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PIONEER
Pioneer Europe Fund
Annual Report 10/31/98
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Table of Contents
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Letter from the Chairman 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 7
Schedule of Investments 10
Financial Statements 17
Notes to Financial Statements 25
Report of Independent Public Accountants 31
Trustees, Officers and Service Providers 32
A Salute to Pioneer Fund 33
Programs & Services for Pioneer Shareowners 34
The Pioneer Family of Mutual Funds 36
Retirement Plans From Pioneer 37
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Pioneer Europe Fund
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Letter from the Chairman 10/31/98
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Dear Shareowner,
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I am pleased to introduce this report for Pioneer Europe Fund, covering the
fiscal year ended October 31, 1998. I thank you for your investment with
Pioneer, and I appreciate this opportunity to comment briefly on the world of
global finance and your Fund's continued success.
No single year in recent memory better illustrated both the potential rewards
and the risks that accompany international investing. The dramatic fluctuations
of global markets put investors to the test every quarter during the period.
Starting with the market dive in October of 1997 that fulfilled the correction
of the preceding summer months and ending with a resurgent bull market in the
United States and Europe in October of 1998, investors saw a little of
everything. Discipline, clear thinking and patience were required for investing
success in the past 12 months. Discipline to recall the risks inherent in any
investment when the markets were up. Clear thinking when prices were down, to
keep emotion at bay and to remember the potential rewards of investing in
well-run companies. Finally, patience to stay invested for the long term and to
understand that a single year is not a definitive time period for success or
failure.
For any individual, these are difficult tasks. For Pioneer, these difficult
tasks are the work we do everyday. Seventy years of experience, coupled with
in-depth research capabilities, gives us the knowledge to stay disciplined,
patient and thoughtful for you and your money. As the 1990's close and we enter
a new decade and a new era, these fundamental precepts of investing should
accompany all investors into the future.
I encourage you to read on and learn more about Pioneer Europe Fund. If you have
questions about your Fund, please contact your investment professional, or call
Pioneer at 1-800-225-6292.
Respectfully,
/s/John F. Cogan, Jr.
John F. Cogan, Jr.,
Chairman and President
1
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Pioneer Europe Fund
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PORTFOLIO SUMMARY 10/31/98
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Portfolio Diversification
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(As a percentage of total investment portfolio)
[The following information was depicted as a pie chart in the printed material.]
International Common Stock 87.6%
Short-Term Cash Equivalents 9.0%
Depositary Receipts for International Stocks 2.1%
International Preferred Stocks 1.2%
Rights and Warrants 0.1%
Geographical Distribution
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(As a percentage of equity holdings)
[The following information was depicted as a bar chart in the printed material.]
United Kingdom 21.7%
Germany 16.3%
France 14.4%
Switzerland 10.9%
Italy 9.7%
Spain 8.3%
Netherlands 4.9%
Sweden 4.5%
Denmark 2.4%
Finland 2.2%
Belgium 2.0%
Portugal 1.7%
Austria 0.9%
Czech Republic 0.1%
10 Largest Holdings
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(As a percentage of equity holdings)
1. MobilCom AG 2.84%
2. Biora AB 2.13
3. Gehe AG 1.75
4. Siebe Plc 1.65
5. Ashtead Group Plc 1.62
6. Julius Baer Holding AG 1.62
7. Sidel SA (Bearer Shares) 1.60
8. Kwik-Fit Holdings Plc 1.57
9. TT Group Plc 1.49
10. Selecta Group 1.47
Fund holdings will vary for other periods.
2
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Pioneer Europe Fund
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PERFORMANCE UPDATE 10/31/98 CLASS A SHARES
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Share Prices and Distributions
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Net Asset Value
per Share 10/31/98 10/31/97
$29.87 $27.60
Distributions per Share Income Short-Term Long-Term
(10/31/97 - 10/31/98) Dividends Capital Gains Capital Gains
-- $0.579 $0.970
Investment Returns
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The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Europe Fund, compared to the growth of the Morgan Stanley Capital
International (MSCI) Europe Index.
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Average Annual Total Returns
(As of October 31, 1998)
Net Asset Public Offering
Period Value Price*
Life-of-Fund 14.49% 13.60%
(4/2/91)
5 Years 18.22 16.83
1 Year 14.51 7.94
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* Reflects deduction of the maximum 5.75% sales charge at the beginning of the
period and assumes reinvestment of distributions at net asset value.
[The following information was depicted as a line graph in the printed material]
Growth of $10,000+
Pioneer Europe
Fund A Shares MSCI Europe
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4/30/91 9,425 10,000
10/31/92 9,194 10,159
10/31/94 13,159 14,202
10/31/96 17,852 18,886
10/31/98 26,215 29,281
+ Index comparison begins April 30, 1991. The Morgan Stanley Capital
International (MSCI) Europe Index is a capitalization-weighted index of the
15 European country indexes included in the MSCI EAFE (Europe, Australasia,
Far East) Index. These countries are: Austria, Belgium, Denmark, Finland,
France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain,
Sweden, Switzerland and the United Kingdom. Index returns are calculated
monthly, assume reinvestment of dividends and, unlike Fund returns, do not
reflect any fees, expenses or sales charges. You cannot invest directly in
the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than
their original cost.
3
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Pioneer Europe Fund
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PERFORMANCE UPDATE 10/31/98 CLASS B SHARES
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Share Prices and Distributions
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Net Asset Value
per Share 10/31/98 10/31/97
$28.79 $26.88
Distributions per Share Income Short-Term Long-Term
(10/31/97 - 10/31/98) Dividends Capital Gains Capital Gains
-- $0.579 $0.970
Investment Returns
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The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Europe Fund, compared to the growth of the Morgan Stanley Capital
International (MSCI) Europe Index.
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Average Annual Total Returns
(As of October 31, 1998)
If If
Period Held Redeemed*
Life-of-Fund 18.03% 17.79%
(4/4/94)
1 Year 13.50 9.50
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* Reflects deduction of the maximum applicable contingent deferred sales charge
(CDSC) at the end of the period and assumes reinvestment of distributions.
The maximum CDSC of 4% declines over six years.
[The following information was depicted as a line graph in the printed material]
Growth of $10,000+
Pioneer Europe
Fund B Shares MSCI Europe
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4/30/94 10,000 10,000
10/31/94 10,539 10,310
10/31/95 12,060 11,671
10/31/96 14,095 13,710
10/31/97 17,943 17,273
10/31/98 20,167 21,256
+ Index comparison begins April 30, 1994. The Morgan Stanley Capital
International (MSCI) Europe Index is a capitalization-weighted index of the
15 European country indexes included in the MSCI EAFE (Europe, Australasia,
Far East) Index. These countries are: Austria, Belgium, Denmark, Finland,
France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain,
Sweden, Switzerland and the United Kingdom. Index returns are calculated
monthly, assume reinvestment of dividends and, unlike Fund returns, do not
reflect any fees, expenses or sales charges. You cannot invest directly in
the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than
their original cost.
4
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Pioneer Europe Fund
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PERFORMANCE UPDATE 10/31/98 CLASS C SHARES
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Share Prices and Distributions
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Net Asset Value
per Share 10/31/98 10/31/97
$28.67 $26.73
Distributions per Share Income Short-Term Long-Term
(10/31/97 - 10/31/98) Dividends Capital Gains Capital Gains
-- $0.579 $0.970
Investment Returns
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The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Europe Fund, compared to the growth of the Morgan Stanley Capital
International (MSCI) Europe Index.
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Average Annual Total Returns
(As of October 31, 1998)
If If
Period Held Redeemed*
Life-of-Fund 20.00% 20.00%
(1/31/96)
1 Year 13.70 13.70
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* Assumes reinvestment of distributions. The 1% contingent deferred sales
charge (CDSC) applies to investments sold within one year of purchase.
[The following information was depicted as a line graph in the printed material]
Growth of $10,000
Pioneer Europe
Fund C Shares MSCI Europe
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1/31/96 10,000 10,000
4/30/96 10,542 10,378
10/31/96 11,396 11,232
4/30/97 12,705 12,554
10/31/97 14,520 14,151
4/30/98 19,095 18,265
10/31/98 16,509 17,414
The Morgan Stanley Capital International (MSCI) Europe Index is a
capitalization-weighted index of the 15 European country indexes included in the
MSCI EAFE (Europe, Australasia, Far East) Index. These countries are: Austria,
Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway,
Portugal, Spain, Sweden, Switzerland and the United Kingdom. Index returns are
calculated monthly, assume reinvestment of dividends and, unlike Fund returns,
do not reflect any fees, expenses or sales charges. You cannot invest directly
in the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
5
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Pioneer Europe Fund
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PERFORMANCE UPDATE 10/31/98 CLASS Y SHARES
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Share Prices and Distributions
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Net Asset Value
per Share 10/31/98 7/2/98
$29.90 $34.63
Distributions per Share Income Short-Term Long-Term
(7/2/98 - 10/31/98) Dividends Capital Gains Capital Gains
-- -- --
Investment Returns
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The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Europe Fund, compared to the growth of the Morgan Stanley Capital
International (MSCI) Europe Index.
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Average Annual Total Returns
(As of October 31, 1998)
If If
Period Held Redeemed
Life-of-Fund (13.66)% (13.66)%
(7/2/98)
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[The following information was depicted as a line graph in the printed material]
Growth of $10,000+
Pioneer Europe
Fund Y Shares MSCI Europe
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7/31/98 10,000 10,000
8/31/98 8,436 8,742
9/30/98 7,822 8,393
10/31/98 8,458 9,064
+ Index comparison begins July 31, 1998. The Morgan Stanley Capital
International (MSCI) Europe Index is a capitalization-weighted index of the
15 European country indexes included in the MSCI EAFE (Europe, Australasia,
Far East) Index. These countries are: Austria, Belgium, Denmark, Finland,
France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain,
Sweden, Switzerland and the United Kingdom. Index returns are calculated
monthly, assume reinvestment of dividends and, unlike Fund returns, do not
reflect any fees, expenses or sales charges. You cannot invest directly in
the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than
their original cost.
6
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Pioneer Europe Fund
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PORTFOLIO MANAGEMENT DISCUSSION 10/31/98
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In recent years, European markets have become an attractive destination for
investors. Improving economic growth, corporate restructuring and the
anticipated launch of the euro in 1999 helped push stock prices higher. And even
though the meltdown of Asia's financial and currency markets became an economic
slowdown of global proportions with European companies feeling the effects, the
Fund performed solidly for the fiscal year. The following discussion with your
Fund's portfolio manager, Patrick M. Smith, explains the factors and events that
influenced his strategy and your Fund's performance over the past year.
Q: How did the Fund perform during the 12 months ended October 31?
A: The Fund got off to a strong start. European stocks rallied well into the
second half of the year, despite ongoing concerns about Asia's economic
malaise. In August, however, decelerating growth worldwide and ongoing
economic turmoil in emerging markets triggered a steep decline in global
stock prices. The markets remained skittish into September. October brought a
partial recovery (helped by a reduction in U.S. interest rates and the
International Monetary Fund's efforts to confront Brazil's deepening economic
crisis).
In this volatile market, Pioneer Europe Fund's Class A Shares returned 14.5%
at net asset value for the year ended October 31, 1998. The average return
for the 91 European regional funds tracked by Lipper Analytical Services was
15.5%. The 12-month total return for the Morgan Stanley Capital International
(MSCI) Europe Index was 23.1%. The Fund's allocations to investment
management and capital goods companies helped the Fund early in the year, but
held it back in later months.
Q: Why has Europe been affected by Asia's recession?
A: For more than a year, currency and economic problems have plagued the Pacific
Rim, driving the region's economies into recession. Asian demand for European
goods has dropped dramatically, resulting in earnings disappointments and
fears that Europe's economic expansion may be slowing.
7
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Pioneer Europe Fund
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PORTFOLIO MANAGEMENT DISCUSSION 10/31/98 (continued)
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The inability of Asian leaders to address their deepening crisis has shaken
investors' confidence in all emerging markets. Russia's default on its
short-term debt and the devaluation of the ruble shocked world markets.
Investors were quick to react, and stocks fell sharply around the globe, most
precipitously in emerging market nations. Now, there is concern Latin America
may be forced to devalue their currencies in the face of continued capital
outflows and falling exports. Nervous investors remain alert to the
vulnerability of European companies to further instability in the economies
and businesses in emerging markets.
Q: Did you find new investment opportunities in this environment?
A: Yes. We found opportunities in telecommunications, healthcare and utility
stocks. These investments tend to play a defensive role, generally declining
less than the overall market in periods of uncertainty. Telecommunications is
an area in which monopolies are coming under pressure and competition is
increasing. MobilCom (Germany), a well-managed company that is steadily
increasing market share, is the Fund's largest holding. The Fund has profited
from holdings in several pharmaceutical companies, Novartis (Switzerland) and
Roche Holdings (Switzerland). Utility investments increased with the addition
of Aguas de Barcelona (Spain) and Suez Lyonnaise des Eaux (France), both of
which are dedicated to delivering high-quality drinking water.
Q: What else are you doing to prepare the Fund for a changing European economy?
A: Improving news on the international front lifted investors' spirits during
October, sparking a rebound in European markets. We took steps to reposition
the portfolio during the rally by selling companies with weaker prospects and
buying less cyclical, more defensive companies, which may fare better in a
slower-growth environment.
The capital goods industry (which manufactures products used in the
production of other goods, such as machinery and equipment), was one of the
most battered sectors in the recent correction. Many of these businesses are
encountering slower global demand. Consequently, we eliminated positions in
machine tool maker IWKA (Germany) and Philips Electronics (Netherlands) while
reducing posi-
8
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Pioneer Europe Fund
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tions in paper machinery company Valmet (Finland) and mining-equipment
provider Svedala (Sweden).
We also sold holdings in several companies that announced disappointing
earnings. This list includes auto/bus fleet manager Arriva (U.K.), the
pharmaceutical company Astra (Sweden), oil and gas producer Veba (Germany),
which has controversial nuclear exposure, and Olicom (Denmark), a
manufacturer of computer networking equipment. The potential for
disappointing earnings led us to sell broadcaster Schibsted (Norway).
Q: How did the Fund's financial holdings fare?
A: Asset management holdings have long been a backbone of the portfolio and
played a large role in the Fund's performance -- both during the stock
market's rise and its correction. After a meteoric climb through March,
financial-service stocks fell further than the general market as investors
moved toward more conservative fixed-income and money market investments.
We're still very optimistic about the sector's long-term potential,
especially in light of the growing demand for pension and personal retirement
plans. Restructuring and mergers and acquisitions should also help boost
prices of financial services companies. Two of the Fund's positions, Amvescap
(U.K.) and Julius Baer Holding, a top ten holding, (Switzerland), are in this
group.
Q: What is your outlook for the new fiscal year?
A: European stocks have generated some very rewarding performance in recent
memory. But markets move in cycles, and investing overseas carries certain
risks, including currency fluctuations and political and economic
uncertainty.
The recent fluctuations in stock prices are disconcerting and distracting.
But stock investing requires a long-term vision, and there are many positive
economic and demographic trends in place throughout Europe that bode well for
its stock markets over time. We believe Pioneer Europe Fund's emphasis on
innovative, fast-growing companies will serve investors well in the coming
months and beyond.
9
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Pioneer Europe Fund
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SCHEDULE OF INVESTMENTS 10/31/98
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Shares Value
INVESTMENT IN SECURITIES - 91.0%
PREFERRED STOCK - 1.2%
75,000 Henkel KGaA (Non-voting) $ 6,406,580
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Total Preferred Stock
(Cost $4,770,647) $ 6,406,580
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COMMON STOCKS - 89.7%
Basic Materials - 3.2%
Chemicals - 0.8%
100,000 BASF AG $ 4,237,851
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Containers & Packaging (Paper) - 1.8%
39,200 Schmalbach Lubeca AG $ 5,975,249
5,350 Viag AG 3,633,414
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$ 9,608,663
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Paper & Forest Products - 0.6%
168,000 NV Koninklijke KNP BT $ 3,011,639
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Total Basic Materials $ 16,858,153
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Capital Goods - 13.2%
Aerospace/Defense - 1.1%
746,600 British Aerospace Plc $ 5,588,600
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Engineering & Construction - 3.2%
2,350,000 Ashtead Group Plc $ 7,670,188
48,000 Technip 4,881,297
46,000 VA Technologies AG 4,263,463
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$ 16,814,948
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Machinery (Diversified) - 3.0%
102,801 Sidel SA (Bearer Shares) $ 7,586,243
1,908,000 Siebe Plc 7,824,345
31,400 Valmet Corp. 336,562
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$ 15,747,150
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Manufacturing (Diversified) - 3.4%
373,000 Bodycote International Plc $ 5,556,513
50,000 Mannesmann AG 4,920,012
1,917,000 TT Group Plc 7,059,083
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$ 17,535,608
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10 The accompanying notes are an integral part of these financial statements.
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Pioneer Europe Fund
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Shares Value
Office Equipment & Supplies - 1.0%
246,850 Koninkluke Ahrend NV $ 5,006,349
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Trucks & Parts - 0.4%
150,000 Svedala Industri $ 2,363,415
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Total Capital Goods $ 63,056,070
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Communication Services - 8.0%
Cellular/Wireless Telecommunications - 4.2%
46,294 MobilCom AG $ 13,442,447
20,500 Telecel-Comunicacaoes Pessoais, SA* 3,776,300
850,000 Telecom Italia Mobile SpA Di Risp 3,012,107
270,000 Telecom Italia Mobile SpA 1,566,924
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$ 21,797,778
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Telephone - 3.8%
90,000 Portugal Telecom SA (A.D.R.) $ 4,252,500
11,700 Swisscom AG* 3,962,444
296,666 Telecom Italia SpA 2,144,181
920,000 Telecom Italia SpA Di Risp 4,634,930
108,545 Telefonica SA 4,900,938
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$ 19,894,993
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Total Communication Services $ 41,692,771
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Consumer Cyclicals - 17.9%
Auto Parts & Equipment - 1.4%
898,000 Kwik-Fit Holdings Plc $ 7,440,208
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Automobiles - 0.9%
60,000 DaimlerChrysler AG (NY shares) $ 4,672,502
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Consumer (Jewelry, Novelties & Gifts) - 1.2%
568,000 Safilo SpA $ 2,528,987
53,000 TAG Heuer International SA (Registered) 3,460,857
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$ 5,989,844
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Household Furnishings & Appliances - 1.9%
11,700 Forbo Holding AG $ 4,834,354
290,000 Moulinex* 4,916,935
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$ 9,751,289
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The accompanying notes are an integral part of these financial statements. 11
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Pioneer Europe Fund
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SCHEDULE OF INVESTMENTS 10/31/98 (continued)
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Shares Value
Publishing - 1.0%
500,000 Reuters Group Plc $ 5,146,934
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Retail (Department Stores) - 1.1%
94,400 Metro AG $ 5,812,738
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Retail (Specialty) - 1.7%
645,000 Carpetright Plc $ 1,975,670
31,700 Selecta Group 6,970,117
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$ 8,945,787
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Services (Commercial & Consumer) - 6.6%
80,000 Falck AS $ 6,224,198
120,000 Hagemeyer NV 3,775,786
310,000 Hays Plc 4,549,937
1,716 Kuoni Reisen Holding AG (Series B) (Registered) 6,128,119
422,311 Prosegur, CIA de Seguridad SA 5,111,744
650,000 Rentokil Initial Plc 3,984,799
525,000 Select Appointments Holdings Plc 4,569,474
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$ 34,344,057
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Textiles (Apparel) - 1.3%
4,725 Hugo Boss AG $ 6,560,519
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Textiles (Home Furnishings) - 0.8%
243,000 Industrie Natuzzi SpA (A.D.R.) $ 4,419,563
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Total Consumer Cyclicals $ 93,083,441
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Consumer Staples - 6.7%
Beverages (Non-Alcoholic) - 0.6%
100,000 Louis Dreyfus Citrus $ 2,879,821
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Broadcasting (Television/Radio/Cable) - 0.1%
110,750 Central European Media Enterprises Ltd.* $ 706,031
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Distributors (Food & Health) - 1.6%
110,000 Gehe AG $ 8,267,431
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Foods - 0.7%
267,000 Raisio Group Plc $ 3,656,808
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Household Products (Non-Durables) - 0.4%
65,000 Hunter Douglas NV $ 2,330,435
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12 The accompanying notes are an integral part of these financial statements.
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Pioneer Europe Fund
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Shares Value
Restaurants - 0.7%
360,400 Compass Group Plc $ 3,619,425
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Retail Stores (Food Chains) - 1.7%
7,000 Carrefour SA $ 4,646,592
47,000 Delhaize-Le Lion, SA 4,014,039
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$ 8,660,631
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Services (Employment) - 0.9%
10,629 Adecco SA $ 4,212,649
1,030 Adecco SA (Bearer Shares) 410,389
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$ 4,623,038
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Total Consumer Staples $ 34,743,620
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Energy - 2.2%
Oil (International Integrated) - 2.2%
47,000 Elf Aquitaine SA $ 5,439,443
1,300,000 Sapiem SpA (A.D.R.) 5,946,754
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Total Energy $ 11,386,197
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Financial - 18.5%
Banks (Major Regional) - 9.3%
895,000 Banca Fideuram SpA $ 5,131,286
579,900 Banca Popolare di Milano 4,587,419
197,880 Banco de Santander SA 3,624,382
75,000 Banque Paribas* 5,513,058
75,000 Credit Commercial de France 5,267,373
82,520 DePfa-Bank 6,525,880
2,500 Julius Baer Holding AG 7,655,132
120,000 Svenska Handelbanken 5,049,638
65,000 Unidanmark A/S 4,953,954
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$ 48,308,122
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Financial (Diversified) - 0.6%
70,000 Internationale Nederlanden Groep NV $ 3,386,221
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Insurance (Life/Health) - 2.1%
115,000 Mapfre Vida Seguros $ 4,563,751
203,000 Mediolanum SpA 5,051,630
11,200 Union Des Assurance Federal 1,401,033
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$ 11,016,414
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The accompanying notes are an integral part of these financial statements. 13
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Pioneer Europe Fund
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SCHEDULE OF INVESTMENTS 10/31/98 (continued)
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Shares Value
Insurance (Multi-Line) - 5.5%
55,000 Axa SA $ 6,216,814
53,000 Axa Colonia Konzern AG 6,111,077
169,400 Catalana Occidente SA 4,497,771
550,000 Royal & Sun Alliance Insurance Group Plc 5,058,642
11,000 Zurich Versicherungsgesellschaft (Registered)* 6,679,702
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$ 28,564,006
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Investment Management - 1.0%
672,000 Amvescap Plc $ 5,151,554
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Total Financial $ 96,426,317
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Healthcare - 7.9%
Healthcare (Drugs/Major Pharmaceuticals) - 5.2%
304,000 Fabrica Espanola de Productos Quimicos y
Farmaceuticos, SA $ 4,586,114
3,200 Novartis AG 5,761,086
500 Roche Holdings AG 5,828,968
450,000 Smithkline Beecham Plc 5,588,818
910 UCB SA 5,311,217
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$ 27,076,203
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Healthcare (Medical Products/Supplies) - 2.7%
1,155,200 Biora AB*+ $ 10,062,589
130,000 Biora AB (A.D.R.)* 2,380,625
800,000 Esaote Biomedica SpA 1,783,416
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$ 14,226,630
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Total Healthcare $ 41,302,833
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Technology - 5.6%
Communications Equipment - 2.3%
33,500 Alcatel Alsthom SA $ 3,732,339
70,000 Nokia AB 6,419,214
76,000 Telefonaktiebolaget LM Ericsson (Series B) 1,713,444
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$ 11,864,997
------------
Computers (Networking) - 0.1%
12,900 Equant NV* $ 559,103
------------
Computers (Software & Services) - 0.5%
4,025 Ixos Software AG* $ 437,368
450,000 JBA Holdings Plc 2,184,309
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$ 2,621,677
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14 The accompanying notes are an integral part of these financial statements.
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Pioneer Europe Fund
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Shares Value
Electronics (Component Distributors) - 0.6%
460,000 Electrocomponents Plc $ 3,033,595
------------
Electronics (Semiconductors) - 1.0%
89,000 STMicroelectronics NV* $ 5,446,462
------------
Services (Computer Systems) - 1.1%
135,000 Getronics NV $ 5,598,662
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Total Technology $ 29,124,496
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Transportation - 1.1%
Railways - 1.1%
1,417,740 Stagecoach Holdings Plc $ 5,505,390
------------
Total Transportation $ 5,505,390
------------
Utilities - 6.5%
Electric Companies - 2.4%
250,000 Endesa SA $ 6,300,582
650,000 Scottish Power Plc 6,375,504
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$ 12,676,086
------------
Power Producers - 1.0%
3,571,000 AEM SpA* $ 4,857,022
------------
Water Utilities - 3.1%
105,000 Aguas De Barcelona $ 5,598,112
30,000 Suez Lyonnaise Des Eaux 5,372,667
350,000 United Utilities Plc 5,120,154
------------
$ 16,090,933
------------
Total Utilities $ 33,624,041
------------
Total Common Stocks
(Cost $436,633,157) $466,803,329
------------
RIGHTS & WARRANTS - 0.1%
105,000 Aguas De Barcelona, 11/20/98* $ 52,179
60,000 Banca Popolare di Bergamo, 3/31/04* 177,488
------------
Total Rights & Warrants
(Cost $53,079) $ 229,667
------------
TOTAL INVESTMENT IN SECURITIES
(Cost $441,456,883)(a) $473,439,576
------------
The accompanying notes are an integral part of these financial statements. 15
<PAGE>
Pioneer Europe Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 10/31/98 (continued)
- --------------------------------------------------------------------------------
Principal
Amount Value
TEMPORARY CASH INVESTMENTS - 9.0%
Commercial Paper - 9.0%
$18,775,000 American Express Credit Corp., 5.35%, 11/2/98 $ 18,775,000
13,000,000 Citigroup Inc., 5.5% 11/3/98 13,000,000
14,771,000 Household Finance Corp., 5.5%, 11/4/98 14,771,000
------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $46,546,000) $ 46,546,000
------------
TOTAL INVESTMENT IN SECURITIES AND
TEMPORARY CASH INVESTMENTS - 100%
(Cost $488,002,883)(b) $519,985,576
============
* Non-income producing security.
+ Investment held by Fund representing 5% or more of the outstanding voting
stock of such company.
(a) Distribution of investments by country of issue, as a percentage of total
equity holdings, is as follows:
United Kingdom 21.7%
Germany 16.3
France 14.4
Switzerland 10.9
Italy 9.7
Spain 8.3
Netherlands 4.9
Sweden 4.5
Denmark 2.4
Finland 2.2
Belgium 2.0
Portugal 1.7
Others (individually less than 1%) 1.0
-----
100.0%
=====
(b) At October 31, 1998, the net unrealized gain on investments based on cost
for federal income tax purposes of $488,607,652 was as follows:
Aggregate gross unrealized gain for all investments
in which there is an excess of value over tax cost $ 76,190,179
Aggregate gross unrealized loss for all investments
in which there is an excess of tax cost over value (44,812,255)
------------
Net unrealized gain $ 31,377,924
============
Purchases and sales of securities (excluding temporary cash investments) for the
year ended October 31, 1998, aggregated $418,386,421 and $133,656,929,
respectively.
16 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Europe Fund
- --------------------------------------------------------------------------------
BALANCE SHEET 10/31/98
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including
temporary cash investments of $46,546,000)
(cost $488,002,883) $519,985,576
Cash 577
Foreign currencies, at value 1,060,459
Receivables -
Investment securities sold 1,378,258
Fund shares sold 3,494,893
Dividends, interest and foreign taxes withheld 696,543
Forward foreign currency settlement hedge contracts - net 1,074
Other 4,036
------------
Total assets $526,621,416
------------
LIABILITIES:
Payables -
Investment securities purchased $ 27,345,899
Fund shares repurchased 563,434
Due to affiliates 736,199
Accrued expenses 133,417
------------
Total liabilities $ 28,778,949
============
NET ASSETS:
Paid-in capital $452,699,109
Accumulated undistributed net investment income 1,023,223
Accumulated undistributed net realized gain on
investments and foreign currency transactions 12,106,600
Net unrealized gain on investments 31,982,693
Net unrealized gain on forward foreign currency
contracts and other assets and liabilities
denominated in foreign currencies 30,842
------------
Total net assets $497,842,467
============
Net Asset Value Per Share:
(Unlimited number of shares authorized)
Class A (based on $315,308,505/10,556,866 shares) $ 29.87
============
Class B (based on $135,534,605/4,707,598 shares) $ 28.79
============
Class C (based on $39,261,137/1,369,520 shares) $ 28.67
============
Class Y (based on $7,738,220/258,785 shares) $ 29.90
============
Maximum Offering Price:
Class A $ 31.69
============
The accompanying notes are an integral part of these financial statements. 17
<PAGE>
Pioneer Europe Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended 10/31/98
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld
of $490,787) $ 6,125,830
Interest 1,243,755
-----------
Total investment income $ 7,369,585
-----------
EXPENSES:
Management fees $ 3,506,082
Transfer agent fees
Class A 431,133
Class B 211,021
Class C 37,640
Class Y 142
Distribution fees
Class A 639,637
Class B 870,504
Class C 204,848
Accounting 95,295
Custodian fees 276,523
Registration fees 69,350
Professional fees 66,115
Printing 24,071
Fees and expenses of nonaffiliated trustees 21,897
Miscellaneous 28,213
-----------
Total expenses $ 6,482,471
Less fees paid indirectly (163,330)
-----------
Net expenses $ 6,319,141
-----------
Net investment income $ 1,050,444
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $12,168,065
Forward foreign currency contracts
and other assets
and liabilities denominated
in foreign currencies (13,714) $ 12,154,351
----------- ------------
Change in net unrealized gain from:
Investments $(16,508,720)
Forward foreign currency contracts
and other assets
and liabilities denominated
in foreign currencies 27,047 $(16,481,673)
Net loss on investments and foreign currency ------------ ------------
transactions $ (4,327,322)
------------
Net decrease in net assets
resulting from operations $ (3,276,878)
============
18 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Europe Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Years Ended 10/31/98 and 10/31/97
Year Ended Year Ended
10/31/98 10/31/97
FROM OPERATIONS:
Net investment income $ 1,050,444 $ 65,440
Net realized gain on investments
and foreign currency transactions 12,154,351 11,830,813
Change in net unrealized gain on investments
and foreign currency transactions (16,481,673) 28,225,699
------------- -------------
Net increase (decrease) in net assets resulting
from operations $ (3,276,878) $ 40,121,952
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ($0.00 and $0.22 per share, respectively) $ -- $ (956,926)
Class B ($0.00 and $0.11 per share, respectively) -- (105,769)
Class C ($0.00 and $0.20 per share, respectively) -- (13,921)
Net realized gain:
Class A ($1.55 and $1.58 per share, respectively) (8,775,752) (6,974,917)
Class B ($1.55 and $1.58 per share, respectively) (2,579,252) (1,552,623)
Class C ($1.55 and $1.58 per share, respectively) (378,222) (110,662)
------------- -------------
Total distributions to shareholders $(11,733,226) $ (9,714,818)
------------- -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $643,617,168 $125,553,018
Reinvestment of distributions 10,774,515 9,105,491
Cost of shares repurchased (342,543,555) (85,380,022)
------------- -------------
Net increase in net assets resulting from
fund share transactions $311,848,128 $ 49,278,487
------------- -------------
Net increase in net assets $296,838,024 $ 79,685,621
NET ASSETS:
Beginning of year 201,004,443 121,318,822
------------- -------------
End of year (including accumulated
undistributed net investment income of
$1,023,223 and $18,964, respectively) $497,842,467 $201,004,443
============ ============
The accompanying notes are an integral part of these financial statements. 19
<PAGE>
Pioneer Europe Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
For the Years Ended 10/31/98 and 10/31/97
Class A '98 Shares '98 Amount '97 Shares '97 Amount
Shares sold 13,160,674 $ 422,013,822 3,641,336 $ 92,409,000
Reinvestment of
distributions 308,498 8,233,806 338,436 7,526,823
Less shares
repurchased (8,428,265) (264,240,423) (2,760,613) (71,517,391)
---------- ------------- ---------- ------------
Net increase 5,040,907 $ 166,007,205 1,219,159 $ 28,418,432
========== ============= ========== ============
Class B
Shares sold 4,459,295 $ 140,928,732 1,134,352 $ 28,009,864
Reinvestment of
distributions 87,112 2,257,941 68,391 1,490,927
Less shares
repurchased (1,419,146) (42,296,605) (511,877) (13,113,393)
---------- ------------- ---------- ------------
Net increase 3,127,261 $ 100,890,068 690,866 $ 16,387,398
========== ============= ========== ============
Class C
Shares sold 2,318,898 $ 72,082,438 207,616 $ 5,134,154
Reinvestment of
distributions 10,969 282,768 4,049 87,741
Less shares
repurchased (1,194,746) (35,901,342) (29,057) (749,238)
---------- ------------- ---------- ------------
Net increase 1,135,121 $ 36,463,864 182,608 $ 4,472,657
========== ============= ========== ============
Class Y*
Shares sold 262,130 $ 8,592,176
Less shares
repurchased (3,345) (105,185)
---------- -------------
Net increase 258,785 $ 8,486,991
========== =============
* Class Y shares were first publicly offered on July 2, 1998.
20 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Europe Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 10/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
10/31/98 10/31/97 10/31/96 10/31/95(a) 10/31/94
<S> <C> <C> <C> <C> <C>
CLASS A
Net asset value,
beginning of year $ 27.60 $ 23.25 $ 21.19 $ 19.91 $ 17.73
-------- ------- ------- ------- -------
Increase from investment
operations:
Net investment income $ 0.10 $ 0.04 $ 0.11 $ 0.12 $ 0.10
Net realized and unrealized
gain on investments
and foreign currency
transactions 3.72 6.11 3.38 2.57 2.65
-------- -------- ------- ------- -------
Net increase from
investment operations $ 3.82 $ 6.15 $ 3.49 $ 2.69 $ 2.75
Distributions to shareholders:
Net investment income -- (0.22) -- (0.01) (0.31)
Net realized gain (1.55) (1.58) (1.43) (1.40) (0.26)
-------- -------- ------- ------- -------
Net increase in net
asset value $ 2.27 $ 4.35 $ 2.06 $ 1.28 $ 2.18
-------- -------- ------- ------- -------
Net asset value, end of year $ 29.87 $ 27.60 $ 23.25 $ 21.19 $ 19.91
======== ======== ======= ======= =======
Total return* 14.51% 28.30% 17.80% 15.12% 15.97%
Ratio of net expenses to
average net assets 1.54%+ 1.78%+ 1.94%+ 1.76%+ 1.86%
Ratio of net investment income
to average net assets 0.47%+ 0.19%+ 0.57%+ 0.59%+ 0.28%
Portfolio turnover rate 39% 32% 56% 62% 100%
Net assets, end of year
(in thousands) $315,309 $152,267 $99,915 $78,505 $67,375
Ratios assuming no waiver
of management fees by
PIM and no reduction
for fees paid indirectly:
Net expenses 1.54% 1.78% 2.00% 2.10% 2.48%
Net investment income (loss) 0.47% 0.19% 0.51% 0.25% (0.34)%
Ratios assuming waiver of
management fees by
PIM and reduction for
fees paid indirectly:
Net expenses 1.49% 1.77% 1.93% 1.75% --
Net investment income 0.52% 0.20% 0.58% 0.60% --
</TABLE>
(a) The per share data presented above is based upon the average shares
outstanding for the period presented.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
+ Ratio assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 21
<PAGE>
Pioneer Europe Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 10/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended 4/4/94 to
10/31/98(a) 10/31/97 10/31/96 10/31/95(a) 10/31/94
<S> <C> <C> <C> <C> <C>
CLASS B
Net asset value,
beginning of period $ 26.88 $ 22.74 $ 20.92 $ 19.80 $ 17.96
-------- ------- ------- ------- -------
Increase (decrease) from
investment operations:
Net investment income (loss) $ (0.09) $ (0.10) $ (0.04) $ (0.02) $ 0.01
Net realized and unrealized
gain on investments
and foreign currency
transactions 3.55 5.93 3.29 2.56 1.88
-------- ------- ------- ------- -------
Net increase from investment
operations $ 3.46 $ 5.83 $ 3.25 $ 2.54 $ 1.89
Distributions to shareholders:
Net investment income -- (0.11) -- (0.02) (0.05)
Net realized gain (1.55) (1.58) (1.43) (1.40) --
-------- ------- ------- ------- -------
Net increase in net
asset value $ 1.91 $ 4.14 $ 1.82 $ 1.12 $ 1.84
-------- ------- ------- ------- -------
Net asset value,
end of period $ 28.79 $ 26.88 $ 22.74 $ 20.92 $ 19.80
======== ======= ======= ======= =======
Total return* 13.50% 27.35% 16.82% 14.43% 10.55%
Ratio of net expenses
to average net assets 2.35%+ 2.57%+ 2.76%+ 2.49%+ 2.47%**
Ratio of net investment
loss to average net assets (0.34)%+ (0.55)%+ (0.23)%+ (0.13)%+ (0.75)%**
Portfolio turnover rate 39% 32% 56% 62% 100%
Net assets, end of
period (in thousands) $135,535 $42,472 $20,228 $ 8,826 $ 3,037
Ratios assuming no waiver
of management fees
by PIM and no reduction
for fees paid indirectly:
Net expenses 2.35% 2.57% 2.80% 2.85% 2.95%**
Net investment loss (0.34)% (0.55)% (0.27)% (0.49)% (1.23)%**
Ratios assuming waiver
of management fees by
PIM and reduction for
fees paid indirectly:
Net expenses 2.31% 2.55% 2.74% 2.46% --
Net investment loss (0.30)% (0.53)% (0.21)% (0.10)% --
</TABLE>
(a) The per share data presented above is based upon average shares outstanding
for the period presented.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.
22 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Europe Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 10/31/98
- --------------------------------------------------------------------------------
Year Ended Year Ended 1/31/96 to
10/31/98(a) 10/31/97(a) 10/31/96
CLASS C
Net asset value, beginning
of period $ 26.73 $ 22.69 $ 19.92
------- ------- -------
Increase (decrease) from
investment operations:
Net investment loss $ (0.04) $ (0.12) $ --
Net realized and unrealized
gain on investments and
foreign currency transactions 3.53 5.94 2.77
------- ------- -------
Net increase from investment
operations $ 3.49 $ 5.82 $ 2.77
Distributions to shareholders:
Net investment income -- (0.20) --
Net realized gain (1.55) (1.58) --
------- ------- -------
Net increase in net
asset value $ 1.94 $ 4.04 $ 2.77
------- ------- -------
Net asset value, end
of period $ 28.67 $ 26.73 $ 22.69
======= ======= =======
Total return* 13.70% 27.47% 13.91%
Ratio of net expenses
to average net assets 2.28%+ 2.49%+ 2.74%**+
Ratio of net investment
loss to average net assets (0.20)%+ (0.52)%+ 0.00%**+
Portfolio turnover rate 39% 32% 56%
Net assets, end of
period (in thousands) $39,261 $ 6,266 $ 1,175
Ratios assuming no waiver
of management fees by PIM
and no reduction for fees
paid indirectly:
Net expenses 2.28% 2.49% 2.75%**
Net investment loss (0.20)% (0.52)% (0.01)%**
Ratios assuming waiver of
management fees by PIM
and reduction for
fees paid indirectly:
Net expenses 2.22% 2.46% 2.71%**
Net investment income (loss) (0.14)% (0.49)% 0.03%**
(a) The per share data presented above is based upon the average shares
outstanding for the period presented.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 23
<PAGE>
Pioneer Europe Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 10/31/98
- --------------------------------------------------------------------------------
7/2/98 to
10/31/98
CLASS Y (a)
Net asset value, beginning of period $ 34.63
-------
Increase (decrease) from investment operations:
Net investment income $ 0.07
Net realized and unrealized loss on investments
and foreign currency transactions (4.80)
-------
Net decrease in net asset value $ (4.73)
-------
Net asset value, end of period $ 29.90
=======
Total return* (13.66)%
Ratio of net expenses to average net assets 1.12%**+
Ratio of net investment income to average net assets 0.95%**+
Portfolio turnover rate 39%
Net assets, end of period (in thousands) $ 7,738
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.11%**
Net investment income 0.96%**
(a) Class Y shares were first publicly offered on July 2, 1998.
* Assumes initial investment at net asset value at the beginning of the
period, reinvestment of distributions, and the complete redemption of the
investment at net asset value at the end of the period.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.
24 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Europe Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/98
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Europe Fund (the Fund) is a Massachusetts business trust registered
under the Investment Company Act of 1940 as a diversified, open-end management
investment company. The investment objective of the Fund is to seek long-term
growth of capital.
The Fund offers four classes of shares - Class A, Class B, Class C, and Class Y
shares. Class Y shares were first publicly offered on July 2, 1998. Each class
of shares represents an interest in the same portfolio of investments of the
Fund and have equal rights to voting, redemptions, dividends and liquidation,
except that the level of transfer agent and distribution fees may differ among
classes. Class A, Class B and Class C shareholders have exclusive voting rights
with respect to the distribution plan for each class. There is no distribution
plan for Class Y shares.
The Fund's financial statements have been prepared in conformity with generally
accepted accounting principles that require the management of the Fund to, among
other things, make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates. The following is a summary of significant accounting policies
consistently followed by the Fund, which are in conformity with those generally
accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded on trade date. The net asset value is
computed once daily, on each day the New York Stock Exchange is open, as of
the close of regular trading on the Exchange. In computing the net asset
value, securities are valued at the last sale price on the principal exchange
where they are traded. Securities that have not traded on the date of
valuation, or securities for which sale prices are not generally reported,
are valued at the mean between the last bid and asked prices. Securities for
which market quotations are not readily available are valued at their fair
values as determined by, or under
25
<PAGE>
Pioneer Europe Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/98 (continued)
- --------------------------------------------------------------------------------
the direction of, the Board of Trustees. Trading in foreign securities is
substantially completed each day at various times prior to the close of the
New York Stock Exchange. The values of such securities used in computing the
net asset value of the Fund's shares are determined as of such times.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have passed
are recorded as soon as the Fund is informed of the ex-dividend data in the
exercise of reasonable diligence. Interest income is recorded on the accrual
basis, net of unrecoverable foreign taxes withheld at the applicable country
rates. Temporary cash investments are valued at amortized cost.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes. It
is the Fund's practice to first select for sale those securities that have
the highest cost and also qualify for long-term capital gain or loss
treatment for tax purposes.
B. Foreign Currency Translation
The books and records of the Fund are maintained in U.S. dollars. Amounts
denominated in foreign currencies are translated into U.S. dollars using
current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
among other things, the net realized gains and losses on foreign currency
contracts, disposition of foreign currencies and the difference between the
amount of income accrued and the U.S. dollar actually received. Further, the
effects of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts
The Fund enters into forward foreign currency contracts (contracts) for the
purchase or sale of a specific foreign currency at a fixed price on a future
date as a hedge or cross-hedge against either specific invest-
26
<PAGE>
Pioneer Europe Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ment transactions (settlement hedges) or portfolio positions (portfolio
hedges). All contracts are marked to market daily at the applicable exchange
rates, and any resulting unrealized gains or losses are recorded in the
Fund's financial statements. The Fund records realized gains and losses at
the time a portfolio hedge is offset by entry into a closing transaction or
extinguished by delivery of the currency. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the
terms of the contract and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar.
As of October 31, 1998, the Fund had no outstanding portfolio hedges. The
Fund's gross forward foreign currency settlement contracts receivable and
payable were $25,037,177 and $25,036,103, respectively, resulting in a net
receivable of $1,074 as of October 31, 1998.
D. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareholders. Therefore, no federal income tax provision is required.
The characterization of distributions to shareholders for financial reporting
purposes is determined in accordance with federal income tax rules.
Therefore, the source of the Fund's distributions may be shown in the
accompanying financial statements as either from or in excess of net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
At October 31, 1998, the Fund has reclassified $46,185 from accumulated
undistributed net investment income to accumulated undistributed net realized
gain on investments and foreign currency transactions. The reclassification
has no impact on the net asset value of the Fund and is designed to present
the Fund's capital accounts on a tax basis.
27
<PAGE>
Pioneer Europe Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/98 (continued)
- --------------------------------------------------------------------------------
In order to comply with federal income tax regulations, the Fund has
designated $12,772,834 as a capital gain dividend for the purposes of the
dividend paid deduction.
E. Fund Shares
The Fund records sales and repurchases of its shares on trade date. Net
losses, if any, as a result of cancellations are absorbed by Pioneer Funds
Distributor, Inc. (PFD), the principal underwriter for the Fund and an
indirect subsidiary of The Pioneer Group, Inc. (PGI). PFD earned $365,139 in
underwriting commissions on the sale of fund shares during the year ended
October 31, 1998.
F. Class Allocations
Distribution fees are calculated based on the average daily net asset value
attributable to Class A, Class B and Class C shares of the Fund,
respectively. Class Y shares are not subject to a distribution plan.
Shareholders of each class share all expenses and fees paid to the transfer
agent, Pioneering Services Corporation (PSC), for their services, which are
allocated based on the number of accounts in each class and the ratable
allocation of related out-of-pocket expense (see Note 3).
Income, common expenses and realized and unrealized gains and losses are
calculated at the Fund level and allocated daily to each class of shares
based on the respective percentage of adjusted net assets at the beginning of
the day.
Distributions to shareholders are recorded as of the ex-dividend date.
Distributions paid by the Fund with respect to each class of shares are
calculated in the same manner, at the same time, and in the same amount,
except that Class A, Class B, Class C, and Class Y shares can bear different
transfer agent and distribution fees.
2. Management Agreement
Pioneer Investment Management, Inc. (PIM), the Fund's investment adviser,
manages the Fund's portfolio and is a wholly owned subsidiary of PGI.
28
<PAGE>
Pioneer Europe Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Management fees are calculated daily at the annual rate of 1.00% of the Fund's
average daily net assets up to $300 million; 0.85% of the next $200 million; and
0.75% of the excess over $500 million.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Fund. At October 31, 1998, $486,647 was payable to PIM
related to management fees and administrative services.
3. Transfer Agent
PSC, a wholly owned subsidiary of PGI, provides substantially all transfer agent
and shareholder services to the Fund at negotiated rates. Included in due to
affiliates is $58,059 in transfer agent fees payable to PSC at October 31, 1998.
4. Distribution Plans
The Fund adopted Plans of Distribution with respect to Class A, Class B, and
Class C shares (Class A Plan, Class B Plan and Class C Plan) in accordance with
Rule 12b-1 of the Investment Company Act of 1940. Pursuant to the Class A Plan,
the Fund pays PFD a service fee of up to 0.25% of the Fund's average daily net
assets in reimbursement of its actual expenditures to finance activities
primarily intended to result in the sale of Class A shares. Pursuant to the
Class B Plan and the Class C Plan, the Fund pays PFD 1.00% of the average daily
net assets attributable to each class of shares. The fee consists of a 0.25%
service fee and a 0.75% distribution fee paid as compensation for personal
services and/or account maintenance services or distribution services with
regard to Class B and Class C shares. Included in due to affiliates is $191,493
in distribution fees payable to PFD at October 31, 1998.
In addition, redemptions of each class of shares (except Class Y shares) may be
subject to a contingent deferred sales charge (CDSC). A CDSC of 1.00% may be
imposed on redemptions of certain net asset value purchases of Class A shares
within one year of purchase. Class B shares
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Pioneer Europe Fund
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NOTES TO FINANCIAL STATEMENTS 10/31/98 (continued)
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that are redeemed within six years of purchase are subject to a CDSC at
declining rates beginning at 4.0%, based on the lower of cost or market value of
shares being redeemed. Redemptions of Class C shares within one year of purchase
are subject to a CDSC of 1.00%. Proceeds from the CDSCs are paid to PFD. For the
year ended October 31, 1998, CDSCs in the amount of $202,834 were paid to PFD.
5. Expense Offsets
The Fund has entered into certain expense offset arrangements resulting in a
reduction in the Fund's total expenses. For the year ended October 31, 1998, the
Fund's expenses were reduced by $163,330 under such arrangements.
6. Line of Credit Facility
Effective April 14, 1998, the Fund, along with certain other Funds in the
Pioneer Family of Funds (the Funds), collectively participate in a $50 million
committed, unsecured revolving line of credit facility. Borrowings are used
solely for temporary or emergency purposes. The Fund may borrow up to the lesser
of $50 million or the limits set by its prospectus for borrowings. Interest on
collective borrowings of up to $25 million is payable at the Federal Funds Rate
plus 3/8% on an annualized basis, or at the Federal Funds Rate plus 1/2% if the
borrowing exceeds $25 million at any one time. The Funds pay an annual
commitment fee for this facility. The commitment fee is allocated among such
Funds based on their respective borrowing limits. For the period ended October
31, 1998, the Fund had no borrowings under this agreement.
7. Affiliated Companies
The Fund's investments in certain companies exceed 5% of the outstanding voting
stock. Such companies are deemed affiliates of the Fund for financial reporting
purposes. The following summarizes transactions with affiliates of the Fund as
of October 31, 1998:
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Affiliates Purchases Sales Income Value
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Biora AB $8,314,472 -- -- $10,062,589
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Pioneer Europe Fund
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
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To the Shareowners and the Board of Trustees of Pioneer Europe Fund:
We have audited the accompanying balance sheet, including the schedule of
investments, of Pioneer Europe Fund as of October 31, 1998, and the related
statement of operations, the statements of changes in net assets, and the
financial highlights for the periods presented. These financial statements and
the financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1998 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer Europe Fund as of October 31, 1998, the results of its operations, the
changes in its net assets, and the financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
December 4, 1998
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Pioneer Europe Fund
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TRUSTEES, OFFICERS AND SERVICE PROVIDERS
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Trustees Officers
John F. Cogan, Jr. John F. Cogan, Jr., Chairman and
Mary K. Bush President
Richard H. Egdahl, M.D. David D. Tripple, Executive Vice President
Margaret B.W. Graham Patrick M. Smith, Vice President
John W. Kendrick John A. Boynton, Treasurer
Marguerite A. Piret Joseph P. Barri, Secretary
David D. Tripple
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Public Accountants
Arthur Andersen LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneering Services Corporation
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A SALUTE TO PIONEER FUND
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HAPPY 70th BIRTHDAY
PIONEER FUND
[LOGO]
This year, 1998, marks a special anniversary for the Pioneer family of mutual
funds and an important milestone for the entire mutual fund industry. In the
1920s, a group of forward thinking financial professionals started the first
"open-end" investment companies, known today as mutual funds. They provided a
way for small investors to benefit from professional financial management.
In 1928, Pioneer Fund became the fourth mutual fund created.
Pioneer Fund has gone to work for its shareowners everyday for 70 years. Through
15 bear markets, 16 bull markets and even the Great Depression, Pioneer Fund has
stayed true to an investment ethic that relies on the rewards of hard work.
Rather than follow trends, the financial professionals at Pioneer roll-up their
sleeves and research. We look for value in an investment: companies that might
not be the current rage on Wall Street, but that we believe have the business
smarts on Main Street to keep their earnings strong. The Fund's investment
objective continues to be growth and income.
For 70 years, Pioneer Fund has made investments based on experience, our own
investment ethic, and the needs of our shareowners.
Every day, the financial professionals at Pioneer Fund come to work, aware of
the job at hand. We know shareowners are investing their hard-earned money to
provide for the future.
In 1928 there were four mutual funds. Today there are 11,000. Only one can tell
the Pioneer Fund story.
For the complete Pioneer Fund story call your investment professional, or
Pioneer at 1-800-225-6292, for a prospectus. Please read it carefully before you
invest or send money.
Class B and C Shares have been available since 7/1/96. Past performance does not
guarantee future results.
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PROGRAMS AND SERVICES FOR PIONEER SHAREOWNERS
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Your investment representative can give you additional information on Pioneer's
programs and services. If you want to order literature on any of the following
items directly, simply call Pioneer at 1-8O0-225-6292.
FactFone(SM)
Our automated account information service, available to you 24 hours a day,
seven days a week. FactFone gives you a quick and easy way to check fund share
prices, yields, dividends and distributions, as well as information about your
own account. Simply call 1-800-225-4321. For specific account information, have
your 13-digit account number and four-digit personal identification number at
hand.
90-Day Reinstatement Privilege (for Class A Shares)
Enables you to reinvest all or a portion of the money you redeem from your
Pioneer account - without paying a sales charge - within 90 days of your
redemption. You have the choice of investing in any Pioneer fund, as long as you
meet its minimum investment requirement.
Investomatic Plan
An easy and convenient way for you to invest on a regular basis. All you need to
do is authorize a set amount of money to be moved out of your bank account into
the Pioneer fund of your choice. Investomatic also allows you to change the
dollar amount, frequency and investment date right over the phone. By putting
aside affordable amounts of money regularly, you can build a long-term
investment without sacrificing your current standard of living.
Payroll Investment Program (PIP)
Lets you invest in a Pioneer fund directly through your paycheck. All that's
involved is for your employer to fill out an authorization form allowing Pioneer
to deduct from participating employees' paychecks. You specify the dollar amount
you want to invest into the Pioneer fund(s) of your choice.
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Automatic Exchange Program
A simple way to move money from one Pioneer fund to another over a period of
time. Just invest a lump sum in one fund, and select the other Pioneer funds you
wish to invest in. You choose the amounts and dates for Pioneer to sell shares
of your original fund and use the proceeds to buy shares of the other funds you
have chosen. Over time, your investment will be shifted out of the original
fund. (Automatic Exchange is available for originating accounts with a balance
of $5,000 or more.)
Directed Dividends
Lets you invest cash dividends from one Pioneer fund to an account in another
Pioneer fund with no sales charge or fee. Simply fill out the applicable
information on a Pioneer Account Options Form. (This program is available for
dividend payments only; capital gains distributions are not eligible at this
time.)
Direct Deposit
Lets you move money into your bank account using electronic funds transfer
(EFT). EFT moves your money faster than you would receive a check, eliminates
unnecessary paper and mail, and avoids lost checks. Simply fill out a Pioneer
Direct Deposit Form, giving your instructions.
Systematic Withdrawal Plan (SWP)
Lets you establish automatic withdrawals from your account at set intervals. You
decide the frequency and the day of the month you want. Pioneer will send the
proceeds by check to the address you designate, or electronically to your bank
account. You also can authorize Pioneer to make the redemptions payable to
someone else. (SWPs are available only for accounts with a value of $10,000 or
more.)
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THE PIONEER FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
For information about any Pioneer mutual fund, please contact your investment
representative, or call Pioneer at 1-800-225-6292. Ask for a free fund
information kit, which includes a fund prospectus. Please read the prospectus
carefully before you invest or send money.
Growth Funds Income Funds
United States Taxable
Pioneer Capital Growth Fund Pioneer America Income Trust
Pioneer Growth Shares Pioneer Bond Fund
Pioneer Micro-Cap Fund Pioneer Short-Term Income Trust
Pioneer Mid-Cap Fund
Pioneer Small Company Fund Tax-Free
Pioneer Intermediate Tax-Free Fund
International/Global Pioneer Tax-Free Income Fund
Pioneer Emerging Markets Fund
Pioneer Europe Fund Money Market Fund
Pioneer Gold Shares Pioneer Cash Reserves Fund
Pioneer Indo-Asia Fund
Pioneer International Growth Fund
Pioneer World Equity Fund
Growth and Income Funds
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer Real Estate Shares
Pioneer II
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RETIREMENT PLANS FROM PIONEER
- --------------------------------------------------------------------------------
Pioneer offers retirement plans suited to the individual investor and businesses
of all sizes. For information, contact your investment professional, or call
Pioneer at 1-800-622-0176.
Individual Plans
Individual Retirement Account (IRA) The $2,000 maximum annual contribution may
be tax-deductible; earnings are tax-deferred.
Roth IRA New in 1998, $2,000 maximum annual contributions are not
tax-deductible. Earnings are tax-free for qualified withdrawals.
Plans for Small Businesses or the Self-Employed
SIMPLE (Savings Incentive Match PLan for Employees)
IRA or 401(k) Plan For firms with 100 or fewer employees. Employees can make
pre-tax contributions of up to $6,000 annually, and an employer contribution is
required.
Simplified Employee Pension Plan (SEP) Self-employed people and small-business
owners can make tax-deductible contributions of up to 15% of their income.
Employer-Sponsored Plans
401(k) Plan Allows employees to make pre-tax contributions. Also allows for
employer contributions.
403(b) Plan Lets employees of tax-exempt organizations set aside part of their
salary, before taxes, through payroll deduction.
Profit Sharing Plan Employers contribute on a discretionary basis, usually based
on profits.
Age-Weighted Profit Sharing Plan Employer makes discretionary contributions
based on employees' age and salary.
Money Purchase Pension Plan (MPP) Employers contribute based on a fixed formula.
Most retirement plan withdrawals must meet specific conditions
to avoid penalties.
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HOW TO CONTACT PIONEER
- --------------------------------------------------------------------------------
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
Call us for:
Account Information, including existing accounts,
new accounts, propectuses, applications
and service forms 1-800-225-6292
FactFonesm for automated fund yields, prices,
account information and transactions 1-800-225-4321
Retirement plans information 1-800-622-0176
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
Write to us:
Pioneering Services Corporation
60 State Street
Boston, Massachusetts 02109
Our toll-free fax 1-800-225-4240
Our internet e-mail address [email protected]
(for general questions about Pioneer only)
Visit our web site: www.pioneerfunds.com
This report must be preceded or accompanied by a current
Fund prospectus.
[LOGO] Pioneer Investment 1298-5785
PIONEER Management, Inc. (c) Pioneer Funds Distributor, Inc.
60 State Street Printed on Recycled Paper
Boston, Massachusetts 02109
www.pioneerfunds.com
