As Filed with the Securities and Exchange Commission on February 28, 1997.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Pre-Effective Amendment No. ___ / /
Post-Effective Amendment No. 6 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
/ X /
Amendment No. 7 / X /
(Check appropriate box or boxes)
PIONEER EUROPE FUND
(Exact name of registrant as specified in charter)
60 State Street, Boston, Massachusetts 02109
(Address of principal executive office) Zip Code
(617) 742-7825
(Registrant's Telephone Number, including Area Code)
Joseph P. Barri, Hale and Dorr, 60 State Street, Boston, MA 02109
(Name and address of agent for service)
It is proposed that this filing will become effective (check appropriate box):
_X__ immediately upon filing pursuant to paragraph (b)
____ on [date] pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a)(1)
____ on [date] pursuant to paragraph (a)(1)
____ 75 days after filing pursuant to paragraph (a)(2)
____ on [date] pursuant to paragraph (a)(2)of Rule 485
The Registrant has registered an indefinite number of shares pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended. The Registrant has
filed its Rule 24f-2 Notice for its most recent fiscal year on December 27,
1996.
<PAGE>
PIONEER EUROPE FUND
Cross-Reference Sheet Showing Location in Prospectus and
Statement of Additional Information of Information
Required by Items of the Registration Form
Location in
Prospectus or
Statement of
Additional
Form N-1A Item Number and Caption Information
- --------------------------------- -----------
1. Cover Page Prospectus - Cover
Page
2. Synopsis Prospectus - Expense
Information
3. Condensed Financial Information Prospectus -
Financial Highlights
4. General Description of Registrant Prospectus -
Investment Objective
and Policies; Europe;
Management of the
Fund; Fund Share
Alternatives; Share
Price; How to Buy
Fund Shares; How to
Sell Fund Shares; How
to Exchange Fund
Shares; The Fund
5. Management of the Fund Prospectus -
Management of the
Fund
6. Capital Stock and Other Securities Prospectus -
Investment Objective
and Policies; Europe;
Fund Share
Alternatives; Share
Price; How to Buy
Fund Shares; How to
Sell Fund Shares; How
to Exchange Fund
Shares; The Fund
7. Purchase of Securities Being Offered Prospectus - Fund
Share Alternatives;
Share Price; How to
Buy Fund Shares; How
to Sell Fund Shares;
How to Exchange Fund
Shares; The Fund;
Shareholder Services;
Distribution Plans
8. Redemption or Repurchase Prospectus - Fund
Share Alternatives;
Share Price; How to
Buy Fund Shares; How
to Sell Fund Shares;
How to Exchange Fund
Shares; The Fund;
Shareholder Services
<PAGE>
Location in
Prospectus or
Statement of
Additional
Form N-1A Item Number and Caption Information
- --------------------------------- -----------
9. Pending Legal Proceedings Not Applicable
10. Cover Page Statement of
Additional
Information - Cover
Page
11. Table of Contents Statement of
Additional
Information - Cover
Page
12. General Information and History Statement of
Additional
Information - Cover
Page; Description of
Shares
13. Investment Objectives and Policy Statement of
Additional
Information -
Investment Policies
and Restrictions
14. Management of the Fund Statement of
Additional
Information -
Management of the
Fund; Investment
Manager
15. Control Persons and Principle
Holders of Securities Statement of
Additional
Information -
Management of the
Fund
16. Investment Advisory and Other
Services Statement of
Additional
Information -
Management of the
Fund; Investment
Manager; Principal
Underwriter;
Distribution Plans;
Shareholder
Servicing/Transfer
Agent; Custodian;
Independent Public
Accountant
17. Brokerage Allocation and Other
Practices Statement of
Additional
Information -
Portfolio
Transactions
18. Capital Stock and Other Securities Statement of
Additional
Information -
Description of
Shares; Certain
Liabilities
19. Purchase Redemption and Pricing of
Securities Being Offered Statement of
Additional
Information - Letter
of Intention;
Systematic Withdrawal
Plan; Determination
of Net Asset Value
20. Tax Status Statement of
Additional
Information - Tax
Status
<PAGE>
Location in
Prospectus or
Statement of
Additional
Form N-1A Item Number and Caption Information
- --------------------------------- -----------
21. Underwriters Statement of
Additional
Information -
Principal
Underwriter;
Distribution Plans
22. Calculation of Performance Data Statement of
Additional
Information -
Investment Results
23. Financial Statements Statement of
Additional
Information -
Financial Statements
<PAGE>
<PAGE>
[Pioneer Logo]
Pioneer
Europe Fund
Class A, Class B and Class C Shares
Prospectus
February 28, 1997
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 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 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 the Fund's Statement of Additional
Information, also dated February 28, 1997, 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>
<CAPTION>
TABLE OF CONTENTS PAGE
- -------- ------------------------------------------------------ ----
<S> <C> <C>
I. EXPENSE INFORMATION 2
II. FINANCIAL HIGHLIGHTS 2
III. INVESTMENT OBJECTIVE AND POLICIES 5
IV. EUROPE 7
V. MANAGEMENT OF THE FUND 8
VI. FUND SHARE ALTERNATIVES 9
VII. SHARE PRICE 9
VIII. HOW TO BUY FUND SHARES 10
IX. HOW TO SELL FUND SHARES 13
X. HOW TO EXCHANGE FUND SHARES 14
XI. DISTRIBUTION PLANS 15
XII. DIVIDENDS, DISTRIBUTIONS AND TAXATION 16
XIII. SHAREHOLDER SERVICES 16
Account and Confirmation Statements 16
Additional Investments 17
Automatic Investment Plans 17
Financial Reports and Tax Information 17
Distribution Options 17
Directed Dividends 17
Direct Deposit 17
Voluntary Tax Withholding 17
Telephone Transactions and Related Liabilities 17
FactFoneSM 18
Retirement Plans 18
Telecommunications Device for the Deaf (TDD) 18
Systematic Withdrawal Plans 18
Reinstatement Privilege (Class A Shares Only) 18
XIV. THE FUND 18
XV. INVESTMENT RESULTS 19
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
I. EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses that
you, as a shareholder, will bear directly or indirectly when you invest in the
Fund. The table reflects annual operating expenses, based upon actual expenses
of Class A and Class B shares incurred for the fiscal year ended October 31,
1996. For Class C shares, operating expenses are based on expenses that would
have been incurred if Class C shares had been outstanding for the entire fiscal
year ended October 31, 1996.
<TABLE>
<CAPTION>
Class A Class B Class C+
------- ------- --------
<S> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Initial Sales Charge on
Purchases (as a percentage of
offering price) 5.75%1 None None
Maximum Sales Charge on
Reinvestment of Dividends None None None
Maximum Deferred Sales Charge
(as a percentage of purchase price
or redemption proceeds, as
applicable) None1 4.00% 1.00%
Redemption fee2 None None None
Exchange fee None None None
Annual Operating Expenses
(as a percentage of average net
assets):
Management fee 1.00% 1.00% 1.00%
12b-1 fees 0.25% 1.00% 1.00%
Other Expenses (including transfer
agent fee, custodian fees and
accounting and printing expenses) 0.68% 0.74% 0.71%
---- ---- ----
Total Operating Expenses 1.93% 2.74% 2.74%
==== ==== ====
</TABLE>
+ Class C shares were first offered on January 31, 1996.
1 Purchases of $1 million or more and purchases by participants in certain
group plans are not subject to an initial sales charge but may be subject
to a contingent deferred sales charge ("CDSC") as further described under
"How to Sell Fund Shares."
2 Separate fees (currently $10 and $20, respectively) apply to domestic and
international wire transfers of redemption proceeds.
Example:
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return, reinvestment of all dividends and distributions and that the
percentage amounts listed under "Annual Operating Expenses" remain the same each
year.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $76 $115 $156 $270
Class B Shares*
--Assuming complete
redemption at end of
period $68 $115 $165 $288
--Assuming no redemption $28 $ 85 $145 $288
Class C shares**
--Assuming complete
redemption at end of
period $37 $ 84 $143 $304
--Assuming no
redemption $27 $ 84 $143 $304
</TABLE>
*Class B shares convert to Class A shares eight years after purchase;
therefore, Class A share expenses are used after year eight.
**Class C shares redeemed during the first year after purchase are subject to
a 1% CDSC.
THE EXAMPLE IS DESIGNED FOR INFORMATION PURPOSES ONLY, AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURN. ACTUAL FUND
EXPENSES AND RETURN 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, 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 Conduct Rules 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."
II. FINANCIAL HIGHLIGHTS
The following information has been audited by Arthur Andersen LLP,
independent public accountants. Arthur Andersen LLP's report on the Fund's
financial statements as of October 31, 1996 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.
2
<PAGE>
PIONEER EUROPE FUND
Selected Data for a Class A Share Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
4/2/91
For the Year Ended October 31, (Commencement
--------------------------------------- of operations to
1996 1995+ 1994 1993 1992 10/31/91
------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 21.19 $ 19.91 $ 17.73 $ 14.63 $ 15.20 $ 15.00
------- ------- ------- ------- ------- -------
Increase (decrease) from investment
operations:
Net investment income (loss) $ 0.11 $ 0.12 $ 0.10 $ 0.04 $ 0.10 $ 0.00
Net realized and unrealized gain
(loss) on investments and
other forward foreign currency
related transactions 3.38 2.57 2.65 3.33 (0.62) 0.20
------- ------- ------- ------- ------- -------
Net increase (decrease) from
investment operations $ 3.49 $ 2.69 $ 2.75 $ 3.37 $ (0.52) $ 0.20
Distribution to shareholders from:
Net investment income -- (0.01) (0.31) (0.09) (0.05) --
Net realized gains (1.43 (1.40) (0.26) (0.18) 0.00 --
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset
value $ 2.06 $ 1.28 $ 2.18 $ 3.10 $ (0.57) $ 0.20
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 23.25 $ 21.19 $ 19.91 $ 17.73 $ 14.63 $ 15.20
======= ======= ======= ======= ======= =======
Total return* 17.80% 15.12% 15.97% 23.47% (3.46%) 1.33%
Ratio of net operating expenses to
average net assets 1.94%+++ 1.76%+++ 1.86% 2.00% 2.00% 2.00%**
Ratio of net investment income to
average net assets 0.57%+++ 0.59%+++ 0.28% 0.24% 0.74% 0.10%**
Portfolio turnover rate 56% 62% 100% 69% 50% 7%**
Average commission rate paid per
exchange listed transaction*** $0.0251
Net assets, end of period (in
thousands) $99,915 $78,505 $67,375 $48,827 $35,205 $23,993
Ratios assuming no reduction of fees or
expenses by Pioneering Management
Corporation ("PMC"):
Net operating expenses 2.00% 2.10% 2.48% 2.77% 3.46% 4.93%**
Net investment income (loss) 0.51% 0.25% (0.34%) (0.53%) (0.72%) (2.83%)**
Ratios assuming a reduction of fees and
expenses by PMC and a reduction for
fees paid indirectly:
Net operating expenses 1.93% 1.75%
Net investment loss 0.58% (0.60%)
</TABLE>
Selected Data for a Class B Share Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
For the Year Ended April 4, 1994
October 31, to October 31,
------------------- --------------
1996 1995+ 1994
------- ------ ------
<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 (loss) on investments and other
forward foreign currency related transactions 3.29 2.56 1.88
------- ------ ------
Net increase (decrease) from investment operations $ 3.25 $ 2.54 $ 1.89
Distribution to shareholders from:
Net investment income -- (0.02) (0.05)
Net realized gain (loss) (1.43) (1.40) (0.00)
------- ------ ------
Net increase (decrease) 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 operating expenses to average net assets 2.76%+++ 2.49%+++ 2.47%**
Ratio of net investment income (loss) to average net assets (0.23)%+++ (0.13%)+++ (0.75%)**
Portfolio turnover rate 56% 62% 100%
Average commission rate paid per exchange listed transaction*** $0.0251
Net assets, end of period (in thousands) $20,228 $8,826 $3,037
Ratios assuming no reduction of fees or expenses by PMC:
Net operating expenses 2.80% 2.85% 2.95%**
Net investment income (loss) (0.27)% (0.49%) (1.23%)**
Ratios assuming a reduction of fees and expenses by PMC and a
reduction for fees paid indirectly:
Net operating expenses 2.74% 2.46%
Net investment loss (0.21%) (0.10%)
</TABLE>
+The per share data is based upon average shares outstanding for the period
presented.
+++Ratios assuming no reduction for fees paid indirectly.
*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.
***Amount may fluctuate from period to period as a result of portfolio
transactions executed in different markets where trading practices and
commission rate structures may vary.
3
<PAGE>
Selected Data for a Class C Share Outstanding Throughout Each Period+:
<TABLE>
<CAPTION>
For the period January 31, 1996
through October 31, 1996
--------------------------------
<S> <C>
Net asset value, beginning of period $ 19.92
-------
Increase (decrease) from investment operations:
Net investment income (loss) --
Net realized and unrealized gain (loss) on investments
and other forward foreign currency related transactions 2.77
-------
Net increase (decrease) in net asset value $ 2.77
Distributions to shareholders from:
Net investment income (loss) --
Net realized gain (loss) --
-------
Net asset value, end of period $ 22.69
=======
Total return* 13.91%
Ratio of net operating expenses to average net assets 2.74%**+++
Ratio of net investment income to average net assets --%**+++
Portfolio turnover rate 56%
Average commission rate paid per exchange listed transaction*** $0.0251
Net assets, end of period (in thousands) $ 1,175
Ratios assuming no reduction of fees or expenses by PMC:
Net operating expenses 2.75%**
Net investment income (loss) (0.01)%**
Ratios assuming a reduction of fees and expenses by PMC and a
reduction for fees paid indirectly:
Net operating expenses 2.71%**
Net investment income (loss) 0.03%**
</TABLE>
+Class C shares were first offered on January 31, 1996.
+++Ratios assuming no reduction for fees paid indirectly.
*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.
***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.
4
<PAGE>
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, PMC, the Fund's investment adviser, 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, Denmark, Finland,
France, Germany, Italy, Ireland, 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.
In pursuit of its objective, the Fund may pursue certain active management
techniques including forward foreign currency contracts, options and futures.
These techniques may be employed in an attempt to hedge currency exchange rate
or other risks associated with the Fund's securities. Forward foreign currency
contracts, options and futures contracts are described below and in greater
detail in the Statement of Additional Information under the caption "Investment
Policies and Restrictions."
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 PMC 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 PMC 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 place cash or liquid 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 seek 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 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 in the event the
option is exercised, the writer of the securities index option receives a
premium.
5
<PAGE>
Gains or losses on the Fund's transactions in securities index options depend
on price movements in the securities market generally (or, for narrow market
indices, in a particular industry or segment of the market) rather than the
price movement of individual securities held by the Fund. The effectiveness of
hedging through the purchase of stock index options will depend upon the extent
to which price movements in the portion of the securities portfolio being hedged
correlate with the price movements in the selected stock index. Perfect
correlation may not be possible because the securities held or to be acquired by
the Fund may not exactly match the composition of the stock index on which
options are written. In the event of market changes, the Fund's position in
stock index options may not be easily closed out. If PMC's forecasts 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 to seek to protect 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 currencies 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 PMC 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. The Fund will only write
or purchase options on foreign currencies that are 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, securities
indices, currencies and interest rates 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 the amount of any such
6
<PAGE>
option which is "in-the-money," 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.
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.
Temporary Investments
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 PMC believes there to be
extraordinary risks in being substantially fully invested.
Portfolio Turnover
Securities in the Fund's portfolio will be sold whenever PMC 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
(100% or more) involves greater expenses to the Fund and may increase the
possibility of shareholders realizing taxable capital gains. See "Financial
Highlights" for the actual turnover rates.
IV. EUROPE
PMC 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 economic integration of the European Union ("EU") member states. It is
not possible to quantify the economic benefits derived from the attainment of a
single market among member states of the EU. 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 that such economic benefits will
benefit the Fund.
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 10% of its total assets in securities of companies with
principal executive offices located in Eastern European countries and which
trade on recognized European securities exchanges. The Fund may also 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. The countries of Eastern Europe are generally
considered to have emerging economies or securities markets. Political and
economic structures in many of such countries may be undergoing significant
evolution and rapid development, and such countries may lack the social,
political and economic stability characteristic of more developed countries. As
a result, the risks described above relating to investments in foreign
securities, including the risks of nationalization or expropriation of assets,
may be heightened.
7
<PAGE>
V. MANAGEMENT OF THE FUND
The Fund's Board of Trustees has overall responsibility for management and
supervision of the Fund. There are currently eight Trustees, six of whom are not
"interested persons" of the Fund as defined in the Investment Company Act of
1940, as amended (the "1940 Act"). The Board meets at least quarterly. By virtue
of the functions performed by PMC as investment adviser, the Fund requires no
employees other than its executive officers, all of whom receive their
compensation from PMC or other sources. The Statement of Additional Information
contains the names and general business and professional background of each
Trustee and executive officer of the Fund.
The Adviser
The Fund is managed under a contract with PMC, 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. PMC is a wholly-owned subsidiary of The
Pioneer Group, Inc. ("PGI"), a publicly-traded Delaware corporation. Pioneer
Funds Distributor, Inc. ("PFD"), an indirect wholly-owned 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 PMC, Chairman of PFD, and
President and a Director of PGI, beneficially owned approximately 14% of the
outstanding capital stock of PGI as of the date of this Prospectus.
Mr. David Tripple, President and Chief Investment Officer of PMC and
Executive Vice President of each Pioneer mutual fund, has general responsibility
for PMC's investment operations and chairs a committee of PMC's global equity
managers which reviews PMC's research and portfolio operations, including those
of the Fund. Mr. Tripple joined PMC in 1974.
Research and management of the Fund is the responsibility of a team of
portfolio managers and analysts focusing on non-U.S. companies. Members of the
team meet regularly to discuss holdings, prospective investments and portfolio
composition. Dr. Norman Kurland, a Senior Vice President of PMC and Vice
President of the Fund, is the senior member of the team. Dr. Kurland joined PMC
in 1990.
Day-to-day management of the Fund has been the responsibility of Mr. Patrick
M. Smith, a Vice President of PMC and the Fund, since January, 1994. Mr. Smith
joined PMC in 1992 and has 11 years of investment experience.
In addition to the Fund, PMC also manages and serves as the investment
adviser for other mutual funds and is an investment adviser to private
institutional accounts. PMC's and PFD's executive offices are located at 60
State Street, Boston, Massachusetts 02109. In an effort to avoid conflicts of
interest with the Fund, the Fund and PMC have adopted a Code of Ethics that is
designed to maintain a high standard of personal conduct by directing that all
personnel defer to the interests of the Fund and its shareholders in making
personal securities transactions.
In managing the Fund, PMC 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.
Investment advisory services are provided to the Fund by PMC pursuant to a
management contract between PMC and the Fund. PMC assists in the management of
the Fund and is authorized in its discretion to buy and sell securities for the
account of the Fund. PMC pays all the 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 PMC or its affiliates, office space and facilities and
personnel compensation, training and benefits; (b) the charges and expenses of
auditors; (c) the charges and expenses of any custodian, transfer agent, plan
agent, dividend disbursing agent and registrar appointed by the 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
regulatory agencies, individual states or blue sky securities agencies,
territories and foreign countries, including the preparation of Prospectuses and
Statements of Additional Information for filing with regulatory agencies; (g)
all expenses of shareholders' and Trustees' meetings and of preparing, printing
and distributing prospectuses, notices, proxy statements and all reports to
shareholders and to governmental agencies; (h) charges and expenses of legal
counsel to the Fund and 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 Fund who are not affiliated with or
interested persons of the Fund (other than as Trustees), PMC, 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.
As compensation for its management services and certain expenses which PMC
incurs, PMC 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 many 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. See "Expense Information"
in this Prospectus and "Investment Adviser" in the Statement of Additional
Information.
8
<PAGE>
Orders for the Fund's portfolio securities transactions are placed by PMC,
which strives to obtain the best price and execution for each transaction. In
circumstances 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 or other funds for which PMC or any affiliate or
subsidiary serves as investment adviser or manager. See the Statement of
Additional Information for a further description of brokerage allocation
practices.
VI. FUND SHARE ALTERNATIVES
The Fund continuously offers three Classes of shares designated as Class A,
Class B and Class C shares, as described more fully in "How to Buy Fund Shares."
If you do not specify in your instructions to the Fund which Class of shares you
wish to purchase, exchange or redeem, the Fund will assume that your
instructions apply to Class A shares.
Class A Shares. If you invest less than $1 million in Class A shares, you
will pay an initial sales charge. Certain purchases may qualify for reduced
initial sales charges. If you invest $1 million or more in Class A shares, no
sales charge will be imposed at the time of purchase, however, shares redeemed
within 12 months of purchase may be subject to a CDSC. Class A shares are
subject to distribution and service fees at a combined annual rate of up to
0.25% of the Fund's average daily net assets attributable to Class A shares.
Class B Shares. If you plan to invest up to $250,000, Class B shares are
available to you. Class B shares are sold without an initial sales charge, but
are subject to a CDSC of up to 4% if redeemed within six years. Class B shares
are subject to distribution and service fees at a combined annual rate of 1% of
the Fund's average daily net assets attributable to Class B shares. Your entire
investment in Class B shares is available to work for you from the time you make
your investment, but the higher distribution fee paid by Class B shares will
cause your Class B shares (until conversion) to have a higher expense ratio and
to pay lower dividends, to the extent dividends are paid, than Class A shares.
Class B shares will automatically convert to Class A shares, based on relative
net asset value, eight years after the initial purchase.
Class C Shares. Class C shares are sold without an initial sales charge, but
are subject to a 1% CDSC if they are redeemed within the first year after
purchase. Class C shares are subject to distribution and service fees at a
combined annual rate of up to 1% of the Fund's average daily net assets
attributable to Class C shares. Your entire investment in Class C shares is
available to work for you from the time you make your investment, but the higher
distribution fee paid by Class C shares will cause your Class C shares to have a
higher expense ratio and to pay lower dividends, to the extent dividends are
paid, than Class A shares. Class C shares have no conversion feature.
Selecting a Class of Shares. The decision as to which Class to purchase
depends on the amount you invest, the intended length of the investment and your
personal situation. If you are making an investment that qualifies for reduced
sales charges, you might consider Class A shares. If you prefer not to pay an
initial sales charge on an investment of $250,000 or less and you plan to hold
the investment for at least six years, you might consider Class B shares. If you
prefer not to pay an initial sales charge and you plan to hold your investment
for one to eight years, you may prefer Class C shares.
Investment dealers or their representatives may receive different
compensation depending on which Class of shares they sell. Shares may be
exchanged only for shares of the same Class of another Pioneer mutual fund and
shares acquired in the exchange will continue to be subject to any CDSC
applicable to the shares of the Fund originally purchased. Shares sold outside
the U.S. to persons who are not U.S. citizens may be subject to different sales
charges, CDSCs and dealer compensation arrangements in accordance with local
laws and business practices.
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. The net asset value per
share of each Class of Fund shares 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.
9
<PAGE>
VIII. HOW TO BUY FUND SHARES
You may buy Fund shares from any securities broker-dealer which has a sales
agreement with PFD. If you do not have a securities broker-dealer, please call
1-800-225-6292. Shares will be purchased at the public offering price, that is,
the net asset value per share plus any applicable sales charge, next computed
after receipt of a purchase order, except as set forth below.
The minimum initial investment is $1,000 for Class A, Class B and Class C
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 and Class C shares except that the subsequent minimum
investment amount for Class B and Class C 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 indicate otherwise on your Account
Application or by writing to Pioneering Services Corporation ("PSC"). The
telephone purchase option may be used to purchase additional shares for an
existing mutual fund account; it may not be used to establish a new account.
Proper account identification will be required for each telephone purchase. A
maximum of $25,000 per account may be purchased by telephone each day. The
telephone purchase privilege is available to Individual Retirement Accounts
("IRAs") but may not be available to other types of retirement plan accounts.
Call PSC for more information.
You are strongly urged to consult with your financial representative prior to
requesting a telephone purchase. To purchase shares by telephone, you must
establish your bank account of record by completing the appropriate section of
your Account Application or an Account Options Form. PSC will electronically
debit the amount of each purchase from this predesignated bank account.
Telephone purchases may not be made for 30 days after the establishment of your
bank of record or any change to your bank information.
Telephone purchases will be priced at the net asset value plus any applicable
sales charge next determined after PSC's receipt of a telephone purchase
instruction and receipt of good funds (usually three days after the purchase
instruction). You may always elect to deliver purchases to PSC by mail. See
"Telephone Transactions and Related Liabilities" for additional information.
Class A Shares
You may buy Class A shares at the public offering price, including a sales
charge, as follows:
<TABLE>
<CAPTION>
Sales Charge as a Dealer
Percentage of: Allowance
---------------------- as a
Net Percentage of
Offering Amount Offering
Amount of Purchase Price Invested Price
------------------------ ---------- ---------------------------
<S> <C> <C> <C>
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
</TABLE>
The schedule of sales charges above is applicable to purchases of Class A
shares of the Fund by (i) an individual, (ii) an individual and his or her
spouse and children under the age of 21 and (iii) a trustee or other fiduciary
of a trust estate or fiduciary account or related trusts or accounts including
pension, profit-sharing and other employee benefit trusts qualified under
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. At the sole
discretion of PFD, holdings of funds domiciled outside the U.S., but which are
managed by affiliates of PMC, may be included for this purpose.
No sales charge is payable at the time of purchase on investments of $1
million or more or for purchases by participants in certain group plans
(described below) subject to a CDSC of 1% which may be imposed in the event of a
redemption of Class A shares within 12 months of purchase. See "How to Sell Fund
Shares." PFD may, in its discretion, pay a commission to broker- dealers who
initiate and are responsible for such purchases as follows: 1% on the first $5
million invested; 0.50% on the next $45 million; and 0.25% on the excess over
$50 million. These commissions will not be paid if the purchaser is affiliated
with the broker-dealer or if the purchase represents the reinvestment of a
redemption made during the previous 12 calendar months. Broker-dealers who
receive a commission in connection with Class A share purchases at net asset
value by 401(a) or 401(k) retirement plans with 1,000 or more eligible
participants or with at least $10 million in plan assets will be required to
return any commission paid or a pro rata portion thereof if the retirement plan
redeems its shares within 12 months of purchase. See also "How to Sell Fund
Shares." In connection with PGI's acquisition of Mutual of Omaha Fund Management
Company and contingent upon the achievement of certain sales objectives, PFD may
pay to Mutual of Omaha Investor Services, Inc. 50% of PFD's retention of any
sales commission on sales of the Fund's Class A shares through such dealer. From
time to time, PFD may elect to reallow the entire initial sales charge to
participating dealers for all Class A sales with respect to which orders are
10
<PAGE>
placed during a particular period. Dealers to whom substantially the entire
sales charge is reallowed may be deemed to be underwriters under the federal
securities laws.
Qualifying for a Reduced Sales Charge. Class A shares of the Fund may be sold
at a reduced or eliminated sales charge to certain group plans ("Group Plans")
under which a sponsoring organization makes recommendations to, permits group
solicitation of, or otherwise facilitates purchases by, its employees, members
or participants. Class A shares of the Fund may be sold at net asset value
without a sales charge to 401(k) retirement plans with 100 or more participants
or $500,000 or more in plan assets. 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
PMC serves as investment adviser, and the subsidiaries or affiliates of such
persons; (d) current or former officers, partners, employees or registered
representatives of broker- dealers which have entered into sales agreements with
PFD; (e) members of the immediate families of any of the persons above; (f) any
trust, custodian, pension, profit-sharing or other benefit plan of the foregoing
persons; (g) insurance company separate accounts; (h) certain "wrap accounts"
for the benefit of clients of financial planners adhering to standards
established by PFD; (i) other funds and accounts for which PMC or any of its
affiliates serves as investment adviser or manager; and (j) certain unit
investment trusts. Shares so purchased are purchased for investment purposes and
may not be resold except through redemption or repurchase by or on behalf of the
Fund. The availability of this privilege is conditioned upon the receipt by PFD
of written notification of eligibility. Class A shares of the Fund may be sold
at net asset value per share without a sales charge to Optional Retirement
Program (the "Program") participants if (i) the employer has authorized a
limited number of investment company providers for the Program, (ii) all
authorized investment company providers offer their shares to Program
participants at net asset value, (iii) the employer has agreed in writing to
actively promote the authorized investment company providers to Program
participants and (iv) the Program provides for a matching contribution for each
participant contribution. Class A shares may also be sold at net asset value in
connection with certain reorganization, liquidation, or acquisition transactions
involving other investment companies or personal holding companies.
Reduced sales charges are available for purchases of $50,000 or more of Class
A shares (excluding any reinvestments of dividends and capital gains
distributions) made within a 13-month period pursuant to a Letter of Intent
("LOI") which may be established by completing the Letter of Intent section of
the Account Application. The reduced sales charge will be the charge that would
be applicable to the purchase of the specified amount of Class A shares as if
the shares had all been purchased at the same time. A purchase not made pursuant
to an LOI may be included if the LOI is submitted to PSC within 90 days of such
purchase. You may also obtain the reduced sales charge by including the value
(at current offering price) of all your Class A shares in the Fund and all other
Pioneer mutual funds held of record as of the date of your LOI in the amount
used to determine the applicable sales charge for the Class A shares to be
purchased under the LOI. Five percent of your total intended purchase amount
will be held in escrow by PSC, registered in your name, until the terms of the
LOI are fulfilled.
You are not obligated to purchase the amount specified in your LOI. If,
however, the amount actually purchased during the 13-month period is more or
less than that indicated in your LOI, an adjustment in the sales charge will be
made. If a payment to cover actual sales charges is due, it must be paid to PFD
within 20 days after PFD or your dealer sends you a written request or PFD will
direct PSC to liquidate sufficient shares from your escrow account to cover the
amount due. See the Statement of Additional Information for more information.
Investors who are clients of a broker-dealer with a current sales agreement
with PFD may purchase Class A shares of the Fund at net asset value, without a
sales charge, to the extent that the purchase price is paid out of proceeds from
one or more redemptions by the investor of shares of certain other mutual funds.
In order for a purchase to qualify for this privilege, the investor must
document to the broker-dealer that the redemption occurred within the 60 days
immediately preceding the purchase of Class A shares; that the client paid a
sales charge on the original purchase of the shares redeemed; and that the
mutual fund whose shares were redeemed also offers net asset value purchases to
redeeming shareholders of any of the Pioneer mutual funds. Further details may
be obtained from PFD.
Class B Shares
You may buy Class B shares at the net asset value next computed after receipt
of a purchase order without the imposition of an initial sales charge. However,
Class B shares redeemed within six years of purchase will be subject to a CDSC
at the rates shown in the table below. The charge will be assessed on the amount
equal to the lesser of the current market value or the original purchase cost of
the shares being redeemed. No CDSC will be imposed on increases in account value
above the initial purchase price, including shares derived from the reinvestment
of dividends or capital gains distributions.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of purchase until the time of redemption of Class B shares. For
the purpose of determining the number of years from the time of any purchase,
all payments during a quarter will be aggregated and deemed to have been made on
the first day of that quarter. In processing redemptions of Class B shares, the
Fund will first redeem shares not subject to any CDSC, and then shares held
longest during the six-year period. As a result, you will pay the lowest
possible CDSC.
11
<PAGE>
The CDSC for Class B shares subject to a CDSC upon redemption will be
determined as follows:
<TABLE>
<CAPTION>
Year Since CDSC as a Percentage of Dollar
Purchase Amount Subject to CDSC
---------- ------------------------------
<S> <C>
First 4.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter none
</TABLE>
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class B shares, including the payment of
compensation to broker-dealers.
Class B shares will automatically convert into Class A shares at the end of
the calendar quarter that is eight years after the purchase date, except as
noted below. Class B shares acquired by exchange from Class B shares of another
Pioneer mutual fund will convert into Class A shares based on the date of the
initial purchase and the applicable CDSC. Class B shares acquired through
reinvestment of distributions will convert into Class A shares based on the date
of the initial purchase to which such shares relate. For this purpose, Class B
shares acquired through reinvestment of distributions will be attributed to
particular purchases of Class B shares in accordance with such procedures as the
Trustees may determine from time to time. The conversion of Class B shares to
Class A shares is subject to the continuing availability of a ruling from the
Internal Revenue Service ("IRS"), which the Fund has obtained, or an opinion of
counsel that such conversions will not constitute taxable events for federal tax
purposes. There can be no assurance that such ruling will be in effect at the
time any particular conversion would normally occur. The conversion of Class B
shares to Class A shares will not occur if such ruling is no longer in effect or
such opinion is not available and, therefore, Class B shares would continue to
be subject to higher expenses than Class A shares for an indeterminate period.
Class C Shares
You may buy Class C shares at the net asset value next computed after receipt
of a purchase order without the imposition of an initial sales charge; however,
Class C shares redeemed within one year of purchase will be subject to a CDSC of
1%. The charge will be assessed on the amount equal to the lesser of the current
market value or the original purchase cost of the shares being redeemed. No CDSC
will be imposed on increases in account value above the initial purchase price,
including shares derived from the reinvestment of dividends or capital gains
distributions. Class C shares do not convert to any other Class of Fund shares.
For the purpose of determining the time of any purchase, all payments during
a quarter will be aggregated and deemed to have been made on the first day of
that quarter. In processing redemptions of Class C shares, the Fund will first
redeem shares not subject to any CDSC, and then shares held for the shortest
period of time during the one-year period. As a result, you will pay the lowest
possible CDSC.
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class C shares, including the payment of
compensation to broker-dealers.
Waiver or Reduction of Contingent Deferred Sales Charge. The CDSC on Class B
shares may be waived or reduced for non-retirement accounts if: (a) the
redemption results from the death of all registered owners of an account (in the
case of UGMAs, UTMAs and trust accounts, waiver applies upon the death of all
beneficial owners) or a total and permanent disability (as defined in Section 72
of the Code) of all registered owners occurring after the purchase of the shares
being redeemed or (b) the redemption is made in connection with limited
automatic redemptions as set forth in "Systematic Withdrawal Plans" (limited in
any year to 10% of the value of the account in the Fund at the time the
withdrawal plan is established).
The CDSC on Class B shares may be waived or reduced for retirement plan
accounts if: (a) the redemption results from the death or a total and permanent
disability (as defined in Section 72 of the Code) occurring after the purchase
of the shares being redeemed of a shareholder or participant in an
employer-sponsored retirement plan; (b) the distribution is to a participant in
an IRA, 403(b) or employer-sponsored retirement plan, is part of a series of
substantially equal payments made over the life expectancy of the participant or
the joint life expectancy of the participant and his or her beneficiary or as
scheduled periodic payments to a participant (limited in any year to 10% of the
value of the participant's account at the time the distribution amount is
established; a required minimum distribution due to the participant's attainment
of age 70-1/2 may exceed the 10% limit only if the distribution amount is based
on plan assets held by Pioneer); (c) the distribution is from a 401(a) or 401(k)
retirement plan and is a return of excess employee deferrals or employee
contributions or a qualifying hardship distribution as defined by the Code or
results from a termination of employment (limited with respect to a termination
to 10% per year of the value of the plan's assets in the Fund as of the later of
the prior December 31 or the date the account was established unless the plan's
assets are being rolled over to or reinvested in the same class of shares of a
Pioneer mutual fund subject to the CDSC of the shares originally held); (d) the
distribution is from an IRA, 403(b) or employer-sponsored retirement plan and is
to be rolled over to or reinvested in the same class of shares in a Pioneer
mutual fund and which will be subject to the applicable CDSC upon redemption;
(e) the distribution is in the form of a loan to a participant in a plan which
permits loans (each repayment of the loan will constitute a new sale which will
be subject to the applicable CDSC upon redemption); or (f) the distribution is
from a qualified defined contribution plan and represents a participant's
directed transfer (provided that this privilege has been pre-authorized through
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a prior agreement with PFD regarding participant directed transfers).
The CDSC on Class C shares and on any Class A shares subject to a CDSC may be
waived or reduced as follows: (a) for automatic redemptions as described in
"Systematic Withdrawal Plans" (limited to 10% of the value of the account
subject to the CDSC); (b) if the redemption results from the death or a total
and permanent disability (as defined in Section 72 of the Code) occurring after
the purchase of the shares being redeemed of a shareholder or participant in an
employer- sponsored retirement plan; (c) if the distribution is part of a series
of substantially equal payments made over the life expectancy of the participant
or the joint life expectancy of the participant and his or her beneficiary; or
(d) if the distribution is to a participant in an employer-sponsored retirement
plan and is (i) a return of excess employee deferrals or contributions, (ii) a
qualifying hardship distribution as defined by the Code, (iii) from a
termination of employment, (iv) in the form of a loan to a participant in a plan
which permits loans, or (v) from a qualified defined contribution plan and
represents a participant's directed transfer (provided that this privilege has
been pre-authorized through a prior agreement with PFD regarding participant
directed transfers).
The CDSC on any shares subject to a CDSC may be waived or reduced for either
non-retirement or retirement plan accounts if: (a) the redemption is made by any
state, county, or city, or any instrumentality, department, authority, or agency
thereof, which is prohibited by applicable laws from paying a 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. The CDSC on any shares subject to a CDSC will not be
applicable if the selling broker-dealer elects, with PFD's approval, to waive
receipt of the commission normally paid at the time of the sale.
Broker-Dealers. An order for any Class of Fund shares received by PFD from a
broker-dealer prior to the close of regular trading on the Exchange is confirmed
at the price appropriate for that Class as determined at the close of regular
trading on the Exchange on the day the order is received, provided the order is
received by PFD 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. PFD or its
affiliates may provide additional compensaton to certain dealers or such
dealers' affiliates based on certain objective criteria established from time to
time by PFD. All such payments are made out of PFD's or the affiliate's own
assets. These payments will not change the price an investor will pay for shares
or the amount that the Fund will receive from such sale.
General. The Fund reserves the right in its sole discretion to withdraw all
or any part of the offering of shares when, in the judgment of the Fund's
management, such withdrawal is in the best interest of the Fund. An order to
purchase shares is not binding on, and may be rejected by, PFD until it has been
confirmed in writing by PFD and payment has been received.
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:
(bullet) If you are selling shares from a retirement account, other than
an IRA, you must make your request in writing (except for
exchanges to other Pioneer mutual funds which can be requested by
phone or in writing). Call 1-800-622-0176 for more information.
(bullet) If you are selling shares from a non-retirement or IRA account,
you may use any of the methods described below.
Your shares will be sold at the share price next calculated after your order
is received in good order less any applicable CDSC. Sale proceeds generally will
be sent to you in cash, normally within seven days after your order is received
in good order. The Fund reserves the right to withhold payment of the sale
proceeds until checks received by the Fund in payment for the shares being sold
have cleared, which may take up to 15 calendar days from the purchase date.
In Writing. You may sell your shares by delivering a written request, signed
by all registered owners, in good order to PSC, however, you must use a written
request, including a signature guarantee, to sell your shares if any of the
following applies:
(bullet) you wish to sell over $50,000 worth of shares,
(bullet) your account registration or address has changed within the last
30 days,
(bullet) the check is not being mailed to the address on your account
(address of record),
(bullet) the check is not being made out to the account owners, or
(bullet) the sale proceeds are being transferred to a Pioneer mutual fund
account with a different registration.
Your request should include your name, the Fund's name, your fund account
number, the Class of shares to be redeemed, the dollar amount or number of
shares to be redeemed, and any other applicable requirements as described below.
Unless instructed otherwise, PSC will send the proceeds of the sale to the
address of record. Fiduciaries and corporations are required to submit
additional documents. For more information, contact PSC at 1-800-225-6292.
Written requests will not be processed until they are received in good order
by PSC. Good order means that there are no outstanding claims or requests to
hold redemptions on the account, any certificates are endorsed by the record
owner(s) exactly as the shares are registered and the signa-
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ture(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 indicate 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, except IRAs. A maximum of $50,000 per account per
day may be redeemed by telephone or fax and the proceeds may be received by
check or 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 predesignated either on your Account Application or on an
Account Options Form and which must not have changed in the last 30 days. To
redeem by fax send your redemption request to 1-800-225-4240. You may always
elect to deliver redemption instructions to PSC by mail. See "Telephone
Transactions and Related Liabilities" below. Telephone 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 million or more, or
by participants in a Group Plan which were not subject to an initial sales
charge, may be subject to a CDSC upon redemption. A CDSC is payable to PFD on
these investments in the event of a share redemption within 12 months following
the share purchase, at the rate of 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividend and capital gain distributions) or
the total cost of such shares. Shares subject to the CDSC which are exchanged
into another Pioneer mutual fund will continue to be subject to the CDSC 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 Pioneer mutual fund into
which you wish to exchange, your fund account number(s), the Class of shares to
be exchanged and the dollar amount or number of shares to be exchanged. Written
exchange requests must be signed by all record owner(s) exactly as the shares
are registered.
Telephone Exchanges. Your account is automatically authorized to have the
telephone exchange privilege unless you indicate otherwise on your Account
Application or by writing to PSC. Proper account identification will be required
for each telephone exchange. Telephone exchanges may not exceed $500,000 per
account per day. Each telephone exchange request, whether by voice or by
FactFone(SM), will be recorded. You are strongly urged to consult with your
financial representative prior to requesting a telephone exchange. See
"Telephone Transactions and Related Liabilities" below.
Automatic Exchanges. You may automatically exchange shares from one Pioneer
mutual fund account for shares of the same Class in another Pioneer mutual fund
account on a monthly or quarterly basis. The accounts must have identical
registrations and the originating account must have a minimum balance of $5,000.
The exchange will be effective on the day of the month designated on your
Account Application or Account Options Form.
General. Exchanges must be at least $1,000. You may exchange your investment
from one Class of Fund shares at net asset value, without a sales charge, for
shares of the same Class of any other Pioneer mutual fund. Not all Pioneer
mutual funds offer more than one Class of shares. A new
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Pioneer mutual fund account opened through an exchange must have a
registration identical to that on the original account.
Shares which would normally be subject to a CDSC upon redemption will not be
charged the applicable CDSC at the time of an exchange. Shares acquired in an
exchange will be subject to the CDSC of the shares originally held. For purposes
of determining the amount of any applicable CDSC, the length of time you have
owned shares acquired by exchange will be measured from the date you acquired
the original shares and will not be affected by any subsequent exchange.
Exchange requests received by PSC before 4:00 p.m. Eastern Time, will be
effective on that day if the requirements above have been met, otherwise, they
will be effective on the next business day. PSC will process exchanges only
after receiving an exchange request in good order. There are currently no fees
or sales charges imposed at the time of an exchange. An exchange of shares may
be made only in states where legally permitted. For federal and (generally)
state income tax purposes, an exchange is considered to be a sale of the shares
of the fund exchanged and a purchase of shares in another fund. Therefore, an
exchange could result in a gain or loss on the shares sold, depending on the tax
basis of these shares and the timing of the transaction, and special tax rules
may apply.
You should consider the differences in objectives and policies of the Pioneer
mutual funds, as described in each fund's current prospectus, before making any
exchange. For the protection of the Fund's performance and shareholders, the
Fund and PFD reserve the right to refuse any exchange request or restrict, at
any time without notice, the number and/or frequency of exchanges to prevent
abuses of the exchange privilege. Such abuses may arise from frequent trading in
response to short-term market fluctuations, a pattern of trading by an
individual or group that appears to be an attempt to "time the market," or any
other exchange request which, in the view of management, will have a detrimental
effect on the Fund's portfolio management strategy or its operations. In
addition, the Fund and PFD reserve the right to charge a fee for exchanges or to
modify, limit, suspend or discontinue the exchange privilege with notice to
shareholders as required by law.
XI. DISTRIBUTION PLANS
The Fund has adopted a Plan of Distribution for each Class of shares (the
"Class A Plan," "Class B Plan," and "Class C 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.
Both the Class B Plan and the Class C Plan provide 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 the applicable Class of 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 that Class of 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 and Class C shares. PFD also
receives the proceeds of any CDSC imposed on the redemption of Class B and Class
C shares.
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.
Commissions of up to 1% of the amount invested in Class C shares, consisting
of 0.75% of the amount invested and a first year's service fee of 0.25% of the
amount invested, are paid to broker-dealers who have selling agreements with
PFD. PFD may advance to dealers the first year service fee at a rate up to 0.25%
of the purchase price of such shares and, as compensation therefore, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Commencing in the 13th month following the purchase
of Class C shares, dealers will
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become eligible for additional annual distribution fees and service fees of
up to 0.75% and 0.25%, respectively, of the net asset value of such shares.
When a broker-dealer sells Class B or Class C shares and elects, with PFD's
approval, to waive its right to receive the commission normally paid at the time
of the sale, PFD may cause all or a portion of the distribution fees described
above to be paid to the broker dealer.
Dealers may from time to time be required to meet certain criteria in order
to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan or the Class C Plan for which there
is no dealer of record or for which qualification standards have not been met as
partial consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for 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 tax on income and capital gains distributed
to shareholders as required under the Code.
Under the Code, the Fund will be subject to a nondeductible 4% excise tax on
a portion of its undistributed ordinary income and capital gains if it fails to
meet certain distribution requirements with respect to each calendar year. The
Fund intends to make distributions in a timely manner and accordingly does not
expect to be subject to the excise tax.
The Fund pays dividends from net investment income and distributes its net
realized short and long-term capital gains, if any, annually, usually in
December. Dividends from income and/or capital gains may also be paid at such
other times as may be necessary for the Fund to avoid federal income or excise
tax. Generally, dividends from the Fund's net investment income, market discount
income, certain net foreign exchange gains, and net short-term capital gains are
taxable under the Code as ordinary income, and dividends from the Fund's net
long-term capital gains are taxable as long-term capital gains. For federal
income tax purposes, all dividends are taxable as described above whether a
shareholder takes them in cash or reinvests them in additional shares of the
Fund. Information as to the federal tax status of dividends and distributions
will be provided to shareholders annually. For further information on the
distribution options available to shareholders, see "Distribution Options" and
"Directed Dividends" below.
The Fund's dividends and distributions generally will not qualify for any
dividends-received deduction available to corporate shareholders.
The Fund may be subject to foreign withholding taxes or other foreign taxes
on income (possibly including, in some cases, capital gains) on certain of its
foreign investments, which will reduce the yield on or return from those
investments. In any year in which the Fund qualifies, it may make an election
that would permit certain of its shareholders to take a credit or a deduction
for qualified foreign taxes paid by the Fund. Each shareholder would then
include in gross income (in addition to dividends actually received) his or her
appropriate share of the amount of qualified 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 qualified foreign taxes paid and the foreign source
income of the Fund.
Dividends and other distributions and the proceeds of redemptions, exchanges
or repurchases of Fund shares paid to individuals and other non-exempt payees
will be subject to 31% backup withholding of federal income tax if the Fund is
not provided with the shareholder's correct taxpayer identification number and
certification that the number is correct and that the shareholder is not subject
to backup withholding or the Fund receives notice from the IRS or a broker that
such withholding applies. Please refer to the Account Application for additional
information.
The description above relates only to U.S. federal income tax consequences
for shareholders who are U.S. persons, i.e., U.S. citizens or residents or U.S.
corporations, partnerships, trust or estates, and who are subject to U.S.
federal income tax. Non-U.S. shareholders and tax-exempt shareholders are
subject to tax treatment that is different than described above. 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, except
Automatic Investment Plan transactions which are confirmed quarterly. The
Pioneer Combined Account Statement, mailed quarterly, is available to
shareholders who have more than one Pioneer mutual fund account.
Shareholders whose shares are held in the name of an investment broker-dealer
or other party will not normally have an account with the Fund and might not be
able to utilize some of the services available to shareholders of record.
Examples of services which might not be available are purchases, exchanges or
redemptions by mail or telephone,
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automatic reinvestment of dividends and capital gains distributions,
withdrawal plans, Letters of Intention, Rights of Accumulation and
newsletters.
Additional Investments
You may add to your account by sending a check (minimum of $50 for Class A
shares and $500 for Class B and Class C shares) to PSC (account number and Class
of shares should be clearly indicated). The bottom portion of a confirmation
statement may be used as a remittance slip to make additional investments.
Additions to your account, whether by check or through a Pioneer Investomatic
Plan, are invested in full and fractional shares of the Fund at the applicable
offering price in effect as of the close of regular trading on the Exchange on
the day of receipt.
Automatic Investment Plans
You may 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 electronic funds transfer or
draft drawn on a checking account. Pioneer Investomatic Plan investments are
voluntary, and you may discontinue the plan at any time without penalty upon 30
days' written notice. PSC acts as agent for the purchaser, the broker-dealer and
PFD in maintaining these plans.
Financial Reports and Tax Information
As a shareholder, you will receive financial reports at least 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.
If you elect to receive either dividends or capital gains or both in cash and
a distribution check issued to you is returned by the U.S. Postal Service as not
deliverable or a distribution check remains uncashed for six months or more, the
amount of the check may be reinvested in your account. Such additional shares
will be purchased at the then current net asset value. Furthermore, the
distribution option on the account will automatically be changed to the
reinvestment option until such time as you request a different option by writing
to PSC.
Directed Dividends
You may elect (in writing) to have the dividends paid by one Pioneer mutual
fund account invested in a second Pioneer mutual fund account. The value of this
second account must be at least $1,000 ($500 for 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 indicate otherwise on your Account Application or by
writing to PSC. You may purchase, sell or exchange Fund shares by telephone. See
"How to Buy Fund Shares," "How to Sell Fund Shares" and "How to Exchange Fund
Shares" for more information. For personal assistance, call 1-800-225-6292
between 8:00 a.m. and 9:00 p.m. Eastern Time on weekdays. Computer-assisted
transactions may be available to shareholders who have pre-recorded certain
bank information (see FactFonesSM). 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, PSC
will record each telephone transaction, require the caller to provide the
personal identification number ("PIN") for the account and send you a written
confirmation of each telephone transaction. Different procedures may apply to
accounts that are 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 dif-
17
<PAGE>
ficult 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(SM) is an automated inquiry and telephone transaction system
available to Pioneer shareholders by dialing 1-800-225-4321. FactFone(SM) 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(SM) to make computer-assisted telephone
purchases, exchanges and redemptions from your Pioneer mutual fund accounts if
you have activated your PIN. Telephone purchases and redemptions require the
establishment of a bank account of record. You are strongly urged to consult
with your financial representative prior to requesting any telephone
transaction. Shareholders whose accounts are registered in the name of a
broker-dealer or other third party may not be able to use FactFone(SM). See "How
to Buy Fund Shares," "How to Exchange Fund Shares," "How to Sell Fund Shares"
and "Telephone Transactions and Related Liabilities." Call PSC for assistance.
Retirement Plans
You should contact the Retirement Plans Department of PSC at 1-800-622-0176
for information relating to retirement plans for 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 access to TDD keyboard equipment, you
can call our TDD number toll-free at 1-800- 225-1997, weekdays from 8:30 a.m. to
5:30 p.m. Eastern Time to contact our telephone representatives with questions
about your account.
Systematic Withdrawal Plans
If your account has a total value of at least $10,000 you may establish a
Systematic Withdrawal Plan ("SWP") providing for fixed payments at regular
intervals. Withdrawals from Class B and Class C share accounts are limited to
10% of the value of the account at the time the SWP is implemented. See "Waiver
or Reduction of 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, less any applicable CDSC. 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 funda-
18
<PAGE>
mental investment restrictions or approving a management 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 three classes of shares, designated Class A,
Class B and Class C. The shares of each class represent an interest in the same
portfolio of investments of the Fund. Each class has equal rights as to voting,
redemption, dividends and liquidation, except that each class bears different
distribution and transfer agent fees and may bear other expenses properly
attributable to the particular class. Class A, Class B and Class C shareholders
have exclusive voting rights with respect to the Rule 12b-1 distribution plans
adopted by holders of those shares in connection with the distribution of
shares. 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 Class A share certificates;
certificates will not be issued for Class B or Class C shares.
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 and Class C shares
the calculation reflects the deduction of any applicable CDSC. The periods
illustrated would normally include one, five and ten years (or since the
commencement of the public offering of the shares of a Class, if shorter)
through the most recent calendar quarter.
One or more additional measures and assumptions, including but not limited to
historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share values;
or any graphic illustration of such data may also be used. These data may cover
any period of the Fund's existence and may or may not include the impact of
sales charges, taxes or other factors.
Other investments or savings vehicles and/or unmanaged market indices,
indicators of economic activity or averages of mutual 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.
19
<PAGE>
[Pioneer Logo]
Pioneer
Europe Fund
60 State Street
Boston, Massachusetts 02109
OFFICERS
JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
NORMAN KURLAND, Ph.D., Vice President
PATRICK M. SMITH, 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 LLP
0297-3998
(C)Pioneer Funds Distributor, Inc.
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
FactFone(SM)
Automated fund yields, automated prices and
account information .......................................... 1-800-225-4321
Retirement plans .............................................. 1-800-622-0176
Toll-free fax ................................................. 1-800-225-4240
Telecommunications Device for the Deaf (TDD) .................. 1-800-225-1997
<PAGE>
PIONEER EUROPE FUND
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
STATEMENT OF ADDITIONAL INFORMATION
CLASS A, CLASS B AND CLASS C SHARES
FEBRUARY 28, 1997
This Statement of Additional Information is not a Prospectus, but
should be read in conjunction with the Prospectus (the "Prospectus") dated
February 28, 1997, as amended and/or supplemented from time to time, 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. The most recent
Annual Report to Shareholders is attached to, and is hereby incorporated into,
this Statement of Additional Information.
TABLE OF CONTENTS
Page
1. Investment Policies and Restrictions.................................. 2
2. Management of the Fund................................................12
3. Investment Manager....................................................15
4. Principal Underwriter.................................................16
5. Distribution Plans....................................................17
6. Shareholder Servicing/Transfer Agent..................................20
7. Custodian.............................................................20
8. Independent Public Accountants........................................21
9. Portfolio Transactions................................................21
10. Tax Status............................................................22
11. Description of Shares.................................................26
12. Certain Liabilities...................................................27
13. Letter of Intention...................................................28
14. Systematic Withdrawal Plan............................................21
15. Determination of Net Asset Value......................................29
16. Investment Results....................................................29
17. Financial.............................................................32
Appendix A............................................................33
Appendix B............................................................49
-------------------------
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 (the "Exchange"), under agreements which 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.
Pioneering Management Corporation ("PMC"), the Fund's investment adviser, will
monitor the creditworthiness of any such firms pursuant to standards approved by
the Fund's Board of Trustees. 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.
INVESTMENTS IN EMERGING MARKETS
Although the Fund invests primarily in securities of established issuers based
in the developed European countries, it may invest up to 10% of its total assets
in securities of issuers in European countries considered to have emerging
economies or securities markets. The Fund may also invest in currencies of such
countries and may purchase certain options traded in the markets of such
countries. Investments in securities of issuers in emerging markets countries
may involve a high degree of risk and many may be considered speculative. These
investments carry all of the risks of investing in securities of foreign
issuers, as described in the Prospectus under the caption
-2-
<PAGE>
"Investment Objective and Policies," to a heightened degree. These heightened
risks include (i) greater risks of expropriation, confiscatory taxation,
nationalization, and less social, political and economic stability; (ii)
limitations on daily price changes and the small current size and inexperience
of the markets for securities of emerging markets issuers and the currently low
or nonexistent volume of trading, resulting in lack of liquidity and in price
volatility; (iii) certain national policies which may restrict the Fund's
investment opportunities including limitations on aggregate holdings by foreign
investors and restrictions on investing in issuers or industries deemed
sensitive to relevant national interest; and (iv) the absence of developed legal
structures governing private or foreign investment and private property. The
following European countries are generally considered to have emerging markets
or economies: Baltic States, Bulgaria, Czech Republic, Hungary, Poland, Romania,
Russia, Slovakia and Ukraine. 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 PMC. The Fund will not enter into speculative forward foreign
currency contracts.
If the Fund enters into a forward contract to purchase foreign
currency, its custodian bank will segregate cash or liquid, 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 or the amount of the Fund's obligation on such forward contract
increases, additional cash or liquid securities will be placed in the account so
that the value of the account will equal the amount of the Fund's commitment
with respect to such contracts.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions 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
-3-
<PAGE>
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.
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.
-4-
<PAGE>
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 or liquid, 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 seek 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.
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 an attempt 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
-5-
<PAGE>
denominated or in one currency to seek 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 PMC, 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, PMC 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 if the option is exercised, 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 if the option is exercised,
which may have a value lower than the exercise price. Thus, the loss incurred by
the Fund in writing call options on futures (and in entering into futures
transactions) 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.
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
-6-
<PAGE>
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
seek 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 seek 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.
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.
-7-
<PAGE>
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 an attempt 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.
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
-8-
<PAGE>
transactions. Personnel of PMC have experience in options transactions and gains
and losses on investments in options (and futures as described above) depend on
PMC's ability to predict correctly the direction of stock prices, currency
exchange and 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;
(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,
-9-
<PAGE>
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 a fundamental policy of the Fund not to concentrate its
investments in securities of companies in any particular industry. Following the
current opinion of the staff of the Securities and Exchange Commission (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 Fund's
policy does not apply to investments in U.S. government securities.
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;
-10-
<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 officers of the Fund are responsible for the Fund's
operations. The Trustees and executive officers of the Fund are listed below,
together with their principal occupations during the past five years. An
asterisk indicates those Trustees who are interested persons of the Fund within
the meaning of the 1940 Act.
JOHN F. COGAN, JR.*, CHAIRMAN OF THE BOARD, PRESIDENT AND TRUSTEE, DOB: JUNE
1926
President, Chief Executive Officer and a Director of The Pioneer Group, Inc.
("PGI"); Chairman and a Director of Pioneering Management Corporation ("PMC")
and Pioneer Funds Distributor, Inc. ("PFD"); Director of Pioneering Services
Corporation ("PSC"), Pioneer Capital Corporation ("PCC") and Forest-Starma (a
Russian timber joint venture); President and Director of Pioneer Plans
Corporation ("PPC"), Pioneer Investment Corp. ("PIC"), Pioneer Metals and
Technology, Inc. ("PMT"), Pioneer International Corp. ("Pintl"), Luscina, Inc.,
Pioneer First Russia, Inc. ("First Russia") and Pioneer Omega, Inc. ("Omega")
and Theta Enterprises, Inc.; Chairman of the Board and Director of Pioneer
Goldfields Limited ("PGL") and Teberebie Goldfields Limited; Chairman of the
Supervisory Board of Pioneer Fonds Marketing, GmbH ("Pioneer GmbH"); Member of
the Supervisory Board of Pioneer First Polish Trust Fund Joint Stock Company
("PFPT"); Chairman, President and Trustee of all of the Pioneer mutual funds and
Partner, Hale and Dorr LLP (counsel to the Fund).
RICHARD H. EGDAHL, M.D., TRUSTEE, DOB: DECEMBER 1926
Boston University Health Policy Institute, 53 Bay State Rd., Boston, MA 02115
Professor of Management, Boston University School of Management; Professor of
Public Health, Boston University School of Public Health; Professor of Surgery,
Boston University School of Medicine; Director, Boston University Health Policy
Institute and Boston University Medical Center; Executive Vice President and
Vice Chairman of the Board, University Hospital; Academic Vice President for
Health Affairs, Boston University; Director, Essex Investment Management
Company, Inc. (investment
-11-
<PAGE>
adviser), Health Payment Review, Inc. (health care containment software firm),
Mediplex Group, Inc. (nursing care facilities firm), Peer Review Analysis, Inc.
(health care facilities firm) and Springer-Verlag New York, Inc. (publisher);
Honorary Trustee, Franciscan Children's Hospital and Trustee of all of the
Pioneer mutual funds.
MARGARET B.W. GRAHAM, TRUSTEE, DOB: MAY 1947
The Keep, P.O. Box 110. Little Deer Isle, ME 04650
Founding Director, Winthrop Group, Inc., consulting firm; Manager of Research
Operations, Xerox Palo Alto Research Center, from 1991 to 1994; Professor of
Operations Management and Management of Technology, Boston University School of
Management ("BUSM"), from 1989 to 1993 and Trustee of all of the Pioneer mutual
funds, except Pioneer Variable Contracts Trust.
JOHN W. KENDRICK, TRUSTEE, DOB: JULY 1917
6363 Waterway Drive, Falls Church, VA 22044
Professor Emeritus and Adjunct Scholar, George Washington University;
Economic Consultant and Director, American Productivity and Quality Center;
American Enterprise Institute and Trustee of all of the Pioneer mutual funds,
except Pioneer Variable Contracts Trust.
MARGUERITE A. PIRET, TRUSTEE, DOB: MAY 1948
One Boston Place, Suite 2635, Boston, MA 02108
President, Newbury, Piret & Company, Inc. (merchant banking firm) and Trustee
of all of the Pioneer mutual funds.
DAVID D. TRIPPLE*, TRUSTEE AND EXECUTIVE VICE PRESIDENT, DOB: FEBRUARY 1944
Executive Vice President and a Director of PGI; President, Chief Investment
Officer and a Director of PMC; Director of PFD, PCC, PIC, PIntl , First Russia,
Omega and Pioneer SBIC Corporation, Executive Vice President and Trustee of all
of the Pioneer mutual funds.
STEPHEN K. WEST, TRUSTEE, DOB: SEPTEMBER 1928
125 Broad Street, New York, NY 10004
Partner, Sullivan & Cromwell (law firm); Trustee, The Winthrop Focus Funds
(mutual funds) and Trustee of all of the Pioneer mutual funds.
JOHN WINTHROP, TRUSTEE, DOB: JUNE 1936
One North Adgers Wharf, Charleston, SC 29401
President, John Winthrop & Co., Inc. (private investment firm); Director of
NUI Corp.; Trustee of Alliance Capital Reserves, Alliance Government Reserves
and Alliance Tax Exempt Reserves and Trustee of all of the Pioneer mutual funds,
except Pioneer Variable Contracts Trust.
-12-
<PAGE>
NORMAN KURLAND, VICE PRESIDENT, DOB: NOVEMBER 1949
Senior Vice President of PMC since 1993; Vice President of PMC from 1990 to
1993; Vice President of Pioneer India Fund, Pioneer Emerging Markets Fund and
Pioneer International Growth Fund.
PATRICK SMITH, VICE PRESIDENT, DOB: MARCH 1962
Vice President of PMC and Pioneer World Equity Fund.
WILLIAM H. KEOUGH, TREASURER, DOB: APRIL 1937
Senior Vice President, Chief Financial Officer and Treasurer of PGI;
Treasurer of PFD, PMC, PSC, PCC, PIC, PIntl, PMT, PGL, First Russia, Omega and
Pioneer SBIC Corporation; Treasurer and Director of PPC and Treasurer of all of
the Pioneer mutual funds.
JOSEPH P. BARRI, SECRETARY, DOB: AUGUST 1946
Secretary of PGI, PMC, PPC, PIC, PIntl, PMT, First Russia, Omega and PCC;
Clerk of PFD and PSC; Partner, Hale and Dorr LLP (counsel to the Fund) and
Secretary of all of the Pioneer mutual funds.
ERIC W. RECKARD, ASSISTANT TREASURER, DOB: JUNE 1956
Manager of Fund Accounting of PMC since May 1994, Manager of Auditing,
Compliance and Business Analysis for PGI prior to May 1994 and Assistant
Treasurer of all of the Pioneer mutual funds.
ROBERT P. NAULT, ASSISTANT SECRETARY, DOB: MARCH 1964
General Counsel and Assistant Secretary of PGI since 1995; Assistant
Secretary of PMC, PIntl, PGL, First Russia, Omega and all of the Pioneer mutual
funds; Assistant Clerk of PFD and PSC: and formerly of Hale and Dorr LLP
(counsel to the Fund) where he most recently served as junior partner.
The Fund's Amended and Restated Declaration of Trust (the "Declaration of
Trust") provides that the holders of two-thirds of its outstanding shares may
vote to remove a Trustee of the Fund at any meeting of shareholders. See
"Description of Shares" below. The business address of all officers is 60 State
Street, Boston, Massachusetts 02109. All of the outstanding capital stock of
PFD, PMC and PSC is owned, directly or indirectly, by PGI, a publicly-owned
Delaware corporation. PMC, the Fund's investment adviser, serves as the
investment adviser for the Pioneer mutual funds listed below and manages the
investments of certain institutional accounts.
The table below lists all the Pioneer mutual funds currently offered to the
public and the investment adviser and principal underwriter for each fund.
Investment Principal
Fund Name Adviser Underwriter
Pioneer World Equity Fund PMC PFD
Pioneer International Growth Fund PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
-13-
<PAGE>
Pioneer India Fund PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Mid-Cap Fund PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Balanced Fund PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer Interest Shares, Inc. PMC Note 1
Pioneer Variable Contracts Trust PMC Note 2
- -----------------
Note 1 This fund is a closed-end fund.
Note 2 This is a series of eight separate portfolios designed to provide
investment vehicles for the variable annuity and variable life
insurance contracts of various insurance companies or for certain
qualified pension plans.
PMC, the Fund's investment adviser, also manages the investments of
certain institutional private accounts. To the knowledge of the Fund, no officer
or Trustee of the Fund owned 5% or more of the issued and outstanding shares of
PGI as of the date of this Statement of Additional Information, except Mr. Cogan
who then owned approximately 14% of such shares. As of the date of this
Statement of Additional Information, the Trustees and officers of the Fund owned
beneficially in the aggregate less than 1% of the outstanding shares of the
Fund. As of January 31, 1997, of the Fund's Class C shares Merrill Lynch,
Pierce, Fenner & Smith, Inc. for the sole benefit of ITS customers, Mutual Fund
Administration, 4800 Deer Lake Drive, Jacksonville, FL 32246 owned of record
26.36% (23,546 shares); Duane K. Chambers, 5690 S. Kalispell Street, Aurora, CO
80015 owned of record 9.38% (8,384.825 shares); Pioneer Funds Distributor, Inc.,
60 State Street, Boston, MA 02109 owned of record 6.17% (5,517.890 shares) and
Seventh Day Baptist Memorial Fund, Inc., P.O. Box 1678, Janesville, WI 53547
owned of record 5.42% (4,845.760 shares).
COMPENSATION OF OFFICERS AND TRUSTEES
The Fund pays no salaries or compensation to any of its officers,
however, the Fund pays an annual trustees' fee to each Trustee who is not
affiliated with PGI, PMC, PFD or PSC consisting of two components: (a) a base
fee of $500 and (b) a variable fee, calculated on the basis of the Fund's
average
-14-
<PAGE>
net assets of the Fund. In addition, the Fund pays a per meeting fee of $100 to
each Trustee who is not affiliated with PGI, PMC, PFD or PSC. The Fund also pays
an annual committee participation fee to each Trustee who serves as a member of
any committees established to act on behalf of one or more of the of Pioneer
mutual funds. Committee fees are allocated to the Fund on the basis of the
Fund's average net assets. Each Trustee who is a member of the Audit Committee
for the Pioneer mutual funds receives an annual fee equal to 10% of the
aggregate annual trustees' fee, except the Committee Chairperson who receives an
annual trustees' fee equal to 20% of the aggregate annual trustees' fee. Members
of the Pricing Committee for the Pioneer mutual funds, as well as any other
committee which renders material functional services to the Board of Trustees
for the Pioneer mutual funds, receives an annual fee equal to 5% of the annual
trustees' fee, except the Committee Chairperson who receives an annual trustees'
fee equal to 10% of the annual trustees' fee. Any such fees paid to affiliates
or interested persons of PGI, PMC, PFD or PSC are reimbursed to the Fund under
its management contract.
The following table sets forth certain information with respect to the
compensation of each Trustee of the Fund
<TABLE>
<CAPTION>
Pension or Retirement Total Compensation
Aggregate Benefits Accrued as from Fund and all
Compensation Part of the Trust's other Pioneer Mutual
Name of Trustee from the Fund** Expenses Funds***
--------------- --------------- -------- --------
<S> <C> <C> <C>
John F. Cogan, Jr. $ 500.00* $0 $ 11,083*
Richard H. Egdahl, M.D. 2021.50 0 59,858
Margaret B.W. Graham 2061.50 0 59,858
John W. Kendrick 2061.50 0 59,858
Marguerite A. Piret 2363.33 0 79,842
David D. Tripple 500.00* 0 11, 083**
Stephen K. West 2189.16 0 67,850
John Winthop 2256.50 0 66,442
================================================================================================
Total 13,953.49 0 417,052
</TABLE>
* Interested persons
* For the fiscal year ended October 31, 1996.
** For the calendar year ended December 31, 1996.
3. INVESTMENT MANAGER
The Fund has contracted with PMC, 60 State Street, Boston,
Massachusetts, to act as its investment manager. 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.
-15-
<PAGE>
The management contract is renewable annually 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 PMC upon sixty days' written notice by vote of its Board
of Directors or Trustees or a majority of its outstanding voting securities.
Under the Fund's current management cContract, which was approved by
the shareholders of the Fund on April 27, 1994 and 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 computed and
accrued daily and paid monthly. Prior to March 1, 1996, PMC had 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 was waived only to the extent the management fee was waived for Class A
shares. This agreement was voluntary and temporary and was terminated by PMC on
February 28, 1996.
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 Fund's 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 to impose a portion of its management fee and to make other
arrangements, if necessary to limit other expenses of the Fund to the extent
necessary 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 in securities of 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.
The Fund paid or owed $243,963, $499,754 and $950,146 in in management
fees for the fiscal years ended October 31, 1994, 1995 and 1996, respectively.
The Fund would have incurred management fees payable to PMC during 1994, 1995
and 1996 of $592,674, $758,700 and$1,009,461, respectively, had the fee
reduction agreements not been in place.
Under the terminated subadvisory agreements, each Subadviser was paid
an advisory fee by PMC 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 PMC without regard to any expense
limitation affecting PMC's fees. During the period from November 1, 1993 to
April 29, 1994, PMC 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.
4. PRINCIPAL UNDERWRITER
PFD serves as the principal underwriter in connection with the
continuous offering of 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 Trustees. 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, 1994, 1995 and 1996, net underwriting commissions
-16-
<PAGE>
retained by PFD were approximately $40,109, $56,000 and $60,000, respectively.
Commissions reallowed to dealers during such periods were approximately
$482,102, $368,000 and $399,000, respectively.
PFD bears all expenses it incurs in providing services under the
Underwriting Agreement. Such expenses include compensation to its employees and
representatives and to securities dealers for distribution related services. 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, the Fund may issue shares for
consideration other than cash in connection with an acquisition of portfolio
securities or a merger or other reorganization.
5. DISTRIBUTION PLANS
The Fund has adopted plans of distribution pursuant to Rule 12b-1
promulgated by the SEC under the 1940 Act with respect to its Class A, Class B
and Class C shares (the "Class A Plan", the "Class B Plan" and the "Class C
Plan") (collectively, the "Plans").
CLASS A PLAN
Pursuant to the Class A Plan, the Fund reimburses PFD for its
expenditures in financing certain activities primarily intended to result in the
sale of Class A 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's service fee at a rate
equal to 0.25% of the amount invested. As compensation therefor, PFD may retain
the service fee paid by the Fund with respect to such shares for the first year
after purchase. Dealers will
-17-
<PAGE>
become eligible for additional service fees with respect to such shares
commencing in the thirteenth month following purchase. Dealers may from time to
time be required to meet certain other criteria in order to receive service
fees. PFD or its affiliates are entitled to retain all service fees payable
under the Class B Plan for which there is no dealer of record or for which
qualification standards have not been met as partial consideration for personal
services and/or account maintenance services performed by PFD or its affiliates
for shareholder accounts.
The purpose of distribution payments to PFD under the Class B Plan is
to compensate PFD for its distribution services to the Fund. PFD pays
commissions to dealers as well as expenses of printing prospectuses and reports
used for sales purposes, expenses with respect to the preparation and printing
of sales literature and other distribution related expenses, including, without
limitation, the cost necessary to provide distribution-related services, or
personnel, travel office expenses and equipment. The Class B Plan also provides
that PFD will receive all contingent deferred sales charges ("CDSCs")
attributable to Class B shares. (See "Distributions Plans" in the Prospectus.)
When the broker-dealer effecting the sale of Class B shares waives its right to
receive commissions on such sales, PFD may cause the distribution fees described
above to be paid to that broker-dealer.
CLASS C PLAN
The Class C Plan provides that the Fund will pay PFD, as the Fund's
distributor for its Class C shares, a distribution fee accrued daily and paid
quarterly, equal on an annual basis to 0.75% of the Fund's average daily net
assets attributable to Class C shares and will pay PFD a service fee equal to
0.25% of the Fund's average daily net assets attributable to Class C shares. PFD
will in turn pay to securities dealers which enter into a sales agreement with
PFD a distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the Fund's average daily net assets attributable to Class C
shares owned by investors for whom that securities dealer is the holder or
dealer of record. The service fee is intended to be in consideration of personal
services and/or account maintenance services rendered by the dealer with respect
to Class C shares. PFD will advance to dealers the first year's service fee at a
rate equal to 0.25% of the amount invested. As compensation therefor, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Commencing in the thirteenth month following a
purchase of Class C shares, dealers will become eligible for additional service
fees at a rate of up to 0.25% of the current value of the amount invested and
additional compensation at a rate of up to 0.75% of the amount invested with
respect to such shares. Dealers may from time to time be required to meet
certain other criteria in order to receive service fees. PFD or its affiliates
are entitled to retain all service fees payable under the Class C Plan for which
there is no dealer of record or for which qualification standards have not been
met as partial consideration for personal services and/or account maintenance
services performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class C Plan is
to compensate PFD for its distribution services with respect to the Class C
shares of the Fund. PFD pays commissions to dealers as well as expenses of
printing prospectuses and reports used for sales purposes, expenses with respect
to the preparation and printing of sales literature and other
distribution-related expenses, including, without limitation, the cost necessary
to provide distribution-related services, or personnel, travel office expenses
and equipment. The Class C Plan also provides that PFD will receive all CDSCs
attributable to Class C shares. (See "Distributions Plans" in the Prospectus.)
When the broker-dealer effecting the sale of Class
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C shares waives its right to receive commissions on such sales, PFD may cause
the distribution fees described above to be paid to that broker-dealer.
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.
During the fiscal year ended October 31, 1996, the Fund incurred total
distribution fees of $215,432, $132,503 and $3,618 pursuant to the Class A Plan,
Class B Plan, and Class C Plan, respectively. Class C shares were first offered
on January 31, 1996. 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.
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 from a maximum of 4.0% of the lower of the cost or market
value of the shares being redeemed. Redemptions of Class C shares within one
year of purchase are subject to a CDSC of 1.00%. For the fiscal year ended
October 31, 1996, CDSCs in the amount of $20,534 were paid to PFD. Such CDSCs
are paid to PFD in reimbursement of expenses related to servicing of
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shareholders accounts and compensation paid to dealers and sales personnel (as
described in "How to Buy Fund Shares" in the Prospectus).
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
orTrustees, as the case may be, or a majority of the Fund's 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 $22.75 per Class A, Class B and Class C
shareholder account from the Fund as compensation for the services described
above. PSC is also reimbursed by the Fund for its 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. The Fund may
compensate entities which have agreed to provide certain sub-accounting services
such as specific transaction processing and recordkeeping services. Any such
payments by the Fund would be in lieu of the per account fee which would
otherwise be paid by the Fund to PSC.
7. CUSTODIAN
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts
02109 (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 the Fund 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 approving the Subcustodian for European securities,
the Fund's 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 the Fund's European custodian arrangements.
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8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, 225 Franklin Street,, 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.
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 its obligations to the Fund. The
receipt of such research has not reduced PMC's normal independent research
activities; however, it enables PMC to avoid the additional expenses which might
otherwise be incurred if it were to attempt to develop comparable information
through its own staff.
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.
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In addition to the Fund, PMC acts as investment adviser to other
Pioneer mutual 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.
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 mutual funds or a private account managed by PMC seeks to acquire the
same security at about the same time as the Fund, 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, 1994, 1995 and 1996, the Fund
paid or owed aggregate brokerage commissions of approximately$364,000, $250,000
and $315,000, 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. These requirements relate to the sources of the
Fund's income, the diversification of its assets and the distribution of its
income to shareholders. If the Fund meets all such requirements and distributes
to its shareholders, in accordance with the Code's timing requirements, all
investment company taxable income and net capital gain, if any, which it earns,
the Fund will be relieved of the necessity of paying federal income tax.
In order to qualify as a regulated investment company under Subchapter
M, the Fund must, among other things, derive at least 90% of its annual gross
income from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stock,
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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 gains
from the sale of stock, securities and certain other positions held for less
than three months to less than 30% of its annual gross income (the "30% test")
and satisfy certain annual distribution and quarterly diversification
requirements.
Dividends from investment company taxable income, which includes net
investment income, net short-term capital gain in excess of net long-term
capital loss, and certain net foreign exchange gains, are taxable as ordinary
income, whether received in cash or reinvested in additional shares. Dividends
from net long-term capital gain in excess of net short-term capital loss, if
any, whether received in cash or reinvested in additional shares, are taxable to
the Fund's shareholders as long-term capital gains for federal income tax
purposes without regard to the length of time shares of the Fund have been held.
The federal income tax status of all distributions will be reported to
shareholders annually.
Any dividend declared by the Fund in October, November or December as
of a record date in such a month and paid during the following January will be
treated for federal income tax purposes as received by shareholders on December
31 of the calendar year in which it is declared.
Foreign exchange gains and losses realized by the Fund in connection
with certain transactions involving foreign currency-denominated debt
securities, certain options and futures contracts relating to foreign currency,
foreign currency forward contracts, foreign currencies, or payables or
receivables denominated in a foreign currency are subject to Section 988 of the
Code, which generally causes such gains and losses to be treated as ordinary
income and losses and may affect the amount, timing and character of
distributions to shareholders. Any such transactions that are not directly
related to the Fund's investments in stock or securities (or its options or
futures contracts with respect to stock or securities) may need to be limited in
order to enable the Fund to satisfy the limitations described in the second
paragraph above that are applicable to the income or gains recognized by a
regulated investment company. If the net foreign exchange loss for a year were
to exceed the Fund's investment company taxable income (computed without regard
to such loss), the resulting ordinary loss for such year would not be deductible
by the Fund or its shareholders in future years.
If the Fund acquires any equity interest (under proposed regulations,
generally including not only stock but also an option to acquire stock) in
certain foreign corporations that receive at least 75% of their annual gross
income from passive sources (such as interest, dividends, rents, royalties or
capital gain) or hold at least 50% of their assets in investments producing such
passive income ("passive foreign investment companies"), the Fund could be
subject to federal income tax and additional interest charges on "excess
distributions" received from such companies or gain from the sale of stock in
such companies, even if all income or gain actually received by the Fund is
timely distributed to its shareholders. The Fund would not be able to pass
through to its shareholders any credit or deduction for such a tax. Certain
elections may, if available, ameliorate these adverse tax consequences, but any
such election would require the Fund to recognize taxable income or gain without
the concurrent receipt of cash. The Fund may limit and/or manage its holdings in
passive foreign investment companies to minimize its tax liability or maximize
its return from these investments.
The Fund may invest to a limited extent in debt obligations that are in
the lower rating categories or are unrated. Investments in debt obligations that
are at risk of default present special tax issues for the Fund. Tax rules are
not entirely clear about issues such as when the Fund may cease to accrue
interest, original issue discount, or market discount, when and to what extent
deductions may be taken for bad debts or worthless securities, how payments
received on obligations in default should be allocated between principal and
income, and whether exchanges of debt obligations in a workout context are
taxable. These and other issues will be addressed by the Fund, in the event it
invests in such securities, in order to seek to ensure that it distributes
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sufficient income to preserve its status as a regulated investment company and
does not become subject to federal income or excise tax.
If the Fund invests in certain pay-in-kind securities ("PIKs"), zero
coupon securities, deferred interest securities or, in general, any other
securities with original issue discount (or with market discount if the Fund
elects to include market discount in income currently), the Fund must accrue
income on such investments for each taxable year, which generally will be prior
to the receipt of the corresponding cash payments. However, the Fund must
distribute, at least annually, all or substantially all of its net income,
including such accrued income, to shareholders to qualify as a regulated
investment company under the Code and avoid Federal income and excise taxes.
Therefore, the Fund may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash, or may have to leverage itself
by borrowing the cash, to satisfy distribution requirements.
For federal income tax purposes, the Fund is permitted to carry forward
a net capital loss for any year to offset its capital gains, if any, during the
eight years following the year of the loss. To the extent subsequent capital
gains are offset by such losses, they would not result in federal income tax
liability to the Fund and therefore are not expected to be distributed as such
to shareholders.
At the time of an investor's purchase of Fund shares, a portion of the
purchase price may be attributable to realized or unrealized appreciation in the
Fund's portfolio or undistributed taxable income of the Fund. Consequently,
subsequent distributions on these shares from such appreciation or income may be
taxable to such investor even if the net asset value of the investor's shares
is, as a result of the distributions, reduced below the investor's cost for such
shares and the distributions economically represent a return of a portion of the
investment.
Redemptions and exchanges are taxable events. Any loss realized by a
shareholder upon the redemption, exchange or other disposition of shares with a
tax holding period of six months or less will be treated as a long-term capital
loss to the extent of any amounts treated as distributions of long-term capital
gain with respect to such shares.
In addition, if Class A shares redeemed or exchanged have been held for
less than 91 days, (1) in the case of a reinvestment at net asset value pursuant
to the reinvestment privilege, the sales charge paid on such shares is not
included in their tax basis under the Code, and (2) in the case of an exchange,
all or a portion of the sales charge paid on such shares is not included in
their tax basis under the Code, to the extent a sales charge that would
otherwise apply to the shares received is reduced pursuant to the exchange
privilege. In either case, the portion of the sales charge not included in the
tax basis of the shares redeemed or surrendered in an exchange is included in
the tax basis of the shares acquired in the reinvestment or exchange. Losses on
redemptions or other dispositions of shares may be disallowed under "wash sale"
rules in the event of other investments in the Fund (including those made
pursuant to reinvestment of dividends and/or capital gain distributions) within
a period of 61 days beginning 30 days before and ending 30 days after a
redemption or other disposition of shares. In such a case, the disallowed
portion of any loss would be included in the federal tax basis of the shares
acquired in the other investments.
Options written or purchased and futures contracts entered into by the
Fund on certain securities, indices and foreign currencies, as well as certain
foreign currency forward contracts, may cause the Fund to recognize gains or
losses from marking-to-market at the end of its taxable year even though such
options may not have lapsed, been closed out, or exercised or such futures or
forward contracts may not have been
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performed or closed out. The tax rules applicable to these contracts may affect
the characterization as long-term or short-term of some capital gains and losses
realized by the Fund. Certain options, futures and forward contracts relating to
foreign currency may be subject to Section 988, as described above, and may
accordingly produce ordinary income or loss. Losses on certain options, 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. Certain tax elections may be
available that would enable the Fund to ameliorate some adverse effects of the
tax rules described in this paragraph. The tax rules applicable to options,
futures or forward contracts and straddles may affect the amount, timing and
character of the Fund's income and losses and hence of its distributions to
shareholders.
The Fund's dividends and distributions will not qualify for any
dividends-received deduction that might otherwise be available for certain
dividends received by shareholders that are corporations.
The Fund may be subject to withholding and other taxes imposed by
foreign countries, including taxes on interest, dividends and capital gains,
with respect to its investments in those countries. Tax conventions between
certain countries and the U.S. may reduce or eliminate such taxes in some cases.
If more than 50% of the Fund's total assets at the close of any taxable year
consists of stock or securities of foreign corporations, the Fund may elect to
pass through to its shareholders their pro rata shares of qualified 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 and
distributions they actually received), would treat such taxes as foreign taxes
paid by them, and may be entitled to a tax deduction or credit for such taxes,
subject to certain limitations under the Code.
Qualified foreign taxes generally include taxes that would be treated
as income taxes under U.S. tax regulations but do not include most other taxes,
such as stamp taxes, securities transaction taxes, and similar taxes. If the
Fund makes the election described above, shareholders may deduct their pro rata
portion of qualified foreign taxes paid by the Fund in computing their income
subject to U.S. federal income taxation or, alternatively, use them as foreign
tax credits, subject to applicable limitations under the Code, against their
U.S. federal income taxes. Shareholders who do not itemize deductions for
federal income tax purposes will not, however, be able to deduct their pro rata
portion of qualified foreign taxes paid by the Fund, although such shareholders
will be required to include their shares of such taxes in gross income if the
Fund makes the election described above.
If the Fund makes this election and a shareholder chooses to take a
credit for the foreign taxes deemed paid by such shareholder, the amount of the
credit that may be claimed in any year may not exceed the same proportion of the
U.S. tax against which such credit is taken which the shareholder's taxable
income from foreign sources (but not in excess of the shareholder's entire
taxable income) bears to his entire taxable income. For this purpose, long-term
and short-term capital gains the Fund realizes and distributes to shareholders
will generally not be treated as income from foreign sources in their hands, nor
will distributions of certain foreign currency gains subject to Section 988 of
the Code and of any other income realized by the Fund that is deemed, under the
Code, to be U.S.-source income in the hands of the Fund. This foreign tax credit
limitation may also be applied separately to certain specific categories of
foreign-source income and the related foreign taxes. As a result of these rules,
which have different effects depending upon each shareholder's particular tax
situation, certain shareholders may not be able to claim a credit for the full
amount of their proportionate share of the foreign taxes paid by the Fund.
Shareholders who are not liable for U.S. federal income taxes, including
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exempt shareholders, will ordinarily not benefit from this election. If the Fund
does make the election, it will provide required tax information to
shareholders. If the Fund does not make the election, it may deduct such taxes
in computing its income available for distribution to shareholders to satisfy
applicable tax distribution requirements.
Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions, and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their tax
advisers for more information.
Federal law requires that the Fund withhold (as "backup withholding")
31% of reportable payments, including dividends, capital gain dividends and the
proceeds of redemptions (including exchanges) and repurchases to shareholders
who have not complied with Internal Revenue Service ("IRS") regulations. In
order to avoid this withholding requirement, shareholders must certify on their
Account Applications, or on separate IRS Forms W-9, that the Social Security
Number or other Taxpayer Identification Number they provide is their correct
number and that they are not currently subject to backup withholding, or that
they are exempt from backup withholding. The Fund may nevertheless be required
to withhold if it receives notice from the IRS or a broker that the number
provided is incorrect or backup withholding is applicable as a result of
previous underreporting of interest or dividend income.
If, as anticipated, the Fund qualifies as a regulated investment
company under the Code, it will not be required to pay any Massachusetts income,
corporate excise or franchise taxes.
The description of certain federal tax provisions above relates only to
U.S. federal income tax consequences for shareholders who are U.S. persons, i.e.
U.S. citizens or residents or U.S. corporations, partnerships, trusts or
estates, and who are subject to U.S. federal income tax. This description does
not address the special tax rules that may be applicable to particular types of
investors, such as financial institutions, insurance companies, securities
dealers, or tax-exempt or tax-deferred plans, accounts or entities. Investors
other than U.S. persons may be subject to different U.S. tax treatment,
including a possible 30% non-resident alien U.S. withholding tax (or
non-resident alien withholding tax at a lower treaty rate) on amounts treated as
ordinary dividends from the Fund and, unless an effective IRS Form W-8 or
authorized substitute for Form W-8 is on file, to 31% backup withholding on
certain other payments from the Fund. Shareholders should consult their own tax
advisers on these matters and on state, local and other applicable tax laws.
11. DESCRIPTION OF SHARES
The Fund's Declaration of Trust permits 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 three classes of shares of the
Fund, Class A shares, Class B shares and Class C shares. Each share of a class
of the Fund represents an equal proportionate interest in the assets of the Fund
allocable to that class. Upon liquidation of the Fund, shareholders of each
class of the Fund are entitled to share pro rata in the Fund's net assets
allocable to such class available for distribution to shareholders. The Fund
reserves the right to create and issue additional series or classes of shares,
in
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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.
The shares of each series of the Fund are entitled to vote separately
to approve investment advisory agreements or changes in investment restrictions,
but shareholders of all series vote together in the election and selection of
Trustees and accountants. Shares of all series of the Fund vote together as a
class on matters that affect all series of the Fund in substantially the same
manner. As to matters affecting a single series or class, shares of such series
or class will vote separately. No amendment adversely affecting the rights of
shareholders may be made to the Fund's Declaration of Trust without the
affirmative vote of a majority of its shares. Shares have no preemptive or
conversion rights. Shares are fully paid and non-assessable by the Fund, except
as stated below. See "Certain Liabilities."
12. CERTAIN LIABILITIES
As a Massachusetts business trust, the Fund's operations are governed
by its Declaration of Trust dated October 13, 1992, as amended from time to
time, a copy of which is on file with the office of the Secretary of State of
The Commonwealth of Massachusetts. Shareholders of a Massachusetts business
trust may, under certain circumstances, be held personally liable for the
obligations of the 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,
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.
-27-
<PAGE>
13. LETTER OF INTENTION
A Letter of Intent (a "Letter") may be established by completing the
Letter of Intent section of the Account Application. When you sign the Account
Application, you agree to irrevocably appoint PSC your attorney-in-fact to
surrender for redemption any or all shares held in escrow with full power of
substitution. A Letter of Intent is not a binding obligation upon the investor
to purchase, or the Fund to sell, the full amount indicated.
If the total purchases, less redemptions, exceed the amount specified
under the Letter of Intention and are in an amount which would qualify for a
further quantity discount, all transactions will be recomputed on the expiration
date of the Letter of Intention to effect the lower sales charge. Any difference
in the sales charge resulting from such recomputation will be either delivered
to you in cash or invested in additional shares at the lower sales charge. The
dealer, by signing the Account Application, agrees to return to PFD, as part of
such retroactive adjustment, the excess of the commission previously reallowed
or paid to the dealer over that which is applicable to the actual amount of the
total purchases under the Letter of Intention.
If the total purchases, less redemptions, are less than the amount
specified under the Letter of Intention, you must remit to PFD any difference
between the sales charge on the amount actually purchased and the amount
originally specified in the Letter of Intention section of the Account
Application. When the difference is paid, the shares held in escrow will be
deposited to your account. If you do not pay the difference in sales charge
within 20 days after written request from PFD or your dealer, PSC, after
receiving instructions from PFD, will redeem the appropriate number of shares
held in escrow to realize the difference and release any excess.
See "How to Buy Fund Shares" in the Prospectus for more information.
14. SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan ("SWP") is designed to provide a
convenient method of receiving fixed payments at regular intervals from shares
of the Fund deposited by the applicant under this SWP. The applicant must
deposit or purchase for deposit with PSC shares of the Fund having a total value
of not less than $10,000. Periodic payments of $50 or more will be deposited
monthly or quarterly directly into a bank account designated by the applicant,
or will be sent by check to the applicant, or any person designated by the
applicant. Class B share accounts must meet the minimum initial investment
requirement prior to establishing a SWP. Withdrawals under a SWP from Class B
and Class C 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. Designation of another person to receive the checks subsequent
to opening an account must be accompanied by a signature guarantee.
Any income dividends or capital gains distributions on shares under the
SWP will be credited to the SWP account on the payment date in full and
fractional shares at the net asset value per share in effect on the record date.
SWP payments are made from the proceeds of the redemption of shares
deposited under the SWP in a SWP account. To the extent that such redemptions
for periodic withdrawals exceed 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
-28-
<PAGE>
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.
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 Exchange (normally 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 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 and Class
C 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 Exchange.
-29-
<PAGE>
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
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.
-30-
<PAGE>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS
Average annual total return quotations for Class A, Class B and Class C
shares are computed by finding the average annual compounded rates of return
that would cause a hypothetical investment in the class made on the first day of
a designated period (assuming all dividends and distributions are reinvested) to
equal the ending redeemable value of such hypothetical investment on the last
day of the designated period in accordance with the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000,
less the maximum sales load of $57.50 for
Class A shares or the deduction of the CDSC
for Class B and Class C shares at the end of
the period.
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000
initial payment made at the beginning of the
designated period (or fractional portion thereof)
For purposes of the above computation, it is assumed that all dividends and
distributions made by the Fund are reinvested at net asset value during the
designated period. The average annual total return quotation is determined to
the nearest 1/100 of 1%.
In determining the average annual total return (calculated as provided
above), recurring fees, if any, that are charged to all shareholder accounts of
a particular Class are taken into consideration. For any account fees that vary
with the size of the account, the account fee used for purposes of the above
computation is assumed to be the fee that would be charged to the Class' mean
account size.
The average annual total return for each Class of shares for the
one-year, five-year, ten-year and life-of-the-Fund periods ended October 31,
1996 were:
1 Year 5 Years 10 Years Life of Fund
------ ------- -------- ------------
Class A Shares 11.09% 12.05% N/A 10.97% *
Class B Shares 12.88% N/A N/A 15.45% **
Class C Shares N/A N/A N/A 12.96%***
- --------------
* Commencement of operations, April 2, 1991.
** Commencement of operations, April 4, 1994.
***Commencement of operations, January 31, 1996.
Class A share results reflect the maximum sales charge of 5.75%. Class
B and Class C share results reflect the effect of the CDSC that would have been
charged if shares were redeemed at the end of each period. If PMC's voluntary
fee and expense reduction agreement had not been in place, total return would
have been lower.
-31-
<PAGE>
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 fund; 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, Class B and Class C shares
(except for Pioneer money market fund, which seeks a stable $1.00 share price)
will also vary and may be worth more or less at redemption than their original
cost.
17. FINANCIAL STATEMENTS
The audited financial statements are included in the Fund's 1996 Annual
Report to Shareholders which is hereby incorporated by reference into this
Statement of Additional Information and attached hereto in reliance upon the
report of Arthur Andersen LLP, independent public accountants, as experts in
accounting and auditing.
-32-
<PAGE>
APPENDIX A
PIONEER EUROPE FUND
CLASS A SHARES
<TABLE>
<CAPTION>
NET ASSET INITIAL NET
INITIAL OFFERING SALES CHARGE SHARES VALUE ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
<S> <C> <C> <C> <C> <C> <C>
4/2/91 $10,000 $15.92 5.75% 628.141 $15.00 $9,425
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
FROM INVESTMENT FROM CAPITAL FROM DIVIDENDS TOTAL
DATE GAINS REINVESTED REINVESTED VALUE
<S> <C> <C> <C> <C>
12/31/91 $9,774 $0 $0 $9,774
12/31/92 $9,253 $113 $84 $9,450
12/31/93 $11,237 $309 $274 $11,820
12/31/94 $10,986 $1,244 $304 $12,534
12/31/95 $12,431 $2,452 $344 $15,227
12/31/96 14,604 4,151 579 19,334
</TABLE>
-33-
<PAGE>
PIONEER EUROPE FUND
CLASS B SHARES
<TABLE>
<CAPTION>
NET ASSET INITIAL NET
INITIAL OFFERING SALES CHARGE SHARES VALUE ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
<S> <C> <C> <C> <C> <C> <C>
4/4/94 $10,000 $17.96 0.00% 556.793 $17.96 $10,000
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
CONTINGENT
DEFERRED SALES
DATE FROM INVESTMENT FROM CAPITAL FROM DIVIDENDS CHARGE IF TOTAL CDSC
---- --------------- ------------- --------------- ---------- -----
GAINS REINVESTED REINVESTED REDEEMED VALUE PERCENTAGE
---------------- ----------- -------- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
12/31/94 $9,661 $793 $38 $386 $10,106 4.00%
12/31/95 $10,852 $1,772 $43 $400 $12,267 4.00%
12/31/96 $12,684 $3,144 $123 $300 $15,651 3.00%
-------- ------- ------ ---- ---- ------- -----
</TABLE>
-34-
<PAGE>
PIONEER EUROPE FUND
CLASS C SHARES
<TABLE>
<CAPTION>
NET ASSET INITIAL NET
INITIAL OFFERING SALES CHARGE SHARES VALUE ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
<S> <C> <C> <C> <C> <C> <C>
1/31/96 $10,000 $19.92 0.00% 502.008 $19.92 $10,000
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
CONTINGENT
DEFERRED SALES
DATE FROM INVESTMENT FROM CAPITAL FROM DIVIDENDS CHARGE IF TOTAL CDSC
---- --------------- ------------- --------------- ---------- -----
GAINS REINVESTED REINVESTED REDEEMED VALUE PERCENTAGE
---------------- ----------- -------- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
12/31/96 $11,361 $828 $104 $100 $12,193 1.00%
-------- ------- ---- ---- ---- ------- -----
</TABLE>
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<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
The following securities indices are well-known, unmanaged measures of market
performance. Advertisements and sales literature for the Fund may refer to these
indices or may present comparisons between the performance of the Fund and one
or more of the indices. Other indices may be used, if appropriate. The indices
are not available for direct investment. The data presented is not meant to be
indicative of the performance of the Fund, reflects past performance and does
not guarantee future results.
S&P 500
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P Composite Index
includes 500 of the largest stocks (in terms of stock market value) in the
United States; prior to March 1957 it consisted of 90 of the largest stocks.
DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of 30 blue chip stocks.
U.S. SMALL STOCK INDEX
This index is a market value weighted index of the ninth and tenth deciles of
the New York Stock Exchange (NYSE), plus stocks listed on the American Stock
Exchange (AMEX) and over-the-counter (OTC) with the same or less capitalization
as the upper bound of the NYSE ninth decile.
U.S. INFLATION
The Consumer Price Index for All Urban Consumers (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S. Department of Labor, Bureau of Labor Statistics, Washington, DC.
S&P/BARRA INDEXES
The S&P/BARRA Growth and Value Indexes are constructed by dividing the stocks in
the S&P 500 Index according to price-to-book ratios. The Growth Index contains
stocks with higher price-to-book ratios, and the Value Index contains stocks
with lower price-to-book ratios. Both indexes are market capitalization
weighted.
-36-
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
LONG-TERM U.S. GOVERNMENT BONDS
The total returns on long-term government bonds from 1977 to 1991 are
constructed with data from The Wall Street Journal. Over 1926-1976, data are
obtained from the Government bond file at the Center for Research in Security
Prices (CRSP), Graduate School of Business, University of Chicago. Each year, a
one-bond portfolio with a term of approximately 20 years and a reasonably
current coupon was used, and whose returns did not reflect potential tax
benefits, impaired negotiability, or special redemption or call privileges.
Where callable bonds had to be used, the term of the bond was assumed to be a
simple average of the maturity and first call dates minus the current date. The
bond was "held" for the calendar year and returns were computed. Total returns
for 1977-1991 are calculated as the change in the flat price or and-interest
price.
INTERMEDIATE-TERM U.S. GOVERNMENT BONDS
Total returns of the intermediate-term government bonds for 1977-1991 are
calculated from The Wall Street Journal prices, using the change in flat price.
Returns from 1934-1986 are obtained from the CRSP Government Bond File.
Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than 5 years, and this bond is "held"
for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934-1942, almost all bonds
with maturities near 5 years were partially or full tax-exempt and were selected
using the rules described above. Personal tax rates were generally low in that
period, so that yields on tax-exempt bonds were similar to yields on taxable
bonds. From 1926-1933, there are few bonds suitable for construction of a series
with a 5-year maturity. For this period, five year bond yield estimates are
used.
MSCI
Morgan Stanley Capital International Indices, developed by the Capital
International S.A., are based on share prices of some 1470 companies listed on
the stock exchanges around the world.
Countries in the MSCI EAFE Portfolio are:
Australia; Austria; Belgium; Denmark; Finland; France; Germany; Hong Kong;
Italy; Japan; Netherlands; N. Zealand; Norway; Singapore/Malaysia; Spain;
Sweden; Switzerland; United Kingdom.
Countries in the MSCI EMERGING MARKET FREE INDEX are: Argentina, Brazil, Chile,
China, Czech Republic, Colombia, Greece, Hungary, India, Indonesia, Israel,
Jordan, Korea Free (at 50%), Malaysia, Mexico Free, Pakistan, Peru, Philippines
Free, Poland, Portugal, South Africa, Sri Lanka, Taiwan, Thailand, Turkey,
Venezuela Free
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<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
6 MONTH CDS
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
LONG-TERM U.S. CORPORATE BONDS
For 1969-1991, corporate bond total returns are represented by the Salomon
Brothers Long-Term High-Grade Corporate Bond Index. Since most large corporate
bond transactions take place over the counter, a major dealer is the natural
source of these data. The index includes nearly all Aaa- and Aa-rated bonds. If
a bond is downgraded during a particular month, its return for the month is
included in the index before removing the bond from future portfolios.
Over 1926-1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946-1968, Ibbotson
and Sinquefield backdated the Salomon Brothers' index, using Salomon Brothers'
monthly yield data with a methodology similar to that used by Salomon for
1969-1991. Capital appreciation returns were calculated from yields assuming (at
the beginning of each monthly holding period) a 20-year maturity, a bond price
equal to par, and a coupon equal to the beginning-of-period yield. For the
period 1926-1945, the Standard and Poor's monthly High-Grade Corporate Composite
yield data were used, assuming a 4 percent coupon and a 20-year maturity. The
conventional present-value formula for bond price for the beginning and
end-of-month prices was used. (This formula is presented in Ross, Stephen A.,
and Randolph W. Westerfield, Corporate Finance, Times Mirror/Mosby, St. Louis,
1990, p. 97 ["Level-Coupon Bonds"].) The monthly income return was assumed to be
one-twelfth the coupon.
U.S. (30 DAY) TREASURY BILLS
For the U.S. Treasury bill index, data from The Wall Street Journal are used for
1977-1991; the CRSP U.S. Government Bond File is the source until 1976. Each
month a one-bill portfolio containing the shortest-term bill having not less
than one month to maturity is constructed. (The bill's original term to maturity
is not relevant.) To measure holding period returns for the one-bill portfolio,
the bill is priced as of the last trading day of the previous month-end and as
of the last trading day of the current month.
NAREIT-EQUITY INDEX
All of the data is based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMSE and the NASDAQ. The data is
market-value-weighted. Prior to 1987 REITs were added to the index the January
following their listing. Since 1987 Newly formed or listed REITs are added to
the total shares outstanding figure in the month that the shares are issued.
Only common shares issued by the REIT are included in the index. The total
return calculation is based upon the weighing at the beginning
-38-
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
of the period. Only those REITs listed for the entire period are used in the
total return calculation. Dividends are included in the month based upon their
payment date. There is no smoothing of income. Liquidating dividends, whether
full or partial, are treated as income.
RUSSELL 2000 SMALL STOCK INDEX
Index of the 2,000 smallest stocks in the Russell 3000 Index (TM); the smallest
company has a market capitalization of approximately $13 million. The Russell
3000 is comprised of the 3,000 largest US companies as determined by market
capitalization representing approximately 98% of the US equity market. The
largest company in the index has a market capitalization of $67 billion. The
Russell Indexes (TM) are reconstituted annually as of June 1st, based on May 31
market capitalization rankings.
WILSHIRE REAL ESTATE SECURITIES INDEX
The Wilshire Real Estate Securities Index is a market capitalization-weighted
index which measures the performance of more than 85 securities.
The index contains performance data on five major categories of property;
office, retail, industrial, apartment and miscellaneous. Additionally, the Index
has real estate portfolio encumbered by 16% third party mortgages. The companies
in the WRESEC are 79% equity and hybrid REITs and 21% real estate operating
companies. The capitalization is 47% NYSE, 33% AMEX and 20% OTC."
STANDARD & POOR'S MIDCAP 400 INDEX
The Standard and Poor's MidCap 400 Index is a market-value-weighted index. The
performance data for the MidCap 400 Index were calculated by taking the stocks
presently in the MidCap 400 Index and tracking them backwards in time as long as
there were prices reported. No attempt was made to determine what stocks "might
have been" in the MidCap 400 Index five or ten years ago had it existed.
Dividends are reinvested on a monthly basis prior to June 30, 1991, and are
reinvested daily thereafter.
The S&P MidCap 400 Index and the S&P 500 together represent approximately 85% of
the total market capitalization of stocks traded in the United States.
LIPPER BALANCED FUNDS INDEX
Equally-weighted performance indices, adjusted for capital gains distributions
and income dividends of approximately 30 of the largest funds with a primary
objective of conserving principal by maintaining at all times a balanced
portfolio of stocks and bonds. Typically, the stock/bond ratio ranges around
60%/40%.
-39-
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
BANK SAVINGS ACCOUNT
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963-1987 and The Wall Street Journal for the years 1988-1994.
Source: Ibbotson Associates
-40-
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S&P 500 Dow U.S. Small S&P/ S&P/
Jones Stock U.S. BARRA BARRA
Industrials Index Inflation Growth Value
- --------------------------------------------------------------------------------
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A
Dec 1931 -43.34 -49.03 -49.75 -9.52 N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A
Dec 1933 53.99 73.71 142.87 0.51 N/A N/A
Dec 1934 -1.44 8.07 24.22 2.03 N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A
Dec 1942 20.34 14.12 44.51 9.29 N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A
-41-
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S&P 500 Dow U.S. Small S&P/ S&P/
Jones Stock U.S. BARRA BARRA
Industrials Index Inflation Growth Value
- --------------------------------------------------------------------------------
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60
Dec 1994 1.31 5.06 3.11 2.78 3.13 -0.64
Dec 1995 37.43 36.84 34.46 2.74 38.13 36.99
Dec 1996 23.07 28.84 17.62 3.58 23.96 21.99
-42-
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Intermediate MSCI Long-
Long-Term -Term U.S. EAFE 6 Term U.S. U.S.
U.S. Gov't Government - Net of MONTH Corporate (30 Day)
Bonds Bonds Taxes CDs Bonds T- Bill
- --------------------------------------------------------------------------------
Dec 1925 N/A N/A N/A N/A N/A N/A
Dec 1926 7.77 5.38 N/A N/A 7.37 3.27
Dec 1927 8.93 4.52 N/A N/A 7.44 3.12
Dec 1928 0.1 0.92 N/A N/A 2.84 3.56
Dec 1929 3.42 6.01 N/A N/A 3.27 4.75
Dec 1930 4.66 6.72 N/A N/A 7.98 2.41
Dec 1931 -5.31 -2.32 N/A N/A -1.85 1.07
Dec 1932 16.84 8.81 N/A N/A 10.82 0.96
Dec 1933 -0.07 1.83 N/A N/A 10.38 0.30
Dec 1934 10.03 9.00 N/A N/A 13.84 0.16
Dec 1935 4.98 7.01 N/A N/A 9.61 0.17
Dec 1936 7.52 3.06 N/A N/A 6.74 0.18
Dec 1937 0.23 1.56 N/A N/A 2.75 0.31
Dec 1938 5.53 6.23 N/A N/A 6.13 -0.02
Dec 1939 5.94 4.52 N/A N/A 3.97 0.02
Dec 1940 6.09 2.96 N/A N/A 3.39 0.00
Dec 1941 0.93 0.50 N/A N/A 2.73 0.06
Dec 1942 3.22 1.94 N/A N/A 2.60 0.27
Dec 1943 2.08 2.81 N/A N/A 2.83 0.35
Dec 1944 2.81 1.80 N/A N/A 4.73 0.33
Dec 1945 10.73 2.22 N/A N/A 4.08 0.33
Dec 1946 -0.10 1.00 N/A N/A 1.72 0.35
Dec 1947 -2.62 0.91 N/A N/A -2.34 0.50
Dec 1948 3.40 1.85 N/A N/A 4.14 0.81
Dec 1949 6.45 2.32 N/A N/A 3.31 1.10
Dec 1950 0.06 0.70 N/A N/A 2.12 1.20
Dec 1951 -3.93 0.36 N/A N/A -2.69 1.49
Dec 1952 1.16 1.63 N/A N/A 3.52 1.66
Dec 1953 3.64 3.23 N/A N/A 3.41 1.82
Dec 1954 7.19 2.68 N/A N/A 5.39 0.86
Dec 1955 -1.29 -0.65 N/A N/A 0.48 1.57
Dec 1956 -5.59 -0.42 N/A N/A -6.81 2.46
Dec 1957 7.46 7.84 N/A N/A 8.71 3.14
Dec 1958 -6.09 -1.29 N/A N/A -2.22 1.54
Dec 1959 -2.26 -0.39 N/A N/A -0.97 2.95
Dec 1960 13.78 11.76 N/A N/A 9.07 2.66
Dec 1961 0.97 1.85 N/A N/A 4.82 2.13
Dec 1962 6.89 5.56 N/A N/A 7.95 2.73
Dec 1963 1.21 1.64 N/A N/A 2.19 3.12
Dec 1964 3.51 4.04 N/A 4.18 4.77 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 3.93
-43-
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Intermediate MSCI Long-
Long-Term -Term U.S. EAFE 6 Term U.S. U.S.
U.S. Gov't Government - Net of MONTH Corporate (30 Day)
Bonds Bonds Taxes CDs Bonds T- Bill
- --------------------------------------------------------------------------------
Dec 1966 3.65 4.69 N/A 5.75 0.20 4.76
Dec 1967 -9.18 1.01 N/A 5.48 -4.95 4.21
Dec 1968 -0.26 4.54 N/A 6.44 2.57 5.21
Dec 1969 -5.07 -0.74 N/A 8.71 -8.09 6.58
Dec 1970 12.11 16.86 -11.66 7.06 18.37 6.52
Dec 1971 13.23 8.72 29.59 5.36 11.01 4.39
Dec 1972 5.69 5.16 36.35 5.38 7.26 3.84
Dec 1973 -1.11 4.61 -14.92 8.60 1.14 6.93
Dec 1974 4.35 5.69 -23.16 10.20 -3.06 8.00
Dec 1975 9.20 7.83 35.39 6.51 14.64 5.80
Dec 1976 16.75 12.87 2.54 5.22 18.65 5.08
Dec 1977 -0.69 1.41 18.06 6.12 1.71 5.12
Dec 1978 -1.18 3.49 32.62 10.21 -0.07 7.18
Dec 1979 -1.23 4.09 4.75 11.90 -4.18 10.38
Dec 1980 -3.95 3.91 22.58 12.33 -2.76 11.24
Dec 1981 1.86 9.45 -2.28 15.50 -1.24 14.71
Dec 1982 40.36 29.1 -1.86 12.18 42.56 10.54
Dec 1983 0.65 7.41 23.69 9.65 6.26 8.80
Dec 1984 15.48 14.02 7.38 10.65 16.86 9.85
Dec 1985 30.97 20.33 56.16 7.82 30.09 7.72
Dec 1986 24.53 15.14 69.44 6.30 19.85 6.16
Dec 1987 -2.71 2.90 24.63 6.58 -0.27 5.47
Dec 1988 9.67 6.10 28.27 8.15 10.70 6.35
Dec 1989 18.11 13.29 10.54 8.27 16.23 8.37
Dec 1990 6.18 9.73 -23.45 7.85 6.78 7.81
Dec 1991 19.3 15.46 12.13 4.95 19.89 5.60
Dec 1992 8.05 7.19 -12.17 3.27 9.39 3.51
Dec 1993 18.24 11.24 32.56 2.88 13.19 2.90
Dec 1994 -7.77 -5.14 7.78 5.40 -5.76 3.90
Dec 1995 31.67 16.8 11.21 5.21 26.39 5.60
Dec 1996 -0.93 2.10 6.05 5.21 1.40 5.21
-44-
<PAGE>
<TABLE>
<CAPTION>
RUSSELL LIPPER MSCI EMERGING
2000 WILSHIRE REAL S&P MIDCAP BALANCED MARKETS FREE BANK
NAREIT-EQUITY INDEX ESTATE 400 FUND INDEX SAVINGS ACCOUNT
SECURITIES INDEX INDEX
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 N/A N/A N/A N/A N/A N/A N/A
Dec 1927 N/A N/A N/A N/A N/A N/A N/A
Dec 1928 N/A N/A N/A N/A N/A N/A N/A
Dec 1929 N/A N/A N/A N/A N/A N/A N/A
Dec 1930 N/A N/A N/A N/A N/A N/A 5.30
Dec 1931 N/A N/A N/A N/A N/A N/A 5.10
Dec 1932 N/A N/A N/A N/A N/A N/A 4.10
Dec 1933 N/A N/A N/A N/A N/A N/A 3.40
Dec 1934 N/A N/A N/A N/A N/A N/A 3.50
Dec 1935 N/A N/A N/A N/A N/A N/A 3.10
Dec 1936 N/A N/A N/A N/A N/A N/A 3.20
Dec 1937 N/A N/A N/A N/A N/A N/A 3.50
Dec 1938 N/A N/A N/A N/A N/A N/A 3.50
Dec 1939 N/A N/A N/A N/A N/A N/A 3.40
Dec 1940 N/A N/A N/A N/A N/A N/A 3.30
Dec 1941 N/A N/A N/A N/A N/A N/A 3.10
Dec 1942 N/A N/A N/A N/A N/A N/A 3.00
Dec 1943 N/A N/A N/A N/A N/A N/A 2.90
Dec 1944 N/A N/A N/A N/A N/A N/A 2.80
Dec 1945 N/A N/A N/A N/A N/A N/A 2.50
Dec 1946 N/A N/A N/A N/A N/A N/A 2.20
Dec 1947 N/A N/A N/A N/A N/A N/A 2.30
Dec 1948 N/A N/A N/A N/A N/A N/A 2.30
Dec 1949 N/A N/A N/A N/A N/A N/A 2.40
Dec 1950 N/A N/A N/A N/A N/A N/A 2.50
Dec 1951 N/A N/A N/A N/A N/A N/A 2.60
Dec 1952 N/A N/A N/A N/A N/A N/A 2.70
Dec 1953 N/A N/A N/A N/A N/A N/A 2.80
Dec 1954 N/A N/A N/A N/A N/A N/A 2.90
Dec 1955 N/A N/A N/A N/A N/A N/A 2.90
Dec 1956 N/A N/A N/A N/A N/A N/A 3.00
Dec 1957 N/A N/A N/A N/A N/A N/A 3.30
Dec 1958 N/A N/A N/A N/A N/A N/A 3.38
Dec 1959 N/A N/A N/A N/A N/A N/A 3.53
Dec 1960 N/A N/A N/A N/A 5.77 N/A 3.86
Dec 1961 N/A N/A N/A N/A 20.59 N/A 3.90
Dec 1962 N/A N/A N/A N/A -6.80 N/A 4.08
Dec 1963 N/A N/A N/A N/A 13.10 N/A 4.17
Dec 1964 N/A N/A N/A N/A 12.36 N/A 4.19
Dec 1965 N/A N/A N/A N/A 9.80 N/A 4.23
Dec 1966 N/A N/A N/A N/A -5.86 N/A 4.45
Dec 1967 N/A N/A N/A N/A 15.09 N/A 4.67
Dec 1968 N/A N/A N/A N/A 13.97 N/A 4.68
Dec 1969 N/A N/A N/A N/A -9.01 N/A 4.80
Dec 1970 N/A N/A N/A N/A 5.62 N/A 5.14
Dec 1971 N/A N/A N/A N/A 13.90 N/A 5.30
-45-
<PAGE>
RUSSELL LIPPER MSCI EMERGING
2000 WILSHIRE REAL S&P MIDCAP BALANCED MARKETS FREE BANK
NAREIT-EQUITY INDEX ESTATE 400 FUND INDEX SAVINGS ACCOUNT
SECURITIES INDEX INDEX
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1972 8.01 N/A N/A N/A 11.13 N/A 5.37
Dec 1973 -15.52 N/A N/A N/A -12.24 N/A 5.51
Dec 1974 -21.40 N/A N/A N/A -18.71 N/A 5.96
Dec 1975 19.30 N/A N/A N/A 27.10 N/A 6.21
Dec 1976 47.59 N/A N/A N/A 26.03 N/A 6.23
Dec 1977 22.42 N/A N/A N/A -0.72 N/A 6.39
Dec 1978 10.34 N/A 13.04 N/A 4.80 N/A 6.56
Dec 1979 35.86 43.09 70.81 N/A 14.67 N/A 7.29
Dec 1980 24.37 38.58 22.08 N/A 19.70 N/A 8.78
Dec 1981 6.00 2.03 7.18 N/A 1.86 N/A 10.71
Dec 1982 21.60 24.95 24.47 22.68 30.63 N/A 11.19
Dec 1983 30.64 29.13 27.61 26.10 17.44 N/A 9.71
Dec 1984 20.93 -7.30 20.64 1.18 7.46 N/A 9.92
Dec 1985 19.10 31.05 22.20 35.58 29.83 N/A 9.02
Dec 1986 19.16 5.68 20.30 16.21 18.43 N/A 7.84
Dec 1987 -3.64 -8.77 -7.86 -2.03 4.13 N/A 6.92
Dec 1988 13.49 24.89 24.18 20.87 11.18 40.43 7.20
Dec 1989 8.84 16.24 2.37 35.54 19.70 64.96 7.91
Dec 1990 -15.35 -19.51 -33.46 -5.12 0.66 10.55 7.80
Dec 1991 35.70 46.05 20.03 50.10 25.83 59.91 4.61
Dec 1992 14.59 18.41 7.36 11.91 7.46 11.40 2.89
Dec 1993 19.65 18.91 15.24 13.96 11.95 74.83 2.73
Dec 1994 3.17 -1.82 1.64 -3.57 -2.05 7.32 4.96
Dec 1995 15.27 28.44 13.65 30.94 24.89 5.21 5.24
Dec 1996 35.26 16.53 36.87 19.20 13.01 6.03 4.95
</TABLE>
Source: Lipper
-46-
<PAGE>
APPENDIX B
ADDITIONAL PIONEER INFORMATION
The Pioneer group of mutual funds was established in 1928 with the
creation of Pioneer Fund. Pioneer is one of the oldest and most experienced
money managers in the United States.
As of December 31, 1996, PMC employed a professional investment staff
of 53, with a combined average of twelve years' experience in the financial
services industry.
Total assets of all Pioneer mutual funds at December 31, 1996, were
approximately $15.8 billion representing 1,086,554 shareholder accounts, 722,661
non-retirement accounts and 363,893 retirement accounts.
-47-
<PAGE>
FORM N-1A
PIONEER EUROPE FUND
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
The financial statements of the Registrant are incorporated by
reference from the Annual Report to Shareholders for the fiscal year
ended October 31, 1996 (filed with the Securities and Exchange
Commission on December 31, 1996, Accession No. 0000866707-96-000017.
(b) Exhibits:
1.1. Amended and Restated Declaration of Trust***
1.2. Establishment and Designation of Classes***
2. Amended and Restated By-Laws***
3. None
4. None
5. Management Contract dated April 30, 1994 between the Registrant and
Pioneering Management Corporation***
6.1. Underwriting Agreement dated October 9, 1990 between the Registrant and
Pioneer Funds Distributor, Inc.***
6.2. Form of Dealer Sales Agreement***
7. None
8. Custodian Agreement dated January 14, 1992 between the Registrant and
Brown Brothers Harriman & Co.***
9. Investment Company Service Agreement dated April 2, 1991 between the
Registrant and Pioneering Services Corporation***
10. None
11. Consent of Arthur Andersen LLP+
C-1
<PAGE>
12. None
13. Stock Purchase Agreement***
14. None
15.1 Distribution Plan+
15.2 Distribution Plan relating to Class B shares***
15.3 Distribution Plan relating to Class C shares***
16. Description of Average Annual Total Return**
17. Financial Data Schedule+
18.1 Multiple Class Plan pursuant to Rule 18f-3 relating to Class A and
Class B shares***
18.2 Multiple Class Plan pursuant to Rule 18f-3 relating to Class A, Class B
and Class C shares***
19. Powers of Attorney.*
- -----------------------
+ Filed herewith.
* Incorporated by reference from the Registrant's Registration Statement
on Form N-1A (File Nos. 33-36265 and 811-6151) (the "Registration
Statement") as filed with the Securities and Exchange Commission (the
"SEC") on August 8, 1990.
** Incorporated by reference from Post-Effective Amendment No. 1 to the
Registrant's Registration Statement as filed with the SEC on February
6, 1992.
*** Incorporated by reference from Post-Effective Amendment No. 5 to the
Registrant's Registration Statement as filed with the SEC on February
28, 1996.
C-2
<PAGE>
Item 25. Persons Controlled By or Under
Common Control With Registrant
PERCENT STATE/COUNTRY
OF OF
COMPANY OWNED BY SHARES INCORPORATION
------- -------- ------ -------------
Pioneering Management Corp. (PMC) PGI 100% DE
Pioneering Services Corp. (PSC) PGI 100% MA
Pioneer Capital Corp. (PCC) PGI 100% MA
Pioneer Fonds Marketing GmbH (GmbH) PGI 100% MA
Pioneer SBIC Corp. (SBIC) PGI 100% MA
Pioneer Associates, Inc. (PAI) PGI 100% MA
Pioneer International Corp. (Pint) PGI 100% MA
Pioneer Plans Corp. (PPC) PGI 100% MA
Pioneer Goldfields Ltd (PGL) PGI 100% MA
Pioneer Investments Corp. (PIC) PGI 100% MA
Pioneer Metals and Technology, Inc. (PMT) PGI 100% DE
Pioneer First Polish Trust Fund
Joint Stock Co. (First Polish) PGI 100% Poland
Teberebie Goldfields Ltd. (TGL) PGI 90% Ghana
Pioneer Funds Distributor, Inc. (PFD) PMC 100% MA
SBIC's outstanding capital stock PCC 100% MA
THE FUNDS: All are parties to management contracts with PMC.
BUSINESS
FUND TRUST
---- -----
Pioneer International Growth Fund MA
Pioneer Europe Fund MA
Pioneer World Equity Fund DE
Pioneer Emerging Markets Fund DE
Pioneer India Fund DE
Pioneer Mid-Cap Fund DE
Pioneer Growth Shares DE
Pioneer Growth Trust MA
Pioneer Micro-Cap Fund DE
Pioneer Fund DE
Pioneer II DE
Pioneer Real Estate Shares DE
Pioneer Short-Term Income Fund MA
Pioneer America Income Trust MA
Pioneer Bond Fund MA
Pioneer Balanced Fund DE
C-3
<PAGE>
Pioneer Intermediate Tax-Free Fund MA
Pioneer Tax-Free Income Fund DE
Pioneer Money Market Trust DE
Pioneer Variable Contracts Trust DE
Pioneer Interest Shares DE
OTHER:
. SBIC is the sole general partner of Pioneer Ventures Limited
Partnership, a Massachusetts limited partnership.
. ITI Pioneer AMC Ltd. (ITI Pioneer) (Indian Corp.), is a joint venture
between PMC and Investment Trust of India Ltd. (ITI) (Indian Corp.)
. ITI and PMC own approximately 49% and 46%, respectively, of the total
equity capital of ITI Pioneer.
JOHN F. COGAN, JR.
OWNS APPROXIMATELY 14% OF THE OUTSTANDING SHARES OF PGI.
TRUSTEE/
ENTITY CHAIRMAN PRESIDENT DIRECTOR OTHER
------ -------- --------- -------- -----
Pioneer Family
of Mutual Funds X X X
PGL X X X
PGI X X X
PPC X X
PIC X X
Pintl X X
PMT X X
PCC X
PSC X
PMC X X
PFD X X
C-4
<PAGE>
TGL X X
First Polish X Member of
Supervisory
Board
Hale and Dorr LLP Partner
GmbH Chairman of
Supervisory
Board
Item 26. Number of Holders of Securities
The following table sets forth the approximate number of
record holders of each class of securities of the Registrant as of January 31,
1997:
Class A Class B Class C
Number of Record Holders: 9,007 2,340 111
Item 27. Indemnification
Except for the Declaration of Trust dated June 22, 1990, and
amended and restated on October 13, 1992 (the "Declaration of Trust"),
establishing the Registrant as a Trust under Massachusetts law, there is no
contract, arrangement or statute under which any director, officer, underwriter
or affiliated person of the Registrant is insured or indemnified. The
Declaration of Trust provides that no Trustee or officer will be indemnified
against any liability to which the Registrant would otherwise be subject by
reason of or for willful misfeasance, bad faith, gross negligence or reckless
disregard of such person's duties.
Insofar as indemnification for liability arising under the
Securities Act of 1933, as amended (the "Act"), may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment of the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
C-5
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
All of the information required by this item is set forth in
the Form ADV, as amended, of the Registrant's investment advisor, Pioneering
Management Corporation. The following sections of such Form ADV are incorporated
herein by reference:
(a) Items 1 and 2 of Part 2;
(b) Section IV, Business Background, of each Schedule D.
Item 29. Principal Underwriter
(a) See Item 25 above.
(b) Directors and Officers of PFD:
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
---- ---------------- ---------------
John F. Cogan, Jr. Director and Chairman Chairman of the Board, Chief
Executive Officer and Trustee
Robert L. Butler Director and President None
David D. Tripple Director Executive Vice President
and Trustee
Steven M. Graziano Senior Vice President None
Stephen W. Long Senior Vice President None
John W. Drachman Vice President None
Mary Kleeman Vice President None
Barry G. Knight Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Elizabeth B. Rice Vice President None
Mary Kleeman Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy Supovitz Vice President None
Steven R. Berke Assistant Vice President None
Mary Sue Hoban Assistant Vice President None
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
(c) Not applicable.
C-6
<PAGE>
Item 30. Location of Accounts and Records
The accounts and records are maintained at the Registrant's
office at 60 State Street, Boston, Massachusetts; contact the Treasurer.
Item 31. Management Services
The Registrant is not a party to any management-related
service contract, except as described in the Prospectus and Statement of
Additional Information.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to deliver, or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given a copy of the Registrant's report to shareholders furnished pursuant to
and meeting the requirements of Rule 30d-1 under the Investment Company Act of
1940 from which the specified information is incorporated by reference, unless
such person currently holds securities of the Registrant and otherwise has
received a copy of such report, in which case the Registrant shall state in the
Prospectus that it will furnish, without charge, a copy of such report on
request, and the name, address and telephone number of the person to whom such a
request should be directed.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has caused this Post-Effective
Amendment to the Registration Statement (the "Amendment") (which meets all the
requirements for effectiveness pursuant to Rule 485(b) under the Securities Act
of 1933) to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston and The Commonwealth of Massachusetts, on the
26th day of February, 1997.
PIONEER EUROPE FUND
/s/ John F. Cogan, Jr.
John F. Cogan, Jr.
President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
Signature Date
--------- ----
Principal Executive Officer: )
)
)
John F. Cogan, Jr.* )
John F. Cogan, Jr., President )
)
)
Principal Financial and )
Accounting Officer: )
)
)
William H. Keough* )
William H. Keough, Treasurer )
)
Trustees: )
)
)
)
John F. Cogan, Jr.* )
John F. Cogan, Jr. )
C-8
<PAGE>
)
)
Robert H. Egdahl, M.D.* )
Robert H. Egdahl, M.D. )
)
)
John W. Kendrick* )
John W. Kendrick )
)
)
Marguerite A. Piret* )
Marguerite A. Piret )
)
)
David D. Tripple* )
David D. Tripple )
)
)
Stephen K. West* )
Stephen K. West )
)
)
John Winthrop* )
John Winthrop )
)
)
Margaret B. W. Graham* )
Margaret B. W. Graham )
*By: /s/ Joseph P. Barri February 26, 1997
---------------------------
Joseph P. Barri,
Attorney-in-Fact
C-9
<PAGE>
EXHIBIT INDEX
Exhibit
Number Document Title
11. Consent of Arthur Andersen LLP
15.1 Distribution Plan
17. Financial Data Schedule
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
use of our report on Pioneer Europe Fund dated December 4, 1996 (and to all
references to our firm) included in or made a part of Post-Effective Amendment
No. 6 and Amendment No. 7 to Registration Statement File Nos. 33-36265 and
811-6151, respectively.
/s/ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 24, 1997
DISTRIBUTION PLAN
PIONEER EUROPE FUND
DISTRIBUTION PLAN, dated as of October 9, 1990 of PIONEER EUROPE FUND,
a Massachusetts business trust (the "Trust").
WITNESSETH
WHEREAS, the Trust is engaged in business as an open-end, diversified,
management investment company and is registered under the Investment Company Act
of 1940, as amended (collectively with the rules and regulations promulgated
thereunder, the "1940 Act");
WHEREAS, the Trust intends to distribute its shares of beneficial
interest (the "Shares") of the securities portfolio of each series of the Trust
which the Trustees may establish from time to time (the "portfolio") in
accordance with Rule 12b-1 promulgated by the Securities and Exchange Commission
under the 1940 Act ("Rule 12b-1"), and desires to adopt this Distribution Plan
(the "Plan") as a Plan of Distribution pursuant to such rule;
WHEREAS, the Trust desires to engage Pioneer Funds Distributor, Inc., a
Massachusetts corporation ("PFD"), to provide certain distribution services for
the Trust in connection with the Plan;
WHEREAS, the Trust desires to enter into an underwriting agreement with
PFD, whereby PFD will provide facilities and personnel and render services to
the Trust in connection with the offering and distribution of Shares (the
"Underwriting Agreement");
WHEREAS, the Trust also recognizes and agrees that (a) PFD may retain
the services of firms or individuals to act as dealers or wholesalers
(collectively, the "Dealers") of the Shares in connection with the offering of
Shares, (b) PFD may compensate any Dealer that sells Shares in the manner and at
the rate or rates to be set forth in an agreement between PFD and such Dealer,
and (c) PFD may make such payments to the Dealers for distribution services out
of the fee paid to PFD hereunder, its profits or any other source available to
it; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Trust should adopt and implement this Plan, has evaluated such information as it
deemed necessary to make an informed determination whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of the Trust for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Trust and its
shareholders;
<PAGE>
NOW, THEREFORE, that Board of Trustees of the Trust hereby adopts this
Plan for the Trust as a plan for distribution in accordance with Rule 12b-1, on
the following terms and conditions;
1. The Trust may expend pursuant to the Plan amounts not to
exceed .25% of 1% of the average daily net assets of each Portfolio per annum.
2. Subject to the limit in paragraph 1, the Trust shall
reimburse PFD for amounts expended by PFD to finance any activity which is
primarily intended to result in the sale of Shares of the Trust or the provision
of services to shareholders of the Trust, including but not limited to
commissions or other payments to Dealers and salaries and other expenses of PFD
relating to selling or servicing efforts, provided, that the Board of Trustees
of the Trust shall approve categories of expenses for which reimbursement shall
be made pursuant to this paragraph 2 and such reimbursement shall be paid ten
(10) days after the end of the month or quarter, as the case may be, in which
such expenses are incurred. The Trust acknowledges that PFD will charge a sales
load in connection with sales of such shares and that PFD will reallow to
Dealers all or a portion of such sales load, as described in the Trust's
Prospectus from time to time. Nothing contained herein is intended to have any
effect whatsoever of PFD's ability to charge any such sales load or to reallow
all or any portion thereof to Dealers.
3. The Trust understands that agreements between PFD and
Dealers may provide for payment of fees to Dealers in connection with the sale
of Shares and the provision of services to shareholders of the Trust. Nothing in
this Plan shall be construed as requiring the Trust to make any payment to any
Dealer or to have any obligations to any Dealer in connection with services as a
dealer of the Shares. PFD shall agree and undertake that any agreement entered
into between PFD and any Dealer shall provide that such Dealer shall look solely
to PFD for compensation for its services thereunder and that in no event shall
such Dealer seek any payment from the Trust.
4. Nothing herein contained shall be deemed to require the
Trust to take any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Trust's Board of Trustees of the
responsibility for any control of the conduct of the affairs of the Trust.
5. This Plan shall become effective upon approval by a vote of
the Board of Trustees and a vote of a majority of the Trustees who are not
"interested persons" of the Trust and who have no direct or indirect financial
interest in the operation of the Plan or in any agreement related to the Plan
(the "Qualified Trustees"), such votes to be cast in person at a meeting called
for the purpose of voting on this Plan.
-2-
<PAGE>
6. This Plan will remain in effect indefinitely, provided that
such continuance is "specifically approved at least annually" by a vote of both
a majority of the Trustees of the Trust and a majority of the Qualified
Trustees. If such annual approval is not obtained, this Plan shall expire on
October 9, 1991.
7. This Plan may be amended at any time by the Board of
Trustees, provided that this Plan may not be amended to increase materially the
limitation on the annual percentage of average net assets which may be expended
hereunder without the approval of holders of a "majority of the outstanding
voting securities" of the Portfolio effected thereby and may not be materially
amended in any case without a vote of a majority of both the Trustees and the
Qualified Trustees. This plan may be terminated at any time by a vote of a
majority of the Qualified Trustees or by a vote of the holders of a "majority of
the outstanding voting securities" of the Trust.
8. The Trust and PFD shall provide the Trust's Board of
Trustees, and the Board of Trustees shall review, at least quarterly, a written
report of the amounts expended under this Plan and the purposes for which such
expenditures were made.
9. While this Plan is in effect, the selection and nomination
of Qualified Trustees shall be committed to the discretion of the Trustees who
are not "interested persons" of the Trust.
10. For the purposes of this Plan, the terms "interested
persons," "majority of the outstanding voting securities" and "specifically
approved at least annually" are used as defined in the 1940 Act.
11. The Trust shall preserve copies of this Plan, and each
agreement related hereto and each report referred to in paragraph 8 hereof
(collectively, the "Records"), for a period of not less than six (6) years from
the end of the fiscal year in which such Records were made and for a period of
two (2) years, each of such Records shall be kept in an easily accessible place.
12. This Plan shall be construed in accordance with the laws
of the Commonwealth of Massachusetts and the applicable provisions of the 1940
Act.
13. If any provision of this Plan shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Plan shall not be affected thereby.
-3-
[ARTICLE] 6
[CIK] 0000866707
[NAME] PIONEER EUROPE FUND
[SERIES]
[NUMBER] 001
[NAME] PIONEER EUROPE FUND CLASS A
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] OCT-31-1996
[PERIOD-END] OCT-31-1996
[INVESTMENTS-AT-COST] 99236287
[INVESTMENTS-AT-VALUE] 119502641
[RECEIVABLES] 2694189
[ASSETS-OTHER] 6073
[OTHER-ITEMS-ASSETS] 1251918
[TOTAL-ASSETS] 123454821
[PAYABLE-FOR-SECURITIES] 1814245
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 321754
[TOTAL-LIABILITIES] 2135999
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 91572494
[SHARES-COMMON-STOCK] 4296800
[SHARES-COMMON-PRIOR] 3704319
[ACCUMULATED-NII-CURRENT] 1120171
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 8356648
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 20269509
[NET-ASSETS] 121318822
[DIVIDEND-INCOME] 2245147
[INTEREST-INCOME] 297629
[OTHER-INCOME] 0
[EXPENSES-NET] (2060968)
[NET-INVESTMENT-INCOME] 481808
[REALIZED-GAINS-CURRENT] 9058285
[APPREC-INCREASE-CURRENT] 6998959
[NET-CHANGE-FROM-OPS] 16539052
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] (5330480)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 1739083
[NUMBER-OF-SHARES-REDEEMED] 1408516
[SHARES-REINVESTED] 261914
[NET-CHANGE-IN-ASSETS] 33988040
[ACCUMULATED-NII-PRIOR] 217538
[ACCUMULATED-GAINS-PRIOR] 5672389
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1009461
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 2133347
[AVERAGE-NET-ASSETS] 87349166
[PER-SHARE-NAV-BEGIN] 21.19
[PER-SHARE-NII] 0.11
[PER-SHARE-GAIN-APPREC] 3.38
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] (1.43)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 23.25
[EXPENSE-RATIO] 1.94
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<PAGE>
[ARTICLE] 6
[CIK] 0000866707
[NAME] PIONEER EUROPE FUND
[SERIES]
[NUMBER] 002
[NAME] PIONEER EUROPE FUND CLASS B
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] OCT-31-1996
[PERIOD-END] OCT-31-1996
[INVESTMENTS-AT-COST] 99236287
[INVESTMENTS-AT-VALUE] 119502641
[RECEIVABLES] 2694189
[ASSETS-OTHER] 6073
[OTHER-ITEMS-ASSETS] 1251918
[TOTAL-ASSETS] 123454821
[PAYABLE-FOR-SECURITIES] 1814245
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 321754
[TOTAL-LIABILITIES] 2135999
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 91572494
[SHARES-COMMON-STOCK] 889471
[SHARES-COMMON-PRIOR] 421926
[ACCUMULATED-NII-CURRENT] 1120171
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 8356648
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 20269509
[NET-ASSETS] 121318822
[DIVIDEND-INCOME] 2245147
[INTEREST-INCOME] 297629
[OTHER-INCOME] 0
[EXPENSES-NET] (2060968)
[NET-INVESTMENT-INCOME] 481808
[REALIZED-GAINS-CURRENT] 9058285
[APPREC-INCREASE-CURRENT] 6998959
[NET-CHANGE-FROM-OPS] 16539052
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] (622721)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 703595
[NUMBER-OF-SHARES-REDEEMED] 266274
[SHARES-REINVESTED] 30224
[NET-CHANGE-IN-ASSETS] 33988040
[ACCUMULATED-NII-PRIOR] 217538
[ACCUMULATED-GAINS-PRIOR] 5672389
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1009461
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 2133347
[AVERAGE-NET-ASSETS] 13276622
[PER-SHARE-NAV-BEGIN] 20.92
[PER-SHARE-NII] (0.04)
[PER-SHARE-GAIN-APPREC] 3.29
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] (1.43)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 22.74
[EXPENSE-RATIO] 2.76
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<PAGE>
[ARTICLE] 6
[CIK] 0000866707
[NAME] PIONEER EUROPE FUND
[SERIES]
[NUMBER] 003
[NAME] PIONEER EUROPE FUND CLASS C
[PERIOD-TYPE] OTHER
[FISCAL-YEAR-END] OCT-31-1996
[PERIOD-END] OCT-31-1996
[INVESTMENTS-AT-COST] 99236287
[INVESTMENTS-AT-VALUE] 119502641
[RECEIVABLES] 2694189
[ASSETS-OTHER] 6073
[OTHER-ITEMS-ASSETS] 1251918
[TOTAL-ASSETS] 123454821
[PAYABLE-FOR-SECURITIES] 1814245
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 321754
[TOTAL-LIABILITIES] 2135999
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 91572494
[SHARES-COMMON-STOCK] 51791
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 1120171
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 8356648
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 20269509
[NET-ASSETS] 121318822
[DIVIDEND-INCOME] 2245147
[INTEREST-INCOME] 297629
[OTHER-INCOME] 0
[EXPENSES-NET] (2060968)
[NET-INVESTMENT-INCOME] 481808
[REALIZED-GAINS-CURRENT] 9058285
[APPREC-INCREASE-CURRENT] 6998959
[NET-CHANGE-FROM-OPS] 16539052
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 58406
[NUMBER-OF-SHARES-REDEEMED] 6615
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 33988040
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1009461
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 2133347
[AVERAGE-NET-ASSETS] 485222
[PER-SHARE-NAV-BEGIN] 19.92
[PER-SHARE-NII] 0
[PER-SHARE-GAIN-APPREC] 2.77
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 22.69
[EXPENSE-RATIO] 2.75
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
