Pioneer
Europe Fund
Class A and Class B Shares
Prospectus
February 28, 1995
(revised October 9, 1995)
Pioneer Europe Fund (the "Fund") seeks long-term growth of capital. The Fund
pursues this objective by investing in a diversified portfolio consisting
primarily of securities of European companies and in Depositary Receipts for
such securities. Any current income generated from these securities is
incidental to the investment objective of the Fund. There is, of course, no
assurance that the Fund will achieve its investment objective.
Fund returns and share prices fluctuate and the value of your account upon
redemption may be more or less than your purchase price. Shares in the Fund are
not deposits or obligations of, or guaranteed or endorsed by, any bank or other
depository institution, and the shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other government
agency. Investments in securities issued by foreign companies or governments
entail risks in addition to those customarily associated with investing in U.S.
securities. The Fund is intended for investors who can accept the risks
associated with its investments and may not be suitable for all investors. See
"Investment Objective and Policies" for a discussion of these risks.
This Prospectus (Part A of the Registration Statement) provides information
about the Fund that you should know before investing. Please read and retain it
for your future reference. More information about the Fund is included in Part
B, the Statement of Additional Information, also dated February 28, 1995
(revised October 9, 1995), which is incorporated into this Prospectus by
reference. A copy of the Statement of Additional Information may be obtained
free of charge by calling Shareholder Services at 1-800-225-6292 or by written
request to the Fund at 60 State Street, Boston, Massachusetts 02109. Additional
information about the Fund has been filed with the Securities and Exchange
Commission (the "SEC") and is available upon request and without charge.
TABLE OF CONTENTS PAGE
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I. EXPENSE INFORMATION 2
II. FINANCIAL HIGHLIGHTS 3
III. INVESTMENT OBJECTIVE AND POLICIES 4
IV. EUROPE 6
Risk Factors 6
V. MANAGEMENT OF THE FUND 6
VI. FUND SHARE ALTERNATIVES 8
VII. SHARE PRICE 8
VIII. HOW TO BUY FUND SHARES 9
Class A Shares 9
Class B Shares 10
IX. HOW TO SELL FUND SHARES 11
X. HOW TO EXCHANGE FUND SHARES 12
XI. DISTRIBUTION PLANS 13
XII. DIVIDENDS, DISTRIBUTIONS AND TAXATION 14
XIII. SHAREHOLDER SERVICES 14
Account and Confirmation Statements 14
Additional Investments 14
Automatic Investment Plans 15
Financial Reports and Tax Information 15
Distribution Options 15
Directed Dividends 15
Direct Deposit 15
Voluntary Tax Withholding 15
Telephone Transactions and Related Liabilities 15
FactFone(SM) 15
Retirement Plans 16
Telecommunications Device for the Deaf (TDD) 16
Systematic Withdrawal Plans 16
Reinstatement Privilege (Class A Shares Only) 16
XIV. THE FUND 16
XV. INVESTMENT RESULTS 17
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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I. EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses that
you, as a shareholder, will bear directly or indirectly when you invest in the
Fund. The table reflects estimated annual operating expenses, based upon actual
expenses for the fiscal year ended October 31, 1994.
Class A Class B
-------- ----------
Shareholder Transaction Expenses:
Maximum Initial Sales Charge on
Purchases(1) (as a percentage of
offering price) 5.75% None
Maximum Sales Charge on
Reinvestment of Dividends None None
Maximum Deferred Sales Charge
(as a percentage of original
purchase price or redemption price,
as applicable) None(1) 4.00%
Redemption Fee(2) None None
Exchange Fee None None
Annual Operating Expenses(4)
(as a percentage of net assets):
Management Fee
(after Expense Limitation)(3) 0.43% 0.43%
12b-1 Fees(4) 0.21% 1.00%
Other Expenses (including transfer
agent fee, custodian fees and
accounting and printing expenses) 1.22% 1.04%
Total Operating Expenses
(after Expense Limitation):(3) 1.86% 2.47%
====== =====
(1) Purchases of $1,000,000 or more and purchases by participants in certain
group plans are not subject to an initial sales charge but may be subject to
a contingent deferred sales charge.
(2) Separate fees (currently $10 and $20, respectively) apply to domestic and
international wire transfers of redemption proceeds.
(3) For Class B shares, percentages are based on estimated expenses that would
have been incurred during the previous fiscal year had Class B shares been
outstanding for the entire period. Class B shares, were first offered April
4, 1994.
(4) Pioneering Management Corporation (the "Manager"), agreed not to impose a
portion of its management fee and to make other arrangements, if necessary,
to limit the operating expenses of the Fund as listed below. This agreement
is voluntary and temporary any may be revised or terminated at any time.
Class A Class B
-------- -----------
Expense Limitation 1.75% see below*
Expenses Absent
Limitation
Total Operating
Expenses 2.48% 2.95%
Management Fee 1.00% 1.00%
*The portion of Fund-wide expenses attributable to Class B shares will be
reduced only to the extent such expenses are reduced for the Class A shares of
the Fund.
Example:
You would pay the following dollar amounts on a $1,000 investment, assuming a
5% annual return and redemption at the end of each of the time periods:
1 Year 3 Years 5 Years 10 Years
-------- -------- -------- ---------
Class A Shares $75 $113 $152 $263
Class B Shares
--Assuming complete
redemption at end of
period $65 $107 $152 $265*
--Assuming no
redemption $25 $ 77 $132 $265*
- ---------
*Class B shares convert to Class A shares eight years after purchase; therefore,
Class A expenses are used after year eight.
The example above assumes reinvestment of all dividends and distributions and
that the percentage amounts listed under "Annual Operating Expenses" remain the
same each year.
The example is designed for information purposes only, and should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and return may vary from year to year and may be higher or lower than
those shown.
For further information regarding management fees, 12b-1 fees and other
expenses of the Fund, including information regarding the basis upon which
management fees and 12b-1 fees are paid, see "Management of the Fund,"
"Distribution Plans" and "How To Buy Fund Shares" in this Prospectus and
"Management of the Fund" and "Distribution Plans" in the Statement of Additional
Information. The Fund's payment of a 12b-1 fee may result in long-term
shareholders indirectly paying more than the economic equivalent of the maximum
initial sales charge permitted under the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. ("NASD").
The maximum initial sales charge is reduced on purchases of specified larger
amounts of Class A shares and the value of shares owned in other Pioneer mutual
funds is taken into account in determining the applicable initial sales charge.
See "How to Buy Fund Shares." No sales charge is applied to exchanges of shares
of other publicly available Pioneer mutual funds. See "How to Exchange Fund
Shares."
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II. FINANCIAL HIGHLIGHTS
The following information has been derived from financial statements which
have been audited by Arthur Andersen LLP, independent public accountants, in
connection with their examination of the Fund's financial statements. Arthur
Andersen LLP's report on the Fund's financial statements as of October 31, 1994
appears in the Fund's Annual Report, which is incorporated by reference into the
Statement of Additional Information. The information listed below should be read
in conjunction with the financial statements contained in the Fund's Annual
Report. The Annual Report includes more information about the Fund's performance
and is available free of charge by calling Shareholder Services at
1-800-225-6292.
PIONEER EUROPE FUND
Financial Highlights For Each Class A Share Outstanding Throughout the
Period:
<TABLE>
<CAPTION>
Year Ended 4/2/91
-------------------------------------- (Commencement
October 31, October 31 October 31, of operations) to
1994 1993 1992 10/31/91
<S> <C> <C> <C> <C>
-------- --------- --------- --------
Net asset value, beginning of period ......... $17.73 $14.6300 $15.2000 $15.0000
-------- --------- --------- --------
Income from investment operations:
Net investment income (loss) ................ $0.10 $0.0383 $0.1031 $0.0047
Net realized and unrealized gain (loss) on
investments and other forward foreign
currency related transactions .............. 2.65 3.3317 (0.6231) 0.1953
-------- --------- --------- --------
Total income (loss) from investment
operations ............................. $2.75 $3.3700 $(0.5200) $0.2000
Distribution to shareholders from:
Net investment income ....................... (0.31) (0.0900) (0.0500) --
Net realized capital gains .................. (0.26) (0.1800) 0.0000 --
-------- --------- --------- --------
Net increase (decrease) in net asset value ... $2.18 $3.1000 $(0.5700) $0.2000
-------- --------- --------- --------
Net asset value, end of period ............... $19.91 $17.7300 $14.6300 $15.2000
======== ========= ========= ========
Total return* ................................ 15.97% 23.47% (3.46%) 1.33%
Ratio of net operating expenses to average net
assets ..................................... 1.86% 2.00% 2.00% 2.00%**
Ratio of net investment income to average net
assets ..................................... 0.28% 0.24% 0.74% 0.10%**
Portfolio turnover rate ...................... 99.92% 68.58% 49.79% 7.34%**
Net assets, end of period (in thousands) ..... $67,375 $48,827 $35,205 $23,993
Ratios assuming no waiver of management
fees or assumption of expenses by the
Manager for the year ended:
Net operating expenses .................... 2.48% 2.77% 3.46% 4.93%**
Net investment income ..................... (0.34%) (0.53%) (0.72%) (2.83%)**
</TABLE>
Financial Highlights For Each Class B Share Outstanding Throughout the Period:
Class B Shares***
-----------------
April 4, 1994 to
October 31, 1994
Net asset value, beginning of period $17.96
-------
Income from investment operations:
Net investment income (loss) .............................. $0.01
Net realized and unrealized gain (loss) on investments
and other forward foreign currency related transactions... 1.88
-------
Total income (loss) from investment operations ......... $1.89
Distribution to shareholders from:
Net investment income ..................................... (0.05)
Net realized capital gains ................................ (0.00)
-------
Net increase (decrease) in net asset value .................. $1.84
-------
Net asset value, end of period .............................. $19.80
=======
Total return* ............................................... 10.55%
Ratio of net operating expenses to average net assets ....... 2.47%
Ratio of net investment income to average net assets ........ (0.75%)
Portfolio turnover rate ..................................... 99.92%
Net assets, end of period (in thousands) .................... $33,037
Ratios assuming no waiver of management fees or assumption of
expenses by the Manager for the year ended:
Net operating expenses ................................... 2.95%
Net investment income .................................... (1.23%)
*Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
**Annualized.
***Class B shares first offered April 4, 1994.
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III. INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is long-term growth of capital. The Fund
pursues this objective by investing in a diversified portfolio consisting
primarily of securities of companies (a) that are organized under the laws of a
European country and have a principal office in a European country or (b) that
derive 50% or more of their total revenues from business in Europe or (c) the
equity securities of which are traded principally on a stock exchange in Europe;
and in Depositary Receipts for such securities (collectively, "European
Securities").
Under normal circumstances at least 80% of the assets of the Fund are
invested in European Securities consisting of common stock and in securities
with common stock characteristics, such as preferred stock, warrants and debt
securities convertible into common stock. The Fund will not invest more than 5%
of its total assets in convertible debt securities rated at the time of purchase
by a national ratings agency below investment grade, i.e., BBB or better by
Moody's Investors Service ("Moody's") or Baa by Standard & Poor's Ratings Group
("Standard & Poor's"). Such securities may have speculative characteristics and
changes in economic conditions or other circumstances may lead to a lesser
capacity to make principal and interest payments than is the case with higher
rated securities. In the event that the rating on a convertible debt security is
downgraded below investment grade, the Manager will dispose of the security in a
timely manner. The Fund may invest the balance of its assets in Temporary
Investments (as defined below).
The Fund may invest in the securities of companies domiciled in any European
country, including but not limited to Austria, Belgium, Finland, France,
Germany, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland,
the United Kingdom and the countries of Eastern Europe in the event that markets
develop for those securities.
No investment is made if as a result 25% or more of the Fund's total assets
would be invested in any one European country.
The Fund's investment objective and certain investment restrictions
designated as fundamental set forth in the Statement of Additional Information
may not be changed without shareholder approval.
Forward Foreign Currency Contracts
The Fund has the ability to hold a portion of its assets in foreign
currencies and to enter into forward foreign currency contracts to facilitate
settlement of foreign securities transactions or to protect against changes in
foreign currency exchange rates. A forward foreign currency contract involves an
obligation to purchase or sell a specific currency on a future date, at a price
set at the time of the contract. The Fund might sell a foreign currency on
either a spot or forward basis to hedge against an anticipated decline in the
dollar value of securities in its portfolio or securities it intends or has
contracted to sell or to preserve the United States ("U.S.") dollar value of
dividends, interest or other amounts it expects to receive. Although this
strategy could minimize the risk of loss due to a decline in the value of the
hedged foreign currency, it could also limit any potential gain which might
result from an increase in the value of the currency. Alternatively, the Fund
might purchase a foreign currency or enter into a forward purchase contract for
the currency to preserve the U.S. dollar price of securities it is authorized to
purchase or has contracted to purchase.
The Fund may also engage in cross-hedging by using forward contracts in one
currency to hedge against fluctuations in the value of securities denominated in
a different currency, if the Fund's Manager determines that there is a pattern
of correlation between the two currencies. Cross-hedging may also include
entering into a forward transaction involving two foreign currencies, using one
foreign currency as a proxy for the U.S. dollar to hedge against variations in
the other foreign currency, if the Manager determines that there is a pattern of
correlation between the proxy currency and the U.S. dollar.
If the Fund enters into a forward contract to buy foreign currency for any
purpose, the Fund will be required to place cash or liquid, high grade liquid
debt securities in a segregated account with the Fund's Custodian in an amount
equal to the value of the Fund's total assets committed to the consummation of
the forward contract. The Fund may enter into forward currency contracts having
an intrinsic value of up to 30% of its net assets.
Options
To realize greater income than would be realized on portfolio transactions
alone, the Fund may write (sell) covered call and put options on any securities
in which it may invest or on any securities index based on securities in which
the Fund may invest. The Fund may also write (as closing transactions) and
purchase put and call options on such securities and indices.
The Fund may purchase put and call options on securities indices to manage
cash flow and to attempt to remain fully invested in the stock market, instead
of or in addition to buying and selling stocks. The Fund may also purchase these
options in order to hedge against risks of market-wide price fluctuations.
Options on securities indices are similar to options on securities except that
the delivery requirements are different. Unlike a securities option, which gives
the holder the right to purchase or sell a specified security at a specified
price, an option on a securities index gives the holder the right to receive a
cash "exercise settlement amount" equal to (i) the difference between the
exercise price of the option and the value of the underlying securities index on
the exercise date, (ii) multiplied by a fixed "index multiplier." In exchange
for undertaking the obligation to make such a cash payment, the writer of the
securities index option receives a premium.
Gains or losses on the Fund's transactions in securities index options depend
on price movements in the securities market generally (or, for narrow market
indices, in a particular industry or segment of the market) rather than the
price movement of individual securities held by the Fund. The effectiveness of
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<PAGE>
hedging through the purchase of stock index options will depend upon the extent
to which price movements in the portion of the securities portfolio being hedged
correlate with the price movements in the selected stock index. Perfect
correlation may not be possible because the securities held or to be acquired by
the Fund may not exactly match the composition of the stock index on which
options are written. In the event of market changes, the Fund's position in
stock index options may not be easily closed out. If the forecasts of the Fund's
Manager regarding movements in securities prices are incorrect, the Fund's
investment results may have been better without the hedge. The Fund has no
present intention of investing more than 5% of the Fund's total assets in
securities index option transactions.
The Fund may also purchase and write put and call options on foreign
currencies for the purpose of protecting against declines in the dollar value of
foreign portfolio securities and against increases in the U.S. dollar cost of
foreign securities to be acquired. The Fund may also use options on currency to
cross-hedge, which involves writing or purchasing options on one currency to
hedge against changes in exchange rates of a different currency with a pattern
of correlation. Cross-hedging may also include using a foreign currency as a
proxy for the U.S. dollar if the Manager determines that there is a pattern of
correlation between that currency and the U.S. dollar. The writing of an option
on foreign currency will constitute only a partial hedge, up to the amount of
the premium received, and the Fund could be required to purchase or sell foreign
currencies at disadvantageous exchange rates, thereby incurring losses. The
purchase of an option on a foreign currency may constitute an effective hedge
against exchange rate fluctuations. However, in the event of unanticipated rate
movements adverse to the Fund's option position, the Fund may forfeit the entire
amount of the premium plus related transaction costs. Options on foreign
currencies to be written or purchased by the Fund will be traded on U.S. or
foreign exchanges or over-the-counter. The Fund may sell an option it has
purchased or a similar option prior to the expiration of the purchased option in
order to close out its position in the purchased option. The Fund may also allow
purchased options to expire unexercised, which would result in the loss of the
premium paid. Options traded in the over-the-counter market may be considered
illiquid. There is no assurance that a liquid secondary market will exist for
any particular option at any particular time, and the Fund may therefore be
unable to effect closing transactions on, or sell, options it has purchased. The
Fund may not invest more than 10% of its net assets in premiums on purchased
options. See "Investment Policies and Restrictions" in the Statement of
Additional Information.
The Fund's transactions in forward currency contracts, futures and options
as described herein may be limited by the requirements for qualification of
the Fund as a regulated investment company for tax purposes. See "Tax Status"
in the Statement of Additional Information.
Investments in Depositary Receipts
The Fund may hold securities of foreign issuers in the form of American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs") and other similar instruments or other securities
convertible into securities of eligible issuers. Generally, ADRs in registered
form are designed for use in U.S. securities markets, and EDRs and GDRs and
other similar global instruments in bearer form are designed for use in non-U.S.
securities markets.
ADRs are denominated in U.S. dollars and represent an interest in the right
to receive securities of foreign issuers deposited in a U.S. bank or
correspondent bank. ADRs do not eliminate all the risk inherent in investing in
the securities of non-U.S. issuers. However, by investing in ADRs rather than
directly in equity securities of non-U.S. issuers, the Fund will avoid currency
risks during the settlement period for either purchases or sales. EDRs and GDRs
are not necessarily denominated in the same currency as the securities for which
they may be exchanged. For purposes of the Fund's investment policies,
investments in ADRs, GDRs and similar instruments will be deemed to be
investments in the underlying equity securities of the foreign issuers. The Fund
may acquire depositary receipts from banks that do not have a contractual
relationship with the issuer of the security underlying the depositary receipt
to issue and secure such depositary receipt. To the extent the Fund invests in
such unsponsored depositary receipts there may be an increased possibility that
the Fund may not become aware of events affecting the underlying security and
thus the value of the related depositary receipt. In addition, certain benefits
(i.e., rights offerings) which may be associated with the security underlying
the depositary receipt may not inure to the benefit of the holder of such
depositary receipt.
Futures Contracts
The Fund may purchase and sell futures contracts on securities indices, and
purchase and write call and put options on such futures contracts. The Fund may
also enter into closing purchase and sale transactions with respect to such
futures contracts and options. The Fund will engage in futures contracts and
related options transactions for bona fide hedging purposes as defined in
regulations of the Commodity Futures Trading Commission or to seek to increase
total return to the extent permitted by such regulations.
The Fund may not purchase or sell futures contracts or purchase related
options to increase total return, except for closing purchase or sale
transactions, if immediately thereafter the sum of the amount of initial margin
deposits on the Fund's outstanding futures and the amount of premiums paid for
outstanding options on futures entered into for the purpose of seeking to
increase total return, adjusted to reflect annualized profits and losses, would
exceed 5% of the value of the Fund's net assets. These transactions involve
brokerage costs, require margin deposits and, in the case of contracts and
options obligating the Fund to purchase securities or currencies, require the
Fund to segregate assets to cover such contracts and options. The loss incurred
by the Fund in writing options on futures is potentially unlimited and may
exceed the amount of the premium received. The Fund may also enter into futures
contracts on currencies,
5
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securities or interest rates and may purchase and sell options on such
futures contracts.
Repurchase Agreements
The Fund may enter into repurchase agreements, generally not exceeding seven
days. Such repurchase agreements will be fully collateralized with securities
whose market value is not less than 100% of the obligation, valued daily.
Collateral will be held in a segregated, safekeeping account for the benefit of
the Fund. The Fund may be prevented from realizing the value of the collateral
by reason of an order of a court with jurisdiction over an insolvency proceeding
with respect to the other party to the repurchase agreement.
Forward foreign currency contracts, options and futures contracts are
described in greater detail in the Statement of Additional Information under the
caption "Investment Policies and Restrictions."
Temporary Investments are short-term (less than 12 months to maturity)
obligations, consisting of: (a) obligations issued or guaranteed by the U.S.
government or the government of a European country or their respective agencies
or instrumentalities; (b) international organizations designated or supported by
multiple foreign governmental entities to promote economic reconstruction or
development; (c) corporate commercial paper and other short-term commercial
obligations, in each case rated or issued by companies with similar securities
outstanding that are rated Prime-1 or Aa or better by Moody's or A-1 or AA or
better by Standard & Poor's; and (d) obligations (including certificates of
deposit, time deposits, demand deposits and bankers' acceptances) of banks
(located in the U.S. or in European countries) with securities outstanding that
are rated Prime-1 or Aa or better by Moody's or A-1 or AA or better by Standard
& Poor's.
The Fund may, for temporary defensive purposes, invest up to 100% of its
assets in Temporary Investments. The Fund may assume a temporary defensive
posture only when political and economic factors broadly affect one or more
European equity markets to such an extent that the Manager believes there to be
extraordinary risks in being substantially fully invested.
Securities in the Fund's portfolio will be sold whenever the Manager believes
that it is necessary without regard to length of time the particular security
may have been held. This policy is subject to certain requirements for
continuing the Fund's qualification as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "Code"). A high portfolio
turnover rate involves greater expenses to the Fund and may increase the
possibility of shareholders realizing taxable capital gains.
IV. EUROPE
The Manager believes that a new and favorable environment for investing in
Europe has been created, and may continue to develop. One of the more
significant changes is the attempt by the European Community ("EC") to create a
single market among its member states. It is not possible to quantify the
economic benefits that might be derived from the attainment of a single market
among member states of the EC. However, a single market is generally expected to
reduce costs of doing business, thereby resulting in a reduction of prices, and
to spur increased competition among businesses in member states. There can be no
assurance, of course, that the single-market program will be achieved or that
its anticipated economic benefits will be realized.
Another development that may provide investment opportunities is the
development and expansion of free-market economies in Eastern Europe. The Fund
may invest up to 5% of its assets in securities of companies with principal
executive offices located in Eastern European countries when those securities
commence trading on recognized European securities exchanges. It is not possible
to predict if or when securities of companies located in any particular Eastern
European country will so commence trading. Even though the Fund does not
currently invest in such securities, the Manager may invest in other European
Securities whose issuers can benefit from the expansion of free-market economies
in Eastern European countries.
Risk Factors
Investing in securities of foreign companies and governments involves certain
considerations and risks which are not typically associated with investing in
securities of domestic companies and the U.S. government. European companies are
not subject to uniform accounting, auditing and financial standards and
requirements comparable to those applicable to U.S. companies. There may also be
less government supervision and regulation of European securities exchanges,
brokers and listed companies than exists in the United States. Interest and
dividends paid by European issuers may be subject to withholding and other
foreign taxes which will decrease the net return on such investments as compared
to interest and dividends paid to a fund by domestic companies or by the U.S.
government.
In addition, the value of European securities may also be adversely affected
by fluctuations in the relative rates of exchange between the currencies of
different nations and by exchange control regulations. There may be less
publicly available information about European companies compared to reports and
ratings published about U.S. companies. European securities markets generally
have substantially less trading volume than domestic markets and securities of
some European companies are less liquid and more volatile than securities of
comparable U.S. companies. Brokerage commissions in Europe are generally fixed,
and other transaction costs on European securities exchanges are generally
higher than in the United States. To the extent the Fund invests in securities
of companies located in Eastern European countries, there will be both country
risks relating to the relative brevity of the free-market movements in such
countries and company risks relating to the brevity of the public-company
experience of such companies.
V. MANAGEMENT OF THE FUND
The Fund's Board of Trustees has overall responsibility for management and
supervision of the Fund. There are currently
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eight Trustees, six of whom are not "interested persons" of the Fund as defined
in the Investment Company Act of 1940, as amended (the "1940 Act"). The Board
meets at least quarterly. By virtue of the functions performed by the Manager,
the Fund requires no employees other than its executive officers, all of whom
receive their compensation from the Manager or other sources. The Statement of
Additional Information contains the names and general business and professional
background of each Trustee and executive officer of the Fund.
The Manager
The Fund is managed under a contract with the Manager, which is responsible
for the overall management of the Fund's assets and business affairs, subject
only to the authority of the Board of Trustees. The Manager is a wholly- owned
subsidiary of The Pioneer Group, Inc. ("PGI"), a publicly-traded Delaware
corporation. Pioneer Funds Distributor, Inc. ("PFD"), an indirect subsidiary of
PGI, is the principal underwriter of the Fund. John F. Cogan, Jr., Chairman and
President of the Fund, Chairman and a Director of the Manager, Chairman of PFD,
and President and a Director of PGI, beneficially owned approximately 15% of the
outstanding capital stock of PGI as of the date of this Prospectus.
All portfolios managed by the Manager, including the Fund, are overseen by an
Investment Committee (the "Committee"), which consists of the Manager's most
senior investment professionals. The Committee is chaired by Mr. David Tripple,
the Manager's President and Chief Investment Officer and Executive Vice
President of the Fund. Mr. Tripple joined the Manager in 1974 and has had
general responsibility for the Manager's investment operations and specific
portfolio assignments for over five years.
Dr. Norman Kurland, Senior Vice President of the Manager and Vice
President of the Fund, is generally responsible for the management of the
international portfolios managed by the Manager. Dr. Kurland joined the
Manager in 1990 after working with a variety of investment and industrial
concerns. Patrick M. Smith, Vice President of the Manager, has been primarily
responsible for day-to-day management of the Fund since January 1994. Mr.
Smith joined the Manager in 1992 after working with several investment
advisers.
In addition to the Fund, the Manager also manages and serves as the
investment adviser for other mutual funds and is an investment adviser to
private institutional accounts. The Manager's and PFD's executive offices are
located at 60 State Street, Boston, Massachusetts 02109.
The Manager relies primarily on the knowledge, experience and judgment of its
research staff, but also receives and uses information from a variety of outside
sources, including brokerage firms, electronic data bases, specialized research
firms and technical journals.
Under the terms of its contract with the Fund, the Manager assists in the
management of the Fund and is authorized in its discretion to buy and sell
securities for the account of the Fund. The Manager pays all the ordinary
operating expenses, including executive salaries and the rental of certain
office space, related to its services for the Fund, with the exception of the
following which are to be paid by the Fund: (a) charges and expenses for fund
accounting, pricing and appraisal services and related overhead, including, to
the extent such services are performed by personnel of the Manager or its
affiliates, office space and facilities and personnel compensation, training and
benefits; (b) the charges and expenses of auditors; (c) the charges and expenses
of any custodian, transfer agent, plan agent, dividend disbursing agent and
registrar appointed by the Trust with respect to the Fund; (d) issue and
transfer taxes, chargeable to the Fund in connection with securities
transactions to which the Fund is a party; (e) insurance premiums, interest
charges, dues and fees for membership in trade associations, and all taxes and
corporate fees payable by the Fund to federal, state or other governmental
agencies; (f) fees and expenses involved in registering and maintaining
registrations of the Fund and/or its shares with the SEC, individual states or
blue sky securities agencies, territories and foreign countries, including the
preparation of Prospectuses and Statements of Additional Information for filing
with 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 to Trustees; (i) distribution fees
paid by the Fund in accordance with Rule 12b-1 promulgated by the SEC pursuant
to the 1940 Act; (j) compensation of those Trustees of the Trust who are not
affiliated with or interested persons of the Manager, the Trust (other than as
Trustees), PGI or PFD; (k) the cost of preparing and printing share
certificates; and (l) interest on borrowed money, if any. In addition to the
expenses described above, the Fund pays all brokers' and underwriting
commissions chargeable to the Fund in connection with securities transactions to
which the Fund is a party.
Effective April 30, 1994, as compensation for its management services and
certain expenses which the Manager incurs, the Manager is entitled to a
management fee equal to 1.00% per annum of the Fund's average daily net assets
up to $300 million, 0.85% of the next $200 million and 0.75% of the excess over
$500 million. While this fee, which is computed daily and paid monthly, is
higher than most management fees, the costs of managing an international fund,
such as the Fund, are significantly greater than the costs of managing a
domestic fund. These greater costs include staff time and expenses required to
deal with language, timing and geographic differences relating to daily
operations of the Fund.
During the fiscal year ended October 31, 1994, the Fund incurred expenses of
$1,409,026, including management fees paid or payable to the Manager of
$592,674. See the Statement of Additional Information for the management fees in
effect through April 29, 1994.
Effective April 30, 1994, the Manager has agreed not to impose a portion of
its management fee to the extent that the Class A expenses of the Fund would
otherwise exceed 1.75% of the Fund's average daily net assets attributable to
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<PAGE>
the Class A shares; the portion of the management fee attributable to Class B
shares will be waived only to the extent the fee is waived for Class A shares.
This agreement is voluntary and temporary and may be revised or terminated by
the Manager at any time. See the Statement of Additional Information for the
expense limitation in effect through April 29, 1994. During the fiscal year
ended October 31, 1994, these arrangements resulted in a reduction of the Fund's
management fee of $348,691.
The primary objective of the Manager in placing orders for the purchase and
sale of securities for the Fund's portfolio is to obtain the most favorable net
results taking into account such factors as price, commission, size of order,
difficulty of execution and skill required of the broker-dealer. Brokerage
commissions in European countries are generally fixed and other transaction
costs on European securities exchanges are generally higher than in the U.S.
In placing orders for the Fund's portfolio securities transactions, the
Manager strives to obtain the best price and execution for each transaction. In
circumstances in which two or more broker-dealers are in a position to offer
comparable prices and execution, consideration may be given to whether the
broker-dealer provides investment research or brokerage services or sells shares
of any Pioneer mutual fund. See the Statement of Additional Information for a
further description of brokerage allocation practices.
VI. FUND SHARE ALTERNATIVES
The Fund continuously offers two Classes of shares designated as Class A and
Class B shares, as described more fully in "How to Buy Fund Shares." If you do
not specify in your instructions to the Fund which Class of shares you wish to
purchase, exchange or redeem, the Fund will assume that your instructions apply
to Class A shares.
Class A Shares. If you invest less than $1 million in Class A shares, you
will pay an initial sales charge. Certain purchases may qualify for reduced
initial sales charges. If you invest $1 million or more in Class A shares, no
sales charge will be imposed at the time of purchase, however, shares redeemed
within 12 months of purchase may be subject to a contingent deferred sales
charge ("CDSC"). Class A shares are subject to distribution and service fees at
a combined annual rate of up to 0.25% of the Fund's average daily net assets
attributable to Class A shares.
Class B Shares. If you plan to invest up to $250,000, Class B shares are
available to you. Class B shares are sold without an initial sales charge, but
are subject to a CDSC of up to 4% if redeemed within six years. Class B shares
are subject to distribution and service fees at a combined annual rate of 1.00%
of the Fund's average daily net assets attributable to Class B shares. Your
entire investment in Class B shares is available to work for you from the time
you make your investment, but the higher distribution fee paid by Class B shares
will cause your Class B shares (until conversion) to have a higher expense ratio
and to pay lower dividends, to the extent dividends are paid, than Class A
shares. Class B shares will automatically convert to Class A shares, based on
relative net asset value, eight years after the initial purchase.
Purchasing Class A or Class B Shares. The decision as to which Class to
purchase depends on the amount you invest, the intended length of the investment
and your personal situation. If you are making an investment that qualifies for
reduced sales charges, you might consider Class A shares. If you prefer not to
pay an initial sales charge on an investment of $250,000 or less and you plan to
hold the investment for at least six years, you might consider Class B shares.
Investment dealers or their representatives may receive different
compensation depending on which Class of shares they sell. Shares may be
exchanged only for shares of the same Class of another Pioneer mutual fund and
shares acquired in the exchange will continue to be subject to any CDSC
applicable to the shares of the Fund originally purchased. Shares sold outside
the U.S. to persons who are not U.S. citizens may be subject to different sales
charges, CDSCs and dealer compensation arrangements in accordance with local
laws and business practices.
VII. SHARE PRICE
Shares of the Fund are sold at the public offering price, which is the net
asset value per share plus the applicable sales charge. Net asset value per
share of a Class of the Fund is determined by dividing the fair market value of
its assets, less liabilities attributable to that Class, by the number of shares
of that Class outstanding. The net asset value is computed once daily, on each
day the New York Stock Exchange (the "Exchange") is open, as of the close of
regular trading on the Exchange.
Securities are valued at the last sale price on the principal exchange or
market where they are traded. Securities which have not traded on the date of
valuation, or securities for which sales prices are not generally reported, are
valued at the mean between the current bid and asked prices. Securities quoted
in foreign currencies are converted to U.S. dollars utilizing foreign exchange
rates employed by the Fund's independent pricing services. Generally, trading in
foreign securities is substantially completed each day at various times prior to
the close of 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 are valued at their fair value
as determined in good faith by the Trustees. All assets of the Fund for which
there is no other readily available valuation method are valued at their fair
value as determined in good faith by the Trustees.
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VIII. HOW TO BUY FUND SHARES
You may buy Fund shares at the public offering price from any securities
broker-dealer which has a sales agreement with PFD. If you do not have a
securities broker-dealer, please call 1-800-225-6292 for assistance.
The minimum initial investment is $1,000 for Class A and Class B shares
except as specified below. The minimum initial investment is $50 for Class A
accounts being established to utilize monthly bank drafts, government
allotments, payroll deduction and other similar automatic investment plans .
Separate minimum investment requirements apply to retirement plans and to
telephone and wire orders placed by broker-dealers; no sales charges or minimum
requirements apply to the reinvestment of dividends or capital gains
distributions. The minimum subsequent investment is $50 for Class A shares and
$500 for Class B shares except that the subsequent minimum investment amount for
Class B share accounts may be as little as $50 if an automatic investment plan
(see "Automatic Investment Plans") is established.
Telephone Purchases. Your account is automatically authorized to have the
telephone purchase privilege unless you indicated otherwise on your Account
Application or by writing to Pioneering Services Corporation ("PSC"). The
telephone purchase option may be used to purchase additional shares for an
existing fund account; it may not be used to establish a new account. Proper
account identification will be required for each telephone purchase. A maximum
of $25,000 per account may be purchased by telephone each day. The telephone
purchase privilege is available to IRA accounts but may not be available to
other types of retirement plan accounts. Call PSC for more information.
You are strongly urged to consult with your financial representative prior to
requesting a telephone purchase. To purchase shares by telephone, you must
establish your bank account of record by completing the appropriate section of
your Account Application or an Account Options Form. PSC will electronically
debit the amount of each purchase from this pre-designated bank account.
Telephone purchases may not be made for 30 days after the establishment of your
bank of record or any change to your bank information.
Telephone purchases will be priced at the net asset value plus any applicable
sales charge next determined after PSC's acceptance of a telephone purchase
instruction and receipt of good funds (usually three days after the purchase
instruction). You may always elect to deliver purchases to PSC by mail. See
"Telephone Transactions and Related Liabilities" for additional information.
Class A Shares
You may buy Class A shares at the public offering price, that is, at the net
asset value per share next computed after receipt of a purchase order, plus a
sales charge as follows:
Sales Charge as a Dealer
Percentage of: Allowance
----------------- as a
Net Percentage of
Offering Amount Offering
Amount of Purchase Price Invested Price
- --------------------- ------ ------- -------------
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than
$100,000 4.50 4.71 4.00
$100,000 but less
than $250,000 3.50 3.63 3.00
$250,000 but less
than $500,000 2.50 2.56 2.00
$500,000 but less
than $1,000,000 2.00 2.04 1.75
$1,000,000 or more -0- -0- see below
No sales charge is payable at the time of purchase on investments of
$1,000,000 or more or for 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. See "How to Sell Fund Shares." PFD
may, in its discretion, pay a commission to broker-dealers who initiate and are
responsible for such purchases as follows: 1% on the first $5 million invested;
0.50% on the next $45 million; and 0.25% on the excess over $50 million. These
commissions will not be paid if the purchaser is affiliated with the
broker-dealer or if the purchase represents the reinvestment of a redemption
made during the previous 12 calendar months. Broker-dealers who receive a
commission in connection with Class A share purchases at net asset value by
401(a) or 401(k) retirement plans with 1,000 or more eligible participants or
with at least $10 million in plan assets will be required to return any
commission paid or a pro rata portion thereof if the retirement plan redeems its
shares within 12 months of purchase. See also "How to Sell Fund Shares." In
connection with PGI's acquisition of Mutual of Omaha Fund Management Company and
contingent upon the achievement of certain sales objectives, PFD pays 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.
The schedule of sales charges above is applicable to purchases of Class A
shares of the Fund by an (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
Section 401 or 408 of the Code of 1986, 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. See the "Letter of
Intention" section of the Account Application.
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<PAGE>
Qualifying for a Reduced Sales Charge. Class A shares of the Fund may be sold
at a reduced or eliminated sales charge to certain group plans ("Group Plans")
under which a sponsoring organization makes recommendations to, permits group
solicitation of, or otherwise facilitates purchases by, its employees, members
or participants. In addition to the exceptions listed in each Fund's prospectus,
Class A shares of a Fund may be sold at net asset value per share without a
sales charge to Optional Retirement Program participants if (i) the employer has
authorized a limited number of investment company providers for the Program,
(ii) all authorized investment company providers offer their shares to Program
participants at net asset value, (iii) the employer has agreed in writing to
actively promote the authorized investment company providers to Program
participants and (iv) the Program provides for a matching contribution for each
participant contribution. Information about such arrangements is available from
PFD.
Class A shares of the Fund may be sold at net asset value per share without a
sales charge to: (a) current or former Trustees and officers of the Fund and
partners and employees of its legal counsel; (b) current or former directors,
officers, employees or sales representatives of PGI or its subsidiaries; (c)
current or former directors, officers, employees or sales representatives of any
subadviser or predecessor investment adviser to any investment company for which
the Manager serves as investment adviser, and the subsidiaries or affiliates of
such persons; (d) current or former officers, partners, employees or registered
representatives of broker-dealers which have entered into sales agreements with
PFD; (e) members of the immediate families of any of the persons above; (f) any
trust, custodian, pension, profit- sharing or other benefit plan of the
foregoing persons; (g) insurance company separate accounts; (h) certain "wrap
accounts" for the benefit of clients of investment advisers adhering to
standards established by PFD; (i) other funds and accounts for which the Manager
or any of its affiliates serves as investment adviser or manager; and (j)
certain unit investment trusts. Shares so purchased are purchased for investment
purposes and may not be resold except through redemption or repurchase by or on
behalf of the Fund. The availability of this privilege is conditioned upon the
receipt by PFD of written notification of eligibility. Shares may also be sold
at net asset value in connection with certain reorganization, liquidation, or
acquisition transactions involving other investment companies or personal
holding companies.
Reduced sales charges for Class A shares are available through an agreement
to purchase a specified quantity of Fund shares over a designated 13-month
period by completing the "Letter of Intention" section of the Account
Application. Information about the Letter of Intention Procedure, including its
terms, is contained in the Statement of Additional Information. Investors who
are clients of a broker- dealer with a current sales agreement with PFD may
purchase shares of the Fund at net asset value, without a sales charge, to the
extent that the purchase price is paid out of proceeds from one or more
redemptions by the investor of shares of certain other mutual funds. In order
for a purchase to qualify for this privilege, the investor must document to the
broker-dealer that the redemption occurred within the 60 days immediately
preceding the purchase of shares of the Fund; that the client paid a sales
charge on the original purchase of the shares redeemed; and that the mutual fund
whose shares were redeemed also offers net asset value purchases to redeeming
shareholders of any of the Pioneer funds.
Further details may be obtained from PFD.
Class B Shares
You may buy Class B shares at net asset value without the imposition of an
initial sales charge. However, Class B shares redeemed within six years of
purchase will be subject to a CDSC at the rates shown in the table below. The
charge will be assessed on the amount equal to the lesser of the current market
value or the original purchase cost of the shares being redeemed. No CDSC will
be imposed on increases in account value above the initial purchase price,
including shares derived from the reinvestment of dividends or capital gains
distributions.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of purchase until the time of redemption of Class B shares. For
the purpose of determining the number of years from the time of any purchase,
all payments during a quarter will be aggregated and deemed to have been made on
the first day of that quarter. In processing redemptions of Class B shares, the
Fund will first redeem shares not subject to any CDSC, and then shares held
longest during the six-year period. As a result, you will pay the lowest
possible CDSC.
Year Since CDSC as a Percentage of Dollar
Purchase Amount Subject to CDSC
- ------------------------- --------------------------------
First 4.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter none
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class B shares, including the payment of
compensation to broker-dealers.
Class B shares will automatically convert into Class A shares at the end of
the calendar quarter that is eight years after the purchase date, except as
noted below. Class B shares acquired by exchange from Class B shares of another
Pioneer fund will convert into Class A shares based on the date of the initial
purchase and the applicable CDSC. Class B shares acquired through reinvestment
of distributions will convert into Class A shares based on the date of the
initial purchase to which such shares relate. For this purpose, Class B shares
acquired through reinvestment of distributions will be attributed to particular
purchases of Class B shares in accordance with such procedures as the Trustees
may determine from time to time. The conversion of Class B shares to Class A
shares is subject to the continuing availability of a ruling from the Internal
Revenue Service ("IRS"),
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<PAGE>
for which the Fund is applying, or an opinion of counsel that such conversions
will not constitute taxable events for federal tax purposes. There can be no
assurance that such ruling or opinion will be available. 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.
Waiver or Reduction of Contingent Deferred Sales Charge. The CDSC on Class B
shares and on any Class A shares subject to a CDSC may be waived or reduced for
non-retirement accounts if: (a) the redemption results from the death of all
registered owners of an account (in the case of UGMAs, UTMAs and trust accounts,
waiver applies upon the death of all beneficial owners) or a total and permanent
disability (as defined in Section 72 of the Code) of all registered owners
occurring after the purchase of the shares being redeemed or (b) the redemption
is made in connection with limited automatic redemptions as set forth in
"Systematic Withdrawal Plans" (limited in any year to 10% of the value of the
account in the Fund at the time the withdrawal plan is established).
The CDSC on Class B shares and on any Class A shares subject to a CDSC may be
waived or reduced for retirement plan accounts if: (a) the redemption results
from the death or a total and permanent disability (as defined in Section 72 of
the Code) occurring after the purchase of the shares being redeemed of a
shareholder or participant in an employer-sponsored retirement plan; (b) the
distribution is to a participant in an Individual Retirement Account ("IRA"),
403(b) or employer-sponsored retirement plan, is part of a series of
substantially equal payments made over the life expectancy of the participant or
the joint life expectancy of the participant and his or her beneficiary or as
scheduled periodic payments to a participant (limited in any year to 10% of the
value of the participant's account at the time the distribution amount is
established; a required minimum distribution due to the participant's attainment
of age 70-1/2 may exceed the 10% limit only if the distribution amount is based
on plan assets held by Pioneer); (c) the distribution is from a 401(a) or 401(k)
retirement plan and is a return of excess employee deferrals or employee
contributions or a qualifying hardship distribution as defined by the Code or
results from a termination of employment (limited with respect to a termination
to 10% per year of the value of the plan's assets in the Fund as of the later of
the prior December 31 or the date the account was established unless the plan's
assets are being rolled over to or reinvested in the same class of shares of a
Pioneer mutual fund subject to the CDSC of the shares originally held); (d) the
distribution is from an IRA, 403(b) or employer-sponsored retirement plan and is
to be rolled over to or reinvested in the same class of shares in a Pioneer
mutual fund and which will be subject to the applicable CDSC upon redemption;
(e) the distribution is in the form of a loan to a participant in a plan which
permits loans (each repayment of the loan will constitute a new sale which will
be subject to the applicable CDSC upon redemption); or (f) the distribution is
from a qualified defined contribution plan and represents a participant's
directed transfer (provided that this privilege has been pre-authorized through
a prior agreement with PFD regarding participant directed transfers).
The CDSC on Class B shares and on any Class A shares subject to a CDSC may be
waived or reduced for either non- retirement or retirement plan accounts if: (a)
the redemption is made by any state, county, or city, or any instrumentality,
department, authority, or agency thereof, which is prohibited by applicable laws
from paying a contingent deferred sales charge in connection with the
acquisition of shares of any registered investment management company; or (b)
the redemption is made pursuant to the Fund's right to liquidate or
involuntarily redeem shares in a shareholder's account.
Broker-Dealers. An order for either Class of Fund shares received by PFD from
a broker-dealer prior to the close of regular trading on the Exchange is
confirmed at the price appropriate for that Class as determined at the close of
regular trading on the Exchange on the day the order is received, provided the
order is received prior to PFD's close of business (usually, 5:30 p.m. Eastern
Time). It is the responsibility of broker-dealers to transmit orders so that
they will be received by PFD prior to its close of business.
General. The Fund reserves the right in its sole discretion to withdraw all
or any part of the offering of shares when, in the judgment of the Fund's
management, such withdrawal is in the best interest of the Fund. An order to
purchase shares is not binding on, and may be rejected by, PFD until it has been
confirmed in writing by PFD and payment has been received.
IX. HOW TO SELL FUND SHARES
You can arrange to sell (redeem) Fund shares on any day the Exchange is open
by selling either some or all of your shares to the Fund.
You may sell your shares either through your broker-dealer or directly to the
Fund. Please note the following:
o If you are selling shares from a retirement account, you must make
your request in writing (except for exchanges to other Pioneer funds
which can be requested by phone or in writing). Call 1-800-622-0176
for more information.
o If you are selling shares from a non-retirement account, you may use
any of the methods described below.
Your shares will be sold at the share price next calculated after your order
is received and accepted less any applicable CDSC. Sale proceeds generally will
be sent to you in cash, normally within seven days after your order is accepted.
The Fund reserves the right to withhold payment of the sale proceeds until
checks received by the Fund in payment for the shares being sold have cleared,
which may take up to 15 calendar days from the purchase date.
In Writing. You may sell your shares by delivering a written request,
signed by all registered owners, in good order to PSC, however, you must use
a written request, including a
11
<PAGE>
signature guarantee, to sell your shares if any of the following situations
applies:
o you wish to sell over $50,000 worth of shares,
o your account registration or address has changed within the last
30 days,
o the check is not being mailed to the address on your account
(address of record),
o the check is not being made out to the account owners, or
o the sale proceeds are being transferred to a Pioneer account with a
different registration.
Your request should include your name, the Fund's name, your fund account
number, the Class of shares to be redeemed, the dollar amount or number of
shares to be redeemed, and any other applicable requirements as described below.
Unless instructed otherwise, Pioneer will send the proceeds of the sale to the
address of record. Fiduciaries or corporations are required to submit additional
documents. For more information, contact PSC at 1-800-225-6292.
Written requests will not be processed until they are received in good order
and accepted by PSC. Good order means that there are no outstanding claims or
requests to hold redemptions on the account, certificates are endorsed by the
record owner(s) exactly as the shares are registered and the signature(s) are
guaranteed by an eligible guarantor. You should be able to obtain a signature
guarantee from a bank, broker, dealer, credit union (if authorized under state
law), securities exchange or association, clearing agency or savings
association. A notary public cannot provide a signature guarantee. Signature
guarantees are not accepted by facsimile ("fax"). For additional information
about the necessary documentation for redemption by mail, please contact PSC at
1-800-225-6292.
By Telephone or by Fax. Your account is automatically authorized to have the
telephone redemption privilege unless you indicated otherwise on your Account
Application or by writing to PSC. Proper account identification will be required
for each telephone redemption. The telephone redemption option is not available
to retirement plan accounts. A maximum of $50,000 may be redeemed by telephone
or fax and the proceeds may be received by check or bank wire or electronic
funds transfer. To receive the proceeds by check: the check must be made payable
exactly as the account is registered and the check must be sent to the address
of record which must not have changed in the last 30 days. To receive the
proceeds by bank wire or by electronic funds transfer: the proceeds must be sent
to your bank address of record which must have been properly pre-designated
either on your Account Application or on an Account Options Form and which must
not have changed in the last 30 days. To redeem by fax send your redemption
request to 1-800-225-4240. You may always elect to deliver redemption
instructions to PSC by mail. See "Telephone Transactions and Related
Liabilities" below. Telephone and fax redemptions will be priced as described
above. You are strongly urged to consult with your financial representative
prior to requesting a telephone redemption.
Selling Shares Through Your Broker-Dealer. The Fund has authorized PFD to act
as its agent in the repurchase of shares of the Fund from qualified
broker-dealers and reserves the right to terminate this procedure at any time.
Your broker-dealer must receive your request before the close of business on the
Exchange and transmit it to PFD before PFD's close of business to receive that
day's redemption price. Your broker-dealer is responsible for providing all
necessary documentation to PFD and may charge you for its services.
Small Accounts. The minimum account value is $500. If you hold shares of the
Fund in an account with a net asset value of less than the minimum required
amount due to redemptions or exchanges, the Fund may redeem the shares held in
this account at net asset value if you have not increased the net asset value of
the account to at least the minimum required amount within six months of notice
by the Fund to you of the Fund's intention to redeem the shares.
CDSC on Class A Shares. Purchases of Class A shares of $1,000,000 or more, or
by participants in a Group Plan which were not subject to an initial sales
charge, may be subject to a CDSC upon redemption. A CDSC is payable to PFD on
these investments in the event of a share redemption within 12 months following
the share purchase, at the rate of 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividend and capital gain distributions) or
the total cost of such shares. Shares subject to the CDSC which are exchanged
into another Pioneer fund will continue to be subject to the CDSC of the shares
originally held until the original 12-month period expires. However, no CDSC is
payable upon redemption with respect to Class A shares purchased by 401(a) or
401(k) retirement plans with 1,000 or more eligible participants or with at
least $10 million in plan assets.
General. Redemptions may be suspended or payment postponed during any period
in which any of the following conditions exist: the Exchange is closed or
trading on the Exchange is restricted; an emergency exists as a result of which
disposal by the Fund of securities owned by it is not reasonably practicable or
it is not reasonably practicable for the Fund to fairly determine the value of
the net assets of its portfolio; or the SEC, by order, so permits.
Redemptions and repurchases are taxable transactions to shareholders. The net
asset value per share received upon redemption or repurchase may be more or less
than the cost of shares to an investor, depending on the market value of the
portfolio at the time of redemption or repurchase.
X. HOW TO EXCHANGE FUND SHARES
Written Exchanges. You may exchange your shares by sending a letter of
instruction to PSC. Your letter should include your name, the name of the Fund
out of which you wish to exchange and the name of the fund into which you wish
to exchange, your fund account number(s), the Class of
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<PAGE>
shares to be exchanged and the dollar amount or number of shares to be
exchanged. Written exchange requests must be signed by all record owner(s)
exactly as the shares are registered.
Telephone Exchanges. Your account is automatically authorized to have the
telephone exchange privilege unless you indicated otherwise on your Account
Application or by writing to PSC. Proper account identification will be required
for each telephone exchange. Telephone exchanges may not exceed $500,000 per
account per day. Each telephone exchange request, whether by voice or by
FactFone, will be recorded. You are strongly urged to consult with your
financial representative prior to requesting a telephone exchange. See
"Telephone Transactions and Related Liabilities" below.
Automatic Exchanges. You may automatically exchange shares from one Pioneer
account for shares of the same Class in another Pioneer account on a monthly or
quarterly basis. The accounts must have identical registrations and the
originating account must have a minimum balance of $5,000. The exchange will be
effective on the 18th day of the month.
General. Exchanges must be at least $1,000. You may exchange your investment
from one Class of Fund shares at net asset value, without a sales charge, for
shares of the same Class of any other Pioneer fund. Not all Pioneer funds offer
more than one Class of shares. A new Pioneer account opened through an exchange
must have a registration identical to that on the original account.
Class A or Class B shares which would normally be subject to a CDSC upon
redemption will not be charged the applicable CDSC at the time of an exchange.
Shares acquired in an exchange will be subject to the CDSC of the shares
originally held. For purposes of determining the amount of any applicable CDSC,
the length of time you have owned Class B shares acquired by exchange will be
measured from the date you acquired the original shares and will not be affected
by any subsequent exchange.
Exchange requests received by PSC before 4:00 p.m. Eastern Time, will be
effective on that day if the requirements above have been met, otherwise, they
will be effective on the next business day. PSC will process exchanges only
after receiving an exchange request in good order. There are currently no fees
or sales charges imposed at the time of an exchange. An exchange of shares may
be made only in states where legally permitted. For federal and (generally)
state income tax purposes, an exchange is considered to be a sale of the shares
of the fund exchanged and a purchase of shares in another fund. Therefore, an
exchange could result in a gain or loss on the shares sold, depending on the tax
basis of these shares and the timing of the transaction, and special tax rules
may apply in particular circumstances.
You should consider the differences in objectives and policies of the Pioneer
funds, as described in each fund's current prospectus, before making any
exchange. To prevent abuse of the exchange privilege to the detriment of other
Fund shareholders, the Fund and PFD reserve the right to limit the number and/or
frequency of exchanges and/or to charge a fee for exchanges. The exchange
privilege may be changed or discontinued and may be subject to additional
limitations, including certain restriction on purchases by market timer
accounts.
XI. DISTRIBUTION PLANS
The Fund has adopted a Plan of Distribution for both Class A shares ("Class A
Plan") and Class B shares ("Class B Plan") in accordance with Rule 12b-1 under
the 1940 Act pursuant to which certain distribution and service fees are paid.
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
Fund's Board of Trustees. As of the date of this Prospectus, the Board of
Trustees has approved the following categories of expenses for Class A shares of
the Fund: (i) a service fee to be paid to qualified broker-dealers in an amount
not to exceed 0.25% per annum of the Fund's daily net assets attributable to
Class A shares; (ii) reimbursement to PFD for its expenditures for broker-dealer
commissions and employee compensation on certain sales of the Fund's Class A
shares with no initial sales charge (See "How to Buy Fund Shares"); and (iii)
reimbursement to PFD for expenses incurred in providing services to Class A
shareholders and supporting broker-dealers and other organizations (such as
banks and trust companies) in their efforts to provide such services. Banks are
currently prohibited under the Glass-Steagall Act from providing certain
underwriting or distribution services. If a bank was prohibited from acting in
any capacity or providing any of the described services, management would
consider what action, if any, would be appropriate.
Expenditures of the Fund pursuant to the Class A Plan are accrued daily and
may not exceed 0.25% of 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
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.
The Class B Plan provides that the Fund will pay a distribution fee at the
annual rate of 0.75% of the Fund's average daily net assets attributable to
Class B shares and will pay PFD a service fee at the annual rate of 0.25% of the
Fund's average daily net assets attributable to Class B shares. The distribution
fee is intended to compensate PFD for its distribution services to the Fund. The
service fee is intended to be additional compensation for personal services
and/or account maintenance services with respect to Class B shares. PFD also
receives the proceeds of any CDSC imposed on the redemption of Class B shares.
13
<PAGE>
Commissions of 4%, equal to 3.75% of the amount invested and a first year's
service fee equal to 0.25% of the amount invested in Class B shares, are paid to
broker-dealers who have selling agreements with PFD. PFD may advance to dealers
the first year service fee at a rate up to 0.25% of the purchase price of such
shares and, as compensation therefore, PFD may retain the service fee paid by
the Fund with respect to such shares for the first year after purchase. Dealers
will become eligible for additional service fees with respect to such shares
commencing in the 13th month following the purchase. Dealers may from time to
time be required to meet certain criteria in order to receive service fees. PFD
or its affiliates are entitled to retain all service fees payable under the
Class B Plan 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.
XII. DIVIDENDS, DISTRIBUTIONS AND TAXATION
The Fund has elected to be treated, has qualified, and intends to qualify
each year as a "regulated investment company" under Subchapter M of the Code, so
that it will not pay federal income taxes on income and capital gains
distributed to shareholders at least annually.
Under the Code, the Fund will be subject to a nondeductible 4% excise tax on
a portion of its undistributed income and capital gains if it fails to meet
certain distribution requirements by the end of the calendar year. The Fund
intends to make distributions in a timely manner and accordingly does not expect
to be subject to the excise tax.
Dividends and other distributions and the proceeds of redemptions or
repurchases of Fund shares paid to individuals and other non-exempt payees will
be subject to a 31% federal backup withholding tax if the Fund is not provided
with the shareholder's correct taxpayer identification number and certification
that the number is correct and the shareholder is not subject to backup
withholding or the Fund receives notice from the IRS or a broker that such
withholding applies. Please refer to the Account Application for additional
information.
The Fund pays dividends from net investment income and distributes its net
realized short and long-term capital gains, if any, annually, usually in the
month of December, with additional distributions made only as required to avoid
federal income or excise tax. Unless shareholders specify otherwise, all
distributions will be automatically reinvested in additional full and fractional
shares of the Fund. Dividends from the Fund's net investment income, certain net
foreign exchange gains and net short-term capital gains are taxable as ordinary
income, and dividends from the Fund's net long-term capital gains are taxable
as long-term capital gains. For federal income tax purposes, all dividends are
taxable as described above whether a shareholder takes them in cash or reinvests
them in additional shares of the Fund. Information as to the federal tax status
of dividends and distributions will be provided annually. For further
information on the distribution options available to shareholders, see
"Distribution Options" and "Directed Dividends" below.
In any year in which the Fund qualifies, it may make an election that will
permit certain of its shareholders to take a credit (or, if more advantageous, a
deduction) for foreign income taxes paid by the Fund. Each shareholder would
then treat as an additional dividend his or her appropriate share of the amount
of foreign taxes paid by the Fund. If this election is made, the Fund will
notify its shareholders annually as to their share of the amount of foreign
taxes paid and the foreign source income of the Fund.
The description above relates only to Federal income tax consequences for
shareholders who are U.S. persons, i.e., U.S. citizens or residents or U.S.
corporations, partnerships, trust or estates, and who are subject to U.S.
federal income tax. Shareholders should consult their own tax advisors
regarding state, local and other applicable tax laws.
XIII. SHAREHOLDER SERVICES
PSC is the shareholder services and transfer agent for shares of the Fund.
PSC, a Massachusetts corporation, is a wholly-owned subsidiary of PGI. PSC's
offices are located at 60 State Street, Boston, Massachusetts 02109, and
inquiries to PSC should be mailed to Pioneering Services Corporation, P.O. Box
9014, Boston, Massachusetts 02205-9014. Brown Brothers Harriman & Co. (the
"Custodian") serves as custodian of the Fund's portfolio securities. The
principal business address of the mutual fund division of the Custodian is 40
Water Street, Boston, Massachusetts 02109. The Custodian oversees a network of
subcustodians and depositories in Europe.
Account and Confirmation Statements
PSC maintains an account for each shareholder and all transactions of the
shareholder are recorded in this account. Confirmation statements showing
details of transactions are sent to shareholders as transactions occur. The
Pioneer Combined Account Statement, mailed quarterly, is available to
shareholders who have more than one Pioneer account.
Shareholders whose shares are held in the name of an investment broker-dealer
or other party will not normally have an account with the Fund and might not be
able to utilize some of the services available to shareholders of record.
Examples of services which might not be available are investment or redemption
of shares by mail or telephone, automatic reinvestment of dividends and capital
gains distributions, withdrawal plans, Letters of Intention, Rights of
Accumulation, telephone exchanges, and newsletters.
Additional Investments
You may add to your account by sending a check (minimum of $50 for Class A
shares and $500 for Class B shares) to PSC (account number and Class of shares
should be clearly indicated). The bottom portion of a confirmation statement may
be used as a remittance slip to make additional investments. Additions to your
account, whether by check or through an Investomatic Plan, are invested in full
and fractional shares of the Fund at the applicable offering price in
14
<PAGE>
effect as of the close of regular trading on the Exchange on the day of
receipt.
Automatic Investment Plans
You may arrange for regular automatic investments of $50 or more through
government/military allotments, payroll deduction or through a Pioneer
Investomatic Plan. A Pioneer Investomatic Plan provides for a monthly or
quarterly investment by means of a pre-authorized draft drawn on a checking
account. Pioneer Investomatic Plan investments are voluntary, and you may
discontinue the plan at any time without penalty upon 30 days' written notice.
PSC acts as agent for the purchaser, the broker-dealer and PFD in maintaining
these plans. See "How to Buy Fund Shares."
Financial Reports and Tax Information
As a shareholder, you will receive financial reports at least semiannually.
In January of each year, the Fund will mail you information about the tax status
of dividends and distributions.
Distribution Options
Dividends and capital gains distributions, if any, will automatically be
invested in additional shares of the Fund, at the applicable net asset value per
share, unless you indicate another option on the Account Application.
Two other options available are (a) dividends in cash and capital gains
distributions in additional shares; and (b) all dividends and capital gains
distributions in cash. These two options are not available, however, for
retirement plans or for an account with a net asset value of less than $500.
Changes in your distribution options may be made by written request to PSC.
Directed Dividends
You may elect (in writing) to have the dividends paid by one Pioneer fund
account invested in a second Pioneer fund account. The value of this second
account must be at least $1,000 ($500 for Pioneer Fund or Pioneer II). Invested
dividends may be in any amount, and there are no fees or charges for this
service. Retirement plan shareholders may only direct dividends to accounts with
identical registrations, i.e., PGA IRA Cust for John Smith may only go into
another account registered PGA IRA Cust for John Smith.
Direct Deposit
If you have elected to take distributions, whether dividends or dividends and
capital gains, in cash, or have established a Systematic Withdrawal Plan, you
may choose to have those cash payments deposited directly into your savings,
checking or NOW bank account. You may also establish this service by completing
the appropriate section on the Account Application when opening a new account or
the Account Options Form for an existing account.
Voluntary Tax Withholding
You may request (in writing) that PSC withhold 28% of the dividends and
capital gains distributions paid from your account (before any reinvestment) and
forward the amount withheld to the IRS as a credit against your federal income
taxes. This option is not available for retirement plan accounts or for accounts
subject to backup withholding.
Telephone Transactions and Related Liabilities
Your account is automatically authorized to have telephone transaction
privileges unless you indicated otherwise on your Account Application or by
writing to PSC. You may purchase, sell or exchange Fund shares by telephone. See
"Share Price" and "How to Buy Fund Shares" for more information. For personal
assistance, call 1-800-225-6292 between 8:00 a.m. and 8:00 p.m. Eastern Time on
weekdays. Computer-assisted transactions may be available to shareholders who
have pre-recorded certain bank information (see FactFone). You are strongly
urged to consult with your financial representative 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 or PFD will be
responsible for the authenticity of instructions received by telephone,
therefore, you bear the risk of loss for unauthorized or fraudulent telephone
transactions.
During times of economic turmoil or market volatility or as a result of
severe weather or a natural disaster, it may be difficult to contact the Fund by
telephone to institute a redemption or exchange. You should communicate with the
Fund in writing if you are unable to reach the Fund by telephone.
FactFone(SM)
FactFone is an automated inquiry and telephone transaction system available
to Pioneer shareholders by dialing 1-800-225-4321. FactFone allows you to obtain
current information on your Pioneer mutual fund accounts and to inquire about
the prices and yields of all publicly available Pioneer mutual funds. In
addition, you may use FactFone to make computer-assisted telephone purchases,
exchanges and redemptions from your Pioneer accounts if you have activated your
PIN. Telephone purchases and redemptions require the establishment of a bank
account of record. You are strongly urged to consult with your financial
representative prior to requesting any telephone transaction. Shareholders whose
accounts are registered in the name of a broker-dealer or other third party may
not be able to use FactFone. See "How to Buy Fund Shares," "How to Exchange Fund
Shares," "How to Sell Fund Shares" and "Telephone Transactions and Related
Liabilities." Call PSC for assistance.
15
<PAGE>
Retirement Plans
You should contact the Retirement Plans Department of PSC at 1-800-622-0176
for information relating to retirement plans for businesses, age-weighted profit
sharing plans, Simplified Employee Pension Plans, IRAs, and Section 403(b)
retirement plans for employees of certain non-profit organizations and public
school systems, all of which are available in conjunction with investments in
the Fund. The Account Application enclosed with this Prospectus should not be
used to establish any of these plans. Separate applications are required.
Telecommunications Device for the Deaf (TDD)
If you have a hearing disability and you own TDD keyboard equipment, you can
call our TDD number toll-free at 1-800-225-1997, weekdays from 8:30 a.m. to
5:30 p.m. Eastern Time to contact our telephone representatives with questions
about your account.
Systematic Withdrawal Plans
If your account has a total value of at least $10,000 you may establish a
Systematic Withdrawal Plan ("SWP") providing for fixed payments at regular
intervals. Withdrawals from Class B share accounts are limited to 10% of the
value of the account at the time the plan is implemented. See "Waiver or
Reduction of CDSC" for more information. Periodic payments of $50 or more will
be sent to you, or any person designated by you, monthly or quarterly and your
periodic redemptions may be taxable to you. Payments can be made either by check
or electronic transfer to a bank account designated by you. If you direct that
withdrawal payments be made to another person after you have opened your
account, a signature guarantee must accompany your instructions. Purchases of
Class A shares of the Fund at a time when you have a SWP in effect may result in
the payment of unnecessary sales charges and may, therefore, be disadvantageous.
You may obtain additional information by calling PSC at 1-800-225-6292 or by
referring to the Statement of Additional Information.
Reinstatement Privilege (Class A Shares Only)
If you redeem all or part of your Class A shares of the Fund, you may
reinvest all or part of the redemption proceeds without a sales charge in Class
A shares of the Fund if you send a written request to PSC not more than 90 days
after your shares were redeemed. Your redemption proceeds will be reinvested at
the next determined net asset value of the Class A shares of the Fund in effect
immediately after receipt of the written request for reinstatement. You may
realize a gain or loss for federal income tax purposes as a result of the
redemption, and special tax rules may apply if a reinstatement occurs. In
addition, if redemption resulted in a loss and an investment is made in shares
of the Fund within 30 days before or after the redemption, you may not be able
to recognize the loss for federal income tax purposes. Subject to the provisions
outlined under "How to Exchange Fund Shares" above, you may also reinvest in
Class A shares of other Pioneer mutual funds; in this case, you must meet the
minimum investment requirement for each fund you enter.
The 90-day reinstatement period may be extended by PFD for periods of up to
one year for shareholders living in areas that have experienced a natural
disaster, such as a flood, hurricane, tornado or earthquake.
-------------------
The options and services available to shareholders, including the terms of
the Exchange Privilege and the Pioneer Investomatic Plan, may be revised,
suspended or terminated at any time by PFD or by the Fund. You may establish the
services described in this section when you open your account. You may also
establish or revise many of them on an existing account by completing an Account
Options Form, which you may request by calling 1-800-225-6292.
XIV. THE FUND
Pioneer Europe Fund is an open-end, diversified management investment company
(commonly referred to as a mutual fund) organized as a Massachusetts business
trust on June 22, 1990. The Fund has authorized an unlimited number of shares of
beneficial interest. As an open-end management investment company, the Fund
usually continuously offers its shares to the public and under normal conditions
must redeem its shares upon the demand of any shareholder at the then current
net asset value per share. See "How to Sell Fund Shares." The Fund is not
required, and does not intend, to hold annual shareholder meetings, although
special meetings may be called for the purposes of electing or removing
Trustees, changing fundamental investment restrictions or approving a management
or subadvisory contract.
The Trustees have the authority, without further shareholder approval, to
classify and reclassify the shares of the Fund, or any additional series of the
Fund, into one or more classes. As of the date of this Prospectus, the Trustees
have authorized the issuance of two classes of shares, designated Class A and
Class B. 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 distribution plans adopted by holders of those
shares in connection with the distribution of shares. The Fund reserves the
right to create and issue additional series of shares.
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 by the Fund. Shares will remain on deposit with the Fund's
transfer agent and certificates will not normally be issued. The Fund reserves
the right to charge a fee for the issuance of certificates.
16
<PAGE>
XV. INVESTMENT RESULTS
The average annual total return (for a designated period of time) on an
investment in the Fund may be included in advertisements, and furnished to
existing or prospective shareholders. The average annual total return for each
Class is computed in accordance with the SEC's standardized formula. The
calculation for all Classes assumes the reinvestment of all dividends and
distributions at net asset value and does not reflect the impact of federal or
state income taxes. In addition, for Class A shares the calculation assumes the
deduction of the maximum sales charge of 5.75%; for Class B shares the
calculation reflects the deduction of any applicable CDSC. The periods
illustrated would normally include one, five and ten years (or since the
commencement of the public offering of the shares of a Class, if shorter)
through the most recent calendar quarter.
One or more additional measures and assumptions, including but not limited to
historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share values;
or any graphic illustration of such data may also be used. These data may cover
any period of the Fund's existence and may or may not include the impact of
sales charges, taxes or other factors.
Other investments or savings vehicles and/or unmanaged market indexes,
indicators of economic activity or averages of mutual funds results may be cited
or compared with the investment results of the Fund. Rankings or listings by
magazines, newspapers or independent statistical or rating services, such as
Lipper Analytical Services, Inc., may also be referenced.
The Fund's investment results will vary from time to time depending on market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. All quoted investment results are historical and should not be
considered representative of what an investment in the Fund may earn in any
future period. For further information about the calculation methods and uses of
the Fund's investment results, see the Statement of Additional Information.
17
<PAGE>
Notes
18
<PAGE>
THE PIONEER FAMILY OF MUTUAL FUNDS
International Growth Funds
Pioneer India Fund
Pioneer Emerging Markets Fund
Pioneer International Growth Fund
Pioneer Europe Fund
Growth Funds
Pioneer Gold Shares
Pioneer Growth Shares
Pioneer Capital Growth Fund
Growth and Income Funds
Pioneer Three
Pioneer II
Pioneer Fund
Pioneer Real Estate Shares
Pioneer Equity-Income Fund
Income Funds
Pioneer Income Fund
Pioneer Bond Fund
Pioneer America Income Trust
Pioneer Short-Term Income Trust
Tax-Free Income Funds
Pioneer California Double Tax-Free Fund*
Pioneer Massachusetts Double Tax-Free Fund*
Pioneer New York Triple Tax-Free Fund*
Pioneer Tax-Free Income Fund*
Pioneer Intermediate Tax-Free Fund*
Money Market Funds
Pioneer Tax-Free Money Fund*
Pioneer Cash Reserves Fund
Pioneer U.S. Government Money Fund
*Not suitable for retirement accounts.
<PAGE>
Pioneer
Europe Fund
60 State Street
Boston, Massachusetts 02109
OFFICERS
JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
DR. NORMAN KURLAND, Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: 1-800-225-6292
SERVICE INFORMATION
If you would like information on the following, please call .....
Existing and new accounts, prospectuses, applications,
service forms and telephone transactions .................. 1-800-225-6292
Retirement plans ............................................ 1-800-622-0176
FactFone(SM)
Automated fund yields, automated prices and
account information ........................................ 1-800-225-4321
Fax transactions ............................................ 1-800-225-4240
TDD (Telecommunications
Device for the Deaf) ....................................... 1-800-225-1997
1095-2773
(C)Pioneer Funds Distributor, Inc.
<PAGE>
PIONEER EUROPE FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
Class A and Class B Shares
February 28, 1995
(revised October 9, 1995)
This Statement of Additional Information (Part B of the Registration
Statement) is not a Prospectus, but should be read in conjunction with the
Prospectus (the "Prospectus") dated February 28, 1995 (revised October 9, 1995),
of Pioneer Europe Fund (the "Fund"). A copy of the Prospectus can be obtained
free of charge by calling Shareholder Services at 1-800-225-6292 or by written
request to the Fund at 60 State Street, Boston, Massachusetts 02109.
TABLE OF CONTENTS
Page
1. Investment Policies and Restrictions................................B-2
2. Management of the Fund..............................................B-10
3. Investment Manager..................................................B-14
4. Principal Underwriter...............................................B-15
5. Distribution Plans..................................................B-16
6. Shareholder Servicing/Transfer Agent................................B-18
7. Custodian...........................................................B-18
8. Independent Public Accountants......................................B-18
9. Portfolio Transactions..............................................B-19
10. Tax Status..........................................................B-20
11. Description of Shares...............................................B-23
12. Certain Liabilities.................................................B-23
13. Letter of Intention.................................................B-24
14. Systematic Withdrawal Plan..........................................B-24
15. Determination of Net Asset Value....................................B-25
16. Investment Results..................................................B-25
17. Financial Statements................................................B-28
Appendix A........................................................B-29
Appendix B........................................................B-34
-------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS
AND IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
<PAGE>
1. INVESTMENT POLICIES AND RESTRICTIONS
The Fund's Prospectus presents the investment objective and the
principal investment policies of the Fund. Additional investment policies and a
further description of some of the policies described in the Prospectus appear
below. Capitalized terms not otherwise defined herein have the meaning given to
them in the Prospectus.
The following policies and restrictions supplement those discussed in
the Prospectus. Except with respect to the policy on borrowing described below,
whenever an investment policy or restriction states a maximum percentage of the
Fund's assets that may be invested in any security or presents a policy
regarding quality standards, this standard or other restrictions shall be
determined immediately after and as a result of the Fund's investment.
Accordingly, any later increase or decrease resulting from a change in values,
net assets or other circumstances will not be considered in determining whether
the investment complies with the Fund's investment objective and policies, other
than the policy on borrowing.
Lending of Portfolio Securities
The Fund may lend portfolio securities to member firms of the New York
Stock Exchange, under agreements which would require that the loans be fully
collateralized by cash, cash equivalents or United States ("U.S.") Treasury
Bills whose market value is not less than 100% of the securities loaned, marked
to market daily. The Fund would continue to receive the equivalent of the
interest or dividends paid by the issuer on the securities loaned and would also
receive compensation based on investment of the collateral. The Fund would not,
however, have the right to vote any securities having voting rights during the
existence of the loan, but would call the loan in anticipation of an important
vote to be taken among holders of the securities or of the giving or withholding
of their consent on a material matter affecting the investment.
As with other extensions of credit there are risks of delay in recovery
or even loss of rights in the collateral should the borrower of the securities
fail financially. The Fund will lend portfolio securities only to firms which
have been approved in advance by the Fund's Board of Trustees, which will
monitor the creditworthiness of any such firms. At no time would the value of
the securities loaned exceed 30% of the value of the Fund's total assets. The
Fund did not lend portfolio securities during the last fiscal year and has no
present intention to engage in any material portfolio lending in the future.
Forward Foreign Currency Contracts
The foreign currency transactions of the Fund may be conducted on a
spot, i.e., cash, basis at the spot rate for purchasing or selling currency
prevailing in the foreign exchange market. The Fund also has authority to deal
in forward foreign currency exchange contracts involving currencies as a hedge
against possible variations in the foreign exchange rate between these
currencies and the U.S. Dollar. This is accomplished through contractual
agreements to purchase or sell a specified currency at a specified future date
and price set at the time of the contract. The Fund's dealings in forward
foreign currency contracts will be limited to hedging either specific
transactions or portfolio positions. Transaction hedging is the purchase or sale
of forward foreign currency contracts with respect to specific receivables or
payables of the Fund accruing in connection with the purchase and sale of its
portfolio securities denominated in foreign currencies. Portfolio hedging is the
use of forward foreign currency contracts to offset portfolio security positions
denominated or quoted in such foreign currencies. There is no guarantee that the
Fund will be engaged in hedging activities when adverse exchange rate movements
occur. The Fund will not attempt to hedge all of its foreign portfolio positions
and will enter into such transactions only to the extent, if any, deemed
appropriate by the Fund's investment adviser. The Fund will not enter into
speculative forward foreign currency contracts.
B-2
<PAGE>
If the Fund enters into a forward contract to purchase foreign
currency, its custodian bank will segregate cash or high grade liquid debt
securities in a separate account of the Fund in an amount equal to the value of
the Fund's total assets committed to the consummation of such forward contract.
Those assets will be valued at market daily and if the value of the assets in
the separate account declines, additional cash or securities will be placed in
the accounts so that the value of the account will equal the amount of the
Fund's commitment with respect to such contracts.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also limit the opportunity
for gain if the value of the hedged currency should rise. Moreover, it may not
be possible for the Fund to hedge against a devaluation that is so generally
anticipated that the Fund is not able to contract to sell the currency at a
price above the devaluation level it anticipates.
The cost to the Fund of engaging in foreign currency transactions
varies with such factors as the currency involved, the size of the contract, the
length of the contract period and the market conditions then prevailing. Since
transactions in foreign currency and forward contracts are usually conducted on
a principal basis, no fees or commissions are involved. The Fund may close out a
forward position in a currency by selling the forward contract or entering into
an offsetting forward contract.
Options on Foreign Currencies
The Fund may purchase and write options on foreign currencies for
hedging purposes in a manner similar to that of transactions in forward
contracts. For example, a decline in the dollar value of a foreign currency in
which portfolio securities are denominated will reduce the dollar value of such
securities, even if their value in the foreign currency remains constant. In
order to protect against such decreases in the value of portfolio securities,
the Fund may purchase put options on the foreign currency. If the value of the
currency declines, the Fund will have the right to sell such currency for a
fixed amount of dollars which exceeds the market value of such currency. This
would result in a gain that may offset, in whole or in part, the negative effect
of currency depreciation on the value of the Fund's securities denominated in
that currency.
Conversely, if a rise in the dollar value of a currency is projected
for those securities to be acquired, thereby increasing the cost of such
securities, the Fund may purchase call options on such currency. If the value of
such currency increases, the purchase of such call options would enable the Fund
to purchase currency for a fixed amount of dollars which is less than the market
value of such currency. Such a purchase would result in a gain that may offset,
at least partially, the effect of any currency related increase in the price of
securities the Fund intends to acquire. As in the case of other types of options
transactions, however, the benefit the Fund derives from purchasing foreign
currency options will be reduced by the amount of the premium and related
transaction costs. In addition, if currency exchange rates do not move in the
direction or to the extent anticipated, the Fund could sustain losses on
transactions in foreign currency options which would deprive it of a portion or
all of the benefits of advantageous changes in such rates.
The Fund may also write options on foreign currencies for hedging
purposes. For example, if a Fund anticipated a decline in the dollar value of
foreign currency denominated securities because of declining exchange rates, it
could, instead of purchasing a put option, write a covered call option on the
relevant currency. If the expected decline occurs, the option will most likely
not be exercised, and the decrease in value of portfolio securities will be
offset by the amount of the premium received by the Fund.
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Similarly, the Fund could write a put option on the relevant currency,
instead of purchasing a call option, to hedge against an anticipated increase in
the dollar cost of securities to be acquired. If exchange rates move in the
manner projected, the put option will expire unexercised and allow the Fund to
offset such increased cost up to the amount of the premium. However, as in the
case of other types of options transactions, the writing of a foreign currency
option will constitute only a partial hedge up to the amount of the premium,
only if rates move in the expected direction. If unanticipated exchange rate
fluctuations occur, the option may be exercised and the Fund would be required
to purchase or sell the underlying currency at a loss which may not be fully
offset by the amount of the premium. As a result of writing options on foreign
currencies, the Fund also may be required to forego all or a portion of the
benefits which might otherwise have been obtained from favorable movements in
currency exchange rates.
A call option written on foreign currency by the Fund is "covered" if
the Fund owns the underlying foreign currency subject to the call, or if it has
an absolute and immediate right to acquire that foreign currency without
additional cash consideration. A call option is also covered if the Fund holds a
call on the same foreign currency for the same principal amount as the call
written where the exercise price of the call held is (a) equal to or less than
the exercise price of the call written or (b) greater than the exercise price of
the call written if the amount of the difference is maintained by the Fund in
cash and high liquid debt grade securities in a segregated account with its
custodian.
The Fund may close out its position in a currency option by either
selling the option it has purchased or entering into an offsetting option.
Futures Contracts and Options on Future Contracts
All futures contracts entered into by the Fund are traded on U.S.
exchanges or boards of trade that are licensed and regulated by the Commodity
Futures Trading Commission (the "CFTC") or on foreign exchanges.
Futures Contracts. A futures contract may generally be described as an
agreement between two parties to buy and sell particular financial instruments
for an agreed price during a designated month (or to deliver the final cash
settlement price, in the case of a contract relating to an index or otherwise
not calling for physical delivery at the end of trading in the contract).
When interest rates are rising or securities prices are falling, the
Fund can seek to offset a decline in the value of its current portfolio
securities through the sale of futures contracts. When interest rates are
falling or securities prices are rising, the Fund, through the purchase of
futures contracts, can attempt to secure better rates or prices than might later
be available in the market when it effects anticipated purchases. Similarly, the
Fund can sell futures contracts on a specified currency to protect against a
decline in the value of such currency and a decline in the value of its
portfolio securities which are denominated in such currency. The Fund can
purchase futures contracts on foreign currency to establish the price in U.S.
dollars of a security denominated in such currency that the Fund has acquired or
expects to acquire.
Positions taken in the futures markets are not normally held to
maturity but are instead liquidated through offsetting transactions which may
result in a profit or a loss. While futures contracts on securities or currency
will usually be liquidated in this manner, the Fund may instead make, or take,
delivery of the underlying securities or currency whenever it appears
economically advantageous to do so. A clearing corporation associated with the
exchange on which futures on securities or currency are traded guarantees that,
if still open, the sale or purchase will be performed on the settlement date.
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Hedging Strategies. Hedging, by use of futures contracts, seeks to
establish with more certainty the effective price, rate of return and currency
exchange rate on portfolio securities and securities that the Fund owns or
proposes to acquire. The Fund may, for example, take a "short" position in the
futures market by selling futures contracts in order to hedge against an
anticipated rise in interest rates or a decline in market prices or foreign
currency rates that would adversely affect the value of the Fund's portfolio
securities. Such futures contracts may include contracts for the future delivery
of securities held by the Fund or securities with characteristics similar to
those of the Fund's portfolio securities. Similarly, the Fund may sell futures
contracts in currency in which its portfolio securities are denominated or in
one currency to hedge against fluctuations in the value of securities
denominated in a different currency if there is an established historical
pattern of correlation between the two currencies. If, in the opinion of the
Manager, there is a sufficient degree of correlation between price trends for
the Fund's portfolio securities and futures contracts based on other financial
instruments, securities indices or other indices, the Fund may also enter into
such futures contracts as part of its hedging strategy. Although under some
circumstances prices of securities in the Fund's portfolio may be more or less
volatile than prices of such futures contracts, the Manager will attempt to
estimate the extent of this volatility difference based on historical patterns
and compensate for any such differential by having the Fund enter into a greater
or lesser number of futures contracts or by attempting to achieve only a partial
hedge against price changes affecting the Fund's securities portfolio. When
hedging of this character is successful, any depreciation in the value of
portfolio securities will be substantially offset by appreciation in the value
of the futures position. On the other hand, any unanticipated appreciation in
the value of the Fund's portfolio securities would be substantially offset by a
decline in the value of the futures position.
On other occasions, the Fund may take a "long" position by purchasing
futures contracts. This would be done, for example, when the Fund anticipates
the subsequent purchase of particular securities when it has the necessary cash,
but expects the prices or currency exchange rates then available in the
applicable market to be less favorable than prices or rates that are currently
available.
Options on Futures Contracts. The acquisition of put and call options
on futures contracts will give the Fund the right (but not the obligation) for a
specified price to sell or to purchase, respectively, the underlying futures
contract at any time during the option period. As the purchaser of an option on
a futures contract, the Fund obtains the benefit of the futures position if
prices move in a favorable direction but limits its risk of loss in the event of
an unfavorable price movement to the loss of the premium and transaction costs.
The writing of a call option on a futures contract generates a premium
which may partially offset a decline in the value of the Fund's assets. By
writing a call option, the Fund becomes obligated, in exchange for the premium,
to sell a futures contract, which may have a value higher than the exercise
price. Conversely, the writing of a put option on a futures contract generates a
premium which may partially offset an increase in the price of securities that
the Fund intends to purchase. However, the Fund becomes obligated to purchase a
futures contract which may have a value lower than the exercise price. Thus, the
loss incurred by the Fund in writing options on futures is potentially unlimited
and may exceed the amount of the premium received. The Fund will incur
transaction costs in connection with the writing of options on futures.
The holder or writer of an option on a futures contract may terminate
its position by selling or purchasing an offsetting option on the same series.
There is no guarantee that such closing transactions can be effected. The Fund's
ability to establish and close out positions on such options will be subject to
the development and maintenance of a liquid market.
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The Fund may use options on futures contracts for bona fide hedging
purposes or to seek to increase total return.
Other Considerations. The Fund will engage in futures and related
options transactions for bona fide hedging purposes in accordance with CFTC
regulations or to seek to increase total return to the extent permitted by such
regulations, which permit principals of an investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act") to engage in
such transactions without registering as commodity pool operators. The Fund is
not permitted to engage in speculative futures trading. The Fund will determine
that the price fluctuations in the futures contracts and options on futures used
for hedging purposes are substantially related to price fluctuations in
securities held by the Fund or which it expects to purchase.
Except as stated below, the Fund's futures transactions will be entered
into for traditional hedging purposes -- i.e., futures contracts will be sold to
protect against a decline in the price of securities (or the currency in which
they are denominated) that the Fund owns, or futures contracts will be purchased
to protect the Fund against an increase in the price of securities (or the
currency in which they are denominated) it intends to purchase. As evidence of
this hedging intent, the Fund expects that on 75% or more of the occasions on
which it takes a long futures or option position (involving the purchase of
futures contracts), the Fund will have purchased, or will be in the process of
purchasing, equivalent amounts of related securities or assets denominated in
the related currency in the cash market at the time when the futures or option
position is closed out. However, in particular cases, when it is economically
advantageous for the Fund to do so, a long futures position may be terminated or
an option may expire without the corresponding purchase of securities or other
assets.
As an alternative to literal compliance with the bona fide hedging
definition, a CFTC regulation permits the Fund to elect to comply with a
different test, under which the sum of the amounts of initial margin deposits on
the Fund's existing futures contracts and premiums paid for options on futures
entered into for the purpose of seeking to increase total return (net of the
amount the positions are "in the money") would not exceed 5% of the market value
of the Fund's net assets.
The Fund will engage in transactions in futures contracts and related
options only to the extent such transactions are consistent with the
requirements of the Internal Revenue Code of 1986, as amended (the "Code"), for
maintaining its qualification as a regulated investment company for federal
income tax purposes.
While transactions in futures contracts and options on futures may
reduce certain risks, such transactions themselves entail certain other risks.
Thus, while the Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates, securities prices or currency exchange
rates may result in a poorer overall performance for the Fund than if it had not
entered into any futures contracts or options transactions. In the event of an
imperfect correlation between a futures position and a portfolio position which
is intended to be protected, the desired protection may not be obtained and the
Fund may be exposed to risk of loss.
Perfect correlation between the Fund's futures positions and portfolio
positions will be difficult to achieve because no futures contracts based on
foreign corporate equity securities are currently available. The only futures
contracts available to hedge the Fund's portfolio are various futures on U.S.
Government securities and foreign currencies, futures on a municipal securities
index and stock index futures. In addition, it is not possible to hedge fully or
perfectly against the effect of currency fluctuations on the value of foreign
securities because currency movements impact the value of different securities
to different degrees.
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Securities Index Options
The Fund may purchase call and put options on securities indices for
the purpose of hedging against the risk of unfavorable price movements adversely
affecting the value of the Fund's securities or securities the Fund intends to
buy. Securities index options will not be used for speculative purposes.
Currently, options on stock indices are traded only on national
securities exchanges and over-the-counter, both in the U.S. and in foreign
countries. A securities index fluctuates with changes in the market values of
the securities included in the index. For example, some stock index options are
based on a broad market index such as the S&P 500 or the Value Line Composite
Index in the U.S., the Nikkei in Japan or the FTSE 100 in the United Kingdom.
Index options may also be based on a narrower market index such as the S&P 100
or on an industry or market segment such as the AMEX Oil and Gas Index or the
Computer and Business Equipment Index.
The Fund may purchase put options in order to hedge against an
anticipated decline in securities prices that might adversely affect the value
of the Fund's portfolio securities. If the Fund purchases a put option on a
securities index, the amount of the payment it would receive upon exercising the
option would depend on the extent of any decline in the level of the securities
index below the exercise price. Such payments would tend to offset a decline in
the value of the Fund's portfolio securities. However, if the level of the
securities index increases and remains above the exercise price while the put
option is outstanding, the Fund will not be able to profitably exercise the
option and will lose the amount of the premium and any transaction costs. Such
loss may be partially offset by an increase in the value of the Fund's portfolio
securities.
The Fund may purchase call options on securities indices in order to
remain fully invested in a particular foreign stock market or to lock in a
favorable price on securities that it intends to buy in the future. If the Fund
purchases a call option on a securities index, the amount of the payment it
receives upon exercising the option depends on the extent of an increase in the
level of other securities indices above the exercise price. Such payments would
in effect allow the Fund to benefit from securities market appreciation even
though it may not have had sufficient cash to purchase the underlying
securities. Such payments may also offset increases in the price of securities
that the Fund intends to purchase. If, however, the level of the securities
index declines and remains below the exercise price while the call option is
outstanding, the Fund will not be able to exercise the option profitably and
will lose the amount of the premium and transaction costs. Such loss may be
partially offset by a reduction in the price the Fund pays to buy additional
securities for its portfolio.
The Fund may sell the securities index option it has purchased or write
a similar offsetting securities index option in order to close out a position in
a securities index option which it has purchased. These closing sale
transactions enable the Fund immediately to realize gains or minimize losses on
its options positions. However, there is no assurance that a liquid secondary
market on an options exchange will exist for any particular option, or at any
particular time, and for some options no secondary market may exist. In
addition, securities index prices may be distorted by interruptions in the
trading of securities of certain companies or of issuers in certain industries,
or by restrictions that may be imposed by an exchange on opening or closing
transactions, or both, which would disrupt trading in options on such indices
and preclude the Fund from closing out its options positions. If the Fund is
unable to effect a closing sale transaction with respect to options that it has
purchased, it would have to exercise the options in order to realize any profit.
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The hours of trading for options may not conform to the hours during
which the underlying securities are traded. To the extent that the options
markets close before the markets for the underlying securities, significant
price and rate movements can take place in the underlying markets that can not
be reflected in the options markets. The purchase of options is a highly
specialized activity which involves investment techniques and risks different
from those associated with ordinary portfolio securities transactions. Personnel
of the Fund's Manager have experience in options transactions and gains and
losses on investments in options (and futures as described above) depend on the
Manager's ability to predict correctly the direction of stock prices, interest
rates and other economic factors.
In addition to the risks of imperfect correlation between the Fund's
portfolio and the index underlying the option, the purchase of securities index
options involves the risk that the premium and transaction costs paid by the
Fund in purchasing an option will be lost. This could occur as a result of
unanticipated movements in prices of the securities comprising the securities
index on which the option is based.
Investment Restrictions
Fundamental Investment Restrictions. The following list presents all of
the fundamental investment restrictions applicable to the Fund. These
restrictions cannot be changed without the affirmative vote of the holders of a
majority of the Fund's outstanding shares. As used in the Prospectus and this
Statement of Additional Information, such approval means the approval of the
lesser of (i) the holders of 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) the holders of more than 50% of the outstanding shares.
Pursuant to these restrictions, the Fund may not:
(1) 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);
(2) purchase securities of an issuer (other than the U.S. Government,
its agencies or instrumentalities), if such purchase would at the time result in
more than 10% of the outstanding voting securities of such issuer being held by
the Fund;
(3) purchase securities for the purpose of controlling management of
other companies;
(4) invest in commodities or commodity contracts, except interest rate
futures contracts, options on securities, securities indices, currency and other
financial instruments, futures contracts on securities, securities indices,
currency and other financial instruments and options on such futures contracts,
forward foreign currency exchange contracts, forward commitments, securities
index put or call warrants and repurchase agreements entered into in accordance
with the Fund's investment policies;
(5) invest in real estate or interests therein, except that the Fund
may invest in readily marketable securities, other than limited partnership
interests, of companies that invest in real estate;
(6) make loans, provided that the lending of portfolio securities and
the purchase of debt securities pursuant to the Fund's investment objective
shall not be deemed loans for the purposes of this restriction;
(7) act as an underwriter, except as it may be deemed to be an
underwriter in a sale of restricted securities;
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<PAGE>
(8) issue senior securities, except as permitted by restrictions
numbers 1, 4 and 6 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 currency exchange contracts and repurchase
agreements entered into in accordance with the Fund's investment policies, and
the pledge, mortgage or hypothecation of the Fund's assets within the meaning of
restriction number 9 below are not deemed to be senior securities;
(9) guarantee the securities of any other company, or mortgage,
pledge, hypothecate, assign or otherwise encumber as security for indebtedness
its securities or receivables in an amount exceeding the amount of the borrowing
secured thereby; or
(10) invest more than 5% of its total assets in convertible debt
securities rated by a national ratings agency below investment grade.
In addition to the foregoing fundamental restrictions,
at least 75% of the value of the Fund's total assets must be represented by cash
and cash items, U.S. Government securities, securities of other investment
companies, and other securities for the purpose of this calculation limited in
respect of any one issuer to an amount not greater in value than 5% of the value
of the total assets of the Fund and to not more than 10% of the outstanding
voting securities of such issuer.
It is the policy of the Fund not to concentrate its investments in
securities of companies in any particular industry. In the opinion of the staff
of the SEC, investments are deemed to be concentrated in a particular industry
if such investments constitute 25% or more of the Fund's total assets. The 1940
Act provides that the policy of the Fund with respect to concentration is a
fundamental policy.
Non-Fundamental Investment Restrictions. The following list represents
non-fundamental investment restrictions applicable to the Fund. These
non-fundamental restrictions may be changed by a vote of the Board of Trustees
without shareholder approval.
The Fund may not:
(a) purchase securities "on margin" or effect "short sales" of
securities;
(b) acquire the securities of other domestic or foreign investment
companies or investment funds if, as a result, (i) more than 10% of the Fund's
total assets would be invested in securities of closed-end investment companies,
(ii) such purchase would result in more than 3% of the total outstanding voting
securities of any one such closed-end investment company being held by the Fund,
or (iii) more than 5% of the Fund's total assets would be invested in any one
such closed-end investment company, except in connection with a plan of merger
or consolidation with or acquisition of substantially all the assets of such
other investment company or fund. The Fund will not invest in the securities of
any open-end investment company, except in connection with a plan of merger or
consolidation with or acquisition of substantially all the assets of such other
open-end investment company;
(c) purchase any security, including any repurchase agreement maturing
in more than seven days, which is illiquid, if more than 15% of the net assets
of the Fund, taken at market value, would be invested in such securities;
B-9
<PAGE>
(d) purchase or retain the securities of any company if officers or
Trustees of the Fund, or officers and directors of its advisers or principal
underwriter, individually own more than one-half of 1% of the securities of such
company or collectively own more than 5% of the securities of such company.
In order to register its shares in certain jurisdictions, the Fund has
agreed to adopt certain additional investment restrictions, which are not
fundamental and which may be changed by a vote of the Fund's Board of Trustees.
Pursuant to these additional investment restrictions, the Fund may not (i)
invest more than 2% of its assets in warrants, valued at the lower of cost or
market, provided that it may invest up to 5% of its total assets, as so valued,
in warrants listed on a recognized securities exchange, and provided further
that warrants acquired in units or attached to securities shall be deemed for
this purpose to have no value, (ii) write (sell) uncovered calls or puts or any
combination thereof or purchase calls, puts, straddles, spreads or any
combination thereof, or (iii) invest in interests in oil, gas or other mineral
exploration or development leases or programs, (iv) purchase the securities of
any enterprise which has a business history of less than three years, including
the operation of any predecessor business to which it has succeeded. 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.
2. MANAGEMENT OF THE FUND
The Fund's Board of Trustees provides broad supervision over the
affairs of the Fund. The executive officers of the Fund are responsible for the
Fund's operations, which are managed by Pioneering Management Corporation ("PMC"
or the "Manager"). 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.*, President and Director of The Pioneer
Chairman of the Board, Group, Inc. ("PGI"); Chairman and
President and Trustee Director of Pioneering Management
Corporation ("PMC"); Chairman of the
Board and Chief Executive Officer of
Pioneer Winthrop Advisers ("PWA") since
1993; Chairman of the Board of Pioneer
Funds Distributor, Inc. ("PFD"); Director
of Pioneering Services Corporation
("PSC") and Pioneer Capital Corporation
("PCC"); President and Director of
Pioneer Plans Corporation ("PPC"),
Pioneer Investment Corp. ("PIC"), Pioneer
International Corp. ("PIntl"), and
Pioneer Metals & Technology, Inc.
("PMT"); Chairman of the Board, President
and Director of Teberebie Goldfields
Limited; Chairman of the Board, President
and Director of Pioneer Goldfields
Limited ("PGL"); Chairman of the
Supervisory Board of Pioneer Fonds
Marketing GmbH; Chairman and President of
the Pioneer mutual funds and Chairman and
Partner, Hale and Dorr (counsel to the
Fund).
RICHARD H. EGDAHL, M.D., Professor of Management, Boston
Trustee University School of Management;
53 Bay State Road Professor of Public Health, Boston
Boston, Massachusetts University School of Public Health;
Professor of Surgery, Boston University
School of Medicine and Boston University
Health Policy Institute; Director, Boston
University Medical Center; Executive Vice
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President and Vice Chairman of the Board,
University Hospital; Academic Vice
President for Health Affairs, Boston
University; Director, Essex Investment
Management Company, Inc. (investment
adviser), Health Payment Review, Inc.
(health care containment software firm),
Mediplex Group, Inc. (nursing care
facilities firm), Peer Review Analysis,
Inc. (health care utilization management
firm) and Springer-Verlag New York, Inc.
(publisher); Honorary Director,
Franciscan Children's Hospital. Boston
University Health Policy Institute and
Trustee of all the Pioneer mutual funds.
MARGARET B.W. GRAHAM, Manager of Research Operations, Xerox
Trustee Palo Alto Research Center, since
The Keep September 1991; Professor of Operations
P.O. Box 110 Management and Management of Technology,
Little Deer Isle, Maine Boston University School of Management
("BUSM"), since 1989; Associate Dean,
BUSM, 1988 to 1990 and previously,
Associate Professor, Department of
Operations Management, BUSM and Trustee
of all the Pioneer mutual funds, except
Pioneer Variable Contracts Trust.
JOHN W. KENDRICK, Professor Emeritus and Adjunct Scholar,
Trustee George Washington University; Economic
6363 Waterway Drive Consultant and Director, American
Falls Church, Virginia Productivity and Quality Center,
American Enterprise Institute and
Trustee of all the Pioneer mutual funds,
except Pioneer Variable Contracts Trust.
MARGUERITE A. PIRET, President, Newbury, Piret & Company, Inc.
Trustee (a merchant banking firm); Trustee of
One Boston Place, all the Pioneer mutual funds
Suite 2635
Boston, Massachusetts.
DAVID D. TRIPPLE*, Executive Vice President and Director of
Trustee and Executive PGI and PWA (since 1993); Director of
Vice President PFD, since 1989; Director of PCC, PIC,
PIntl and Pioneer SBIC Corporation;
President (since 1993), Director,
President and Chief Investment Officer of
PMC and Trustee of all the Pioneer mutual
funds.
STEPHEN K. WEST Partner, Sullivan & Cromwell (a law
Trustee firm); Trustee, The Winthrop Focus Funds
125 Broad Street (mutual funds) andTrustee of all the
New York, New York Pioneer mutual funds.
JOHN WINTHROP, President, John Winthrop & Co., Inc. (a
Trustee firm); Director of NUI Corp., Alliance
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<PAGE>
One North Adgers Wharf Capital private investment Reserves,
Charleston, South Carolina Alliance Government Reserves and Alliance
Tax Exempt Reserves and Trustee of all
the Pioneer mutual funds, except Pioneer
Variable Contracts Trust.
NORMAN KURLAND, Senior Vice President of PMC since 1993;
Vice President Vice President of Pioneer II since 1991;
Vice President of PMC from 1990 to 1993;
International Portfolio Manager and
Analyst, Keystone Custodian Funds from
1987 to 1990.
WILLIAM H. KEOUGH, Senior Vice President, Chief Financial
Treasurer Officer and Treasurer of PGI; Treasurer
of PFD, PMC, PSC, PCC, PIC,PIntl, PMT,
PGL and Pioneer SBIC Corporation;
Treasurer and Director of PPC and
Treasurer of all the Pioneer mutual
funds.
JOSEPH P. BARRI, Secretary of PGI, PMC PPC, PIC, Pintl,
Secretary PMT and PCC; Clerk of PFD and PSC;
Partner, Hale and Dorr (counsel to the
Fund) and Secretary of all the Pioneer
mutual funds.
ERIC W. RECKARD, Manager of Fund Accounting and Compliance
Assistant Treasurer of PMC since 1994; Manager of Auditing
and Business Analysis of PGI (until
1994)and Assistant Treasurer of all the
Pioneer mutual funds.
ROBERT P. NAULT, General Counsel of PGI since 1995;
Assistant Secretary formerly of Hale and Dorr (counsel to the
Fund) where he most recently served as a
junior partner and Assistant Treasurer of
all the Pioneer mutual funds.
The Fund's Declaration of Trust provides that the holders of two-thirds
of its outstanding shares may vote to remove a Trustee of the Fund at any
special meeting of shareholders. The business address of all officers is 60
State Street, Boston, Massachusetts 02109.
All of the outstanding capital stock of PFD, PMC and PSC is owned by
PGI, a Delaware corporation. The table below lists all the Pioneer Funds offered
to the public and the investment adviser and principal underwriter for each
fund.
Investment Principal
Fund Name Adviser Underwriter
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Three PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Real Estate Shares PMC PFD
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Pioneer Europe Fund PMC PFD
Pioneer International Growth Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer India Fund * PFD
Pioneer Bond Fund PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer Income Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer California Double Tax-Free Fund PMC PFD
Pioneer New York Triple Tax-Free Fund PMC PFD
Pioneer Massachusetts Double Tax-Free Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer U.S. Government Money Fund PMC PFD
Pioneer Tax-Free Money Fund PMC PFD
Pioneer Interest Shares, Inc. PMC **
Pioneer Variable Contracts Trust PMC ***
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* ITI Pioneer AMC Ltd. manages the Fund's investments in India, and PMC
manages all of the Fund's other investments.
** This fund is a closed-end investment company.
*** This is a series of seven separate portfolios designed to provide
investment vehicles for the variable annuity and variable life insurance
contracts of various insurance companies or for certain qualified pension
plans.
PMC, the Fund's investment adviser, also manages the investments of
certain institutional private accounts. Messrs. Cogan, Tripple, Keough and
Barri, officers and/or Trustees of the Fund, are also officers and/or directors
of PFD, PMC, PSC (except Mr. Tripple) and PGI. To the knowledge of the Fund, no
officer or Trustee of the Fund owned 5% or more of the issued and outstanding
shares of PGI as of the date of this Statement of Additional Information, except
Mr. Cogan who then owned approximately 15% of such shares.
Remuneration of Trustees
The following table provides information regarding the compensation
paid by the Fund and the other Pioneer Funds to the Trustees for their services
for the Fund's most recently completed fiscal year. The Fund pays no salaries or
compensation to any of its officers. The Fund pays an annual trustees' fee of
$1,000 plus $100 per meeting attended to each Trustee who is not an interested
person of PMC, PFD or PGI and pays an annual trustees' fee of $500 plus expenses
to each other Trustee. Any such fees and expenses paid to interested persons of
PMC, PFD or PGI (currently Messrs. Cogan and Tripple) are reimbursed to the Fund
under its Management Contract. As of the date of this Statement of Additional
Information, the Trustees and officers of the Fund owned beneficially in the
aggregate less than 1% of the outstanding shares of the Fund. As of such date,
to the knowledge of the Fund, no person owned more than 5% of the outstanding
shares of the Fund.
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Total Compensa-
tion from the
Fund and other
Aggregate funds in the
Compensation Pioneer Family
Director From the Fund of Mutual Funds**
John F. Cogan, Jr. $ 500* $ 9,000*
Richard H. Egdahl, M.D. 1,500 55,650
Margaret B.W. Graham 1,500 55,650
John W. Kendrick 1,500 55,650
Marguerite A. Piret 2,250 66,650
David D. Tripple 500* 9,000*
Stephen K. West 2,000 63,650
John Winthrop 2,000 63,650
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Totals $11,750 $378,900
====== =======
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* PMC fully reimbursed the Fund and the other funds in the Pioneer Family of
Mutual Funds for compensation paid to Messrs. Cogan and Tripple.
** For the calendar year ended December 31, 1994.
3. INVESTMENT MANAGER
The Fund has contracted with PMC, 60 State Street, Boston,
Massachusetts, to act as its Manager for management and advisory services. A
description of the services provided under the Management Contract and the
expenses paid by the Fund is set forth under "Management of the Fund" in the
Prospectus.
The Management Contract expires initially on May 31, 1995, but it is
renewable annually after such date by the vote of a majority of the Board of
Trustees (including a majority of the Trustees who are not parties to the
contract or interested persons of any such parties). The vote must be cast in
person at a meeting called for the purpose of voting on each such renewal. The
contract terminates if assigned and may be terminated without penalty by the
Fund or the Manager upon sixty days' written notice by vote of its Board of
Directors or Trustees or a majority of its outstanding voting securities. The
Management Contract was approved by the shareholders of the Fund on April 27,
1994.
Under the Fund's current Management Contract, which became effective on
April 30, 1994, as compensation for its management services and expenses
incurred, PMC is entitled to a management fee from the Fund at the rate of 1.00%
per annum of the Fund's average daily net assets up to $300 million, 0.85% of
the next $200 million and 0.75% of any excess over $500 million. The fee is
normally computed and accrued daily and paid monthly. PMC has agreed not to
impose a portion of its management fee to the extent required to limit the Class
A shares' total expenses to 1.75% of the average daily net assets attributable
to the Class A shares. The portion of the management fee attributable to Class B
shares will be waived only to the extent the management fee is waived for Class
A shares. This agreement is voluntary and temporary and may be revised or
terminated by PMC at any time.
The Manager has agreed that if in any fiscal year the aggregate
expenses of the Fund exceed the expense limitation established by any state
having jurisdiction over the Fund, the Manager will reduce its management fee to
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<PAGE>
the extent required by state law. The most restrictive state expense limit
currently applicable to the Fund provides that the Fund's expenses in any fiscal
year may not exceed 2.5% of the first $30 million of average daily net assets,
2.0% of the next $70 million of such assets and 1.5% of such assets in excess of
$100 million. In the past, the relevant state has granted relief for
international funds, such as the Fund, because of their higher operations costs,
and the Fund expects to seek such relief to the extent it becomes necessary to
do so.
Under the Fund's prior Management Contract, which terminated on April
29, 1994, as compensation for its management services and expenses incurred, PMC
was entitled to a management fee from the Fund at the rate of 1.10% per annum of
the funds average daily net assets up to $300 million, 1.05% of the next $200
million and 0.95% of any excess over $500 million. PMC had also voluntarily
agreed not impose a portion of its management fee and to make other
arrangements, if necessary to limit other expenses of the Fund to the extent to
limit the Class A shares total expenses to 2.00% of the average daily net assets
attributable to the Class A shares. This expense limitation also terminated on
April 29, 1994. Prior to April 30, 1994, the Fund relied on five Subadvisers
(collectively, the "Subadvisers") for investment advice with respect to
investments and companies whose principal executive officers were located in
France, Germany, Italy, Netherlands and the United Kingdom. These subadvisory
arrangements also terminated on April 29, 1994.
For the fiscal year ended October 31, 1992, the Fund paid no management
fees. The Fund paid $131,361 and $243,963 in management fees for the fiscal
years ended October 31, 1993 and 1994, respectively. The Fund would have
incurred management fees payable to PMC of $358,064, $443,141 and $592,674,
respectively, had the fee reduction agreement not been in place.
Under the terminated subadvisory agreements, each of the Subadvisers
was paid an advisory fee by the Manager at the annual rate of 0.50% of the
average daily net assets of the Fund managed by it. These subadvisory fees,
which accrued daily and were paid quarterly, were payable by the Manager without
regard to any expense limitation affecting the Manager's fees. For the fiscal
years ended October 31, 1992 and 1993, the Manager paid subadvisory fees of
$5,976, $31,182 and $29,478, respectively, to BPG Advisory Investment S.A.;
$5,036, $18,803 and $17,617, respectively, to Schroder Munchmeyer Hengst Capital
GmbH; $2,067, $4,183 and $6,342, respectively, to Euromobiliare, S.I.M., S.p.A.;
$3,622, $19,944 and $34,763, respectively, to Mees & Hope Fundmanagement B.V.;
and $8,565, $37,249 and $45,048, respectively, to Edinburgh-Wilmington
International Capital Management. During the period from November 1, 1993 to
April 29, 1994, the Manager paid subadvisory fees of $24,302, $10,411 and
$15,840 to BPG Advisory Investment S.A., Schroder Munchmeyer Hengst Capital GmbH
and Mees & Hope Fundmanagement B.V., respectively. During the same period, no
subadvisory fees were paid to Euromobiliare, S.I.M., S.p.A. and
Edinburgh-Wilmington International Capital Management.
The Fund's subadvisory agreement with a Spanish subadviser, Gestemar
Gestion, S.G.I.I.C., S.A., terminated on July 29, 1993, following a change in
the subadviser's management. The Manager assumed responsibility for managing the
Fund's Spanish assets at that time. For the fiscal year ended October 31, 1992
and for the period from November 1, 1992 to July 29, 1993, the Manager paid
subadvisory fees of $4,556, $11,181 and $10,315, respectively, to Gestemar
Gestion, S.G.I.I.C., S.A.
4. PRINCIPAL UNDERWRITER
PFD serves as the principal underwriter in connection with the
continuous offering of the shares of the Fund pursuant to an Underwriting
Agreement, dated October 9, 1990. The Trustees who were not interested persons
of the Fund, as defined in the 1940 Act, approved the Underwriting Agreement,
which will continue in effect from year to year, if annually approved by the
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<PAGE>
Trustees, in conjunction with the continuance of the Plans of Distribution. See
"Distribution Plans" below. The Underwriting Agreement provides that PFD will
bear certain distribution expenses not borne by the Fund. For the fiscal years
ended October 31, 1992, 1993 and 1994, net underwriting commissions earned by
PFD were approximately $87,729, $38,447 and $40,109, respectively. Commissions
reallowed to dealers during such period were approximately $588,363, $281,000
and $482,102, respectively.
PFD bears all expenses it incurs in providing services under the
Underwriting Agreement. Such expenses include compensation to its employees and
representatives and to securities dealers for distribution related services. PFD
also pays certain expenses in connection with the distribution of the Fund's
shares, including the cost of preparing, printing and distributing advertising
or promotional materials, and the cost of printing and distributing prospectuses
and supplements to prospective shareholders. The Fund bears the cost of
registering its shares under federal, state and foreign securities law. See
"Distribution Plans" below.
The Fund and PFD have agreed to indemnify each other against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
Under the Underwriting Agreement, PFD will use its best efforts in rendering
services to the Fund.
The Fund will not generally issue Fund shares for consideration other
than cash. At the Fund's sole discretion, however, it may issue Fund shares for
consideration other than cash in connection with a bona fide reorganization,
statutory merger or other acquisition of portfolio securities (other than
municipal debt securities issued by state political subdivisions or their
agencies or instrumentalities) provided (i) the securities meet the investment
objectives and policies of the Fund; (ii) the securities are acquired by the
Fund for investment and not for resale; (ii) the securities are not restricted
as to transfer either by law or liquidity of market; and (iv) the securities
have a value which is readily ascertainable (and not established only by
evaluation procedures) as evidenced by a listing on the American Stock exchange
or the New York Stock Exchange or by quotation under the Nasdaq National Market.
An exchange of securities for Fund shares will generally be a taxable
transaction to the shareholder.
5. DISTRIBUTION PLANS
The Fund has adopted a plan of distribution pursuant to Rule 12b-1
promulgated by the SEC under the 1940 Act with respect to Class A shares (the
"Class A Plan") and a plan of distribution with respect to Class B shares (the
"Class B Plan") (together, the "Plans").
Class A Plan
Pursuant to the Class A Plan the Fund may reimburse PFD for its
expenditures in financing any activity primarily intended to result in the sale
of the Class A Plan shares. Certain categories of such expenditures have been
approved by the Board of Trustees and are set forth in the Prospectus. See
"Distribution Plans" in the Prospectus. The expenses of the Fund pursuant to the
Class A Plan are accrued 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.
Class B Plan
The Class B Plan provides that the Fund shall pay PFD, as the Fund's
distributor for its Class B shares, a daily distribution fee equal on an annual
basis to 0.75% of the Fund's average daily net assets attributable to Class B
shares and will pay PFD a service fee equal to 0.25% of the Fund's average daily
net assets attributable to Class B shares (which PFD will in turn pay to
securities dealers which enter into a sales agreement with PFD at a rate of up
to 0.25% of the Fund's average daily net assets attributable to Class B shares
owned by investors for whom that securities dealer is the holder or dealer of
record). This service fee is intended to be consideration of personal services
and/or account maintenance services rendered by the dealer with respect to Class
B shares. PFD will advance to dealers the first- year service fee at a rate
equal to 0.25% of the amount invested. As compensation therefor, PFD may retain
B-16
<PAGE>
the service fee paid by the Fund with respect to such shares for the first year
after purchase. Dealers will become eligible for additional service fees with
respect to such shares commencing in the thirteenth month following purchase.
Dealers may from time to time be required to meet certain other criteria in
order to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class B Plan is
to compensate PFD for its distribution services to the Fund. PFD pays
commissions to dealers as well as expenses of printing prospectuses and reports
used for sales purposes, expenses with respect to the preparation and printing
of sales literature and other distribution related expenses, including, without
limitation, the cost necessary to provide distribution- related services, or
personnel, travel office expenses and equipment. The Class B Plan also provides
that PFD will receive all contingent deferred sales charges ("CDSCs")
attributable to Class B shares. (See "Distributions Plans" in the Prospectus.)
General
In accordance with the terms of the Plans, PFD provides to the Fund for
review by the Trustees a quarterly written report of the amounts expended under
the respective Plan and the purpose 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.
The Plans were adopted by a majority vote of the Board of Trustees,
including all of the Trustees who are not, and were not at the time they voted,
interested persons of the Fund, as defined in the 1940 Act (none of whom has or
have any direct or indirect financial interest in the operation of the Plans)
(the "Qualified Trustees"), cast in person at a meeting called for the purpose
of voting on the Plans. In approving the Plans, the Trustees identified and
considered a number of potential benefits which the Plans may provide. The Board
of Trustees believes that there is a "reasonable likelihood" that the Plans will
benefit the Fund and its current and future shareholders. Under their terms, the
Plans remain in effect from year to year provided such continuance is approved
annually by vote of the Trustees in the manner described above. The Plans may
not be amended to increase materially the 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 in the manner
described above. A Plan may be terminated at any time, without payment of any
penalty, by vote of the majority of the Trustees who are not interested persons
of the Fund and have no direct or indirect financial interest in the operations
of the Plan, or by a vote of a majority of the outstanding voting securities of
the respective Class of the Fund (as defined in the 1940 Act). A Plan will
automatically terminate in the event of its assignment (as defined in the 1940
Act). In the Trustees' quarterly review of the Plans, they will consider the
Plans continued appropriateness and the level of compensation they provide.
B-17
<PAGE>
During the fiscal year ended October 31, 1994, the Fund incurred total
distribution fees of $117,143 and $6,123 pursuant to the Class A Plan and the
Class B Plan, respectively. Distribution fees were paid by the Fund to PFD in
reimbursement of expenses related to servicing of shareholder accounts and to
compensate dealers and sales personnel.
6. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with PSC, 60 State Street, Boston,
Massachusetts, to act as shareholder servicing and transfer agent for the Fund.
This contract terminates if assigned and may be terminated without penalty by
either party upon ninety days' written notice by vote of its Board of Directors
or Trustees or a majority of its outstanding voting securities.
Under the terms of its contract with the Fund, PSC will service
shareholder accounts, and its duties will include: (i) processing sales,
redemptions and exchanges of shares of the Fund; (ii) distributing dividends and
capital gains associated with Fund portfolio accounts; and (iii) maintaining
account records and responding to shareholder inquiries.
PSC receives an annual fee of $22.00 per Class A and Class B
shareholder account from the Fund as compensation for the services described
above. PSC is also reimbursed by the Fund for its out-of-pocket expenditures.
The annual fee is set at an amount determined by vote of a majority of the
Fund's Trustees (including a majority of the Trustees who are not parties to the
contract with PSC or interested persons of any such parties) to be comparable to
fees for such services being paid by other investment companies.
7. CUSTODIAN
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts
02109 (the "Custodian"), is the custodian of the Fund's assets. The Custodian's
responsibilities include safekeeping and controlling the Fund's cash and
securities in the U.S. as well as in Europe, handling the receipt and delivery
of securities, and determining income and collecting interest and dividends on
the Fund's investments. The Custodian fulfills its function in Europe through a
network of subcustodian banks located in European countries (the
"Subcustodians"). The Custodian also provides fund accounting, bookkeeping and
pricing assistance to the Fund and assistance in arranging for forward currency
exchange contracts as described above under "Investment Policies and
Restrictions."
The Custodian does not determine the investment policies of the Fund or
decide which securities it will buy or sell. The Fund may invest in securities
issued by the Custodian or any of the Subcustodians, deposit cash in the
Custodian or any Subcustodian and deal with the Custodian or any of the
Subcustodians as a principal in securities transactions. Portfolio securities
may be deposited into the Federal Reserve-Treasury Department Book Entry System
or the Depository Trust Company in the U.S. or in recognized central
depositories in Europe. In selecting Brown Brothers Harriman & Co. as the
Custodian for European Securities, the Board of Trustees made certain
determinations required by Rule 17f-5 promulgated under the 1940 Act. The
Trustees will annually review and approve the continuations of its European
custodian arrangements.
8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, One International Place, Boston, Massachusetts
02110, are the Fund's independent public accountants, providing audit services
and assistance and consultation with respect to the preparation of tax returns
and filings with the SEC.
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<PAGE>
9. PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of the Fund by PMC pursuant to authority contained in the Fund's
management contract. In selecting brokers or dealers, PMC considers other
factors relating to best execution, including, but not limited to, the size and
type of the transaction; the nature and character of the markets for the
security to be purchased or sold; the execution efficiency, settlement
capability and financial condition of the dealer; the dealer's execution
services rendered on a continuing basis; and the reasonableness of any dealer
spreads.
PMC may select broker-dealers which provide brokerage and/or research
services to the Fund and/or other investment companies or accounts managed by
PMC. In addition, if PMC determines in good faith that the amount of commissions
charged by a broker-dealer is reasonable in relation to the value of brokerage
and research services provided by such broker-dealer, the Fund may pay
commissions to the broker-dealer in an amount greater than the amount another
firm might charge. Such services may include advice concerning the value of
securities; the advisability of investing in, purchasing or selling securities;
the availability of securities or the purchasers or sellers of securities;
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and performance of accounts; and
effecting securities transactions and performing functions incidental thereto
(such as clearance and settlement). PMC maintains a listing of broker-dealers
who provide such services on a regular basis. However, because many transactions
on behalf of the Fund and other investment companies or accounts managed by PMC
are placed with broker-dealers (including broker-dealers on the listing) without
regard to the furnishing of such services, it is not possible to estimate the
proportion of such transactions directed to such broker-dealers solely because
such services were provided. Management believes that no exact dollar value can
be calculated for such services.
The research received from broker-dealers may be useful to PMC in
rendering investment management services to the Fund as well as to other
investment companies or accounts managed by PMC, although not all of such
research may be useful to the Fund. Conversely, such information provided by
brokers or dealers who have executed transaction orders on behalf of such other
accounts may be useful to PMC in carrying out their respective obligations to
the Fund. The receipt of such research has not reduced PMC's normal independent
research activities; however, it enables PMC to avoid the additional expenses
which might otherwise be incurred if it were to attempt to develop comparable
information through their own staffs.
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. This policy does not imply a commitment to execute all
portfolio transactions through all broker-dealers that sell shares of the Fund.
Brokerage commissions in European countries are generally fixed (non-
negotiable) and other transaction costs on European securities exchanges are
generally higher than in the United States.
In addition to the Fund, PMC acts as investment adviser or subadviser
to other Pioneer Funds and certain private accounts with investment objectives
similar to those of the Fund. Securities frequently meet the investment
objective of the Fund, such other 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.
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<PAGE>
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 company or account may choose to hold its investment
in the same issue may likewise vary. To the extent that more than one of the
Pioneer Funds or a private account managed by PMC seek to acquire the same
security at about the same time, the Fund may not be able to acquire as large a
position in such security as it desires or it may have to pay a higher price for
the security. Similarly, the Fund may not be able to obtain as large an
execution of an order to sell or as high a price for any particular portfolio
security if PMC decides to sell on behalf of another account the same portfolio
security at the same time. On the other hand, if the same securities are bought
or sold at the same time by more than one company 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.
The Trustees periodically review PMC's performance of its
responsibilities in connection with portfolio transactions on behalf of the
Fund.
For the fiscal years ended October 31, 1992, 1993 and 1994, the Fund
paid or owed aggregate brokerage commissions of $180,422, $205,326 and $363,875,
respectively. For the fiscal year ended October 31, 1994, the Fund paid a
brokerage commission of $3,949 to an affiliated broker of Euromobiliare, S.I.M.,
S.p.A.. The percentage of the Fund's aggregate brokerage commissions paid to an
affiliated broker of the former Subadviser was 1%.
10. TAX STATUS
It is the Fund's policy to meet the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code") for qualification as a
regulated investment company. If the Fund meets all such requirements and
distributes to its shareholders at least annually all taxable and exempt income,
if any, which it receives, the Fund will be relieved of the necessity of paying
federal income tax.
In order to qualify as a regulated investment company under Subchapter
M, the Fund must, among other things, derive at least 90% of its annual gross
income from dividends, interest, gains from the sale or other disposition of
stock, securities or foreign currencies, or other income (including gains from
options, futures and forward contracts) derived with respect to its business of
investing in such stock, securities or currencies (the "90% income test"), limit
its gross gains from the sale of stock, securities and certain other investments
held for less than three months to less than 30% of its annual gross income (the
"30% test") and satisfy certain annual distribution and quarterly
diversification requirements.
Dividends from net investment income, net short-term capital gains and
certain net foreign exchange gains are taxable as ordinary income to the
shareholders, whether received in cash or in additional shares. Dividends from
net long-term capital gains, if any, whether received in cash or additional
shares, are taxable to the Fund's shareholders as long-term capital gains for
federal income tax purposes without regard to the length of time shares of the
Fund have been held. The federal income tax status of all distributions will be
reported to shareholders annually.
Any dividend declared by the Fund in October, November or December as
of a record date in such a month and paid during the following January will be
treated for federal income tax purposes as received by shareholders on December
31 of the calendar year in which it is declared.
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<PAGE>
Foreign exchange gains and losses realized by the Fund in connection
with certain transactions involving foreign currency- denominated debt
securities, forward foreign currency contracts, foreign currencies, options and
future contracts on foreign currencies or payables or receivables denominated in
a foreign currency are subject to Section 988 of the Code, which generally
causes such gains and losses to be treated as ordinary income and losses and may
affect the amount, timing and character of distributions to shareholders. Any
such transactions that are not directly related to the Fund's investment in
stock or securities may increase the amount of gain it is deemed to recognize
from the sale of certain investments held for less than 3 months for purposes of
the 30% test and may under future Treasury regulations produce income not among
the types of "qualifying income" for purposes of the 90% income test. If the net
foreign exchange loss for a year were to exceed the Fund's investment company
taxable income (computed without regard to such loss) the resulting overall
ordinary loss for such year would not be deductible by the Fund or its
shareholders in future years.
If the Fund acquires stock in certain non-U.S. corporations that
receive at least 75% of their annual gross income from passive sources (such as
sources that produce interest, dividend, rental, royalty or capital gain income)
or hold at least 50% of their assets in such passive sources ("passive foreign
investment companies") the Fund could be subject to federal income tax and
additional interest charges on "excess distributions" received from such
companies or gain from the sale of stock in such companies, even if all income
or gain actually received by the Fund is timely distributed to its shareholders.
The Fund would not be able to pass through to its shareholders any credit or
deduction for such a tax. In certain cases, an election may be available that
would ameliorate these adverse tax consequences. The Fund may limit its
investments in passive foreign investment companies and will undertake
appropriate actions, including consideration of any available elections, to
limit its tax liability, if any, with respect to such investments.
Since, at the time of an investor's purchase of Fund shares, a portion
of the per share net asset value by which the purchase price is determined may
be represented by realized or unrealized appreciation in the Fund's portfolio or
undistributed taxable income of the Fund, subsequent distributions (or portions
thereof) on such shares may be taxable to such investor even if the net asset
value of his shares is, as a result of the distributions, reduced below his cost
for such shares and the distributions (or portions thereof) in reality represent
a return of a portion of his investment.
Any loss realized by a shareholder upon the redemption of shares with a
tax holding period at the time of redemption 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, as described in the Prospectus, the tax treatment of gains
or losses on the redemption or exchange of certain Class A shares within 90 days
after their purchase may be affected by subsequent investments in the same Fund
or another fund pursuant to a reinvestment or exchange privilege, and losses on
certain redemptions may be disallowed under "wash sale" rules in the event of
other investments in the Fund within 30 days before or after a redemption or
other sale of shares.
For federal income tax purposes, the Fund is permitted to carry forward
a net realized capital loss in any year to offset realized capital gains, if
any, during the eight years following the year of the loss. To the extent
subsequent net realized capital gains are offset by such losses, they would not
result in federal income tax liability to the Fund and are not expected to be
distributed as such to shareholders.
The Fund's dividends normally will not qualify for the 70%
dividends-received deduction available to corporations, because the Fund does
not expect to receive dividends from U.S. domestic corporations.
B-21
<PAGE>
The Fund may be subject to withholding and other taxes imposed by
foreign countries with respect to its investments in those countries. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes. If more than 50% of the value of the Fund's total assets at the close of
any fiscal year consists of stock or securities of foreign corporations, the
Fund may elect to pass through to shareholders their pro rata shares of foreign
taxes paid by the Fund, with the result that shareholders would be required to
include such taxes in their gross incomes (in addition to dividends actually
received) and would treat such shares as foreign taxes paid by them, for which
they may be entitled to a tax deduction or credit for such taxes on their own
tax returns, subject to certain limitations under the Code.
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.
The Fund is not subject to Massachusetts corporate excise or franchise
taxes. Provided that the Fund qualifies as a regulated investment company under
the Code, it will also not be required to pay any Massachusetts income tax.
Interest rate futures contracts or futures contracts on securities,
securities indices or foreign currencies entered into by the Fund and options
written or purchased by the Fund on securities, securities indices, foreign
currencies or futures contracts, as well as certain foreign currency forward
contracts, may cause the Fund to recognize gains or losses from
marking-to-market at the end of its taxable year even though such futures or
forward contracts may not have been disposed of or closed out and delivery may
not have been made thereunder and such options may not have lapsed, been closed
out, or exercised, and the tax rules applicable to these derivative instruments
may affect the characterization as long-term or short-term of some capital gains
and losses realized by the Fund. Additionally, certain options, futures, and
forward contracts on foreign currency and certain options on foreign currency
futures contracts may be subject to Section 988, described above, and
accordingly produce ordinary income or loss. Losses on certain options, futures,
or forward contracts and/or offsetting positions (portfolio securities or other
positions with respect to which the Fund's risk of loss is substantially
diminished by one or more options, futures, or forward contracts) may also be
deferred under the tax straddle rules of the Code, which may also affect the
characterization of capital gains or losses from straddle positions and certain
successor positions as long-term or short-term. The tax rules applicable to
options, futures, forward contracts and straddles may affect the amount, timing
and character of the Fund's income and loss and hence of distributions to
shareholders. Certain elections may be available with respect to these
instruments that may enable the Fund to ameliorate some adverse effects of the
tax rules described in this paragraph.
Federal law requires that the Fund withhold (as "backup withholding")
31% of reportable payments, including dividends, capital gain dividends, and the
proceeds of redemptions, repurchases or exchanges, to shareholders who have not
complied with Internal Revenue Service ("IRS") regulations. In order to avoid
this withholding requirement, shareholders must certify on their Account
Applications, or on separate W-9 Forms, that their Social Security or other
Taxpayer Identification Number is correct 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.
The description above relates only to U.S. federal income tax
consequences for shareholders who are U.S. persons, i.e., U.S. citizens or
residents and U.S. domestic corporations, partnerships, trusts or estates, and
who are subject to federal income tax. The description does not address any
special tax rules applicable to particular types of entities, such as banks,
B-22
<PAGE>
insurance companies or tax-exempt organizations. Shareholders should consult
their own tax advisors on these matters and on state, local and other applicable
tax laws. Investors other than U.S. persons may be subject to different U.S. tax
treatment, including a possible 30% U.S. withholding tax (or a lower treaty
rate) on dividends treated as ordinary income.
11. DESCRIPTION OF SHARES
The Fund's Declaration of Trust permits the Board of Trustees to
authorize the issuance of an unlimited number of full and fractional shares of
beneficial interest (without par value) which may be divided into such separate
series as the Trustees may establish. Currently, the Fund consists of only one
series. The Trustees may, however, establish additional series of shares in the
future, and may divide or combine the shares into a greater or lesser number of
shares without thereby changing the proportionate beneficial interests in the
Fund. The Declaration of Trust further authorizes the Trustees to classify or
reclassify any series of the shares into one or more classes. Pursuant thereto,
the Trustees have authorized the issuance of two classes of shares of the Fund,
Class A shares and Class B 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.
Shareholders are entitled to one vote for each share held and may vote
in the election of Trustees and on other matters submitted to meetings of
shareholders. Although Trustees are not elected annually by the shareholders,
shareholders have, under certain circumstances, the right to remove one or more
Trustees. No amendment adversely affecting the rights of shareholders may be
made to the Fund's Declaration of Trust without the affirmative vote of a
majority of its shares. Shares have no preemptive or conversion rights. Shares
are fully paid and non-assessable by the Trust, except as stated below. See
"Certain Liabilities."
12. CERTAIN LIABILITIES
As a Massachusetts business trust, the Fund's operations are governed
by its Declaration of Trust dated October 13, 1992, a copy of which is on file
with the office of the Secretary of State of The Commonwealth of Massachusetts.
Theoretically, shareholders of a Massachusetts business trust may, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Declaration of Trust 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 of Trust 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 of Trust 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 be limited to
circumstances in which the Fund itself would 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 of Trust further provides that the Fund shall indemnify
each of its Trustees and officers against liabilities and expenses reasonably
incurred by them, in connection with, or arising out of, any action, suit or
proceeding, threatened against or otherwise involving such Trustee or officer,
B-23
<PAGE>
directly or indirectly, by reason of being or having been a Trustee or officer
of the Fund. The Declaration of Trust does not authorize the Fund to indemnify
any Trustee or officer against any liability to which he or she would otherwise
be subject by reason of or for willful misfeasance, bad faith, gross negligence
or reckless disregard of such person's duties.
13. LETTER OF INTENTION
Purchases in the Fund of $50,000 or over of Class A shares (excluding
any reinvestments of dividends and capital gains distributions) made within a
13-month period pursuant to a Letter of Intention provided by PFD will qualify
for a reduced sales charge. Such reduced sales charge will be the charge that
would be applicable to the purchase of all of Class A shares purchased during
such 13-month period pursuant to a Letter of Intention had such shares been
purchased all at once. See "How to Buy Fund Shares" in the Prospectus. For
example, a person who signs a Letter of Intention providing for a total
investment in Fund Class A shares of $50,000 over a 13-month period would be
charged at the 4.50% sales charge rate with respect to all purchases during that
period. Should the amount actually purchased during the 13-month period be more
or less than that indicated in the Letter, an adjustment in the sales charge
will be made. A purchase not made pursuant to a Letter of Intention may be
included thereafter if the Letter is filed within 90 days of such purchase. Any
shareholder may also obtain the reduced sales charge by including the value (at
current offering price) of all the shares of record he holds in the Fund and in
all other Pioneer Funds, except Pioneer Money Market Trust, as of the date of
the Letter of Intention as a credit toward determining the applicable sales
charge for the Class A shares to be purchased under the Letter of Intention.
The Letter of Intention authorizes PSC to escrow shares having a
purchase price equal to 5% of the stated investment specified in the Letter of
Intention. A Letter of Intention is not a binding obligation upon the investor
to purchase, or the Fund to sell, the full amount indicated and the investor
should read the provisions of the Letter of Intention carefully before signing.
14. SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan ("SWP") is designed to provide a
convenient method of receiving fixed payments at regular intervals from shares
of the Fund deposited by the applicant under this SWP. The applicant must
deposit or purchase for deposit with PSC shares of the Fund having a total value
of not less than $10,000. Periodic payments of $50 or more will be made to the
applicant, or any person designated by him, monthly or quarterly. Class B share
accounts must meet the minimum initial investment requirement prior to
establishing a SWP. Withdrawals from Class B share accounts are limited to 10%
of the value at the time the SWP is established. See "Waiver or Reduction of
Contingent Deferred Sales Charge" in the prospectus.
Any income dividends or capital gains distributions on shares under the
SWP will be credited to the Plan account on the payment date in full and
fractional shares at the net asset value per share in effect on the record date.
SWP payments are made from the proceeds of the redemption of shares
deposited under the SWP in a SWP account. To the extent that such redemptions
for periodic withdrawals exceed dividend income reinvested in the SWP account,
such redemptions will reduce and may ultimately exhaust the number of shares
deposited in the SWP account. Share redemptions are taxable transactions, and 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.
B-24
<PAGE>
The SWP may be terminated at any time (1) by written notice to PSC or
from PSC to the shareholder; (2) upon receipt by PSC of appropriate evidence of
the shareholder's death; or (3) when all shares under the SWP have been
redeemed.
15. DETERMINATION OF NET ASSET VALUE
The net asset value per share of each class of the Fund is determined
as of the close of regular trading on the New York Stock Exchange (the
"Exchange") (currently 4:00 PM, Eastern Time) on each day on which the Exchange
is open for trading. As of the date of this Statement of Additional Information,
the New York Stock Exchange is open for trading every weekday except for the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset
value per share of each class of the Fund is also determined on any other day in
which the level of trading in its portfolio securities is sufficiently high 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 in which no purchase orders for the shares
of the Fund become effective and no shares are tendered for redemption.
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 a class, and dividing it by the number of
outstanding shares. For purposes of determining net asset value expenses of the
classes of the Fund are accrued daily.
Securities which have not traded on the date of valuation or securities
for which sales prices are not generally reported are valued at the mean between
the last bid and asked prices. Securities for which no market quotations are
readily available (including those the trading of which has been suspended) will
be valued at fair value as determined in good faith by the Board of Trustees,
although the actual computations may be made by persons acting pursuant to the
direction of the Board. The maximum offering price per Class A share is the net
asset value per Class A share, plus the maximum sales charge. Class B shares are
offered at net asset value without the imposition of an initial sales charge.
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
Analytical Services, Inc., a widely recognized independent service which
monitors mutual fund performance; the Europe Australia Far East Index ("EAFE"),
an unmanaged index of international stock markets; The Europe 13 Index, an
unmanaged market weighted index of 13 European markets; any of the country
indexes or regional indexes prepared by Morgan Stanley Capital International;
the Standard & Poor's 500 Stock Index ("S&P 500"), an index of unmanaged groups
of common stock; or the Dow Jones Industrial Average, a recognized unmanaged
index of common stocks of 30 industrial companies listed on the New York Stock
Exchange.
In addition, the performance of the classes of the Fund may be compared
to alternative investment or savings vehicles and/or to indexes or indicators of
economic activity, e.g., inflation or interest rates. Performance rankings and
listings reported in newspapers or national business and financial publications,
such as Barron's, Business Week, Consumers Digest, Consumer Reports, Financial
World, Forbes, Fortune, Investors Business Daily, Kiplinger's Personal Finance
B-25
<PAGE>
Magazine, Money Magazine, New York Times, USA Today, U.S. News and World Report
and the Wall Street Journal 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, Investment Company Data, Inc.,
Johnson's Charts, Lipper Analytical Services, Inc., Kanon Bloch Carre & Co.,
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 the Fund's 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 Annual Average Total Return Quotations
and Other Performance Quotations
One of the primary methods used to measure the performance of a Class
of the Fund is "total return." "Total return" will normally represent the
percentage change in value of an account, or of a hypothetical investment in a
Class of the Fund, over any period up to the lifetime of that Class of the Fund.
Total return calculations will usually assume the reinvestment of all dividends
and capital gains distributions and will be expressed as a percentage increase
or decrease from an initial value, for the entire period or for one or more
specified periods within the entire period. Total return percentages for periods
of less than one year will usually be annualized; total return percentages for
periods longer than one year will usually be accompanied by total return
percentages for each year within the period and/or by the average annual
compounded total return for the period. The income and capital components of a
given return may be separated and portrayed in a variety of ways in order to
illustrate their relative significance. Performance may also be portrayed in
terms of cash or investment values, without percentages. Past performance cannot
guarantee any particular future result.
The Fund's average annual total return quotations for each of its
classes as that information may appear in the Prospectus, this Statement of
Additional Information or in advertising are calculated by standard methods
prescribed by the SEC.
Standardized Average Annual Total Return Quotations
Average annual total return quotations for Class A and Class B 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
B-26
<PAGE>
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 shares at the end of the period.
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical
$1000 initial payment made at the beginning of
the designated period (or fractional portion
thereof)
For purposes of the above computation, it is assumed that all dividends and
distributions made by the Fund are reinvested at net asset value during the
designated period. The average annual total return quotation is determined to
the nearest 1/100 of 1%.
In determining the average annual total return (calculated as provided
above), recurring fees, if any, that are charged to all shareholder accounts of
a particular Class are taken into consideration. For any account fees that vary
with the size of the account, the account fee used for purposes of the above
computation is assumed to be the fee that would be charged to the Class' mean
account size.
The average annual total return of the Class A shares for the one-year,
three-year and life-of-the-Fund periods ended October 31, 1994 were 15.97%,
11.38% and 9.86%, respectively. The average annual total return of the Class B
shares of the Fund for the period April 4, 1994 (commencement of offering) to
October 31, 1994 was 10.55%.
Automated Information Line
FactFoneSM, Pioneer's 24-hour automated information line, allows
shareholders to dial toll-free 1-800-225-4321 and hear recorded fund
information, including:
o net asset value prices for all Pioneer Mutual funds;
o annualized 30-day yields on Pioneer's fixed income funds;
o annualized 7-day yields and 7-day effective (compound) yields for
Pioneer's money market funds; and
o dividends and capital gains distributions on all Pioneer mutual
funds.
Yields are calculated in accordance with SEC mandated standard formulas.
In addition, using a personal identification number ("PIN"),
shareholders may enter purchases, exchanges and redemptions, access their
account balance and last three transactions and may order a duplicate statement.
See "FactFoneSM" in the Prospectus for more information.
All performance numbers communicated through FactFoneSM represent past
performance and figures for all quoted bond funds include the maximum applicable
sales charge. A shareholder's actual yield and total return will vary with
changing market conditions. The value of Class A and Class B shares (except for
Pioneer money market funds, which seek a stable $1.00 share price) will also
vary and may be worth more or less at redemption than their original cost.
B-27
<PAGE>
17. FINANCIAL STATEMENTS
The audited financial statements and related report of Arthur Andersen
LLP contained in the Fund's 1994 Annual Report are hereby incorporated by
reference and attached hereto. A copy of the Annual Report may be obtained
without charge by calling Shareholder Services at 1-800-225-6292 or by written
request to the Fund at 60 State Street, Boston, Massachusetts 02109.
B-28
<PAGE>
PIONEER EUROPE FUND
Appendix A
Risk-Adjusted Average Annual Total Return (1983-1993)
with varying U.S./International Asset Allocation
The graph below illustrates the level of risk associated with selected
U.S./international allocations of an assumed investment. Percentages indicate
the level of allocation between a domestic portfolio (represented by the
Standard & Poor's 500-Stock Index) and an international portfolio (represented
by the Europe, Australia, Far East Index valued in U.S. dollars). The model
assumes reinvestment of dividends and does not consider the effect of taxes.
<TABLE>
<CAPTION>
DATE QUARTERLY RETURNS PORTFOLIOS:
YYMM EAFE USA EAFE USA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8212 273.13 200.93 10/90 20/80 30/70 40/60 50/50 60/40 70/30 80/20 90/10
8303 288.67 220.09 1Q83 5.69% 9.54% 9.15% 8.77% 8.38% 8.00% 7.61% 7.23% 6.84% 6.46% 6.08%
8306 310.17 242.09 2Q83 7.45% 9.99% 9.74% 9.49% 9.23% 8.98% 8.72% 8.47% 8.21% 7.96% 7.70%
8309 317.43 241.46 3Q83 2.34% -0.26% 0.00% 0.26% 0.52% 0.78% 1.04% 1.30% 1.56% 1.82% 2.08%
8312 337.84 241.87 4Q83 6.43% 0.17% 0.79% 1.42% 2.05% 2.67% 3.30% 3.92% 4.55% 5.18% 5.80%
8403 389.31 232.83 1Q84 15.24% -3.74% -1.84% 0.06% 1.95% 3.85% 5.75% 7.65% 9.54% 11.44% 13.34%
8406 343.51 226.10 2Q84 -11.76% -2.89% -3.78% -4.66% -5.55% -6.44% -7.33% -8.21% -9.10% -9.99% -10.88%
8409 345.64 248.36 3Q84 0.62% 9.85% 8.92% 8.00% 7.08% 6.16% 5.23% 4.31% 3.39% 2.46% 1.54%
8412 362.78 252.66 4Q84 4.96% 1.73% 2.05% 2.38% 2.70% 3.02% 3.34% 3.67% 3.99% 4.31% 4.64%
8503 397.34 276.15 1Q85 9.53% 9.30% 9.32% 9.34% 9.37% 9.39% 9.41% 9.44% 9.46% 9.48% 9.50%
8506 423.41 296.07 2Q85 6.56% 7.21% 7.15% 7.08% 7.02% 6.95% 6.89% 6.82% 6.76% 6.69% 6.63%
8509 486.48 282.46 3Q85 14.89% -4.60% -2.65% -0.70% 1.25% 3.20% 5.15% 7.10% 9.05% 11.00% 12.95%
8512 566.53 331.19 4Q85 16.45% 17.25% 17.17% 17.09% 17.01% 16.93% 16.85% 16.77% 16.69% 16.61% 16.53%
8603 735.76 377.55 1Q86 29.87% 14.00% 15.59% 17.17% 18.76% 20.35% 21.94% 23.52% 25.11% 26.70% 28.29%
8606 800.15 394.75 2Q86 8.75% 4.56% 4.97% 5.39% 5.81% 6.23% 6.65% 7.07% 7.49% 7.91% 8.33%
8609 923.63 366.21 3Q86 15.43% -7.23% -4.96% -2.70% -0.43% 1.83% 4.10% 6.37% 8.63% 10.90% 13.17%
8612 959.92 385.10 4Q86 3.93% 5.16% 5.03% 4.91% 4.79% 4.67% 4.54% 4.42% 4.30% 4.18% 4.05%
8703 1183.33 463.00 1Q87 23.27% 20.23% 20.53% 20.84% 21.14% 21.45% 21.75% 22.06% 22.36% 22.67% 22.97%
8706 1266.81 484.17 2Q87 7.05% 4.57% 4.82% 5.07% 5.32% 5.57% 5.81% 6.06% 6.31% 6.56% 6.81%
8709 1338.03 514.84 3Q87 5.62% 6.33% 6.26% 6.19% 6.12% 6.05% 5.98% 5.91% 5.84% 5.76% 5.69%
8712 1196.37 396.30 4Q87 -10.59% -23.02% -21.78% -20.54% -19.29% -18.05% -16.81% -15.56% -14.32% -13.07% -11.83%
8803 1378.76 415.02 1Q88 15.25% 4.72% 5.77% 6.83% 7.88% 8.93% 9.98% 11.04% 12.09% 13.14% 14.19%
8806 1318.27 440.84 2Q88 -4.39% 6.22% 5.16% 4.10% 3.04% 1.98% 0.92% -0.14% -1.20% -2.27% -3.33%
8809 1326.76 441.62 3Q88 0.64% 0.18% 0.23% 0.27% 0.32% 0.36% 0.41% 0.46% 0.50% 0.55% 0.60%
8812 1534.57 454.22 4Q88 15.66% 2.85% 4.13% 5.41% 6.70% 7.98% 9.26% 10.54% 11.82% 13.10% 14.38%
8903 1538.82 483.49 1Q89 0.28% 6.44% 5.83% 5.21% 4.59% 3.98% 3.36% 2.74% 2.13% 1.51% 0.89%
8906 1443.88 526.08 2Q89 -6.17% 8.81% 7.31% 5.81% 4.32% 2.82% 1.32% -0.18% -1.68% -3.17% -4.67%
8909 1622.77 580.36 3Q89 12.39% 10.32% 10.52% 10.73% 10.94% 11.15% 11.35% 11.56% 11.77% 11.98% 12.18%
8912 1696.26 590.54 4Q89 4.53% 1.75% 2.03% 2.31% 2.59% 2.86% 3.14% 3.42% 3.70% 3.97% 4.25%
9003 1360.86 572.23 1Q90 -19.77% -3.10% -4.77% -6.43% -8.10% -9.77% -11.44% -13.10% -14.77% -16.44% -18.11%
9006 1490.88 608.65 2Q90 9.55% 6.36% 6.68% 7.00% 7.32% 7.64% 7.96% 8.28% 8.60% 8.92% 9.24%
9009 1174.84 525.18 3Q90 -21.20% -13.71% -14.46% -15.21% -15.96% -16.71% -17.46% -18.20% -18.95% -19.70% -20.45%
9012 1298.54 571.95 4Q90 10.53% 8.91% 9.07% 9.23% 9.39% 9.56% 9.72% 9.88% 10.04% 10.20% 10.37%
9103 1395.06 654.75 1Q91 7.43% 14.48% 13.77% 13.07% 12.36% 11.66% 10.95% 10.25% 9.55% 8.84% 8.14%
9106 1318.94 651.80 2Q91 -5.46% -0.45% -0.95% -1.45% -1.95% -2.45% -2.95% -3.45% -3.95% -4.46% -4.96%
9109 1432.01 685.50 3Q91 8.57% 5.17% 5.51% 5.85% 6.19% 6.53% 6.87% 7.21% 7.55% 7.89% 8.23%
9112 1456.01 743.92 4Q91 1.68% 8.52% 7.84% 7.15% 6.47% 5.78% 5.10% 4.41% 3.73% 3.04% 2.36%
9203 1283.22 724.67 1Q92 -11.87% -2.59% -3.51% -4.44% -5.37% -6.30% -7.23% -8.15% -9.08% -10.01% -10.94%
9206 1310.35 735.88 2Q92 2.11% 1.55% 1.60% 1.66% 1.72% 1.77% 1.83% 1.89% 1.94% 2.00% 2.06%
9209 1330.10 754.68 3Q92 1.51% 2.55% 2.45% 2.35% 2.24% 2.14% 2.03% 1.93% 1.82% 1.72% 1.61%
9212 1278.77 791.48 4Q92 -3.86% 4.88% 4.00% 3.13% 2.26% 1.38% 0.51% -0.36% -1.24% -2.11% -2.99%
9303 1432.06 823.92 1Q93 11.99% 4.10% 4.89% 5.68% 6.47% 7.25% 8.04% 8.83% 9.62% 10.41% 11.20%
9306 1576.10 827.20 2Q93 10.06% 0.40% 1.36% 2.33% 3.30% 4.26% 5.23% 6.19% 7.16% 8.13% 9.09%
9309 1680.60 846.10 3Q93 6.63% 2.28% 2.72% 3.15% 3.59% 4.02% 4.46% 4.89% 5.33% 5.76% 6.20%
9312 1695.20 863.90 4Q93 0.87% 2.10% 1.98% 1.86% 1.73% 1.61% 1.49% 1.36% 1.24% 1.12% 0.99%
9403 1754.40 830.90 1Q94 3.49% -3.82% -3.09% -2.36% -1.63% -0.90% -0.16% 0.57% 1.30% 2.03% 2.76%
9406 1844.00 831.20 2Q94 5.11% 0.04% 0.54% 1.05% 1.56% 2.06% 2.57% 3.08% 3.59% 4.09% 4.60%
9409 1845.80 872.80 3Q94 0.10% 5.00% 4.51% 4.02% 3.53% 3.04% 2.55% 2.06% 1.57% 1.08% 0.59%
9412 1827.00 873.70 4Q94 -1.02% 0.10% -0.01% -0.12% -0.23% -0.35% -0.46% -0.57% -0.68% -0.79% -0.91%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMPOUND ANNUAL RETURN
DATE
YYMM
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8303 109.15% 108.77% 108.38% 108.00% 107.61% 107.23% 106.84% 106.46% 106.08%
8306 1.1978544 1.1908628 1.1838909 1.1769386 1.1700059 1.1630927 1.1561992 1.1493252 1.1424708
8309 1.1978518 1.1939568 1.1900451 1.186117 1.1821724 1.1782117 1.1742349 1.1702422 1.1662337
8312 1.207373 1.2109199 1.214401 1.2178161 1.2211652 1.2244481 1.2276646 1.2308146 1.233898
8403 1.1851403 1.2115978 1.2381229 1.2647117 1.2913602 1.3180645 1.3448206 1.3716247 1.3984728
8406 1.1403855 1.1550914 1.1693916 1.1832805 1.1967528 1.2098033 1.222427 1.234619 1.2463745
8409 1.2421519 1.2475121 1.2521663 1.2561201 1.2593792 1.2619497 1.2638381 1.2650512 1.265596
8412 1.2676705 1.2771656 1.2859704 1.2940836 1.3015043 1.3082323 1.3142675 1.3196105 1.324262
8503 1.3858182 1.3964933 1.4064178 1.4155897 1.4240079 1.4316713 1.4385795 1.4447326 1.4501311
8506 1.4848433 1.4953751 1.5050897 1.5139867 1.522066 1.5293281 1.5357742 1.5414056 1.5462243
8509 1.4455274 1.4849273 1.5239104 1.5624284 1.6004334 1.6378783 1.6747163 1.7109014 1.7463882
8512 1.6937611 1.7387425 1.7831733 1.8269981 1.870162 1.9126111 1.9542924 1.9951534 2.035143
8603 1.9577643 2.0373572 2.1177243 2.1987725 2.2804063 2.3625276 2.4450357 2.527828 2.6107994
8606 2.0551575 2.1472576 2.2408447 2.3358298 2.4321195 2.5296161 2.6282176 2.7278181 2.8283074
8609 1.9531446 2.0893342 2.2311787 2.3786886 2.5318616 2.6906826 2.8551229 3.0251401 3.2006773
8612 2.0514836 2.1919638 2.3380351 2.4896878 2.6468985 2.8096306 2.9778333 3.1514417 3.3303762
8703 2.4727453 2.648745 2.8323734 3.0236694 3.2226559 3.4293387 3.6437061 3.8657286 4.0953575
8706 2.5919602 2.7830182 2.982984 3.1919556 3.4100141 3.637223 3.8736274 4.1192526 4.3741041
8709 2.754271 2.9553126 3.1655353 3.3850237 3.6138449 3.8520466 4.0996569 4.3566831 4.6231111
8712 2.1543736 2.3483834 2.5548037 2.7740468 3.0065138 3.2525933 3.5126595 3.7870698 4.0761631
8803 2.2787882 2.5087137 2.7561106 3.0218198 3.3066874 3.6115623 3.9372935 4.284727 4.6547026
8806 2.3963868 2.6115631 2.8398634 3.0815888 3.3370106 3.6063667 3.8898591 4.1876508 4.499863
8809 2.4017792 2.618654 2.8488946 3.0928216 3.350726 3.6228661 3.9094641 4.2107038 4.526727
8812 2.501048 2.7604354 3.0396404 3.3395231 3.6609273 4.0046756 4.371564 4.7623557 5.1777759
8903 2.6468125 2.9042911 3.179298 3.4723607 3.783969 4.1145698 4.4645623 4.8342934 5.2240522
8906 2.8403155 3.0731159 3.3164877 3.5701856 3.8338945 4.1072271 4.3897227 4.6808455 4.9799843
8909 3.1392438 3.4029134 3.6792756 3.9681236 4.2691706 4.5820468 4.906297 5.2413784 5.5866589
8912 3.2030341 3.4815023 3.7744546 4.0817837 4.4032978 4.7387159 5.0876646 5.4496741 5.8241755
9003 3.050325 3.2574708 3.4686415 3.6830159 3.8997049 4.1177549 4.3361523 4.5538275 4.7696616
9006 3.2542007 3.4855828 3.722606 3.964425 4.2101105 4.4586523 4.7089623 4.9598793 5.2101737
9009 2.7835563 2.9553871 3.1284953 3.3020501 3.4751767 3.646962 3.8164601 3.9826988 4.1446863
9012 3.035981 3.2281924 3.4223591 3.6175772 3.812889 4.0072892 4.1997303 4.3891297 4.574377
9103 3.454088 3.6500337 3.845469 4.0393431 4.2305715 4.4180435 4.600631 4.7771971 4.9466055
9106 3.4212528 3.5970612 3.770407 3.9402729 4.1056298 4.2654453 4.4186922 4.5643576 4.701452
9109 3.609755 3.8074934 4.0038135 4.1976066 4.3877372 4.5730523 4.7523908 4.9245927 5.0885095
9112 3.892682 4.0798483 4.2627967 4.4403834 4.6114671 4.774919 4.9296336 5.0745384 5.2086044
9203 3.7558594 3.8985855 4.0338465 4.1606878 4.2782001 4.3855276 4.4818777 4.5665285 4.6388366
9206 3.8160574 3.9632865 4.1030845 4.2344673 4.3564945 4.4682784 4.5689934 4.6578845 4.7342753
9209 3.9095473 4.0562329 4.1950124 4.3249043 4.4449753 4.55435 4.6522202 4.7378526 4.8105969
9212 4.0660497 4.1831729 4.289649 4.3846898 4.4675904 4.537736 4.5946084 4.6377917 4.6669755
9303 4.2647764 4.4206215 4.5669788 4.7027512 4.8269063 4.9384878 5.0366259 5.1205471 5.1895824
9306 4.3229533 4.5236288 4.7175149 4.9031925 5.0792687 5.2443912 5.3972636 5.5366597 5.661438
9309 4.4405102 4.6663001 4.8868009 5.1004482 5.3056798 5.5009521 5.6847568 5.8556375 6.0122061
9312 4.5284441 4.7529422 4.9715019 5.1825531 5.3845357 5.5759163 5.755205 5.9209714 6.0718617
9403 4.3885751 4.6408932 4.8906525 5.1361668 5.3757138 5.6075526 5.8299411 6.0411549 6.239506
9406 4.4124143 4.6896372 4.9668206 5.2422043 5.5139574 5.7801944 6.0389937 6.2884163 6.5265266
9409 4.6115948 4.8783188 5.1422811 5.4016687 5.6546302 5.899295 6.1337922 6.3562716 6.5649244
9412 4.6111775 4.8724057 5.1302802 5.3830037 5.6287486 5.8656766 6.0919576 6.3057902 6.5054223
</TABLE>
STD DEV
<TABLE>
<CAPTION>
USA 10/90 20/80 30/70 40/60 50/50 60/40 70/30 80/20 90/10 EAFE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STD DEV 7.69 7.57 7.53 7.60 7.76 8.01 8.34 8.74 9.21 9.73 10.29
RETURN 13.21 13.78 14.33 14.84 15.32 15.77 16.19 16.58 16.93 17.25 17.55
</TABLE>
S&P 500-Stock Index is a recognized unmanaged index of 500 common stocks.
EAFE is a recognized unmanaged index representing the stocks of over 1000
companies in 18 countries in Europe, Australia and the Far East.
B-29
<PAGE>
World Stock Market Performance
January 1, 1985 to December 31, 1994
The table below lists the average annual return for most stock markets in world.
Return is measured in U.S. dollars and does not reflect transaction costs, which
would reduce the returns shown.
Average
Annual
Country Return
Hong Kong 26.50
Belgium 23.37
Austria 22.82
Netherlands 20.72
Switzerland 20.39
France 20.18
Spain 18.84
Germany 18.09
United Kingdom 17.73
Japan 16.69
Denmark 16.52
Singapore/Malaysia 16.50
Italy 16.16
Norway 15.36
Australia 14.52
United States 13.21
Canada 7.33
Source: Morgan Stanley Capital International
Stock Market Capitalization
The table below shows the capitalization of the U.S. stock market versus that of
other recognized world markets (measured in U.S. dollars).
Year End Capitalization
1974 1984 1994
---------------------------------------------------------
United States 56 54 36
Non-U.S. 44 46 64
Source: Morgan Stanley Capital International
B-30
<PAGE>
Illustration of $10,000 Investments in the
Morgan Stanley Capital International Europe 14
Index* and the Standard & Poor's 500-Stock Index**
The table below illustrates the performance of an assumed investment of $10,000
in the MSCI Europe 14 Index and the Standard & Poor's 500-Stock Index for the
period January 1, 1985 to December 31, 1994. It assumes reinvestment of
dividends and capital gains. No adjustments have been made for the effect of
taxes, expense or fees.
Year End Value
MSCI S&P
Year Europe 14 500
- ---- --------- ---
1985 17,893 13,164
1986 14,385 11,862
1987 10,366 10,518
1988 11,581 11,650
1989 12,851 13,159
1990 9,615 9,689
1991 11,311 13,033
1992 9,529 10,761
1993 12,928 11,003
1994 10,228 10,136
- --------------------
* MSCI Europe 14 Index is an index of the markets of Austria, Belgium,
Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway,
Spain, Sweden, Switzerland and the United Kingdom. Measured in U.S.
dollars.
** The S&P 500-Stock Index is a recognized unmanaged index of 500 common
stocks.
The figures shown above should not be considered as representative of
future returns.
B-31
<PAGE>
Top Performing Stock Markets
for Each of the Last Ten Years
The table below shows the top performing stock markets in the world for each of
the last ten years as measured by total return in U.S. dollars. Dividends are
assumed to be reinvested. The effect of income or other taxes has not been
considered.
Total
Year Country Return
1985 Austria 177.3
1986 Spain 123.2
1987 Japan 43.2
1988 Belgium 55.4
1989 Austria 104.9
1990 UK 10.3
1991 Mexico 118.2
1992 Hong Kong 32.3
1993 Hong Kong 116.7
1994 Finland 24.8
Measured in U.S. Dollars
Source: Morgan Stanley Capital International EAFE.
B-32
<PAGE>
Real Gross Domestic Product/Gross National Product Growth:
U.S. versus the Countries of Europe
The table below lists the annual percentage change for each country's Gross
Domestic Product ("GDP")/Gross National Product ("GNP"), that is, the total
value of its goods and services produced by a country over a particular period
of time. Measured in U.S. dollars.
Real GDP/GNP Growth (%)
Country 1992 1993 1994* 1995*
- ------- ---- ---- ---- ----
Belgium 1.0 -1.3 2.1 2.6
Denmark 0.9 -1.4 4.3 3.4
France 1.3 -1.0 2.3 3.0
Germany 1.6 -1.7 2.3 2.5
Italy 0.9 -0.7 2.1 2.8
Netherlands 1.5 0.4 2.2 2.8
Spain 1.0 -1.0 1.8 3.0
Sweden -1.7 -2.1 2.3 2.6
Switzerland -0.1 -0.9 1.9 2.4
United Kingdom -0.6 2.1 3.8 3.2
United States 3.1 4.0 3.0
Source: Consensus Forecasts, A Digest of International
Economic Forecasts, December 12, 1994.
* Data for 1994 & 1995 is projected
B-33
<PAGE>
MSCI EAFE MSCI Europe 14 MSCI World IFC Composite S&P500
Net of Taxes Net of Taxes Net of Taxes
%Total Return %Total Return %Total Return %Total Return %TR
- --------------------------------------------------------------------------------
Dec 1970 -11.66 -10.64 -3.09 N/A 4.01
Dec 1971 29.59 26.33 18.36 N/A 14.31
Dec 1972 36.35 14.40 22.48 N/A 18.98
Dec 1973 -14.92 -8.77 -15.24 N/A -14.66
Dec 1974 -23.16 -24.07 -25.47 N/A -26.47
Dec 1975 35.39 41.45 32.80 N/A 37.20
Dec 1976 2.54 -7.80 13.40 N/A 23.84
Dec 1977 18.06 21.90 0.68 N/A -7.18
Dec 1978 32.62 21.88 16.52 N/A 6.56
Dec 1979 4.75 12.31 10.95 N/A 18.44
Dec 1980 22.58 11.90 25.67 N/A 32.42
Dec 1981 -2.28 -12.46 -4.79 N/A -4.91
Dec 1982 -1.86 3.97 9.71 N/A 21.41
Dec 1983 23.69 20.96 21.93 N/A 22.51
Dec 1984 7.38 0.62 4.72 N/A 6.27
Dec 1985 56.16 78.93 40.56 27.74 32.16
Dec 1986 69.44 43.85 41.89 12.81 18.47
Dec 1987 24.63 3.66 16.16 13.53 5.23
Dec 1988 28.27 15.81 23.29 58.25 16.81
Dec 1989 10.54 28.5 16.61 54.67 31.49
Dec 1990 -23.45 -3.5 -17.02 -29.87 -3.17
Dec 1991 12.13 13.11 18.28 17.63 30.55
Dec 1992 -12.17 -4.71 -5.23 0.33 7.67
Dec 1993 32.56 29.28 22.50 68.18 9.99
Dec 1994 7.78 2.28 5.08 -0.76 1.31
Source for MSCI EAFE, IFC Composite, and S&P500: Ibbotson Associates
Source for MSCI Europe 14 and MSCI World: Lipper Analytical Services
B-34
<PAGE>
MSCI
Morgan Stanley Capital International Indices, developed by the Capital
International S.A., are based on share prices of some 1470 companies listed on
the stock exchanges around the world.
Countries in the MSCI EAFE Portfolio *are: Australia; Austria; Belgium; Denmark;
Finland; France; Germany; Hong Kong; Italy; Japan; Netherlands; N. Zealand;
Norway; Singapore/Malaysia; Spain; Sweden; Switzerland; United Kingdom.
Countries in the MSCI EUROPE 14 Portfolio *** are: Austria, Belgium, Denmark,
Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Spain, Sweden,
Switzerland, United Kingdom
Countries in the MSCI WORLD Portfolio *** are: Australia; Austria; Belgium;
Canada; Denmark; Finland; France; Germany; Hong Kong; Italy; Japan; Netherlands;
N. Zealand; Norway; Singapore/Malaysia; Spain; Sweden; Switzerland; United
Kingdom; United States.
INTERNATIONAL FINANCE CORPORATION COMPOSITE *
An index representing the performance of a composite of Latin America
(Argentina, Brazil, Chile, Columbia, Mexico, Peru, Venezuela), East Asia (China,
Korea, Philippines, Taiwan), South Asia (India, Indonesia, Malaysia, Pakistan,
Sri Lanka, Thailand), Europe/Mideast/Africa (Greece, Hungary, Jordan, Nigeria,
Poland, Portugal, Turkey, Zimbabwe).
S&P 500 *
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P Composite Index
includes 500 of the largest stocks (in terms of stock market value) in the
United States; prior to March 1957 it consisted of 90 of the largest stocks.
Sources: * Ibbotson Associates
** Towers Data Systems
*** Lipper Analytical Services
B-35
<PAGE>
APPENDIX B
The Pioneer family of mutual funds was established in 1928 with the
creation of Pioneer Fund. Pioneer is one of the oldest, most respected and
successful money managers in the United States.
As of December 31, 1994, PMC employed a professional investment staff
of 46, with a combined average of 14 years' experience in the financial services
industry.
At December 31, 1994, there were 591,192 non-retirement shareholder
accounts and 337,577 retirement shareholder accounts in the Pioneer's funds.
Total assets for all Pioneer Funds at December 31, 1994 were $10,038,000,000
representing 928,769 shareholder accounts.
B-36
