The issue rating definitions are expressed in terms of default risk. As such,
they pertain to senior obligations of an entity. Junior obligations are
typically rated lower than senior obligations, to reflect the lower priority in
bankruptcy, as noted above. (Such differentiation applies when an entity has
both senior and subordinated obligations, secured and unsecured obligations, or
operating company and holding company obligations.) Accordingly, in the case of
junior debt, the rating may not conform exactly with the category definition.
AAA: An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA: An obligation rated AA differs from the highest-rated obligations only in
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A: An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB: An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
44
<PAGE>
Obligations rated BB, B, CCC, CC, and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and C
the highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.
BB: An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.
B: An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.
CCC: An obligation rated CCC is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.
CC: An obligation rated CC is currently highly vulnerable to nonpayment.
C: A subordinated debt or preferred stock obligation rated C is currently highly
vulnerable to nonpayment. The C rating may be used to cover a situation where a
bankruptcy petition has been filed or similar action taken, but payments on this
obligation are being continued. A C also will be assigned to a preferred stock
issue in arrears on dividends or sinking fund payments but that is currently
paying.
D: An obligation rated D is in payment default. The D rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
Plus (+) or Minus (-): The rating from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within the major rating
categories.
r: This symbol is attached to the ratings of instruments with significant
noncredit risks. It highlights risks to principal or volatility of expected
returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk, such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.
N.R.: This indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular obligation as a matter of policy.
45
<PAGE>
Local Currency and Foreign Currency Risks
Country risk considerations are a standard part of Standard & Poor's analysis
for credit ratings on any issuer or issue. Currency of repayment is a key factor
in this analysis. An obligor's capacity to repay foreign currency obligations
may be lower than its capacity to repay obligations in its local currency due to
the sovereign government's own relatively lower capacity to repay external
versus domestic debt. These sovereign risk considerations are incorporated in
the debt ratings assigned to specific issues. Foreign currency issuer ratings
are also distinguished from local currency issuer ratings to identify those
instances where sovereign risks make them different for the same issuer.
46
<PAGE>
20. APPENDIX C - PERFORMANCE STATISTICS
Pioneer America Income Trust
Class A Shares
<TABLE>
<CAPTION>
Net Asset
Initial Offering Sales Charge Shares Value per Initial Net
Date Investment Price Included Purchased Share Asset Value
<S> <C> <C> <C> <C> <C> <C>
6/1/88 $10,000 $10.47 4.50% 955.110 $10.0000 $9,550
</TABLE>
Value of Shares
(Dividends and Capital Gains Reinvested)
From
From Capital Gains Dividends
Date From Investment Reinvested Reinvested Total Value
12/31/88 $9,418 $0 $492 $9,910
12/31/89 $9,589 $0 $1,460 $11,049
12/31/90 $9,580 $0 $2,463 $12,043
12/31/91 $9,876 $0 $3,616 $13,492
12/31/92 $9,809 $0 $4,597 $14,406
12/31/93 $10,009 $52 $5,652 $15,713
12/31/94 $8,987 $47 $6,055 $15,089
12/31/95 $9,741 $51 $7,721 $17,513
12/31/96 $9,331 $49 $8,535 $17,915
12/31/97 $9,485 $49 $9,906 $19,440
12/31/98 $9,646 $50 $11,255 $20,951
12/31/99 $8,883 $46 $11,493 $20,422
Past performance does not guarantee future results. Return and share price
fluctuate and your shares when redeemed may be worth more or less than your
original cost.
47
<PAGE>
Pioneer America Income Trust
Class B Shares
<TABLE>
<CAPTION>
Net Asset
Initial Offering Sales Charge Shares Value per Initial Net
Date Investment Price Included Purchased Share Asset Value
<S> <C> <C> <C> <C> <C> <C>
4/29/94 $10,000 $9.8500 0.00% 1,015.228 $9.8500 $10,000
</TABLE>
Value of Shares
(Dividends and Capital Gains Reinvested)
<TABLE>
<CAPTION>
From
From Capital Dividends
Date From Investment Gains Reinvested Reinvested CDSC if Redeemed Total Value CDSC %
<S> <C> <C> <C> <C> <C> <C>
12/31/94 $9,543 $0 $400 $382 $9,561 4.00
12/31/95 $10,324 $0 $1,118 $400 $11,042 4.00
12/31/96 $9,898 $0 $1,726 $297 $11,327 3.00
12/31/97 $10,050 $0 $2,458 $300 $12,208 3.00
12/31/98 $10,223 $0 $3,171 $200 $13,194 2.00
12/31/99 $9,421 $0 $3,539 $94 $12,866 1.00
</TABLE>
Class C Shares
<TABLE>
<CAPTION>
Net Asset
Initial Offering Sales Charge Shares Value per Initial Net
Date Investment Price Included Purchased Share Asset Value
<S> <C> <C> <C> <C> <C> <C>
1/31/96 $10,000 $10.1600 0.00% 984.252 $10.16 $10,000
</TABLE>
Value of Shares
(Dividends and Capital Gains Reinvested)
<TABLE>
<CAPTION>
From
From Capital Dividends
Date From Investment Gains Reinvested Reinvested CDSC if Redeemed Total Value CDSC %
<S> <C> <C> <C> <C> <C> <C>
12/31/96 $9,587 $0 $517 $96 $10,008 1.00
12/31/97 $9,744 $0 $1,146 $0 $10,890 0.00
12/31/98 $9,212 $0 $1,751 $0 $11,663 0.00
12/31/99 $9,134 $0 $2,157 $0 $11,291 0.00
</TABLE>
Past performance does not guarantee future results. Return and share price
fluctuate and your shares when redeemed may be worth more or less than your
original cost.
48
<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 also be used, if appropriate. The
indices are not available for direct investment. The data presented are not
meant to be indicative of the performance of the fund, do not reflect past
performance and do 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 500 includes
500 of the largest stocks (in terms of stock market value) in the U.S.
Dow Jones Industrial Average. This is a total return index based on the
performance of stocks of 30 blue chip companies widely held by individuals and
institutional investors. The 30 stocks represent about a fifth of the $8
trillion-plus market value of all U.S. stocks and about a fourth of the value of
stocks listed on the New York Stock Exchange (NYSE).
U.S. Small Stock Index. This index is a market value weighted index of the ninth
and tenth deciles of the NYSE, plus stocks listed on the American Stock Exchange
and over the counter 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 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.
Merrill Lynch Micro-Cap Index. The Merrill Lynch Micro-Cap Index represents the
performance of 1,980 stocks ranging in market capitalization from $50 million to
$125 million. Index returns are calculated monthly.
Merrill Lynch High Yield Master II Index. This index is a market capitalization
weighted total return index covering U.S. dollar-denominated high-yield bonds.
Qualifying bonds must have at least $100 million par amount outstanding, a
remaining term to maturity greater than or equal to one year, and a credit
rating less than BBB3 but not in default (based on the composite of Moody's and
Standard & Poor's). The index includes deferred interest and pay-in-kind bonds,
but excludes structured notes, floating rate notes and other variable coupon
securities. The index also excludes emerging markets debt (issuers domiciled in
below investment grade rated countries). Index constituents are rebalanced
monthly on the last calendar day of the month. Index values are calculated
daily.
49
<PAGE>
Merrill Lynch Index of Convertible Bonds (Speculative Quality). This is a market
capitalization weighted index including all mandatory and non-mandatory domestic
corporate convertible securities with at least an original par of $50 million or
a $50 million market value; securities dropping below a market value of $40
million are excluded. Returns are calculated weekly based on Thursday's closing
prices and are linked monthly. All securities must be convertible to common
stock only. Quality range is D3-BB1 based on composite Moody's and Standard
&Poor's ratings.
Long-Term U.S. Government Bonds. The total returns on long-term government bonds
after 1977 are constructed with data from The Wall Street Journal and are
calculated as the change in the flat price or and-interest price. From 1926 to
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.
Intermediate-Term U.S. Government Bonds. Total returns of intermediate-term
government bonds after 1987 are calculated from The Wall Street Journal prices,
using the change in flat price. Returns from 1934 to 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 five 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 to 1942, almost all bonds
with maturities near five years were partially or fully 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 to 1933, there are few bonds suitable for construction
of a series with a five-year maturity. For this period, five-year bond yield
estimates are used.
Morgan Stanley Capital International ("MSCI"). These indices are in U.S. dollar
terms with gross dividends reinvested and measure the performance of developed
and emerging stock markets around the world. MSCI All Country indices represent
both the developed and the emerging markets for a particular region. These
indices are unmanaged. The free indices exclude shares which are not readily
purchased by non-local investors. MSCI covers over 1,500 securities in 28
emerging markets and 2,300 securities in 23 developed markets, totaling over $20
trillion in market capitalization. Several Pioneer mutual funds that invest in
international securities compare their performance to various MSCI indices.
6-Month CDs. Data sources include the Federal Reserve Bulletin and The Wall
Street Journal.
Long-Term U.S. Corporate Bonds. Since 1969, corporate bond total returns are
represented by the Salomon Brothers Long-Term High-Grade Corporate Bond Index.
As 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 with at least 10 years to maturity. 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.
50
<PAGE>
From 1926 to 1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946 to 1968,
Ibbotson and Sinquefield backdated the Salomon Brothers' index, using Salomon
Brothers' monthly yield data with a methodology similar to that used by Salomon
Brothers for 1969 to 1995. 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 to 1945, Standard & Poor's
monthly high-grade corporate composite yield data were used, assuming a 4%
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 Westerfield, Randolph W., 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.
Lehman Brothers Government/Corporate Bond Index - Intermediate. This index is
comprised of securities with one to ten years to maturity. It includes Treasury
and government agency securities, investment-grade corporate bonds and Yankee
bonds.
U.S. (30-Day) Treasury Bills. For the U.S. Treasury Bill Index, data from The
Wall Street Journal are used after 1977; the CRSP 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.
National Association of Real Estate Investment Trusts ("NAREIT") Equity REIT
Index. All of the data are based upon the last closing price of the month for
all tax-qualified REITs listed on the NYSE, AMEX and NASDAQ. The data are
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 weighting at the beginning of the period.
Only those REITs listed for the entire period are used in the total return
calculation. Dividends are included in the month based upon their payment date.
There is no smoothing of income. Liquidating dividends, whether full or partial,
are treated as income.
Russell U.S. Equity Indexes. The Russell 3000(R) Index (the "Russell 3000") is
comprised of the 3,000 largest U.S. companies as determined by market
capitalization representing approximately 98% of the U.S. equity market. The
average market capitalization is approximately $4.4 billion. The Russell 2500TM
Index measures performance of the 2,500 smallest companies in the Russell 3000.
The average market capitalization is approximately $876 million, and the largest
company in the index has an approximate market capitalization of $3.8 billion.
The Russell 2000(R) Index measures performance of the 2,000 smallest stocks in
the Russell 3000; the largest company in the index has a market capitalization
of approximately $1.3 billion. The Russell 1000(R) Index (the "Russell 1000")
measures the performance of the 1,000 largest companies in the Russell 3000. The
average market capitalization is approximately $12.1 billion. The smallest
company in the index has an approximate market capitalization of $1.3 billion.
The Russell MidcapTM Index measures performance of the 800 smallest companies in
the Russell 1000. The largest company in the index has an approximate market
capitalization of $11.2 billion. The Russell 1000(R) Growth Index measures the
performance of those Russell 1000 companies with higher price-to-book ratios and
higher forecasted growth values. The Russell 1000(R) Value Index measures the
51
<PAGE>
performance of those Russell 1000 companies with lower price-to-book ratios and
lower forecasted growth values.
The Russell indexes are reconstituted annually as of June 30, based on May 31
market capitalizations.
Wilshire Real Estate Securities Index. The Wilshire Real Estate Securities Index
is a broad measure of the performance of publicly traded real estate securities,
such as REITs and real estate operating companies ("REOCs"). The index is
capitalization-weighted. As of March 31, 1999, 119 companies were included in
the index, with a total market cap of $116.97 billion. At September 30, 1999,
the companies in the index were 92.31% equity and hybrid REITs and 7.69% REOCs.
Standard & Poor's MidCap 400 Index. The S&P 400 is a
market-capitalization-weighted index. The performance data for the index were
calculated by taking the stocks presently in the 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 S&P 400 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.
Lipper Indexes. These indexes represent equally weighted performance, adjusted
for capital gain distributions and income dividends, of mutual funds that are
considered peers of the Pioneer mutual funds. Lipper, Inc. is an independent
firm that tracks mutual fund performance.
Lehman Brothers Aggregate Bond Index. The Lehman Brothers Aggregate Bond Index
is composed of the Lehman Brothers Government/Corporate Index, the Lehman
Brothers Mortgage-Backed Securities Index and the Lehman Brothers Asset-Backed
Securities Index. The index includes fixed rate debt issues rated investment
grade or higher by Moody's Investors Service, Standard & Poor's Corporation or
Fitch Investors Service, in that order. All issues have at least one year to
maturity with intermediate indices including bonds with maturities up to ten
years and long-term indices composed of bonds with maturities longer than ten
years. All returns are market value weighted inclusive of accrued interest.
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 to 1987; and The Wall
Street Journal thereafter.
Nasdaq Composite Index. The Nasdaq Composite Index measures all Nasdaq domestic
and non-U.S. based common stocks listed on The Nasdaq Stock Market. The index is
market-value weighted. The Nasdaq Composite includes over 5,000 companies and is
one of the most widely followed and quoted major market indices because it is so
broad-based.
Sources: Ibbotson Associates, Towers Data Systems, Lipper, Inc. and PGI
52
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
Dow S&P/ S&P/ Merrill
Jones U.S. Small BARRA BARRA Lynch
S&P Industrial Stock U.S. 500 500 Micro-Cap
500 Average Index Inflation Growth Value 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 11.62 N/A 0.28 -1.49 N/A N/A N/A
Dec 1927 37.49 N/A 22.10 -2.08 N/A N/A N/A
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A N/A
Dec 1931 -43.34 -49.02 -49.75 -9.52 N/A N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A N/A
Dec 1933 53.99 73.72 142.87 0.51 N/A N/A N/A
Dec 1934 -1.44 8.08 24.22 2.03 N/A N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A N/A
Dec 1942 20.34 14.13 44.51 9.29 N/A N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A N/A
</TABLE>
53
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
Dow S&P/ S&P/ Merrill
Jones U.S. Small BARRA BARRA Lynch
S&P Industrial Stock U.S. 500 500 Micro-Cap
500 Average Index Inflation Growth Value Index
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A N/A
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38 N/A
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93 N/A
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57 N/A
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16 27.76
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16 43.18
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59 32.32
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02 9.18
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04 33.62
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89 42.44
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52 -14.97
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68 22.89
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67 3.45
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68 -13.84
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67 22.76
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13 8.06
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85 -29.55
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56 57.44
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53 36.62
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60 31.32
Dec 1994 1.31 5.06 3.11 2.67 3.13 -0.64 1.81
Dec 1995 37.43 36.84 34.46 2.54 38.13 36.99 30.70
Dec 1996 23.07 28.84 17.62 3.32 23.96 21.99 13.88
Dec 1997 33.36 24.88 22.78 1.70 36.52 29.98 24.61
Dec 1998 28.58 18.14 -7.31 1.61 42.16 14.67 -6.15
Dec 1999 21.04 27.22 29.79 2.81 28.25 12.72 40.04
</TABLE>
54
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
Long- Intermediate- MSCI Long- Lehman
Term Term U.S. EAFE 6- Term U.S. Bros. U.S.
U.S. Gov't Government (Net of Month Corporate Gov't/Corp T-Bill
Bonds Bonds Taxes) CDs Bonds Intermediate (30-Day)
- -----------------------------------------------------------------------------------------------------------------
<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 7.77 5.38 N/A N/A 7.37 N/A 3.27
Dec 1927 8.93 4.52 N/A N/A 7.44 N/A 3.12
Dec 1928 0.10 0.92 N/A N/A 2.84 N/A 3.56
Dec 1929 3.42 6.01 N/A N/A 3.27 N/A 4.75
Dec 1930 4.66 6.72 N/A N/A 7.98 N/A 2.41
Dec 1931 -5.31 -2.32 N/A N/A -1.85 N/A 1.07
Dec 1932 16.84 8.81 N/A N/A 10.82 N/A 0.96
Dec 1933 -0.07 1.83 N/A N/A 10.38 N/A 0.30
Dec 1934 10.03 9.00 N/A N/A 13.84 N/A 0.16
Dec 1935 4.98 7.01 N/A N/A 9.61 N/A 0.17
Dec 1936 7.52 3.06 N/A N/A 6.74 N/A 0.18
Dec 1937 0.23 1.56 N/A N/A 2.75 N/A 0.31
Dec 1938 5.53 6.23 N/A N/A 6.13 N/A -0.02
Dec 1939 5.94 4.52 N/A N/A 3.97 N/A 0.02
Dec 1940 6.09 2.96 N/A N/A 3.39 N/A 0.00
Dec 1941 0.93 0.50 N/A N/A 2.73 N/A 0.06
Dec 1942 3.22 1.94 N/A N/A 2.60 N/A 0.27
Dec 1943 2.08 2.81 N/A N/A 2.83 N/A 0.35
Dec 1944 2.81 1.80 N/A N/A 4.73 N/A 0.33
Dec 1945 10.73 2.22 N/A N/A 4.08 N/A 0.33
Dec 1946 -0.10 1.00 N/A N/A 1.72 N/A 0.35
Dec 1947 -2.62 0.91 N/A N/A -2.34 N/A 0.50
Dec 1948 3.40 1.85 N/A N/A 4.14 N/A 0.81
Dec 1949 6.45 2.32 N/A N/A 3.31 N/A 1.10
Dec 1950 0.06 0.70 N/A N/A 2.12 N/A 1.20
Dec 1951 -3.93 0.36 N/A N/A -2.69 N/A 1.49
Dec 1952 1.16 1.63 N/A N/A 3.52 N/A 1.66
Dec 1953 3.64 3.23 N/A N/A 3.41 N/A 1.82
Dec 1954 7.19 2.68 N/A N/A 5.39 N/A 0.86
Dec 1955 -1.29 -0.65 N/A N/A 0.48 N/A 1.57
Dec 1956 -5.59 -0.42 N/A N/A -6.81 N/A 2.46
Dec 1957 7.46 7.84 N/A N/A 8.71 N/A 3.14
Dec 1958 -6.09 -1.29 N/A N/A -2.22 N/A 1.54
Dec 1959 -2.26 -0.39 N/A N/A -0.97 N/A 2.95
Dec 1960 13.78 11.76 N/A N/A 9.07 N/A 2.66
</TABLE>
55
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
Long- Intermediate- MSCI Long- Lehman
Term Term U.S. EAFE 6- Term U.S. Bros. U.S.
U.S. Gov't Government (Net of Month Corporate Gov't/Corp T-Bill
Bonds Bonds Taxes) CDs Bonds Intermediate (30-Day)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1961 0.97 1.85 N/A N/A 4.82 N/A 2.13
Dec 1962 6.89 5.56 N/A N/A 7.95 N/A 2.73
Dec 1963 1.21 1.64 N/A N/A 2.19 N/A 3.12
Dec 1964 3.51 4.04 N/A 4.17 4.77 N/A 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 N/A 3.93
Dec 1966 3.65 4.69 N/A 5.76 0.20 N/A 4.76
Dec 1967 -9.18 1.01 N/A 5.47 -4.95 N/A 4.21
Dec 1968 -0.26 4.54 N/A 6.45 2.57 N/A 5.21
Dec 1969 -5.07 -0.74 N/A 8.70 -8.09 N/A 6.58
Dec 1970 12.11 16.86 -11.66 7.06 18.37 N/A 6.52
Dec 1971 13.23 8.72 29.59 5.36 11.01 N/A 4.39
Dec 1972 5.69 5.16 36.35 5.39 7.26 N/A 3.84
Dec 1973 -1.11 4.61 -14.92 8.60 1.14 3.34 6.93
Dec 1974 4.35 5.69 -23.16 10.20 -3.06 5.88 8.00
Dec 1975 9.20 7.83 35.39 6.51 14.64 9.50 5.80
Dec 1976 16.75 12.87 2.54 5.22 18.65 12.34 5.08
Dec 1977 -0.69 1.41 18.06 6.11 1.71 3.31 5.12
Dec 1978 -1.18 3.49 32.62 10.21 -0.07 2.13 7.18
Dec 1979 -1.23 4.09 4.75 11.90 -4.18 6.00 10.38
Dec 1980 -3.95 3.91 22.58 12.33 -2.76 6.41 11.24
Dec 1981 1.86 9.45 -2.28 15.50 -1.24 10.50 14.71
Dec 1982 40.36 29.10 -1.86 12.18 42.56 26.10 10.54
Dec 1983 0.65 7.41 23.69 9.65 6.26 8.61 8.80
Dec 1984 15.48 14.02 7.38 10.65 16.86 14.38 9.85
Dec 1985 30.97 20.33 56.16 7.82 30.09 18.05 7.72
Dec 1986 24.53 15.14 69.44 6.30 19.85 13.12 6.16
Dec 1987 -2.71 2.90 24.63 6.59 -0.27 3.67 5.47
Dec 1988 9.67 6.10 28.27 8.15 10.70 6.78 6.35
Dec 1989 18.11 13.29 10.54 8.27 16.23 12.76 8.37
Dec 1990 6.18 9.73 -23.45 7.85 6.78 9.17 7.81
Dec 1991 19.30 15.46 12.13 4.95 19.89 14.63 5.60
Dec 1992 8.05 7.19 -12.17 3.27 9.39 7.17 3.51
Dec 1993 18.24 11.24 32.56 2.88 13.19 8.73 2.90
Dec 1994 -7.77 -5.14 7.78 5.40 -5.76 -1.95 3.90
Dec 1995 31.67 16.80 11.21 5.21 27.20 15.31 5.60
Dec 1996 -0.93 2.10 6.05 5.21 1.40 4.06 5.21
Dec 1997 15.85 8.38 1.78 5.71 12.95 7.87 5.26
Dec 1998 13.06 10.21 20.00 5.34 10.76 8.42 4.86
Dec 1999 -8.96 -1.77 26.96 5.43 -7.45 0.39 4.68
</TABLE>
56
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
NAREIT Wilshire Lipper MSCI
Equity Russell Real Estate Balanced Emerging Bank
REIT 2000(R) Securities S&P Fund Markets Savings
Index Index Index 400 Index Free Index Account
- -------------------------------------------------------------------------------------------------------
<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
</TABLE>
57
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
NAREIT Wilshire Lipper MSCI
Equity Russell Real Estate Balanced Emerging Bank
REIT 2000(R) Securities S&P Fund Markets Savings
Index Index Index 400 Index Free Index Account
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
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 20.14 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 16.49 36.87 19.20 13.05 6.03 4.95
Dec 1997 20.29 22.36 19.80 32.26 20.30 -11.59 5.17
Dec 1998 -17.51 -2.55 -17.43 19.12 15.09 -25.34 4.63
Dec 1999 -4.62 21.26 14.72 14.72 8.98 66.41 5.29
</TABLE>
58
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
MSCI MSCI All Merrill Lynch
All Country Merrill Index of Lipper
Country (AC) Asia Lehman Lynch Convertible Lipper Growth &
(AC) Asia Pacific Brothers High Yield Bonds Russell Growth Income
Free Free Aggregate Master II (Speculative 1000(R) Fund Fund
ex Japan ex Japan Bond Index Index Quality) Index Index Index
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A 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 N/A
Dec 1927 N/A 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 N/A
Dec 1929 N/A 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 N/A N/A
Dec 1931 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1932 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1933 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1934 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1935 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1936 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1937 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1938 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1939 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1940 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1941 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1942 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1943 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1944 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1945 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1946 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1947 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1948 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1949 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1950 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1951 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1952 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1953 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1954 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1955 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1956 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1957 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1958 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1959 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1960 N/A N/A N/A N/A N/A N/A 6.36 3.04
Dec 1961 N/A N/A N/A N/A N/A N/A 30.16 26.00
</TABLE>
59
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
MSCI MSCI All Merrill Lynch
All Country Merrill Index of Lipper
Country (AC) Asia Lehman Lynch Convertible Lipper Growth &
(AC) Asia Pacific Brothers High Yield Bonds Russell Growth Income
Free Free Aggregate Master II (Speculative 1000(R) Fund Fund
ex Japan ex Japan Bond Index Index Quality) Index Index Index
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dec 1962 N/A N/A N/A N/A N/A N/A -16.84 -11.87
Dec 1963 N/A N/A N/A N/A N/A N/A 22.43 19.10
Dec 1964 N/A N/A N/A N/A N/A N/A 14.99 15.23
Dec 1965 N/A N/A N/A N/A N/A N/A 26.61 19.00
Dec 1966 N/A N/A N/A N/A N/A N/A -1.80 -6.04
Dec 1967 N/A N/A N/A N/A N/A N/A 45.31 27.59
Dec 1968 N/A N/A N/A N/A N/A N/A 15.34 15.29
Dec 1969 N/A N/A N/A N/A N/A N/A -10.62 -11.80
Dec 1970 N/A N/A N/A N/A N/A N/A -8.57 1.10
Dec 1971 N/A N/A N/A N/A N/A N/A 26.17 13.77
Dec 1972 N/A N/A N/A N/A N/A N/A 18.08 12.87
Dec 1973 N/A N/A N/A N/A N/A N/A -24.75 -14.27
Dec 1974 N/A N/A N/A N/A N/A N/A -30.73 -20.85
Dec 1975 N/A N/A N/A N/A N/A N/A 32.83 34.62
Dec 1976 N/A N/A 15.60 N/A N/A N/A 20.07 25.66
Dec 1977 N/A N/A 3.04 N/A N/A N/A -2.62 -3.64
Dec 1978 N/A N/A 1.39 N/A N/A N/A 12.53 7.99
Dec 1979 N/A N/A 1.93 N/A N/A 22.31 29.29 23.87
Dec 1980 N/A N/A 2.71 N/A N/A 31.88 38.67 28.27
Dec 1981 N/A N/A 6.25 N/A N/A -5.10 -6.82 -1.39
Dec 1982 N/A N/A 32.62 N/A N/A 20.30 24.04 24.17
Dec 1983 N/A N/A 8.36 N/A N/A 22.13 21.35 22.76
Dec 1984 N/A N/A 15.15 N/A N/A 4.75 -3.60 4.29
Dec 1985 N/A N/A 22.10 N/A N/A 32.27 30.14 28.55
Dec 1986 N/A N/A 15.26 N/A N/A 17.87 15.59 17.63
Dec 1987 N/A N/A 2.76 4.47 N/A 2.94 3.25 2.64
Dec 1988 30.00 30.45 7.89 13.36 16.19 17.23 14.13 18.35
Dec 1989 32.13 21.43 14.53 2.31 9.82 30.42 27.47 23.73
Dec 1990 -6.54 -11.86 8.96 -4.36 -8.61 -4.16 -5.41 -5.99
Dec 1991 30.98 32.40 16.00 39.17 37.53 33.03 36.33 27.75
Dec 1992 21.81 9.88 7.40 17.44 24.06 9.04 7.63 9.63
Dec 1993 103.39 84.94 9.75 16.69 19.37 10.15 11.98 14.62
Dec 1994 -16.94 -12.59 -2.92 -1.03 -6.91 0.38 -1.57 -0.41
Dec 1995 4.00 10.00 18.47 20.46 25.14 37.77 32.65 31.14
Dec 1996 10.05 8.08 3.63 11.27 15.29 22.45 17.53 20.67
Dec 1997 -40.31 -34.20 9.65 13.27 16.76 32.85 28.03 26.88
Dec 1998 -7.79 -4.42 8.69 2.95 12.62 27.02 25.69 13.58
Dec 1999 64.67 49.83 -0.82 2.51 38.91 20.91 27.96 11.86
</TABLE>
60
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
MSCI All Russell Lipper
MSCI Country World 1000(R) Science and Nasdaq
MSCI World Free ex U.S. Growth Technology Composite
Europe Index Index Index Index Fund Index Index
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dec 1925 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
Dec 1927 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
Dec 1929 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
Dec 1931 N/A N/A N/A N/A N/A N/A
Dec 1932 N/A N/A N/A N/A N/A N/A
Dec 1933 N/A N/A N/A N/A N/A N/A
Dec 1934 N/A N/A N/A N/A N/A N/A
Dec 1935 N/A N/A N/A N/A N/A N/A
Dec 1936 N/A N/A N/A N/A N/A N/A
Dec 1937 N/A N/A N/A N/A N/A N/A
Dec 1938 N/A N/A N/A N/A N/A N/A
Dec 1939 N/A N/A N/A N/A N/A N/A
Dec 1940 N/A N/A N/A N/A N/A N/A
Dec 1941 N/A N/A N/A N/A N/A N/A
Dec 1942 N/A N/A N/A N/A N/A N/A
Dec 1943 N/A N/A N/A N/A N/A N/A
Dec 1944 N/A N/A N/A N/A N/A N/A
Dec 1945 N/A N/A N/A N/A N/A N/A
Dec 1946 N/A N/A N/A N/A N/A N/A
Dec 1947 N/A N/A N/A N/A N/A N/A
Dec 1948 N/A N/A N/A N/A N/A N/A
Dec 1949 N/A N/A N/A N/A N/A N/A
Dec 1950 N/A N/A N/A N/A N/A N/A
Dec 1951 N/A N/A N/A N/A N/A N/A
Dec 1952 N/A N/A N/A N/A N/A N/A
Dec 1953 N/A N/A N/A N/A N/A N/A
Dec 1954 N/A N/A N/A N/A N/A N/A
Dec 1955 N/A N/A N/A N/A N/A N/A
Dec 1956 N/A N/A N/A N/A N/A N/A
Dec 1957 N/A N/A N/A N/A N/A N/A
Dec 1958 N/A N/A N/A N/A N/A N/A
Dec 1959 N/A N/A N/A N/A N/A N/A
Dec 1960 N/A N/A N/A N/A N/A N/A
Dec 1961 N/A N/A N/A N/A 20.30 N/A
</TABLE>
61
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
MSCI All Russell Lipper
MSCI MSCI Country World 1000(R) Science and Nasdaq
Europe World Free ex U.S. Growth Technology Composite
Index Index Index Index Fund Index Index
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dec 1962 N/A N/A N/A N/A -17.43 N/A
Dec 1963 N/A N/A N/A N/A 17.69 N/A
Dec 1964 N/A N/A N/A N/A 11.08 N/A
Dec 1965 N/A N/A N/A N/A 33.54 N/A
Dec 1966 N/A N/A N/A N/A -6.70 N/A
Dec 1967 N/A N/A N/A N/A 32.26 N/A
Dec 1968 N/A N/A N/A N/A 20.26 N/A
Dec 1969 N/A N/A N/A N/A -15.96 N/A
Dec 1970 -10.64 -3.09 N/A N/A -9.81 N/A
Dec 1971 26.33 18.36 N/A N/A 19.72 N/A
Dec 1972 14.40 22.48 N/A N/A 9.94 17.18
Dec 1973 -8.77 -15.24 N/A N/A -24.53 -31.06
Dec 1974 -24.07 -25.47 N/A N/A -28.16 -35.11
Dec 1975 41.45 32.80 N/A N/A 32.45 29.76
Dec 1976 -7.80 13.40 N/A N/A 18.85 26.10
Dec 1977 21.90 0.68 N/A N/A 0.01 7.33
Dec 1978 21.88 16.52 N/A N/A 17.80 12.31
Dec 1979 12.31 10.95 N/A 23.91 29.47 28.11
Dec 1980 11.90 25.67 N/A 39.57 42.48 33.88
Dec 1981 -12.46 -4.79 N/A -11.31 -11.08 -3.21
Dec 1982 3.97 9.71 N/A 20.46 34.46 18.67
Dec 1983 20.96 21.93 N/A 15.98 34.25 19.87
Dec 1984 0.62 4.72 N/A -0.95 -10.13 -11.22
Dec 1985 78.93 40.56 N/A 32.85 22.20 31.36
Dec 1986 43.85 41.89 N/A 15.36 6.44 7.36
Dec 1987 3.66 16.16 N/A 5.31 4.05 -5.26
Dec 1988 15.81 23.29 27.90 11.27 4.87 15.41
Dec 1989 28.51 16.61 12.03 35.92 20.70 19.26
Dec 1990 -3.85 -17.02 -22.74 -0.26 0.87 -17.80
Dec 1991 13.11 18.28 13.96 41.16 50.18 56.84
Dec 1992 -4.71 -5.23 -10.97 5.00 14.31 15.45
Dec 1993 29.28 22.50 34.90 2.90 25.58 14.75
Dec 1994 2.28 5.08 6.63 2.66 13.04 -3.20
Dec 1995 21.62 20.72 9.94 37.19 42.38 39.92
Dec 1996 21.09 13.48 6.68 23.12 19.92 22.71
Dec 1997 23.80 15.76 2.04 30.49 10.90 21.64
Dec 1998 28.53 24.34 14.46 38.71 52.66 39.63
Dec 1999 15.89 24.93 30.91 33.16 134.99 85.59
</TABLE>
Source: Lipper, Inc.
62
<PAGE>
21. APPENDIX D - OTHER 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 U.S.
As of December 31, 1999, Pioneer employed a professional investment staff of 82.
Total assets of all Pioneer mutual funds at December 31, 1999, were
approximately $23 billion representing 1,392,828 shareholder accounts, including
881,091 non-retirement accounts and 511,737 retirement accounts.
63
<PAGE>
PART C - OTHER INFORMATION
Item 23. Exhibits
Amended Form N-1A
Exhibit Reference
(a) 1. Amended and Restated Declaration of Trust, dated
December 7, 1993.(1)
(a) 1.1. Amendment to Amended and Restated Declaration of Trust.(1)
(a) 1.2. Establishment and Designation of Classes.(1)
(a) 1.3. Establishment and Designation of Class C Shares.(2)
(b) 2. By-Laws.(2)
(c) None.
(d) 5. Management Contract with Investment Management, Inc.
(formerly Pioneering Management Corporation), dated January
1, 1994.(1)
(e) 6.1. Form of Underwriting Agreement with Pioneer Funds
Distributor, Inc.(4)
(e) 6.2. Form of Dealer Sales Agreement.(2)
(f) 7. None.
(g) 8. Custodian Agreement with Brown Brothers Harriman & Co.(1)
(h) 9. Form of Investment Company Service Agreement.(6)
(h) 9.1. Administration Agreement with Pioneer Investment Management,
Inc. (formerly Pioneering Management Corporation).(5)
(i) 10. Opinion and Consent of Counsel.(6)
(j) 11. Consent of Independent Public Accountants.(7)
(k) 12. None.
(l) 13. None.
(m) 15. Class A Shares Distribution Plan.(1)
(m) 15.2. Form of Class B Shares Distribution Plan.(4)
(m) 15.3. Class C Shares Distribution Plan.(2)
(n) 18.2. Multiple Class Plan for Class A, Class B and
Class C Shares.(2)
(p) 20. Code of Ethics.(7)
N/A 21. Powers of Attorney.(7)
- -------------------------
(1) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 9 to the Registration Statement (File No.
33-20795) as filed with the Securities and Exchange Commission (the "SEC") on
April 27, 1995 (Accession No. 0000831120-95-000006).
(2) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 10 to the Registration Statement as
filed with the SEC on April 22, 1996 (Accession No. 0000831120-96-000005).
(3) Previously filed. Incorporated herein by reference from the exhibit filed
with Post-Effective Amendment No. 11 to the Registration Statement as
filed with the SEC on April 28, 1997 (Accession No. 0000831120-97-000010).
(4) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 13 to the Registration Statement as
filed with the SEC on October 30, (Accession No. 0000950146-98-001833).
(5) Previously filed. Incorporated herein by reference from the exhibit filed
with Post-Effective Amendment No. 14 to the Registration Statement as
filed with the SEC on February 22, 1999 (Accession No. 0001016964-99-000041).
(6) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 15 to the Registration Statement as filed with
the SEC on April 30, 1999 (Accession No. 0000831120-99-000009).
(7) Filed herewith.
Item 24. Persons Controlled by or Under Common Control with the Fund
None.
Item 25. Indemnification
Except for the Amended and Restated Declaration of Trust, dated
December 7, 1993 (the "Declaration"), establishing the Fund as a business trust
under Massachusetts law, there is no contract, arrangement or statute under
C-1
<PAGE>
which any Trustee, officer, underwriter or affiliated person of the Fund is
insured or indemnified. The Declaration provides that no Trustee or officer
will be indemnified against any liability to which the Fund would otherwise be
subject by reason of or for willful misfeasance, bad faith, gross negligence or
reckless disregard of such person's duties.
Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "1933 Act"), may be available to Trustees, officers
and controlling persons of the Fund pursuant to the foregoing provisions, or
otherwise, the Fund has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Fund of expenses incurred or
paid by a Trustee, officer or controlling person of the Fund in the successful
defense of any action, suit or proceeding) is asserted by such Trustee, officer
or controlling person in connection with the securities being registered, the
Fund will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
Item 26. Business and Other Connections of Investment Adviser
Pioneer Investment Management, Inc. ("Pioneer Investments") is a registered
investment adviser under the Investment Advisers Act of 1940, as amended, and is
a wholly owned subsidiary of The Pioneer Group, Inc. ("Pioneer"). Pioneer
Investments manages investment companies, pension and profit sharing plans,
trusts, estates or charitable organizations and other corporations or
business entities.
To the knowledge of the Fund, none of Pioneer Investments' directors
or executive officers is or has been during their employment with Pioneer
Investments engaged in any other business, profession, vocation or employment
of a substantial nature for the past two fiscal years, except as noted below.
Certain directors and officers, however, may hold or may have held various
positions with, and engage or have engaged in business for, the investment
companies that Pioneer Investments manages, Pioneer and/or other Pioneer
subsidiaries.
OTHER BUSINESS, PROFESSION, VOCATION OR
EMPLOYMENT OF SUBSTANTIAL NATURE WITHIN LAST TWO
NAME OF DIRECTOR/OFFICER FISCAL YEARS
John F. Cogan, Jr. Of Counsel, Hale and Dorr LLP, 60 State
Street, Boston, Massachusetts 02109
Joseph P. Barri Senior Partner, Hale and Dorr LLP, 60 State
Street, Boston, Massachusetts 02109
Item 27. Principal Underwriters
(a) See "Management of the Fund" in the Statement of Additional
Information.
(b) Directors and officers of Pioneer Funds Distributor, Inc.:
POSITIONS AND OFFICES WITH POSITIONS AND OFFICES WITH
NAME UNDERWRITER FUND
John F. Cogan, Jr. Director and Chairman Chairman of the Board,
President and Trustee
David D. Tripple Director and President Executive Vice President and
Trustee
C-2
<PAGE>
Steven M. Graziano Director and
Executive Vice President None
William A. Misata Senior Vice President None
Constance D. Spiros Senior Vice President None
Marcy L. Supovitz Senior Vice President None
Mark R. Kiniry Vice President, Regional
Director, Sales None
Barry G. Knight Vice President None
William H. Spencer Vice President, Regional
Director, Sales None
Elizabeth A. Watson Vice President, Compliance None
Steven R. Berke Assistant Vice President,
Blue Sky None
Eric W. Reckard Treasurer Treasurer
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
The principal business address of each of these individuals is 60 State Street,
Boston, Massachusetts 02109-1820.
(c) Not applicable.
Item 28. Location of Accounts and Records
The accounts and records are maintained at the Fund's office at
60 State Street, Boston, Massachusetts 02109; contact the Treasurer.
Item 29. Management Services
Not applicable.
Item 30. Undertakings
Not applicable.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Fund certifies that it meets all of the
requirements for effectiveness of this registration statement under Rule 485(b)
under the Securities Act of 1933 and has duly caused this registration statement
to be signed on its behalf by the undersigned, duly authorized, in the City of
Boston and The Commonwealth of Massachusetts on the 28th day of April, 2000.
PIONEER AMERICA INCOME TRUST
By: /s/ John F. Cogan, Jr.
----------------------------
John F. Cogan, Jr.
Chairman and President
Pursuant to the requirements of the Securities Act of 1933, this
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) )
)
)
/s/ Eric W. Reckard Chief Financial Officer )
Eric W. Reckard and Treasurer (Principal )
Financial and Accounting )
Officer) )
)
)
Trustees: )
)
)
Mary K. Bush* )
Mary K. Bush )
)
)
/s/John F. Cogan, Jr. )
John F. Cogan, Jr. )
)
)
)
Richard H. Egdahl* )
Richard H. Egdahl )
)
)
Margaret BW Graham* )
Margaret B. W. Graham )
)
)
John W. Kendrick* )
John W. Kendrick )
)
)
Marguerite A. Piret* )
Marguerite A. Piret )
)
)
David D. Tripple* )
David D. Tripple )
)
)
Stephen K. West* )
Stephen K. West )
)
)
John Winthrop* )
John Winthrop )
)
)
*By: /s/ John F. Cogan, Jr. Dated: April 28, 2000)
John F. Cogan, Jr.
Attorney-in-fact
<PAGE>
Exhibit Index
Exhibit
Number Document Title
(j) 11. Consent of Independent Public Accountants
(p) 20. Code of Ethics
N/A 21. Powers of Attorney
Arthur Andersen
Consent of Independent Public Accountants
To the shareholders and Trustees of
Pioneer America Income Fund
As independent public accountants, we hereby consent to the use of our report
on Pioneer America Income Trust dated February 4, 2000 (and to all references
to our firm) included in or made a part of Post-Effective Amendment No. 16 and
Amendment No. 17 to Registration Statement File Nos. 33-20795 and 811-05516,
respectively.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Boston, Massachusetts
April 27, 2000
THE PIONEER COMPLEX OF FUNDS
- --------------------------------------------------------------------------------
CODE OF ETHICS
- --------------------------------------------------------------------------------
INTRODUCTION
This Code of Ethics (the "Code") has been adopted by each registered investment
company (individually an "Investment Company" and collectively the "Investment
Companies") for which Pioneer Investment Management, Inc. ("Pioneer
Investments") serves as an investment adviser or for which Pioneer Funds
Distributor, Inc. ("PFD") serves as principal underwriter, Pioneer Investments
and PFD. The Code is applicable to Access Persons, including Independent
Trustees, of the Investment Companies, as well as Access Persons of Pioneer
Investments and PFD. Pioneer Investments, PFD and the Investment Companies are
sometimes together referred to herein as "Pioneer."
Pioneer and its affiliated entities are committed to maintaining the highest
ethical standards in connection with the management of investment companies and
institutional accounts. Dishonesty, self-dealing, conflicts of interest and
trading on material non-public information will not be tolerated.
The Code reflects Pioneer's views on dishonesty, self-dealing and conflicts of
interest. Every person who has been designated by Pioneer as an "Access Person"
is required to read the Code annually and to certify that he/she has complied
with its provisions and with the reporting requirements. In addition, every
employee of Pioneer is subject to Pioneer's Policies and Procedures to Prevent
Insider Trading.
Any person who has any question regarding the applicability of the Code or
Pioneer's Policies and Procedures to Prevent Insider Trading or the related
prohibitions, restrictions and procedures or the propriety of any action, is
urged to contact the Office of the General Counsel.
SECTION 1
STATEMENT OF POLICY
Section 17(j) of the Investment Company Act of 1940 (the "1940 Act") provides,
among other things, that it is unlawful for any Access Person of Pioneer to
engage in any act, practice or course of business in connection with the
purchase or sale, directly or indirectly, by such Access Person of any Covered
Security held or to be acquired by an Investment Company in contravention of
such rules and regulations as the Securities and Exchange Commission (the
"Commission") may adopt to define and prescribe means reasonably necessary to
prevent such acts, practices or courses of business as are fraudulent, deceptive
or manipulative.
It is the policy of Pioneer that no Access Person shall engage in any act,
practice or course of conduct that would violate the provisions of Section 17(j)
and the rules thereunder. The fundamental position of Pioneer is, and has been,
that each Access Person shall place at all times the interests of the Investment
Companies and their shareholders and the Institutional Accounts ahead of his/her
private Covered Securities transactions. Accordingly, private Covered Securities
transactions by Access Persons must be conducted in a manner consistent with
this Code so as to avoid any actual or potential conflict of interest or any
abuse of an Access Person's position of trust and responsibility. Further,
Access Persons should not take inappropriate advantage of their positions with
or relationships to any Investment Company, any Institutional Account or
Pioneer.
<PAGE>
Without limiting in any manner the fiduciary duty owed by Access Persons or the
provisions of this Code, it should be noted that Pioneer considers it proper
that purchases and sales be made by its Access Persons in the marketplace of
Covered Securities owned by the Investment Companies or Institutional Accounts;
PROVIDED, HOWEVER, that such personal Covered Securities transactions comply
with the spirit of, and the specific restrictions and limitations set forth in,
this Code. Such personal Covered Securities transactions also should be made in
amounts consistent with the normal investment practice of the Access Person
involved and with an investment, rather than a trading, outlook. Not only does
this policy encourage investment freedom and result in establishing investment
experience, but it also fosters a continuing personal interest in such
investments by those responsible for the continuous supervision of the
portfolios of the Investment Companies and Institutional Accounts. In making
personal investment decisions with respect to any Covered Security, extreme care
must be exercised by Access Persons to ensure that the prohibitions of this Code
are not violated. Further, personal investing by Access Persons should be
conducted in such a manner so as to eliminate the possibility that the Access
Person's time and attention is being devoted to his/her personal investments at
the expense of time and attention that should be devoted to management of an
Investment Company's or Institutional Account's portfolio. It should be
emphasized that technical compliance with the procedures, prohibitions and
limitations of this Code will not automatically insulate from scrutiny personal
Covered Securities transactions by an Access Person which show a pattern of
abuse of his/her fiduciary duty to any Investment Company or Institutional
Account.
SECTION 2
DEFINITIONS
2.1 ACCESS PERSON. The term "Access Person" shall mean the following:
o The term "Access Person" with respect to an Investment Company
shall mean any Trustee, officer or Advisory Person of such
Investment Company.
o The term "Access Person" with respect to Pioneer Investments shall
mean any general partner, director, officer or Advisory Person of
Pioneer Investments.
o The term "Access Person" with respect to PFD shall mean any
director or officer of PFD who in the ordinary course of business
makes, participates in or obtains information regarding the
purchase or sale of Covered Securities for an Investment Company
for which PFD acts, or whose functions or duties, in the ordinary
course of business, relate to the making of any recommendation to
an Investment Company or Institutional Account regarding the
purchase or sale of Covered Securities.
2.2 ADVISORY PERSON. The term "Advisory Person" shall mean (i) every
employee of an Investment Company, Pioneer Investments, PFD or The
Pioneer Group, Inc. ("PGI") (or any other company in a Control
relationship with Pioneer Investments) who, in connection with his or
her regular functions or duties, makes, participates in, or obtains
information regarding, the purchase or sale of a Covered Security by an
Investment Company or Institutional Account, or whose functions relate
to the making of any recommendations with respect to such purchases or
sales, (ii) every natural person in a Control relationship to an
Investment Company, Pioneer Investments, PFD or
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PGI who obtains
information concerning recommendations made to an Investment Company or
Institutional Account with regard to the purchase or sale of a Covered
Security and (iii) any other employee or independent contractor of any
Investment Company, Pioneer Investments, PFD or PGI designated as an
Advisory Person by the Review Officer. Advisory Person shall not
include directors of PGI who are not also officers or employees of
Pioneer Investments, PFD, PGI or an Investment Company.
2.3 BENEFICIAL OWNERSHIP "Beneficial Ownership" of a security shall mean
having or sharing an opportunity, either directly or indirectly,
through any contract, arrangement, understanding, relationship or
otherwise, to profit or share in any profit derived from a transaction
in a security. Indirect opportunities to profit or share in any profit
would be deemed to exist as a result of, but not limited to, the
following:
o securities held by members of an Access Person's immediate family
sharing the same household (I.E., any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, sister-in-law, including adoptive relationships)
or any other individual(s) sharing the same household;
o a general partner's proportionate interest in securities held by
a general or limited partnership;
o a performance-related fee, other than an asset-based fee, received
by any broker, dealer, bank, insurance company, investment
company, investment adviser, investment manager, trustee or person
or entity performing a similar function;
o the right to dividends which is separate or separable from the
underlying security;
o an Access Person's interest in securities held by a trust; or
o an Access Person's right to acquire securities through the
exercise or conversion of any derivative security.
2.4 CONSIDERED FOR PURCHASE OR SALE. A Covered Security is being
"Considered for Purchase or Sale" by an Investment Company or
Institutional Account during any period in which Pioneer Investments
is: (i) actively trading or attempting to trade in the Covered Security
for an Investment Company or Institutional Account; (ii) passively
interested in trading in the Covered Security for an Investment Company
or Institutional Account, I.E., would buy or sell the Security within a
price range communicated to Pioneer Investments' trading department; or
(iii) considering, within an Investment Committee of Pioneer
Investments, the implementation of a trading program for the Covered
Security (including any period during which the Investment Committee is
in receipt of a recommendation with respect to which it has not yet
made a decision). With respect to a Pioneer Investments analyst, the
foregoing period shall commence on the day that he/she decides to
recommend the purchase or sale of the Covered Security to the
Investment Committee of Pioneer Investments and shall continue for a
period of three months after such date.
2.5 CONTROL. The term "Control" shall mean the power to exercise a
controlling influence over the management or policies of Pioneer
Investments, PFD or PGI, unless such power is solely the result of an
official position with Pioneer Investments, PFD or PGI, all as
determined in accordance with Section 2(a)(9) of the 1940 Act.
2.6 COVERED SECURITY. The term "Covered Security" shall have the meaning
set forth in Section 2(a)(36) of the 1940 Act and also shall include
other derivative financial instruments
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(including, but not limited to, options, futures contracts and options
on futures contracts) except that it shall not include:
o Direct obligations of the government of the United States;
o Bankers' acceptances;
o Bank certificates of deposit;
o Commercial paper;
o High quality short-term debt instruments, including repurchase
agreements (I.E., any instrument that has a maturity at issuance
of fewer than 366 days and that is rated in one of the two highest
rating categories by a Nationally Recognized Statistical Rating
Organization); or
o Shares of registered open-end investment companies, including the
Investment Companies.
(For reporting purposes, transactions in shares of Pioneer Interest
Shares must be reported.)
2.7 FIDUCIARY ACCOUNT. "Fiduciary Account" is an account with respect to
which an Access Person is an investment adviser, trustee or other
fiduciary and in which the Access Person does not otherwise have any
Beneficial Ownership interest.
2.8 INDEPENDENT TRUSTEE. "Independent Trustee" shall mean any Trustee of
an Investment Company who is not an "interested person" (within the
meaning of Section 2(a)(19) of the 1940 Act) of the Investment
Company, Pioneer Investments or PFD.
2.9 INITIAL PUBLIC OFFERING. "Initial Public Offering" shall mean an
offering of securities registered under the Securities Act of 1933, the
issuer of which, immediately before registration, was not subject to
the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934.
2.10 INSTITUTIONAL ACCOUNT. "Institutional Account" refers to any account,
other than an Investment Company, to which Pioneer Investments provides
investment advice.
2.11 INVESTMENT COMPANY. "Investment Company" refers to any U.S. registered
investment company for which Pioneer Investments serves as an
investment adviser or subadviser or for which PFD serves as principal
underwriter. "Investment Companies" refers to all such companies.
2.12 LIMITED OFFERING. "Limited Offering" shall mean an offering of
securities that is exempt from registration under the Securities Act of
1933 pursuant to Section 4(2) or Section 4(6) or pursuant to Rules 504,
505 or 506 under the Securities Act of 1933.
2.13 MATERIAL NON-PUBLIC INFORMATION. "Material Non-Public Information" with
respect to an issuer is information, not yet released to the public,
that would have a substantial likelihood of affecting a reasonable
investor's decision to buy or sell any Covered Securities of such
issuer.
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2.14 PORTFOLIO MANAGER. "Portfolio Manager" shall mean every person who is
responsible for the day-to-day management of an Investment Company or
an Institutional Account, or every person who shares such
responsibility with another Portfolio Manager.
2.15. PRECLEARANCE OFFICER. "Preclearance Officer" shall mean the officer of
Pioneer Investments designated from time to time by the Chairman of
Pioneer Investments to provide written prior approval of purchases and
sales by Access Persons. The term "Alternative Preclearance Officer"
shall mean the officer designated from time to time by the Chairman of
Pioneer Investments to provide written prior approval of purchases and
sales by the Preclearance Officer, as well as Access Persons when the
Preclearance Officer is not available, and who shall act in all
respects in the manner prescribed herein for the Preclearance Officer.
2.16 REVIEW OFFICER. "Review Officer" shall mean the officer of Pioneer
Investments designated from time to time by the Chairman of Pioneer
Investments to receive and review reports of purchases and sales by
Access Persons. The term "Alternative Review Officer" shall mean the
officer designated from time to time by the Chairman of Pioneer
Investments to receive and review the reports of purchases and sales by
the Review Officer, as well as Access Persons when the Review Officer
is not available, and who shall act in all respects in the manner
prescribed herein for the Review Officer.
SECTION 3
PROHIBITED ACTIVITIES
While the scope of actions which may violate the Statement of Policy set forth
above cannot be exactly defined, such actions would always include at least the
following prohibited activities:
3.1 Except on behalf of Fiduciary Accounts with respect to such Access
Person, no ACCESS PERSON who is not an Independent Trustee shall enter
an order for the purchase or sale of a Covered Security which an
Investment Company or Institutional Account is purchasing or selling or
considering for purchase or sale until the later of (i) the day after
the Investment Company's or Institutional Account's transaction in that
Covered Security is completed or (ii) after the Investment Company or
Institutional Account is no longer considering the Covered Security for
purchase or sale, unless the Review Officer determines, after
disclosure and review of all material information, that it is clear
that, in view of the nature of the Covered Security and the market for
such Covered Security, the order of the Access Person will not
adversely affect the price paid or received by the Investment Company
or Institutional Account and that the order of the Access Person will
not be advantaged by the transaction by the Investment Company or
Institutional Account. Any Covered Securities transactions by an Access
Person in violation of this Subsection 3.1 shall, at the discretion of
the Chairman of Pioneer Investments, be reversed, any profits disgorged
to the affected Investment Company or Institutional Account or to
charity or other appropriate sanctions imposed.
Except on behalf of Fiduciary Accounts as to which the Independent
Trustee is a fiduciary, no Independent Trustee shall enter an order for
the purchase or sale of a Covered Security if he/ she knew or, in the
ordinary course of fulfilling his/ her official duties as an
Independent Trustee, should have known, that during the 15-day period
immediately before or after the entry of such order, such Covered
Security was purchased or sold by an Investment Company, or such
Covered Security was considered by Pioneer Investments for purchase or
sale by an Investment Company.
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3.2 No ACCESS PERSON shall, directly or indirectly, purchase or sell any
Covered Security in which he/she has, or by reason of such purchase
acquires, any Beneficial Ownership interest within a period of seven
calendar days before and after any Investment Company or Institutional
Account advised by Pioneer Investments has purchased or sold such
Covered Security or within seven calendar days of the Covered Security
being recommended for purchase or sale by Pioneer Investments. Any
Covered Security transaction by an Access Person in violation of this
Subsection 3.2 shall, at the discretion of the Chairman of Pioneer
Investments, be reversed, any profits disgorged to the affected
Investment Company or Institutional Account or to charity or other
appropriate sanctions imposed. The provisions of this Subsection 3.2
are subject to a DE MINIMUS exception for Access Persons other than
Advisory Persons at the discretion of the Preclearance Officer.
3.3 No ACCESS PERSON shall purchase or sell, or cause to be purchased or
sold, any Covered Security for a Fiduciary Account as to which he/she
is a fiduciary if any such purchase or sale may, to the reasonable
knowledge of such Access Person, adversely affect the interest of an
Investment Company or Institutional Account in purchasing or selling
such Covered Security or use the transaction by an Investment Company
or Institutional Account to advantage such Fiduciary Account. Covered
Securities transactions for a Fiduciary Account which may adversely
affect an Investment Company or Institutional Account include (i)
purchases that put upward pressure on the price of a Covered Security
being purchased or considered for purchase or (ii) sales that put
downward pressure on the price of a Covered Security being sold or
considered for sale by an Investment Company or Institutional Account.
No Access Person shall be in violation of this Subsection 3.3 with
respect to:
o a transaction in a Covered Security for Fiduciary Accounts if the
aggregate number of shares included in all such transactions on
any trading day does not exceed the lesser of (x) 1% of the
outstanding shares of the Covered Security or (y) the average
weekly trading volume of shares of such Covered Security during
the four previous calendar weeks; or
o the sale of a Covered Security on behalf of a Fiduciary Account by
an Access Person acting in good faith in fulfillment of his/her
fiduciary duty to sell the Covered Security.
3.4 No ACCESS PERSON shall, directly or indirectly, without first obtaining
approval of the President of Pioneer Investments, communicate to any
person any Material Non-Public Information relating to any issuer of
any Covered Security owned by an Investment Company or Institutional
Account. No Access Person shall, directly or indirectly, without first
obtaining approval of the President of Pioneer Investments, communicate
to any person who is not an Access Person any Material Non-Public
Information relating to an Investment Company or Institutional Account,
including, without limitation, the purchase or sale or the considered
purchase or sale of a Covered Security on behalf of such Investment
Company or Institutional Account, except to the extent necessary to
effect Covered Securities transactions on behalf of such Investment
Company or Institutional Account. No Access Person shall trade on or
otherwise use any Material Non-Public Information for his /her personal
benefit or for the benefit of any other person or entity or otherwise
act in a manner detrimental to the Covered Securities transactions of
an Investment Company or Institutional Account.
3.5 No ACCESS PERSON shall engage in, or permit anyone within his /her
Control to engage in, any act, practice or course of conduct which
would operate as a fraud or deceit upon, or constitute a manipulative
practice with respect to, an Investment Company or Institutional
Account or any
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issuer of any Covered Security owned by an Investment
Company or Institutional Account or which would violate Pioneer's
Policies and Procedures to Prevent Insider Trading Violations.
3.6 No ADVISORY PERSON shall, directly or indirectly, purchase any security
pursuant to an Initial Public Offering. Access Persons (other than
Advisory Persons) shall not directly or indirectly purchase any
security pursuant to an Initial Public Offering without obtaining prior
written approval from the Preclearance Officer, after disclosure to and
review by the Preclearance Officer of all material information. Any
approval will take into account whether the investment opportunity
should be reserved for an Investment Company or Institutional Account
and whether the opportunity is being offered to Access Person by virtue
of his /her position with or relationship to an Investment Company or
Institutional Account.
3.7 No ADVISORY PERSON shall, directly or indirectly, purchase any security
sold in a Limited Offering without obtaining prior written approval
from the Preclearance Officer, after disclosure to and review by the
Preclearance Officer of all material information. Any approval will
take into account whether the investment opportunity should be reserved
for an Investment Company or Institutional Account and whether the
opportunity is being offered to such Advisory Person by virtue of his
/her position with or relationship to an Investment Company or
Institutional Account.
3.8 No ADVISORY PERSON shall accept any gift or personal benefit valued in
excess of a DE MINIMUS value (as established from time to time by the
Preclearance Officer). Any solicitation of gifts or gratuities is
unprofessional and is strictly prohibited.
3.9 No ADVISORY PERSON shall serve on the board of directors of any
publicly traded company, absent prior written authorization by the
President of Pioneer Investments and determination by the President of
Pioneer Investments that the board service would be consistent with the
interests of the Investment Companies and the Institutional Accounts.
An Advisory Person who serves on the board of directors of a publicly
traded company may not participate in the decision to purchase or sell
any Covered Securities of such company by or on behalf of any
Investment Company or Institutional Account.
3.10 No ADVISORY PERSON shall recommend any Covered Securities transaction
for any Investment Company or Institutional Account without having
previously disclosed any interest in such Covered Securities or the
issuer thereof to the President of Pioneer Investments, including
without limitation:
o his/her Beneficial Ownership of any Covered Securities of such
issuer;
o any contemplated transaction by such person in such Covered
Securities;
o any position with such issuer or its affiliates; and
o any present or proposed business relationship between such issuer
or its affiliates and such person or any party in which such
person has a significant interest.
Such interested Advisory Person may not participate in the decision by
Pioneer Investments on behalf of any Investment Company or
Institutional Account to purchase and sell Covered Securities of such
issuer.
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SECTION 4
EXEMPT TRANSACTIONS AND CONDUCT
The prohibitions of Section 3 of this Code (other than Subsections 3.4 and 3.5)
shall not be deemed to be violated by any of the following transactions:
4.1 Purchases or sales of Covered Securities for an account over which the
Access Person has no direct or indirect influence or Control;
4.2 Purchases or sales of Covered Securities which are non-volitional on
the part of the Access Person;
4.3 Purchases or sales of Covered Securities pursuant to an automatic
dividend reinvestment, cash purchase or withdrawal plan provided that
no adjustment is made by the Access Person to the rate at which Covered
Securities are purchased or sold, as the case may be, under such a plan
during any period in which the Covered Security is being considered for
purchase or sale by any Investment Company or Institutional Account;
4.4 Purchases of Covered Securities effected upon the exercise of rights
issued by an issuer pro rata to all holders of a class of its Covered
Securities, to the extent such rights were acquired by the Access
Person from the issuer, and sales of such rights so acquired;
4.5 Purchases or sales of Covered Securities which receive the prior
approval of the Review Officer, after disclosure to and review by the
Review Officer of all material information and provided that such prior
approval is based on the reasonable conclusion that the proposed
purchase or sale would not be in violation of the spirit of this Code
or would not cause any injury to any Investment Company or
Institutional Account;
4.6 Purchases or sales of Covered Securities made in good faith on behalf
of another Investment Company or Institutional Account, it being
understood by, and disclosed to, the Investment Companies and
Institutional Accounts that Pioneer may make contemporaneous investment
decisions and cause to be effected contemporaneous executions on behalf
of one or more Investment Companies and Institutional Accounts and that
such executions may increase or decrease the price at which Covered
Securities are purchased or sold for the Investment Companies and
Institutional Accounts;
4.7 Tenders of Covered Securities pursuant to tender offers which are
expressly conditioned on the tender offer's acquisition of all of the
Covered Securities of the same class; and
4.8 Except as otherwise provided in Section 3.3, purchases or sales of
Covered Securities for a Fiduciary Account as to which the Access
Person is a fiduciary.
SECTION 5
POLICIES AND PROCEDURES TO PREVENT INSIDER TRADING VIOLATIONS
All employees of Pioneer or any affiliate, including Access Persons other than
Independent Trustees, are subject to Pioneer's Policies and Procedures to
Prevent Insider Trading Violations, in addition to the
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requirements of this Code. Any violation of the Insider Trading Policy
which adversely affects any Investment Company or Institutional Account shall be
deemed to be a violation of this Code.
SECTION 6
CONFIDENTIALITY
All information obtained from any Access Person hereunder shall be kept in
strict confidence by Pioneer, except that reports of Covered Securities
transactions hereunder will be made available to the Investment Companies and
Institutional Accounts and to the Commission or any other regulatory or
self-regulatory organization to the extent required by law or regulation or to
the extent Pioneer considers necessary or advisable in cooperating with an
investigation or inquiry by the Commission or any other regulatory or
self-regulatory organization.
SECTION 7
INTERPRETATION
The Board of Trustees, on behalf of an Investment Company, as well as Pioneer,
may from time to time adopt such interpretations of this Code as it deems
appropriate.
SECTION 8
EXCEPTIONS TO THE CODE
Although exceptions to the Code will rarely, if ever, be granted, Pioneer
Investments' Chairman, after consultation with the Review Officer, may make
exceptions on a case by case basis, to any of the provisions of this Code upon a
determination that the conduct at issue involves a negligible opportunity for
abuse or otherwise merits an exemption from the Code. All such exceptions must
be received in writing by the Access Person before becoming effective. The
Review Officer shall report the exception to the Board of Trustees of the
Investment Companies at the next regularly scheduled Board meeting.
SECTION 9
ADOPTION OF PROCEDURES TO ADMINISTER THE CODE
Pioneer has adopted procedures to administer the Code of Ethics and Pioneer's
Policies and Procedures to Prevent Insider Trading. Pioneer shall administer
such procedures in accordance with applicable rules and regulations adopted by
the Commission, and all Access Persons are required to comply with such
procedures.
Approved: March 7, 2000
Effective: March 7, 2000
9
POWER OF ATTORNEY
I, the undersigned officer or trustee of the Pioneer mutual funds
listed on Annex A, do hereby constitute and appoint John F. Cogan, Jr., David D.
Tripple, Joseph P. Barri and Eric W. Reckard, and each of them acting singly, to
be my true, sufficient and lawful attorneys, with full power to each of them and
each of them acting singly, to sign for me, in my name and the capacities
indicated below, any Registration Statement on Form N-1A, Form N-14 or any other
applicable registration form and any and all amendments thereto filed by any of
the Pioneer mutual funds of which I am now or on the date of such filing a
Trustee (each a "Trust") under the Investment Company Act of 1940, as amended,
and under the Securities Act of 1933, as amended, with respect to the offering
of its shares of beneficial interest, and any and all other documents and papers
relating thereto, and generally to do all such things in my name and on behalf
of me in the capacities indicated to enable the Trust to comply with the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended, and thereunder, hereby ratifying and confirming my signature as it may
be signed by said attorneys or each of them to any and all Registration
Statements and amendments to said Registration Statement.
IN WITNESS WHEREOF, I have hereunder set my hand on this 7th day of
September, 1999.
/s/ Mary K. Bush
Mary K. Bush
/s/ Blake Eagle
Blake Eagle
/s/ Richard H. Egdahl
Richard H. Egdahl, M.D.
/s/ Margaret BW Graham
Margaret B.W. Graham
/s/ Stephen G. Kasnet
Stephen G. Kasnet
/s/ John W. Kendrick
John W. Kendrick
/s/ Marguerite A. Piret
Marguerite A. Piret
/s/ Fred N. Pratt, Jr.
Fred N. Pratt, Jr.
/s/ Stephen K. West
Stephen K. West
/s/ John Winthrop
John Winthrop
/s/ John F. Cogan, Jr.
John F. Cogan, Jr.
/s/ David D. Tripple
David D. Tripple
/s/ Eric W. Reckard
Eric W. Reckard
<PAGE>
Power of Attorney
Annex A
Pioneer International Growth Fund
Pioneer Europe Fund
Pioneer World Equity Fund
Pioneer Emerging Markets Fund
Pioneer Indo-Asia Fund
Pioneer Capital Growth Fund
Pioneer Mid-Cap Fund
Pioneer Growth Shares
Pioneer Small Company Fund
Pioneer Independence Fund
Pioneer Micro-Cap Fund
Pioneer Gold Shares
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer II
Pioneer Real Estate Shares
Pioneer Short-Term Income Trust/
Pioneer Limited Maturity Bond Fund
Pioneer America Income Trust
Pioneer Bond Fund
Pioneer Tax-Free Income Fund
Pioneer Money Market Trust
Pioneer Strategic Income Fund
Pioneer Tax-Managed Equity Fund/
Pioneer Tax-Managed Fund
Pioneer High Yield Fund
Pioneer Interest Shares
Pioneer Variable Contracts Trust
