[PIONEER LOGO]
PIONEER EUROPE FUND
ANNUAL REPORT 10/31/96
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TABLE OF CONTENTS
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Letter From The Chairman 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 6
Schedule Of Investments 9
Financial Statements 16
Notes To Financial Statements 22
Report Of Independent Public Accountants 27
Tax Treatment Of Distributions 28
Trustees' Fees And Share Ownership 28
Trustees, Officers And Service Providers 29
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PIONEER EUROPE FUND
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LETTER FROM THE CHAIRMAN 10/31/96
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DEAR SHAREOWNER,
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It is with pleasure that I introduce this report for Pioneer Europe Fund,
covering the year ended October 31, 1996. We wish to welcome new shareowners,
particularly those who joined the Fund through Class C Shares, which were
introduced on January 31.
Your Fund had a good year, despite the generally slow pace of European stock
markets overall. It was clearly an environment that rewarded careful country and
company selection, and the Fund's emphasis on buying reasonably priced stocks
proved especially prudent. In its August 16, 1996, evaluation of the Fund,
Morningstar Inc., an independent rating agency, summarized the importance of our
investment approach: "Manager Patrick Smith likes to buy growth stocks, but he's
careful to get value in what he buys...his pursuit of reasonably priced growth
has distinguished the fund with a good record." As U.S. investors have learned,
there can be significant risks for those who chase "hot" stocks; we still think
a stock should be purchased because it represents a good value for a company
with strong prospects over time.
A final note. As you see, we've given your Fund's annual report a facelift. The
new, improved style reflects what shareowners told us they want to see in fund
reports. Our thanks to all of you who took the time to respond to our questions.
Now you'll find a Table of Contents and consistent, easy-to-read summaries of
portfolio information and performance. There's also a Portfolio Management
Discussion, where your Fund's portfolio manager offers insights into market
conditions, portfolio strategy and results. We hope you find them informative.
Please contact your investment representative, or us at 1-800-225-6292, if you
have questions about your investment in Pioneer Europe Fund. Thank you for your
continued support.
Respectfully,
/S/ JOHN F. COGAN, JR.
John F. Cogan, Jr.,
Chairman and President
1
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PIONEER EUROPE FUND
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- -
PORTFOLIO SUMMARY 10/31/96
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- -
PORTFOLIO DIVERSIFICATION
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- -
(As a percentage of total investment portfolio)
[Pie chart depicting the following:]
International Common Stocks 92%
International Preferred Stocks 3%
Short-Term Cash Equivalents 3%
Depositary Receipts for International Stocks 2%
GEOGRAPHICAL DISTRIBUTION
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- -
(As a percentage of equity holdings)
[A bar chart depicting the following:]
United Kingdom 21.4%
France 10.9%
Germany 10.5%
Italy 10.0%
Switzerland 9.0%
Netherlands 7.7%
Spain 7.6%
Sweden 4.8%
Denmark 4.1%
Norway 3.1%
Finland 3.1%
Belgium 2.5%
Austria 2.4%
Portugal 1.8%
Poland 0.7%
Bermuda 0.4%
10 LARGEST HOLDINGS
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- -
(As a percentage of equity holdings)
1. Sidel, SA (Bearer Shares) 1.44%
2. Storebrand ASA (Class A) 1.42
3. Safilo SpA 1.35
4. Union Des Assurances Federal 1.35
5. Powerscreen International Plc 1.28
6. Banca Fideraum SpA 1.19
7. Julius Baer Holding AG (Bearer Shares) 1.18
8. Esselte AB (Series B) 1.16
9. Telecom Italia SpA 1.16
10. Liechstenstein Global Trust (Participating Certificates) 1.15
Fund holdings will vary for other periods.
2
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PIONEER EUROPE FUND
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PERFORMANCE UPDATE 10/31/96 CLASS A SHARES
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SHARE PRICES AND DISTRIBUTIONS
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NET ASSET VALUE
PER SHARE 10/31/96 10/31/95
$23.25 $21.19
DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM
(10/31/95 - 10/31/96) DIVIDENDS CAPITAL GAINS CAPITAL GAINS
- $0.153 $1.273
INVESTMENT RETURNS
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The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Europe Fund at public offering price, compared to the growth of the
Morgan Stanley Capital International (MSCI) Europe Index.
[Growth of $10,000+ Mountain Chart]
Pioneer MSCI
Europe Fund Europe
4/30/91 9,425 10,000
10/31/91 9,524 10,378
4/30/92 10,320 11,192
10/31/92 9,194 10,233
4/30/93 10,265 11,417
10/31/93 11,346 12,913
4/30/94 12,423 13,957
10/31/94 13,159 14,417
4/30/95 13,568 15,309
10/31/95 15,148 16,389
4/30/96 16,447 17,824
10/31/96 17,844 19,330
AVERAGE ANNUAL TOTAL RETURNS
(As of October 31, 1996)
NET ASSET PUBLIC OFFERING
PERIOD VALUE PRICE*
Life of Fund (4/2/91) 12.15% 10.96%
5 Years 13.38 12.04
1 Year 17.80 11.04
*Reflects deduction of the maximum 5.75% sales charge at the beginning of the
period and assumes reinvestment of distributions at net asset value.
+Index comparison begins April 30, 1991. The Morgan Stanley Capital
International (MSCI) Europe Index is a capitalization-weighted index of the 14
European country indexes included in the MSCI EAFE (Europe, Australasia, Far
East) Index. These countries are: Austria, Belgium, Denmark, Finland, France,
Germany, Ireland, Italy, Netherlands, Norway, Spain, Sweden, Switzerland and
the United Kingdom. Index returns are calculated monthly, assume reinvestment
of dividends and, unlike Fund returns, do not reflect any fees, expenses or
sales charges. You cannot invest directly in the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than
their original cost.
3
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PIONEER EUROPE FUND
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PERFORMANCE UPDATE 10/31/96 CLASS B SHARES
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SHARE PRICES AND DISTRIBUTIONS
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NET ASSET VALUE
PER SHARE 10/31/96 10/31/95
$22.74 $20.92
DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM
(10/31/95 - 10/31/96) DIVIDENDS CAPITAL GAINS CAPITAL GAINS
- $0.153 $1.273
INVESTMENT RETURNS
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The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Europe Fund at public offering price, compared to the growth of the
Morgan Stanley Capital International (MSCI) Europe Index.
[Growth of $10,000+ Mountain Chart]
Pioneer MSCI
Europe Fund Europe
4/30/94 10,000 10,000
5/31/94 9,682 9,578
6/30/94 9,586 9,480
7/31/94 10,124 9,980
8/31/94 10,363 10,300
9/30/94 10,092 9,895
10/31/94 10,539 10,329
11/30/94 10,007 9,937
12/31/94 10,002 9,997
1/31/95 9,916 9,922
2/28/95 10,146 10,150
3/31/95 10,042 10,625
4/30/95 10,838 10,969
5/31/95 11,345 11,197
6/30/95 11,628 11,307
7/31/95 12,268 11,900
8/31/95 11,997 11,444
9/30/95 12,371 11,794
10/31/95 12,060 11,742
11/30/95 11,962 11,830
12/31/95 12,076 12,209
1/31/96 12,348 12,293
2/29/96 12,714 12,521
3/31/96 12,906 12,675
4/30/96 13,048 12,771
5/31/96 13,383 12,874
6/30/96 13,538 13,020
7/31/96 13,191 12,861
8/31/96 13,674 13,248
9/30/96 13,860 13,531
10/31/96 13,789 13,849
AVERAGE ANNUAL TOTAL RETURNS
(As of October 31, 1996)
NET ASSET PUBLIC OFFERING
PERIOD VALUE PRICE*
Life of Fund (4/4/94) 16.35% 15.43%
1 Year 16.82 12.82
*Reflects deduction of the maximum appilcable contingent deferred sales charge
(CDSC) at the end of the period and assumes reinvestment of distributions. The
maximum CDSC of 4% declines over six years.
+Index comparison begins April 30, 1994. The Morgan Stanley Capital
International (MSCI) Europe Index is a capitalization-weighted index of the 14
European country indexes included in the MSCI EAFE (Europe, Australasia, Far
East) Index. These countries are: Austria, Belgium, Denmark, Finland, France,
Germany, Ireland, Italy, Netherlands, Norway, Spain, Sweden, Switzerland and
the United Kingdom. Index returns are calculated monthly, assume reinvestment
of dividends and, unlike Fund returns, do not reflect any fees, expenses or
sales charges. You cannot invest directly in the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than
their original cost.
4
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PIONEER EUROPE FUND
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PERFORMANCE UPDATE 10/31/96 CLASS C SHARES
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SHARE PRICES AND DISTRIBUTIONS
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NET ASSET VALUE
PER SHARE 10/31/96 10/31/95
$22.69 $19.92
DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM
(1/31/96 - 10/31/96) DIVIDENDS CAPITAL GAINS CAPITAL GAINS
- - -
INVESTMENT RETURNS
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Europe Fund at public offering price, compared to the growth of the
Morgan Stanley Capital International (MSCI) Europe Index.
[Growth of $10,000+ Mountain Chart]
Pioneer MSCI
Europe Fund Europe
1/31/96 10,000 10,000
2/29/96 10,246 10,186
3/31/96 10,412 10,311
4/30/96 10,542 10,389
5/31/96 10,823 10,473
6/30/96 10,954 10,592
7/31/96 10,678 10,463
8/31/96 11,069 10,777
9/30/96 11,215 11,007
10/31/96 11,291 11,266
AVERAGE ANNUAL TOTAL RETURNS
(As of October 31, 1996)
NET ASSET PUBLIC OFFERING
PERIOD VALUE PRICE*
Life of Fund (1/31/96) 13.91% 12.91%
*Reflects deduction of the 1% contingent deferred sales charge (CDSC) at the
end of the period and assumes reinvestment of distributions at net asset
value.
The Morgan Stanley Capital International (MSCI) Europe Index is a
capitalization-weighted index of the 14 European country indexes included in
the MSCI EAFE (Europe, Australasia, Far East) Index. These countries are:
Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy,
Netherlands, Norway, Spain, Sweden, Switzerland and the United Kingdom. Index
returns are calculated monthly, assume reinvestment of dividends and, unlike
Fund returns, do not reflect any fees, expenses or sales charges. You cannot
invest directly in the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than
their original cost.
5
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PIONEER EUROPE FUND
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PORTFOLIO MANAGEMENT DISCUSSION 10/31/96
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DEAR SHAREOWNER,
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It's my pleasure to report that Pioneer Europe Fund finished its sixth year in
good standing. Although Europe's economic recovery is languishing, "bottom-up"
stock selection helped the Fund achieve a double-digit total return for the year
ended October 31, 1996. The Fund earned top marks from Morningstar, an
independent firm that tracks fund performance. Class A Shares received a risk-
adjusted rating of five stars for the three-year period, and four stars for the
five-year period ended October 31.* The Fund was rated among 348 and 173
international equity funds for the three- and five-year periods, respectively.
FINDING POCKETS OF OPPORTUNITY IN RESTRAINED ECONOMIC RECOVERY
For much of the fiscal year, European economies were sluggish. Without notable
domestic consumer spending - largely a result of corporate restructurings and
downsizing - much of the eventual pickup was export-driven. In the second half
of the year, the strengthening U.S. dollar fueled demand from abroad, supporting
Europe's economic recovery.
Selecting stocks of companies that can perform well in spite of weak growth is
especially important in an uneven economy. As always, we first assess long-term
growth prospects and then select stocks priced low enough to allow the Fund to
post attractive gains as growth targets are realized. Understanding company
fundamentals goes hand-in-hand with buying a stock at the right price.
One area of focus was manufacturing exporters, which traditionally perform well
in the early stages of economic recoveries and are helped by a strengthening
dollar. Examples include BBC (a Swedish engineering firm that competes globally
with the likes of General Electric), Siemens (a German engineering firm) and
Danieli (an Italian builder of steel plants). Given consumers' inability to
muster spending power, we limited investments in producers and providers of
consumer goods.
- ------
*Morningstar proprietary ratings reflect historical risk-adjusted performance
and are subject to change every month. Ratings are calculated from the Fund's
three- and five-year average annual returns in excess of 90-day Treasury bill
returns with appropriate fee adjustments, and a risk factor that reflects fund
performance below 90-day Treasury bill returns. Ten percent of the funds in an
investment category receive five stars and the next 22.5% receive four stars.
The Fund's Class B and C Shares will not be eligible for a Morningstar rating
until they have three years of operating history. Past performance does not
guarantee future results.
6
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PIONEER EUROPE FUND
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A DIVERSIFIED PORTFOLIO
We continued to find the finance industry attractive, especially asset
management and life insurance companies. Banca Fideuram, an Italian mutual fund
and insurance company, appreciated rapidly with the surge in popularity of
pension- and investment-related products.(Most European pensions are government
sponsored, and there are concerns about their viability, much like Social
Security concerns here.) In the U.K., we added asset manager Invesco. After a
significant run-up, we sold the Fund's position in Polish bank Wielkopolski Bank
Kredytowy. On the insurance side, Storebrand (Norway), did well in recent
months.
European-based technology stocks were volatile, though not to the extent of
their U.S. counterparts. We scaled back positions in Ericsson (Finland), Nokia
(Sweden) and completely sold off SAP (Germany), locking in gains in the wake of
investors' more pessimistic view. We remain vigilant for opportunities to
rebuild holdings in these companies should their valuations become more
attractive. Austria Micro Systeme reported lower-than-expected earnings, and we
had reduced this position by October 31.
While we evaluate stocks individually, a glance at changes in the Fund's
geographic distribution reveals where we think opportunities lie. We increased
U.K. holdings, expecting its continuing economic expansion will boost corporate
profits. We also added to select holdings in the Netherlands, including
Getronics (information technology services), although the overall position in
the Netherlands decreased as the year progressed. Reflecting our view that
Polish holdings had become overvalued, we reduced positions there and eliminated
Elektrim Spolka Akcyjna, a company that experienced excellent price appreciation
after winning a cellular license. In our estimation, the Polish market's fast
rise increased risk, and we opted for attractive valuations in more stable,
developed countries.
7
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PIONEER EUROPE FUND
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- -
PORTFOLIO MANAGEMENT DISCUSSION 10/31/96 (continued)
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- -
CHANGES IN POLICY AND ATTITUDE SHOULD BOOST MARKETS
Major developments are enhancing the competitiveness of European corporations.
One is the European Monetary Union (EMU), which would create a single currency
for member nations. Membership in the EMU requires a budgetary deficit of no
more than 3% of gross national product in 1997. Efforts to reduce fiscal
expenditures, despite slow economic growth, could help move interest rates lower
and weaken European currencies. The likely result - more domestic economic
activity and increased exports - should be good news for Fund holdings.
Another positive trend is the emphasis European companies are placing on
shareholders. Corporations are starting to buy back shares, spin-off
unprofitable divisions or increase dividends. Arcane regulations are being
lifted, eliminating historical barriers to shareholder value. (Henkel (Germany)
and Svenska Handelbanken (Sweden) are already making efforts to buy back shares.
In France, Alcatel Alsthom is also showing signs of making business decisions
with the shareholder in mind.) Already, healthier companies with improving
balance sheets and enhanced earnings growth have seen stock prices rise. As
European markets develop an investing culture more like that of the U.S. and the
U.K., demand for European stocks should increase.
While investing outside the U.S. involves certain risks - including currency
fluctuations and political and economic uncertainties - we continue to believe
that Europe offers a unique potential for investors. The road to greater
shareholder value and a single currency should present many long-term
opportunities for your Fund. The transformation of publicly funded pensions into
privately directed retirement plans should create a new influx of capital and
greater demand for European stocks. In addition, we expect interest rates will
remain stable for the foreseeable future. This powerful mix of factors bodes
well for your Fund in fiscal 1997 and beyond.
Respectfully,
/S/ PATRICK M. SMITH
Patrick M. Smith,
Portfolio Manager
8
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<TABLE>
PIONEER EUROPE FUND
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SCHEDULE OF INVESTMENTS 10/31/96
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<CAPTION>
SHARES VALUE
<S> <C> <C>
INVESTMENT IN SECURITIES - 96.8%
PREFERRED STOCKS - 2.4%
17,000 Bau Holdings AG $ 805,839
25,000 Henkel KGaA (Non-voting) 1,122,028
7,000 SAP AG (Non-voting) 942,272
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TOTAL PREFERRED STOCKS
(Cost $ 2,129,167) $ 2,870,139
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COMMON STOCKS - 94.3%
BASIC INDUSTRIES - 4.4%
CONTAINERS - 1.5 %
25,000 N.V. Koninklijke KNP BT $ 550,875
6,000 Schmalbach Lubeca AG* 1,198,811
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$ 1,749,686
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IRON & STEEL - 0.4%
4,400 Acerniox SA $ 527,545
------------
METALS & MINING - 1.7%
16,500 Eramet SA $ 765,700
150,000 Hays Plc 1,257,324
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$ 2,023,024
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PAPER PRODUCTS - 0.8%
150,000 Field Group Plc $ 935,059
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TOTAL BASIC INDUSTRIES $ 5,235,314
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CAPITAL GOODS - 13.8%
AEROSPACE - 1.0%
67,000 British Aerospace Plc $ 1,272,608
------------
CONSTRUCTION & ENGINEERING - 7.7%
770 ABB AG (Bearer Shares) $ 952,514
330,000 Ashtead Group Plc 1,248,779
25,000 Cardo AB* 612,354
235,000 Danieli & Co. SpA, Di Risp 747,040
2,700 Mannesmann AG 1,048,613
150,000 Powerscreen International Plc 1,484,375
55,000 Tarkett AG 1,191,546
9,000 VA Technologies AG 1,258,741
6,655 Zardoya-Otis SA 678,486
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$ 9,222,448
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
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<TABLE>
PIONEER EUROPE FUND
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SCHEDULE OF INVESTMENTS 10/31/96 (continued)
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<CAPTION>
SHARES VALUE
<S> <C> <C>
PRODUCER GOODS - 5.1%
600 Bobst, SA (Bearer Shares) $ 777,857
5,500 IWKA AG 1,173,382
25,000 Sidel, SA (Bearer Shares) 1,668,330
77,000 Siebe Plc 1,208,138
250,000 Wassall Plc 1,216,634
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$ 6,044,341
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TOTAL CAPITAL GOODS $ 16,539,397
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CONSUMER DURABLES - 1.7%
MOTOR VEHICLES - 1.7%
100,000 Cowie Group Plc $ 585,938
344,000 Magneti Marelli SpA 333,507
10,000 Sylea SA 1,156,239
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$ 2,075,684
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TOTAL CONSUMER DURABLES $ 2,075,684
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CONSUMER NON-DURABLES - 11.4%
CONSUMER LUXURIES - 0.4%
3,300 TAG Heuer International SA (Registered)* $ 535,757
------------
COSMETICS - 0.6%
280,000 McBride Plc $ 683,594
------------
HOME PRODUCTS - 2.3%
88,000 Safilo SpA $ 1,567,024
280,000 Tompkins Plc 1,175,781
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$ 2,742,805
------------
RETAIL FOOD - 3.7%
2,100 Carrefour SA $ 1,165,571
50,000 Centro Comerciales Pryca SA 1,148,029
10,000 Delhaize-Le Lion, SA 559,474
26,000 G.I.B. Holdings Ltd. 1,097,019
6,000 Metro AG* 492,206
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$ 4,462,299
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RETAIL NON-FOOD - 2.9%
3,000 Forbo Holding AG $ 1,192,682
26,000 Industrie Natuzzi SpA (Sponsored A.D.R.) 1,179,750
18,000 Stockmann AB (B Shares) 1,030,284
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$ 3,402,716
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
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<TABLE>
PIONEER EUROPE FUND
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<CAPTION>
SHARES VALUE
<S> <C> <C>
TEXTILES/CLOTHES - 1.5%
1,000 Hugo Boss AG $ 1,208,719
100,000 Marzotto & Figli SpA 591,261
------------
1,799,980
------------
TOTAL CONSUMER NON-DURABLES $ 13,627,151
------------
ENERGY - 1.8%
OIL & GAS EXTRACTION - 0.9%
14,000 Elf Aquitaine SA $ 1,119,693
------------
OIL SERVICES - 0.9%
20,000 VEBA AG $ 1,066,975
------------
TOTAL ENERGY $ 2,186,668
------------
FINANCIAL - 23.1%
COMMERICAL BANK - 10.2%
60,000 Banca Popolare di Bergamo $ 941,797
20,000 Banco de Santander SA 1,026,565
25,000 Bank Gdanski SA (G.D.R.) 381,250
75,630 BPI-SGPS SA 900,334
24,000 Credit Commercial de France 1,079,469
28,000 DePfa-Bank 1,146,631
106,000 Fokus Bank ASA 618,134
60,000 HSBC Holdings Plc 1,229,492
1,300 Julius Baer Holding AG (Bearer Shares) 1,368,259
390,000 Merita Ltd. (Class A)* 1,152,701
50,000 Svenska Handelbanken (Series A) 1,232,314
24,000 Unidanmark A/S (Class A) 1,106,581
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$ 12,183,527
------------
MISC.-FINANCE - 3.1%
650,000 Banca Fideuram SpA $ 1,378,236
4,500 Cetelem SA 960,500
2,800 Liechtenstein Global Trust (Participating Certificates) 1,330,482
------------
$ 3,669,218
------------
INSURANCE-GENERAL - 6.3%
700,000 INA SpA $ 967,189
35,500 Internationale Nederlanden Groep NV 1,106,434
20,900 Pohjola Insurance Group (Series B) 437,942
88,000 Riunione Adriatica di Sicurta SpA 833,425
280,000 Storebrand ASA (Class A)* 1,641,585
13,848 Union Des Assurances Federal 1,557,812
3,535 Zurich Versicherungsgesellschaft (Registered) 968,646
------------
$ 7,513,033
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
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PIONEER EUROPE FUND
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SCHEDULE OF INVESTMENTS 10/31/96 (continued)
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<CAPTION>
SHARES VALUE
<S> <C> <C>
INVESTMENTS - 0.7%
225,000 Invesco Plc $ 853,271
------------
LIFE INSURANCE - 1.8%
23,000 Aegon NV $ 1,169,446
16,000 Mapfre Vida Seguros 1,028,132
------------
$ 2,197,578
------------
SAVINGS & LOANS - 1.0%
110,000 Abbey National Plc $ 1,145,833
------------
TOTAL FINANCIAL $ 27,562,460
------------
SERVICES - 17.5%
BROADCASTING & MEDIA - 0.4%
18,000 Central European Media Enterprises Ltd.* $ 504,000
------------
HEALTH & PERSONAL CARE - 0.8%
400,000 Takare Plc $ 930,990
------------
PHARMACEUTICALS - 6.6%
10,000 Amersham International Plc $ 169,271
22,000 Astra AB (Series A) 1,010,802
10,000 Gehe AG 673,712
65,000 Glaxo Wellcome Plc 1,020,915
30,000 Jelfa SA* 426,864
7,000 Novo Nordisk A/S (Class B) 1,165,763
125 Roche Holdings AG 946,385
1,000 Sandoz AG (Registered) 1,157,044
580 UCB SA 1,278,455
------------
$ 7,849,211
------------
PUBLISHING - 2.0%
66,000 Elsevier NV $ 1,096,565
85,000 Schibsted ASA 1,299,144
------------
$ 2,395,709
------------
MISC.-SERVICES - 7.7%
4,317 Adecco SA* $ 1,222,956
22,925 Ahrend Groep NV 1,218,308
125,200 Compass Group Plc 1,245,072
170,000 Electrocomponents Plc 1,144,124
14,500 Hagemeyer NV 1,089,230
45,000 ISS International Service System A/S (Class B) 1,277,419
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
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<TABLE>
PIONEER EUROPE FUND
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<CAPTION>
SHARES VALUE
<S> <C> <C>
MISC.-SERVICES (CONTINUED)
11,000 Randstad Holdings NV 889,177
175,000 Rentokil Initial Plc 1,174,927
------------
$ 9,261,213
------------
TOTAL SERVICES $ 20,941,123
------------
TECHNOLOGY - 6.6%
BUSINESS MACHINES - 1.1%
60,000 Esselte AB (Series B) $ 1,341,853
------------
COMPUTER SERVICES - 0.7%
35,000 Getronics NV $ 859,895
------------
ELECTRONICS - 4.2%
290,000 Amstrad Plc $ 708,008
11,000 Austria Micro Systeme International AG 700,052
20,000 Nokia AB (Series A) 923,749
26,000 Phillips Electronics NV 916,043
15,000 SGS - Thomson Microelectronics NV* 794,988
18,000 Siemens AG 931,030
------------
$ 4,973,870
------------
PHOTO/INSTRUMENTATION - 0.6%
100,000 Anagen Plc* $ 48,828
6,000 Elektra Instrument AB (B Shares) 213,145
55,000 Whatman Plc 471,761
------------
$ 733,734
------------
TOTAL TECHNOLOGY $ 7,909,352
------------
TRANSPORTATION - 1.0%
140,000 BAA Plc $ 1,127,930
------------
TOTAL TRANSPORTATION $ 1,127,930
------------
UTILITIES - 13.0%
ELECTRIC UTILITY - 4.0%
3,000 Elektrowatt AG $ 1,140,413
16,000 Endesa (Empresa Nacional de Electridad SA) 979,234
110,000 Iberdrola SA 1,168,012
41,850 Southern Electric Plc 437,981
165,000 Union Electrica Fenosa SA 1,070,606
------------
$ 4,796,246
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
<TABLE>
PIONEER EUROPE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 10/31/96 (continued)
- --------------------------------------------------------------------------------
<CAPTION>
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS - 6.3%
12,500 Alcatel Alsthom SA $ 1,066,244
45,000 Portugal Telecom SA (Sponsored A.D.R.) 1,164,375
420,000 Stet Societa' Finanziaria Telefonica SpA Di Risp 1,119,077
600,000 Telecom Italia SpA 1,337,510
270,000 Telecom Italia Mobile SpA* 558,252
40,000 Telefonaktiebolaget LM Ericsson (Series B) 1,083,219
60,000 Telefonica de Espana 1,203,667
------------
$ 7,532,344
------------
MISC.-UTILITY - 1.0%
18,500 Nordtank Energy Group A/S $ 1,193,548
------------
WATER UTILITY - 1.7%
120,000 Anglian Water Plc $ 1,062,500
90,000 Yorkshire Water Plc 908,203
------------
$ 1,970,703
------------
TOTAL UTILITIES $ 15,492,841
------------
TOTAL COMMON STOCKS
(Cost $ 93,197,746) $112,697,920
------------
WARRANTS-0.1%
3,400 British Aerospace Plc, 11/15/00* $ 35,804
119,750 Danieli & Co. SpA, 11/30/99* 65,788
25,000 Distefora Holding Ltd., 11/15/96* 990
------------
TOTAL WARRANTS
(Cost $ 77,374) $ 102,582
------------
TOTAL INVESTMENT IN SECURITIES
(Cost $ 95,404,287) $115,670,641
------------
PRINCIPAL
AMOUNT
TEMPORARY CASH INVESTMENT - 3.2%
COMMERCIAL PAPER - 3.2%
$3,832,000 Household Financial Corp., 5.55%, 11/1/96 $ 3,832,000
------------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $ 3,832,000) $ 3,832,000
------------
TOTAL INVESTMENT IN SECURITIES AND
TEMPORARY CASH INVESTMENT - 100%
(Cost $ 99,236,287) $119,502,641
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
PIONEER EUROPE FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Non-income producing security.
<TABLE>
(a) Distribution of investments by country of issue, as a percentage of total
equity holdings, is as follows:
<S> <C>
United Kingdom 21.4
%
France 10.9
Germany 10.5
Italy 10.0
Switzerland 9.0
Netherlands 7.7
Spain 7.6
Sweden 4.8
Denmark 4.1
Norway 3.1
Finland 3.1
Belgium 2.5
Austria 2.4
Portugal 1.8
Others (individually less than 1%) 1.1
-----
100.0
%
-----
</TABLE>
<TABLE>
(b) At October 31, 1996, the net unrealized gain on investments based on cost
for federal income tax purposes of $99,236,287 was as follows:
<S> <C>
Aggregate gross unrealized gain for all investments in
which there is an excess of value over tax cost $ 23,437,046
Aggregate gross unrealized loss for all investments in
which there is an excess of tax cost over value (3,170,692
)
------------
Net unrealized gain $ 20,266,354
------------
</TABLE>
Purchases and sales of securities (excluding temporary cash investments) for the
year ended October 31, 1996, aggregated $70,163,576 and $53,510,818,
respectively.
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
PIONEER EUROPE FUND
<TABLE>
- --------------------------------------------------------------------------------
BALANCE SHEET 10/31/96
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investment in securities, at value (including temporary
cash investment of $3,832,000) (cost $99,236,287) $119,502,641
Cash 118
Foreign currencies, at value 1,251,800
Receivables -
Investment securities sold 1,402,830
Fund shares sold 1,100,853
Dividends, interest and foreign taxes withheld 190,506
Other 6,073
------------
Total assets $123,454,821
------------
LIABILITIES:
Payables -
Investment securities purchased $ 1,814,245
Fund shares repurchased 70,900
Forward foreign currency settlement contracts - net 1,116
Due to affiliates 172,823
Accrued expenses 76,915
------------
Total liabilities $ 2,135,999
------------
NET ASSETS:
Paid-in capital $ 91,572,494
Accumulated undistributed net investment income 1,120,171
Accumulated undistributed net realized gain on
investments and foreign currency transactions 8,356,648
Net unrealized gain on investments 20,266,354
Net unrealized gain on forward foreign currency contracts and other
assets and liabilities denominated in foreign currencies 3,155
------------
Total net assets $121,318,822
------------
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $99,914,982/4,296,800 shares) $ 23.25
------------
Class B (based on $20,228,485/889,471 shares) $ 22.74
------------
Class C (based on $1,175,355/51,791 shares) $ 22.69
------------
MAXIMUM OFFERING PRICE:
Class A $ 24.67
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
PIONEER EUROPE FUND
<TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 10/31/96
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED 10/31/96
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $307,017) $2,245,147
Interest 297,629
----------
Total investment income $ 2,542,776
------------
EXPENSES:
Management fees $1,009,461
Transfer agent fees
Class A 209,558
Class B 36,846
Class C 760
Distribution fees
Class A 215,432
Class B 132,503
Class C 3,618
Accounting 159,066
Custodian fees 137,418
Registration fees 59,441
Professional fees 69,171
Printing 22,549
Fees and expenses of nonaffiliated trustees 18,758
Miscellaneous 58,766
----------
Total expenses $ 2,133,347
Less management fees waived by
Pioneering Management Corporation (59,315)
Less fees paid indirectly (13,064)
------------
Net expenses $ 2,060,968
------------
Net investment income $ 481,808
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain from:
Investments $8,637,460
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 420,825 $ 9,058,285
---------- ------------
Change in net unrealized gain or loss from:
Investments $6,776,932
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 222,027 $ 6,998,959
---------- ------------
Net gain on investments and foreign currency
transactions $ 16,057,244
------------
Net increase in net assets resulting from operations $ 16,539,052
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
PIONEER EUROPE FUND
<TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE YEARS ENDED 10/31/96 AND 10/31/95
<CAPTION>
YEAR ENDED YEAR ENDED
FROM OPERATIONS: 10/31/96 10/31/95
<S> <C> <C>
Net investment income $ 481,808 $ 416,511
Net realized gain on investments
and foreign currency transactions 9,058,285 5,819,824
Change in net unrealized gain on investments
and foreign currency transactions 6,998,959 4,430,730
----------- ------------
Net increase in net assets resulting from
operations $16,539,052 $ 10,667,065
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A ($0.00 and $0.01 per share, respectively) $ - $ (19,784)
Class B ($0.00 and $0.02 per share, respectively) - (3,800)
Net realized gain:
Class A ($1.43 and $1.40 per share, respectively) (5,330,480) (4,612,153)
Class B ($1.43 and $1.40 per share, respectively) (622,721) (265,778)
----------- ------------
Total distributions to shareholders $(5,953,201) $(4,901,515)
----------- ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $53,717,473 $44,624,316
Reinvestment of distributions 5,647,032 4,612,514
Cost of shares repurchased (35,962,316) (38,083,556)
----------- ------------
Net increase in net assets resulting from
fund share transactions $23,402,189 $11,153,274
----------- ------------
Net increase in net assets $33,988,040 $16,918,824
NET ASSETS:
Beginning of year 87,330,782 70,411,958
----------- ------------
End of year (including accumulated undistributed
net investment income of $1,120,171 and
$217,538,respectively) $121,318,822 $87,330,782
----------- ------------
<CAPTION>
CLASS A '96 SHARES '96 AMOUNT '95 SHARES '95 AMOUNT
<S> <C> <C> <C> <C>
Shares sold 1,739,083 $ 37,427,960 1,851,392 $36,748,396
Reinvestment of distributions 261,914 5,070,664 252,860 4,351,713
Less shares repurchased (1,408,516) (30,180,014) (1,784,047) (35,190,480)
----------- ------------ ----------- ------------
Net increase 592,481 $ 12,318,610 320,205 $ 5,909,629
----------- ------------ ----------- ------------
CLASS B
Shares sold 703,595 $ 15,026,838 402,070 $ 7,875,920
Reinvestment of distributions 30,224 576,368 15,269 260,801
Less shares repurchased (266,274) (5,637,583) (148,762) (2,893,076)
----------- ------------ ----------- ------------
Net increase 467,545 $ 9,965,623 268,577 $ 5,243,645
----------- ------------ ----------- ------------
Class C*
Shares sold 58,406 $ 1,262,675
Less shares repurchased (6,615) (144,719)
----------- ------------
Net increase 51,791 $ 1,117,956
----------- ------------
<FN>
* Class C shares were first publicly offered on January 31, 1996.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
PIONEER EUROPE FUND
<TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 10/31/96
- --------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
CLASS A 10/31/96 10/31/95+ 10/31/94 10/31/93 10/31/92
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 21.19 $19.91 $ 17.73 $ 14.63 $ 15.20
------- ------ ------- ------- --------
Increase (decrease) from
investment operations:
Net investment income $ 0.11 $ 0.12 $ 0.10 $ 0.04 $ 0.10
Net realized and unrealized
gain (loss) on investments and
foreign currency transactions 3.38 2.57 2.65 3.33 (0.62)
------- ------ ------- ------- --------
Net increase (decrease) from
investment operations $ 3.49 $ 2.69 $ 2.75 $ 3.37 $ (0.52)
Distributions to shareholders from:
Net investment income - (0.01) (0.31) (0.09) (0.05)
Net realized gain (1.43) (1.40) (0.26) (0.18) -
------- ------ ------- ------- --------
Net increase (decrease) in net
asset value $ 2.06 $ 1.28 $ 2.18 $ 3.10 $ (0.57)
------- ------ ------- ------- --------
Net asset value, end of year $ 23.25 $21.19 $ 19.91 $ 17.73 $ 14.63
------- ------ ------- ------- --------
Total return* 17.80% 15.12% 15.97% 23.47% (3.46)%
Ratio of net expenses to average
net assets 1.94%++ 1.76%++ 1.86% 2.00% 2.00%
Ratio of net investment income to
average net assets 0.57%++ 0.59%++ 0.28% 0.24% 0.74%
Portfolio turnover rate 56% 62% 100% 69% 50%
Average commission rate paid (1) $0.0251 - - - -
Net assets, end of year
(in thousands) $99,915 $78,505 $67,375 $48,827 $35,205
Ratios assuming no waiver of
management fees and assumption
of expenses by PMC and no reduction
for fees paid indirectly:
Net expenses 2.00% 2.10% 2.48% 2.77% 3.46%
Net investment income (loss) 0.51% 0.25% (0.34)% (0.53)% (0.72)%
Ratios assuming no waiver of
management fees and assumption
of expenses by PMC and no reduction
for fees paid indirectly:
Net expenses 1.93% 1.75% - - -
Net investment income 0.58% 0.60% - - -
<FN>
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sale charges were taken into
account.
+ The per share data is based upon average shares outstanding for the period
presented.
++ Ratio assuming no reduction for fees paid indirectly.
(1)Amount may fluctuate from year to year as a result of portfolio transactions
executed in different markets where trading practices and commission rate
structures may vary.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
PIONEER EUROPE FUND
<TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 10/31/96
- --------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED YEAR ENDED 4/4/94 TO
CLASS B 10/31/96 10/31/95+ 10/31/94
<S> <C> <C> <C>
Net asset value,
beginning of period $ 20.92 $ 19.80 $ 17.96
-------- -------- --------
Increase (decrease)
from investment operations:
Net investment income (loss) $ (0.04) $ (0.02) $ 0.01
Net realized and unrealized
gain on investments and
foreign currency transactions 3.29 2.56 1.88
-------- -------- --------
Net increase from investment
operations $ 3.25 $ 2.54 $ 1.89
Distributions to shareholders from:
Net investment income - (0.02) (0.05)
Net realized gain (1.43) (1.40) -
-------- -------- --------
Net increase in net asset value $ 1.82 $ 1.12 $ 1.84
-------- -------- --------
Net asset value, end of period $ 22.74 $ 20.92 $ 19.80
-------- -------- --------
Total return* 16.82% 14.43% 10.55%
Ratio of net expenses to
average net assets 2.76%++ 2.49%++ 2.47%**
Ratio of net investment loss
to average net assets (0.23)%++ (0.13)%++ (0.75)%**
Portfolio turnover rate 56% 62% 100%
Average commission rate paid (1) $ 0.0251 - -
Net assets, end of period
(in thousands) $ 20,228 $ 8,826 $ 3,037
Ratios assuming no waiver of
management fees by PMC and no
reduction for fees paid indirectly:
Net expenses 2.80% 2.85% 2.95%**
Net investment loss (0.27)% (0.49)% (1.23)%**
Ratios assuming no waiver of
management fees by PMC and no
reduction for fees paid indirectly:
Net expenses 2.74% 2.46% -
Net investment loss (0.21)% (0.10)% -
<FN>
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sale charges were taken into
account.
** Annualized.
+ The per share data is based upon average shares outstanding for the period
presented.
++ Ratio assuming no reduction for fees paid indirectly.
(1) Amount may fluctuate from period to period as a result of portfolio
transactions executed in different markets where trading practices and
commission rate structures may vary.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
PIONEER EUROPE FUND
<TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 10/31/96
- --------------------------------------------------------------------------------
<CAPTION>
1/31/96 TO
CLASS C (a) 10/31/96
<S> <C>
Net asset value, beginning of period $ 19.92
---------
Increase from investment operations:
Net investment income $ -
Net realized and unrealized gain on investments
and foreign currency transactions 2.77
---------
Net increase in net asset value $ 2.77
---------
Net asset value, end of period $ 22.69
---------
Total return* 13.91%
Ratio of net expenses to average net assets 2.74%**++
Ratio of net investment income to average net assets 0.00%**++
Portfolio turnover rate 56%
Average commission rate paid (1) $ 0.0251
Net assets, end of period (in thousands) $ 1,175
Ratios assuming no waiver of management fees
by PMC and no reduction for
fees paid indirectly:
Net expenses 2.75%**
Net investment loss (0.01)%**
Ratios assuming waiver of management fees
by PMC and reduction for
fees paid indirectly:
Net expenses 2.71%**
Net investment income 0.03%**
<FN>
(a) Class C shares were first publicly offered on January 31, 1996.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sale charges were taken into
account.
** Annualized.
++ Ratio assuming no reduction for fees paid indirectly.
(1) Amount may fluctuate from period to period as a result of portfolio
transactions executed in different markets where trading practices and
commission rate structures may vary.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
PIONEER EUROPE FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/96
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Pioneer Europe Fund (the Fund) is a Massachusetts business trust registered
under the Investment Company Act of 1940 as a diversified, open-end management
investment company. The investment objective of the Fund is to seek long-term
growth of capital by investing in a diversified portfolio consisting primarily
of securities of European companies.
The Fund offers three classes of shares - Class A, Class B and Class C shares.
Class C shares were first publicly offered on January 31, 1996. Shares of Class
A, Class B and Class C each represent an interest in the same portfolio of
investments of the Fund and have equal rights to voting, redemptions, dividends
and liquidation, except that each class of shares can bear different transfer
agent and distribution fees and have exclusive voting rights with respect to the
distribution plans that have been adopted by Class A, Class B and Class C
shareholders, respectively.
The Fund's financial statements have been prepared in conformity with generally
accepted accounting principles that require the management of the Fund to, among
other things, make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates. The following is a summary of significant accounting policies
consistently followed by the Fund, which are in conformity with those generally
accepted in the investment company industry:
A. SECURITY VALUATION
Security transactions are recorded on trade date. Each day, securities are
valued at the last sale price on the principal exchange where they are
traded. Securities that have not traded on the date of valuation, or
securities for which sale prices are not generally reported, are valued at
the mean between the last bid and asked prices. Securities for which market
quotations are not readily available are valued at their fair values as
determined by, or under the direction of, the Board of Trustees. Trading in
foreign securities is substantially completed each day at various times
prior to the close of the New York Stock Exchange. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Dividend income is recorded on the ex-dividend
date. Interest income is recorded on the accrual basis, net of
unrecoverable foreign taxes withheld at the applicable country rates.
Temporary cash investments are valued at amortized cost.
22
<PAGE>
PIONEER EUROPE FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
It is the Fund's practice to first select for sale those securities that
have the highest cost and also qualify for long-term capital gain or loss
treatment for tax purposes.
B. FOREIGN CURRENCY TRANSLATION
The books and records of the Fund are maintained in U.S. dollars. Amounts
denominated in foreign currencies are translated into U.S. dollars using
current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
among other things, the net realized gains and losses on foreign currency
contracts, disposition of foreign currencies and the difference between the
amount of income accrued and the U.S. dollar actually received. Further,
the effects of changes in foreign currency exchange rates on investments
are not segregated in the statement of operations from the effects of
changes in market price of those securities but are included with the net
realized and unrealized gain or loss on investments.
C. FORWARD FOREIGN CURRENCY CONTRACTS
The Fund enters into forward foreign currency contracts (contracts) for the
purchase or sale of a specific foreign currency at a fixed price on a
future date as a hedge or crosshedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the Fund's
financial statements. The Fund records realized gains and losses at the
time a portfolio hedge is offset by entry into a closing transaction or
extinguished by delivery of the currency. Risks may arise upon entering
into these contracts from the potential inability of counterparties to meet
the terms of the contract and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar. As of October 31, 1996, the
Fund had no outstanding portfolio hedges. The Fund's gross forward foreign
currency settlement contracts receivable and payable were $1,196,768 and
$1,197,884, respectively, resulting in a net payable of $1,116 as of
October 31, 1996.
23
<PAGE>
PIONEER EUROPE FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/96 (continued)
- --------------------------------------------------------------------------------
D. FEDERAL INCOME TAXES
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareholders. Therefore, no federal income tax provision is required.
The characterization of distributions to shareholders for financial
reporting purposes is determined in accordance with federal income tax
rules. Therefore, the source of the Fund's distributions may be shown in
the accompanying financial statements as either from or in excess of net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
At October 31, 1996, the Fund has reclassified $420,825 from accumulated
undistributed net realized gain on investments and foreign transactions to
accumulated undistributed net investment income. The reclassification has
no impact on the net asset value of the Fund and is designed to present the
Fund's capital accounts on a tax basis.
E. FUND SHARES
The Fund records sales and repurchases of its shares on trade date. Net
losses, if any, as a result of cancellations are absorbed by Pioneer Funds
Distributor, Inc. (PFD), the principal underwriter for the Fund and an
indirect subsidiary of The Pioneer Group, Inc. (PGI). PFD earned $60,257 in
underwriting commissions on the sale of Fund shares during the year ended
October 31, 1996.
F. CLASS ALLOCATIONS
Distribution fees are calculated based on the average daily net asset value
attributable to Class A, Class B and Class C shares of the Fund,
respectively. Shareholders of each class share all expenses and fees paid
to the transfer agent, Pioneering Services Corporation (PSC), for their
services, which are allocated based on the number of accounts in each class
and the ratable allocation of related out-of-pocket expense (see Note 3).
Income, common expenses and realized and unrealized gains and losses are
calculated at the Fund level and allocated daily to each class of shares
based on the respective percentage of adjusted net assets at the beginning
of the day.
Distributions to shareholders are recorded as of the ex-dividend date.
Distributions paid by the Fund with respect to each class of shares are
24
<PAGE>
PIONEER EUROPE FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
calculated in the same manner, at the same time, and in the same amount,
except that Class A, Class B and Class C shares can bear different transfer
agent and distribution fees.
G. REPURCHASE AGREEMENT
With respect to repurchase agreements entered into by the Fund, the value
of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Fund's custodian, or subcustodians. The Fund's
investment adviser, Pioneering Management Corporation (PMC), is responsible
for determining that the value of the collateral remains at least equal to
the repurchase price.
2. MANAGEMENT AGREEMENT
PMC manages the Fund's portfolio and is a wholly owned subsidiary of PGI.
Management fees are calculated daily at the annual rate of 1.00% of the Fund's
average daily net assets up to $300 million; 0.85% of the next $200 million; and
0.75% of excess over $500 million.
Until March 1, 1996, PMC had agreed not to impose a portion of its management
fee and to assume other operating expenses of the Fund to the extent that such
expenses exceeded 1.75% of the Class A expenses; the portion of the Fund-wide
expenses attributable to Class B and Class C shares were reduced only to the
extent that such expenses were reduced for Class A shares.
In addition, under the management agreement, certain other services and costs,
including accounting, regulatory reporting and insurance premiums, are paid by
the Fund. At October 31, 1996, $113,838 was payable to PMC related to management
fees and certain other services.
3. TRANSFER AGENT
PSC, a wholly owned subsidiary of PGI, provides substantially all transfer agent
and shareholder services to the Fund at negotiated rates. Included in due to
affiliates is $22,171 in transfer agent fees payable to PSC at October 31, 1996.
25
<PAGE>
PIONEER EUROPE FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/96 (continued)
- --------------------------------------------------------------------------------
4. DISTRIBUTION PLANS
The Fund adopted a Plan of Distribution for each class of shares (Class A Plan,
Class B Plan and Class C Plan) in accordance with Rule 12b-1 of the Investment
Company Act of 1940. Pursuant to the Class A Plan, the Fund pays PFD a service
fee of up to 0.25% of the Fund's average daily net assets in reimbursement of
its actual expenditures to finance activities primarily intended to result in
the sale of Class A shares. Pursuant to the Class B Plan and the Class C Plan,
the Fund pays PFD 1.00% of the average daily net assets attributable to each
class of shares. The fee consists of a 0.25% service fee and a 0.75%
distribution fee paid as compensation for personal services and/or account
maintenance services or distribution services with regard to Class B and Class C
shares. Included in due to affiliates is $36,814 in distribution fees payable to
PFD at October 31, 1996.
In addition, redemptions of each class of shares may be subject to a contingent
deferred sales charge (CDSC). A CDSC of 1.00% may be imposed on redemptions of
certain net asset value purchases of Class A shares within one year of purchase.
Class B shares that are redeemed within six years of purchase are subject to a
CDSC at declining rates beginning at 4.0%, based on the lower of cost or market
value of shares being redeemed. Redemptions of Class C shares within one year of
purchase are subject to a CDSC of 1.00%. Proceeds from the CDSC are paid to PFD.
For the year ended October 31, 1996, CDSCs in the amount of $20,534 were paid to
PFD.
5. EXPENSE OFFSETS
The Fund has entered into certain expense offset arrangements resulting in a
reduction in the Fund's total expenses. For the year ended October 31, 1996, the
Fund's expenses were reduced by $13,064 under such arrangements.
26
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PIONEER EUROPE FUND
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
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TO THE SHAREHOLDERS AND THE BOARD OF TRUSTEES OF PIONEER EUROPE FUND:
We have audited the accompanying balance sheet, including the schedule of
investments, of Pioneer Europe Fund as of October 31, 1996, and the related
statement of operations, the statements of changes in net assets, and the
financial highlights for the periods presented. These financial statements and
the financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer Europe Fund as of October 31, 1996, the results of its operations, the
changes in its net assets, and the financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
December 4, 1996
27
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PIONEER EUROPE FUND
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TAX TREATMENT OF DISTRIBUTIONS
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MADE DURING THE YEAR ENDED 10/31/96
During the year ended October 31, 1996, Pioneer Europe Fund paid the following
distributions per share for Class A and B shareholders:
Net
Realized Gain
--------------------------------------------
Record Date Payment Date Short-Term Long-Term
12/20/95 12/28/95 $0.153 $1.273
On a per share basis, distributions of $0.152 from short-term capital gain
should be reported as ordinary income. Shareholders who elected to take the
Capital Gain Distribution in additional shares of the Fund should report the
distribution as explained above. The tax cost of the shares received on December
28, 1995 are $19.36 and $19.07 per share for Class A and Class B shares,
respectively. The Fund hereby designates $7,185,122 as a capital gain dividend
for the purposes of the dividend paid deduction.
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TRUSTEES' FEES AND SHARE OWNERSHIP 10/31/96
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TRUSTEES' FEES, PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF TRUSTEES AND
OFFICERS (UNAUDITED)
The aggregate remuneration paid by the Fund to nonaffiliated trustees and
officers during the year ended October 31, 1996 was $13,434, plus expenses
incurred in attending trustees meetings of $2,987. Fees of trustees who are
affiliated with or "interested persons" of Pioneering Management Corporation and
Pioneer Funds Distributor, Inc., investment adviser and principal underwriter,
respectively, of the Fund ($1,000 in 1996) are reimbursed to the Fund by
Pioneering Management Corporation in accordance with the management agreement
with the Fund. At October 31, 1996, the trustees and officers of the Fund owned
beneficially 18,426 of Class A shares of the Fund (0.4% of the outstanding Class
A shares). The Pioneer Group, Inc., the parent company of Pioneering Management
Corporation and Pioneer Funds Distributor, Inc., is a publicly held corporation
of which Mr. Cogan, Chairman and President of the Fund, owned approximately 14%
of the outstanding shares of capital stock at October 31, 1996.
28
<PAGE>
PIONEER EUROPE FUND
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TRUSTEES, OFFICERS AND SERVICE PROVIDERS
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TRUSTEES
John F. Cogan, Jr.
Richard H. Egdahl, M.D.
Margaret B.W. Graham
John W. Kendrick
Marguerite A. Piret
David D. Tripple
Stephen K. West
John Winthrop
OFFICERS
John F. Cogan, Jr., Chairman and President
David D. Tripple, Executive Vice President
Patrick M. Smith, Vice President
William H. Keough, Treasurer
Joseph P. Barri, Secretary
INVESTMENT ADVISER
Pioneering Management Corporation
CUSTODIAN
Brown Brothers Harriman & Co
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
PRINCIPAL UNDERWRITER
Pioneer Funds Distributor, Inc.
LEGAL COUNSEL
Hale and Dorr
SHAREHOLDER SERVICES AND TRANSFER AGENT
Pioneering Services Corporation
29
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HOW TO CONTACT PIONEER
- --------------------------------------------------------------------------------
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
YOU CAN CALL US FOR:
ACCOUNT INFORMATION, including existing accounts,
new accounts, propectuses, applications
and service forms 1-800-225-6292
FACTFONE[SM] for automated fund yields, prices,
account information and transactions 1-800-225-4321
RETIREMENT PLANS INFORMATION 1-800-622-0176
TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD) 1-800-225-1997
OR WRITE TO US AT:
Pioneering Services Corporation
60 State Street
Boston, Massachusetts 02109
OUR TOLL-FREE FAX 1-800-225-4240
OUR INTERNET E-MAIL ADDRESS [email protected]
(for general questions about Pioneer only)
THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT FUND PROSPECTUS.
[PIONEER LOGO] PIONEER FUNDS DISTRIBUTOR, INC. 1296-3831
60 STATE STREET [COPYRIGHT]PIONEER FUNDS DIST.,INC.
BOSTON, MASSACHUSETTS 02109 [LOGO]PRINTED ON RECYCLED PAPER
