[Pioneer Logo]
Pioneer
International
Growth Fund
Prospectus
Class A and Class B Shares
March 27, 1995
(revised December 6, 1995)
Pioneer International Growth Fund (the "Fund") seeks long-term growth of
capital by investing in a portfolio consisting primarily of foreign equity
securities and of Depositary Receipts for such securities. Any current income
generated from these securities is incidental to the investment objective of
the Fund. The Fund is a diversified open-end investment company designed for
investors seeking to achieve capital growth and diversification through
foreign investments. There is, of course, no assurance that the Fund will
achieve its investment objective.
The Fund will seek to achieve its investment objective by investing primarily
in equity and equity-related securities of companies organized and domiciled
in countries other than the United States (the "U.S."), which securities are
considered by the Fund's investment adviser to offer the potential for
long-term growth of capital. The Fund expects to employ certain active
management techniques in order to hedge the foreign currency and other risks
associated with the Fund's investments. The Fund may invest without limit in
both emerging and established markets. Emerging markets may offer significant
investment opportunities but may also involve speculative risks.
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 foreign securities, particularly in
emerging markets, entail risks in addition to those customarily associated
with investing in U.S. securities. The Fund is intended for investors who can
accept the risks associated with its investments and may not be suitable for
all investors. See "Investment Objective and Policies" for a discussion of
these risks.
This Prospectus (Part A of the Registration Statement) provides information
about the Fund that you should know before investing. Please read and retain
it for your future reference. More information about the Fund is included in
the Statement of Additional Information (Part B of the Registration
Statement), also dated March 27, 1995 (revised December 6, 1995), which is
incorporated into this Prospectus by reference. A copy of the Statement of
Additional Information may be obtained free of charge by calling Shareholder
Services at 1-800-225-6292 or by written request to the Fund at 60 State
Street, Boston, Massachusetts 02109. Additional information about the Fund
has been filed with the Securities and Exchange Commission (the "SEC") and is
available upon request and without charge.
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TABLE OF CONTENTS PAGE
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I. EXPENSE INFORMATION .................................. 2
II. FINANCIAL HIGHLIGHTS ................................ 3
III. INVESTMENT OBJECTIVE AND POLICIES .................... 4
IV. MANAGEMENT OF THE FUND ............................... 6
V. FUND SHARE ALTERNATIVES ............................. 7
VI. SHARE PRICE ......................................... 7
VII. HOW TO BUY FUND SHARES ............................... 8
VIII. HOW TO SELL FUND SHARES ............................. 10
IX. HOW TO EXCHANGE FUND SHARES .......................... 11
X. DISTRIBUTION PLANS ................................... 12
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION ............... 13
XII. SHAREHOLDER SERVICES ................................ 13
Account and Confirmation Statements ................. 13
Additional Investments ............................. 13
Automatic Investment Plans .......................... 13
Financial Reports and Tax Information ............... 14
Distribution Options ................................ 14
Directed Dividends .................................. 14
Direct Deposit ...................................... 14
Voluntary Tax Withholding ........................... 14
Telephone Transactions and Related Liabilities ...... 14
FactFone(SM) ........................................ 14
Retirement Plans ................................... 14
Telecommunications Device for the Deaf (TDD) ....... 14
Systematic Withdrawal Plans ........................ 15
Reinstatement Privilege (Class A Shares Only) ....... 15
XIII. THE FUND ............................................ 15
XIV. INVESTMENT RESULTS ................................... 15
APPENDIX ............................................ 16
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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I. EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses
that you, as a shareholder, will bear directly or indirectly when you invest
in the Fund. The table reflects estimated annual operating expenses, based
upon actual expenses for the fiscal year ended November 30, 1994.
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Class A Class B
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Shareholder Transaction Expenses
Maximum Sales Charge on Purchases(1)
(as a percentage of offering price) ........... 5.75% none
Maximum Sales Charge on Reinvestment of
Dividends ..................................... none none
Maximum Deferred Sales Charge
(as a percentage of original purchase price
or redemption proceeds, as applicable) ........ none(1) 4.00%
Redemption Fee(2) ............................... none none
Exchange Fee ................................... none none
Annual Operating Expenses
(as a percentage of average net assets):(3)
Management Fees ............................... 1.00% 1.00%
12b-1 Fees ...................................... 0.25% 1.00%
Other Expenses (including accounting and
transfer agent fees, custodian fees and
printing expenses): ........................... 0.70% 1.02%
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Total Operating Expenses ........................ 1.95% 3.02%
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(1) Purchases of $1,000,000 or more and purchases by participants in certain
group plans are not subject to an initial sales charge but may be subject
to a contingent deferred sales charge.
(2) Separate fees (currently $10 and $20, respectively) apply to domestic and
international bank wire transfers of redemption proceeds.
(3) For Class B shares, percentages are based on estimated expenses that
would have been incurred during the previous period had Class B shares
been outstanding for the entire period.
Example:
You would pay the following dollar amounts on a $1,000 investment,
assuming a 5% annual return and redemption at the end of each time period:
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1 Year 3 Years 5 Years 10 Years
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Class A Shares $76 $115 $157 $272
Class B Shares
- --Assuming complete
redemption at end of
period $71 $123 $179 $310*
- --Assuming no redemption $31 $ 93 $159 $310*
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* Class B shares convert to Class A shares eight years after purchase;
therefore, Class A expenses are used after year eight.
The example above assumes reinvestment of all dividends and distributions
and that the percentage amounts listed under "Annual Operating Expenses"
remain the same each year.
The example is designed for information purposes only, and should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and return vary from year to year and may be higher or lower than
those shown.
For further information regarding management fees, 12b-1 fees and other
expenses of the Fund, including information regarding the basis upon which
fees and expenses are reduced or reallocated, see "Management of the Fund,"
"Distribution Plans" and "How to Buy Fund Shares" in this Prospectus and
"Management of the Fund" and "Underwriting Agreement and Distribution Plans"
in the Statement of Additional Information. The Fund's payment of a 12b-1 fee
may result in long-term shareholders indirectly paying more than the economic
equivalent of the maximum initial sales charge permitted under the Rules of
Fair Practice of the National Association of Securities Dealers Inc.
("NASD").
The maximum initial sales charge is reduced on purchases of specified
larger amounts of Class A shares and the value of shares owned in other
Pioneer mutual funds is taken into account in determining the applicable
initial sales charge. See "How to Buy Fund Shares." No sales charge is
applied to exchanges of shares of the Fund for shares of other publicly
available Pioneer mutual funds. See "How to Exchange Fund Shares."
2
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II. FINANCIAL HIGHLIGHTS
The following information has been derived from financial statements which
have been audited by Arthur Andersen LLP, independent public accountants, in
connection with their examination of the Fund's financial statements. Arthur
Andersen LLP's report on the Fund's financial statements as of November 30,
1994 appears in the Fund's Annual Report, which is incorporated by reference
into the Statement of Additional Information. The information listed below
should be read in conjunction with 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.
Financial Highlights
For Each Class A Share Outstanding Throughout the Period+:
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Year April 1, 1993
Ended to
November 30 November 30
1994 1993
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Net asset value, beginning of period $ 20.91 $ 15.00
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Income from investment operations:
Net investment income (loss) $ 0.19 $ (0.03)
Net realized and unrealized gain (loss) on investments, forward
foreign currency hedge contracts and other foreign currency related
transactions 1.87 5.94
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Total income (loss) from investment operations $ 2.06 $ 5.91
Distributions to shareholders:
In excess of net investment income (loss) (0.03) --
Net realized capital gains (1.39) --
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Net increase (decrease) in net asset value $ (0.64) $ 5.91
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Net asset value, end of period $ 21.55 $ 20.91
========== ============
Total return* 10.03% 39.40%
Ratio of net operating expenses to average net assets 1.95% 1.73%**
Ratio of net investment income (loss) to average net assets 0.84% (0.48%)**
Portfolio turnover rate 274.89% 184.69%**
Net assets, end of period (in thousands) $282,03 $86,923
Ratios assuming no reduction fees or expenses by PMC:
Net operating expenses -- 2.88%**
Net investment loss -- (1.63%)**
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For Each Class B Share Outstanding Throughout the Period:+***
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April 4, 1994
to November 30
1994
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Net asset value, beginning of period $ 21.06
-------------
Income from investment operations:
Investment income (loss)--net $ 0.06
Net realized and unrealized gain (loss) on investments, forward
foreign currency hedge contracts and other foreign currency related
transactions 0.33
-------------
Total income (loss) from investment operations $ 0.39
Distribution to shareholders --
-------------
Net increase (decrease) in net asset value $ 0.39
-------------
Net asset value, end of period $ 21.45
=============
Total return* 1.85%
Ratio of net operating expenses to average net assets 3.02%
Ratio of net investment income (loss) to average net assets 0.72%
Portfolio turnover rate 274.89%
Net assets, end of period (in thousands) $21,236
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+ The per share data presented above is based upon average shares
outstanding and average net assets for the periods presented.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sales charges were taken
into account.
** Annualized.
*** Class B shares were first offered on April 4, 1994.
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III. INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is long-term growth of capital. The Fund
pursues this objective by investing in a diversified portfolio consisting
primarily of the equity and equity-related securities of companies that are
organized and have principal offices in foreign countries ("Foreign
Companies") and Depositary Receipts for securities of such companies. There
can be no assurance that the Fund will achieve its objective.
Under normal circumstances, at least 80% of the Fund's total assets are
invested in equity securities consisting of common stock and securities with
common stock characteristics, such as preferred stock, warrants and debt
securities convertible into common stock and American Depositary Receipts for
such securities ("Equity Securities"). Pioneering Management Corporation (the
"Manager") currently intends to focus on securities of issuers located in
such countries as Australia, Canada, Hong Kong, Japan, Malaysia, Mexico, New
Zealand, Singapore, the United Kingdom and the other developed countries of
Western Europe as well as the countries with emerging markets listed in
"Investments in Emerging Markets." The Fund may also invest up to 20% of its
total assets in Other Eligible Investments (as defined below), consisting of
money market and fixed-income securities, and may employ certain other active
management techniques. Certain of these techniques may be used in an attempt
to hedge foreign currency and other risks associated with the Fund's
investments. These techniques include purchasing options on securities
indices, entering into forward foreign currency exchange contracts,
purchasing options on foreign currencies, entering into futures contracts on
securities indices and currencies, purchasing and selling options on such
futures contracts, and lending portfolio securities. The Fund may also enter
into repurchase agreements and invest in restricted and illiquid securities.
See the Appendix to this Prospectus and the Statement of Additional
Information for a description of these investment practices and securities
and associated risks.
As to any specific investment in Equity Securities, the Manager's analysis
will focus on evaluating the fundamental value of an enterprise. The Fund
will purchase securities for its portfolio when their market price appears to
be less than their fundamental value in the judgment of the Manager. In
selecting specific investments, the Manager will attempt to identify
securities with strong potential for appreciation relative to their downside
exposure. In this regard the Manager will also use a macro-analysis of
numerous economic and valuation variables to determine the anticipated
investment climate in specific countries.
In making these determinations, the Manager will take into account
price-earnings ratios, cash flow, the relationship of asset value to market
price of the securities and other factors which it may determine from time to
time to be relevant. Because current income is not the Fund's investment
objective, the Fund will not restrict its investments in Equity Securities to
those of issuers with a record of timely dividend payments.
While investing in foreign Equity Securities involves certain risks, as
discussed below, the Manager believes such investments offer opportunities
for capital growth and diversification. Today, more than two-thirds of the
world's stock market value is traded on markets outside the United States.
Investing overseas can help diversify a portfolio otherwise invested solely
in U.S. securities. Foreign stock and bond markets often do not parallel the
performance of U.S. markets, which means that, over time, diversifying
investments across several countries can help reduce portfolio volatility.
Under normal circumstances at least 65% of the Fund's total assets will be
invested in securities of companies domiciled in at least three different
foreign countries.
Risk Factors
Investing in the securities of Foreign Companies and foreign governments
involves certain considerations and risks which are not typically associated
with investing in securities of domestic companies and the U.S. government.
In many foreign countries, issuers are not subject to uniform accounting,
auditing and financial standards and requirements comparable to those
applicable to U.S. companies. Also in many foreign countries, there is less
government supervision and regulation of foreign securities exchanges,
brokers and listed companies than exists in the United States. Interest and
dividends paid by foreign 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 foreign 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. The
Fund's investment performance may be significantly affected, either
positively or negatively, by currency exchange rates because the U.S. dollar
value of securities denominated in a foreign currency will increase or
decrease in response to changes in the value of foreign currencies in
relation to the U.S. dollar. There may also be less publicly available
information about Foreign Companies compared to reports and ratings published
about U.S. companies. Some foreign securities markets generally have
substantially less trading volume than domestic markets and securities of
some Foreign Companies are less liquid and more volatile than securities of
comparable U.S. companies.
Brokerage commissions in foreign countries are generally fixed, and other
transaction costs related to securities exchanges are generally higher than
in the United States. Most foreign Equity Securities of the Fund are held by
foreign subcustodians that satisfy certain eligibility requirements. However,
foreign subcustodian arrangements are significantly more expensive than
domestic custody. In addition, foreign settlement of securities transactions
is subject to local law and custom that is not, generally, as well
established or as reliable as U.S. regulation and custom applicable to
settlements of securities transactions and, accordingly, there is generally
perceived to be a greater risk of loss in connection with securities
transactions in many foreign countries.
Additionally, in some foreign countries, there is the possibility of
expropriation, nationalization or confiscation of assets and property,
limitations on the removal of securities, property or other assets of the
Fund, political or social instability, or diplo-
4
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matic developments which could affect U.S. investments in those countries.
The Manager will take these factors into consideration in managing the Fund's
investments.
Investment in Japan and the United Kingdom
The Fund may invest more than 25% of its total assets in the securities of
corporate issuers located in each of Japan and the United Kingdom and more
than 25% of the Fund's total assets, adjusted to reflect currency
transactions and positions, may be denominated in the Japanese yen and the
British pound. Investment of a substantial portion of the Fund's assets in
such countries or currencies will subject the Fund to the risks of adverse
securities markets, exchange rates and social, political or economic events
which may occur in those countries.
Investments in Emerging Markets
The Fund may invest without limitation in securities of issuers located in
countries with emerging economies or securities markets, but will not invest
more than 25% of its total assets in securities of issuers located in any one
such country. Countries with emerging economies or securities markets
include: Argentina, Bangladesh, Brazil, Chile, China, Colombia, Czech
Republic, Egypt, Greece, Hungary, India, Indonesia, Israel, Jamaica, Jordan,
Kenya, South Korea, Kuwait, Morocco, Nigeria, Pakistan, Peru, the
Philippines, Poland, South Africa, Sri Lanka, Taiwan, Thailand, Turkey,
Venezuela and Zimbabwe. 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. In addition,
unanticipated political or social developments may affect the values of the
Fund's investments and the availability to the Fund of additional investments
in such countries. The small size and inexperience of the securities markets
in certain of such countries and the limited volume of trading in securities
in those countries may make the Fund's investments in such countries less
liquid and more volatile than investments in countries with more developed
securities markets (such as Japan or most Western European countries).
Investments in Depositary Receipts
The Fund may hold securities of foreign issuers in the form of American
Depositary Receipts ("ADRs"), 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 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.
GDRs are not necessarily denominated in the same currency as the underlying
securities which they represent. 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.
Other Eligible Investments
The Fund's Other Eligible Investments consist of: (a) corpo- rate
commercial paper and other short-term commercial obligations, in each case
rated or issued by foreign or domestic companies with similar securities
outstanding that are rated Prime-1, Aa or better by Moody's Investors
Service, Inc. ("Moody's"), or A-1, AA or better by Standard and Poor's
Ratings Group ("Standard and Poor's"); (b) obligations (including
certificates of deposit, time deposits, demand deposits and bankers'
acceptances) of banks (located in the U.S. or foreign countries) with
securities outstanding that are rated Prime-1, Aa or better by Moody's, or
A-1, AA or better by Standard and Poor's; (c) obligations issued or
guaranteed by the U.S. government or the government of a foreign country or
their respective agencies or instrumentalities; (d) fixed- income securities
of foreign or domestic companies which are rated, at the time of investment,
within the top four grades by the major rating services (Moody's "Baa" or
higher, Standard and Poor's "BBB" or higher) or, if unrated, judged to be of
comparable quality by the Manager; and (e) repurchase agreements. These
securities may be denominated in U.S. dollars or in foreign currencies. In
the event that the credit quality of a security falls below investment grade
subsequent to purchase, the Fund may nevertheless retain such security as
long as the Manager determines it is advisable to do so. However, at no time
may the Fund have more than 5% of its net assets invested in fixed-income
securities rated below investment grade. Securities rated "Baa" or "BBB" and
securities of comparable quality may have speculative characteristics and
changes in economic conditions or other circumstances are more likely to lead
to a weakened capacity to make principal and interest payments than is the
case with higher grade debt securities.
The Fund may on occasion, for temporary defensive purposes to preserve
capital, invest up to 100% of its total assets in Other Eligible Investments
except that when the Fund assumes a defensive posture, it will not invest in
fixed-income securities of foreign or domestic companies rated below A by
Moody's or Standard & Poor's, or if unrated, judged to be of comparable
credit quality by the Manager. The Fund will assume a temporary defensive
posture only when political and economic factors affect foreign equity
markets to such an extent that the Manager believes there to be extraordinary
risks in being substantially invested in foreign Equity Securities.
5
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Lending of Portfolio Securities
The Fund may also seek to earn additional income by lending its portfolio
securities. Under present regulatory policies, such loans may be made to
institutions, such as certain broker-dealers, and are required to be secured
continuously by collateral in cash, cash equivalents or U.S. government
securities maintained on a current basis at an amount at least equal to the
market value of the securities loaned. If the Manager decides to make
securities loans, the value of the securities loaned would not exceed 33-1/3%
of the value of the total assets of the Fund. See "Investment Policy and
Restrictions" in the Statement of Additional Information. The Fund may
experience a loss or delay in the recovery of its securities if the
institution with which it has engaged in a portfolio securities loan
transaction breaches its agreement with the Fund.
Certain Other Investment Techniques
As noted above, the Fund may purchase put and call options on securities
indices, purchase put and call options on currencies, enter into forward
foreign currency exchange contracts and enter into futures contracts on
indices and currencies and purchase and sell options on such futures
contracts. These techniques may be employed in an attempt to hedge currency
or other risks associated with the Fund's portfolio securities. While the
successful use of these techniques may reduce or eliminate certain risks,
these techniques also involve transaction costs as well as risks. These risks
include the risk that contractual positions once entered may not be easily
closed out on a particular market, the risk that the attempted hedge may be
ineffective because changes in the value of a hedged position may not
correlate to the securities market or currency being hedged and the risk that
an incorrect prediction by the Manager in the movement of securities prices
or exchange rates may cause the Fund to perform less well if the hedge had
not been attempted. See the Appendix for a further description of these
techniques and associated risks.
Portfolio Turnover
The Manager avoids market-timing or speculating on broad market
fluctuations. Therefore, except as described above, the Fund is substantially
fully invested at all times. A high rate of portfolio turnover (100% or more)
involves correspondingly greater transaction costs which must be borne by the
Fund and its shareholders and may, under certain circumstances, make it more
difficult for the Fund to qualify as a regulated investment company under the
Internal Revenue Code. See "Dividends, Distributions and Taxation." Changes
in the portfolio may be made promptly when determined to be advisable by
reason of developments not foreseen at the time of the initial investment
decision, and usually without reference to the length of time a security has
been held. Accordingly, portfolio turnover rates are not considered a
limiting factor in the execution of investment decisions.
The Fund's investment objective and certain investment restrictions
designated as fundamental in the Statement of Additional Information may be
changed by the Board of Trustees only with shareholder approval.
IV. 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 Pioneering Management Corporation as
investment adviser, the Fund requires no employees other than its executive
officers, all of whom receive their compensation from the Manager or other
sources. The Statement of Additional Information contains the names and
general business and professional background of each Trustee and executive
officer of the Fund.
The Fund is managed under a contract with the Manager, which serves as
investment adviser to the Fund and is responsible for the overall management
of the Fund's business affairs, subject only to the authority of the Board of
Trustees. The Manager is a wholly-owned subsidiary of The Pioneer Group, Inc.
("PGI"), a Delaware corporation. Pioneer Funds Distributor, Inc. ("PFD"), an
indirectly 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 the Manager, Chairman of PFD, and President and a Director
of PGI, beneficially owned approximately 15% of the outstanding capital stock
of PGI as of the date of this Prospectus.
Each international equity portfolio managed by the Manager, including the
Fund, is overseen by an Equity Committee, which consists of the Manager's
most senior equity professionals, and a Portfolio Management Committee, which
consists of PMC's international equity portfolio managers. Both committees
are chaired by Mr. David Tripple, the Manager's President and Chief
Investment Officer and Executive Vice President of each of the Pioneer mutual
funds. Mr. Tripple joined the Manager in 1974 and has had general
responsibility for the Manager's investment operations and specific portfolio
assignments for over five years.
Day-to-day management of the Fund since its inception has been the
responsibility of Dr. Norman Kurland, Vice President of the Fund and of the
Manager. Dr. Kurland joined the Manager in 1990 after working with a variety
of investment and industrial concerns.
In addition to the Fund, the Manager also manages and serves as the
investment adviser for other mutual funds and is an investment adviser to
certain other institutional accounts. The Manager's and PFD's executive
offices are located at 60 State Street, Boston, Massachusetts 02109.
Under the terms of its contract with the Fund, the Manager assists in the
management of the Fund and is authorized in its discretion to buy and sell
securities for the account of the Fund. The Manager pays all the ordinary
operating expenses, including executive salaries and the rental of office
space relating to its services for the Fund with the exception of the
following which are to be paid by the Fund: (a) taxes and other governmental
charges, if any; (b) interest on borrowed money, if any; (c) legal fees and
expenses; (d) auditing fees; (e) insurance premiums; (f) dues and fees for
membership in trade associations; (g) fees and expenses of registering and
maintaining registrations by the Fund of its shares with the SEC, individual
states, territories and foreign jurisdictions and of preparing reports to
government agencies; (h) fees and expenses of Trustees not affiliated with or
interested per-
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sons of the Manager; (i) fees and expenses of the custodian, dividend
disbursing agent, transfer agent and registrar; (j) issue and transfer taxes
chargeable to the Fund in connection with securities transactions to which
the Fund is a party; (k) costs of reports to shareholders, shareholders'
meetings and Trustees' meetings; (l) the cost of certificates representing
shares of the Fund; (m) bookkeeping and appraisal charges; and (n)
distribution fees in accordance with Rule 12b-1. The Fund also pays all
brokerage commissions in connection with its portfolio transactions.
Orders for the Fund's portfolio securities transactions are placed by the
Manager, 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. See the Statement of
Additional Information for a further description of the Manager's brokerage
allocation practices.
As compensation for its management services and certain expenses which the
Manager incurs, the Manager is entitled to a management fee equal to 1.00%
per annum of the Fund's average daily net assets up to $300 million, 0.85% of
the next $200 million and .75% of the excess over $500 million. The fee is
normally computed daily and paid monthly. The management fee paid by the Fund
is greater than those paid by most funds. Due to the added complexity of
managing funds with an international investment strategy, however, management
fees for international funds tend to be higher than those paid by most funds.
During the fiscal year ended November 30, 1994, the Fund incurred expenses
of $4,472,536, including management fees paid or payable to the Manager of
$2,256,822.
V. FUND SHARE ALTERNATIVES
The Fund continuously offers two Classes of shares designated as Class A
and Class B shares, as described more fully in "How to Buy Fund Shares." If
you do not specify in your instructions to the Fund which Class of shares you
wish to purchase, exchange or redeem, the Fund will assume that your
instructions apply to Class A shares.
Class A Shares. If you invest less than $1 million in Class A shares, you
will pay an initial sales charge. Certain purchases may qualify for reduced
initial sales charges. If you invest $1 million or more in Class A shares, no
sales charge will be imposed at the time of purchase. However, shares
redeemed within 12 months of purchase may be subject to a contingent deferred
sales charge ("CDSC"). Class A shares are subject to distribution and service
fees at a combined annual rate of up to 0.25% of the Fund's average daily net
assets attributable to Class A shares.
Class B Shares. If you plan to invest up to $250,000, Class B shares are
available to you. Class B shares are sold without an initial sales charge,
but are subject to a CDSC of up to 4% if redeemed within six years. Class B
shares are subject to distribution and service fees at a combined annual rate
of 1.00% of the Fund's average daily net assets attributable to Class B
shares. Your entire investment in Class B shares is available to work for you
from the time you make your investment, but the higher distribution fee paid
by Class B shares will cause your Class B shares (until conversion) to have a
higher expense ratio and to pay lower dividends, to the extent dividends are
paid, than Class A shares. Class B shares will automatically convert to Class
A shares, based on relative net asset value, eight years after the initial
purchase.
Purchasing Class A or Class B Shares. The decision as to which Class to
purchase depends on the amount you invest, the intended length of the
investment and your personal situation. If you are making an investment that
qualifies for reduced sales charges, you might consider Class A shares. If
you prefer not to pay an initial sales charge on an investment of $250,000 or
less and you plan to hold the investment for at least six years, you might
consider Class B shares.
Investment dealers or their representatives may receive different
compensation depending on which Class of shares they sell. Shares may be
exchanged only for shares of the same Class of another Pioneer mutual fund
and shares acquired in the exchange will continue to be subject to any CDSC
applicable to 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.
VI. SHARE PRICE
Shares of the Fund are sold at the public offering price, which is the net
asset value per share plus any applicable sales charge. Net asset value per
share of a Class of the Fund is determined by dividing the fair market value
of its assets, less liabilities attributable to that Class, by the number of
shares of that Class outstanding. The net asset value is computed once daily,
on each day the New York Stock Exchange (the "Exchange") is open, as of the
close of regular trading on the Exchange.
Securities are valued at the last sale price on the principal exchange or
market where they are traded. Securities which have not traded on the date of
valuation, or securities for which sales prices are not generally reported,
are valued at the mean between the current bid and asked prices. Securities
quoted in foreign currencies are converted to U.S. dollars utilizing foreign
exchange rates employed by the Fund's independent pricing services.
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of regular trading on the Exchange. The
values of such securities used in computing the net asset value of the Fund's
shares are determined as of such times. Foreign currency exchange rates are
also generally determined prior to the close of regular trading on the
Exchange. Occasionally, events which affect the values of such securities and
such exchange rates may occur between the times at which they are determined
and the close of regular trading on the Exchange and will therefore not be
reflected in the computation of the Fund's net asset value. If events
materially affecting the value of such securities occur during such period,
then these securities are valued at their fair value as determined in good
faith by the Trustees. All assets of the Fund for which there is no other
readily available valuation
7
<PAGE>
method are valued at their fair value as determined in good faith by the
Trustees.
VII. HOW TO BUY FUND SHARES
You may buy Fund shares at the public offering price from any securities
broker-dealer which has a sales agreement with PFD. If you do not have a
securities broker-dealer, please call 1-800-225-6292 for assistance.
The minimum initial investment is $1,000 for Class A and Class B shares
except as specified below. The minimum initial investment is $50 for Class A
accounts being established to utilize monthly bank drafts, government
allotments, payroll deduction and other similar automatic investment plans.
Separate minimum investment requirements apply to retirement plans and to
telephone and wire orders placed by broker-dealers; no sales charges or
minimum requirements apply to the reinvestment of dividends or capital gains
distributions. The minimum subsequent investment is $50 for Class A shares
and $500 for Class B shares except that the subsequent minimum investment
amount for Class B share accounts may be as little as $50 if an automatic
investment plan (see "Automatic Investment Plans") is established.
Telephone Purchases. Your account is automatically authorized to have the
telephone purchase privilege unless you indicated otherwise on your Account
Application or by writing to Pioneering Services Corporation ("PSC"). The
telephone purchase option may be used to purchase additional shares for an
existing fund account; it may not be used to establish a new account. Proper
account identification will be required for each telephone purchase. A
maximum of $25,000 per account may be purchased by telephone each day. The
telephone purchase privilege is available to 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 pre-designated
bank account. Telephone purchases may not be made for 30 days after the
establishment of your bank of record or any change to your bank information.
Telephone purchases will be priced at the net asset value plus any
applicable sales charge next determined after PSC's acceptance of a telephone
purchase instruction and receipt of good funds (usually three days after the
purchase instruction). You may always elect to deliver purchases to PSC by
mail. See "Telephone Transactions and Related Liabilities" for additional
information.
Class A Shares
You may buy Class A shares at the public offering price, that is, at the
net asset value per share next computed after receipt of a purchase order,
plus a sales charge as follows:
<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>
No sales charge is payable at the time of purchase on investments of
$1,000,000 or more or for participants in certain group plans (described
below) subject to a CDSC of 1% which may be imposed in the event of a
redemption of Class A shares within 12 months of purchase. See "How to Sell
Fund Shares." PFD may, in its discretion, pay a commission to broker-dealers
who initiate and are responsible for such purchases as follows: 1% on the
first $5 million invested; 0.50% on the next $45 million; and 0.25% on the
excess over $50 million. These commissions will not be paid if the purchaser
is affiliated with the broker-dealer or if the purchase represents the
reinvestment of a redemption made during the previous 12 calendar months.
Broker-dealers who receive a commission in connection with Class A share
purchases at net asset value by 401(a) or 401(k) retirement plans with 1,000
or more eligible participants or with at least $10 million in plan assets
will be required to return any commission paid or a pro rata portion thereof
if the retirement plan redeems its shares within 12 months of purchase. See
"How to Sell Fund Shares." In connection with PGI's acquisition of Mutual of
Omaha Fund Management Company and contingent upon the achievement of certain
sales objectives, PFD pays to Mutual of Omaha Investor Services, Inc. 50% of
PFD's retention of any sales commission on sales of the Fund's Class A shares
through such dealer.
The schedule of sales charges above is applicable to purchases of Class A
shares of the Fund by an (i) an individual, (ii) an individual and his or her
spouse and children under the age of 21 and (iii) a trustee or other
fiduciary of a trust estate or fiduciary account or related trusts or
accounts including pension, profit-sharing and other employee benefit trusts
qualified under Section 401 or 408 of the Internal Revenue Code of 1986, as
amended (the "Code"), although more than one beneficiary is involved. The
sales charges applicable to a current purchase of Class A shares of the Fund
by a person listed above is determined by adding the value of shares to be
purchased to the aggregate value (at the then current offering price) of
shares of any of the other Pioneer mutual funds previously purchased (except
direct purchases of Pioneer Money Market Trust's Class A shares) and then
owned, provided PFD is notified by such person or his or her broker-dealer
each time a purchase is made which would qualify. Pioneer mutual funds
include all mutual funds for which PFD serves as principal underwriter. See
the "Letter of Intention" section of the Account Application.
8
<PAGE>
Qualifying for a Reduced Sales Charge. Class A shares of the Fund may be
sold at a reduced or eliminated sales charge to certain group plans ("Group
Plans") under which a sponsoring organization makes recommendations to,
permits group solicitation of, or otherwise facilitates purchases by, its
employees, members or participants. Information about such arrangements is
available from PFD.
Class A shares of the Fund may be sold at net asset value per share
without a sales charge to: (a) current or former Trustees and officers of the
Fund and partners and employees of its legal counsel; (b) current or former
directors, officers, employees or sales representatives of PGI or its
subsidiaries; (c) current or former directors, officers, employees or sales
representatives of any subadviser or predecessor investment adviser to any
investment company for which the Manager serves as investment adviser, and
the subsidiaries or affiliates of such persons; (d) current or former
officers, partners, employees or registered representatives of broker-
dealers which have entered into sales agreements with PFD; (e) members of the
immediate families of any of the persons above; (f) any trust, custodian,
pension, profit-sharing or other benefit plan of the foregoing persons; (g)
insurance company separate accounts; (h) certain "wrap accounts" for the
benefit of clients of financial planners adhering to standards established by
PFD; (i) other funds and accounts for which the Manager or any of its
affiliates serves as investment adviser or manager; and (j) certain unit
investment trusts. Shares so purchased are purchased for investment purposes
and may not be resold except through redemption or repurchase by or on behalf
of the Fund. The availability of this privilege is conditioned upon the
receipt by PFD of written notification of eligibility. In addition, Class A
shares of a Fund may be sold at net asset value per share without a sales
charge to Optional Retirement Program participants if (i) the employer has
authorized a limited number of investment providers for the Program, (ii) all
authorized providers offer their shares to Program participants at net asset
value, (iii) the employer has agreed in writing to actively promote the
authorized investment providers to Program participants and (iv) the Program
provides for a matching contribution for each participant contribution.
Shares may also be sold at net asset value in connection with certain
reorganization, liquidation, or acquisition transactions involving other
investment companies or personal holding companies.
Reduced sales charges for Class A shares are available through an
agreement to purchase a specified quantity of Fund shares over a designated
13-month period by completing the "Letter of Intention" section of the
Account Application. Information about the Letter of Intention Procedure,
including its terms, is contained in the Statement of Additional Information.
Investors who are clients of a broker-dealer with a current sales agreement
with PFD may purchase 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 shares of the Fund;
that the client paid a sales charge on the original purchase of the shares
redeemed; and that the mutual fund whose shares were redeemed also offers net
asset value purchases to redeeming shareholders of any of the Pioneer funds.
Further details may be obtained from PFD.
Class B Shares
You may buy Class B shares at the net asset value per share next computed
after receipt of a purchase order without the imposition of an initial sales
charge. However, Class B shares redeemed within six years of purchase will be
subject to a CDSC at the rates shown in the table below. The charge will be
assessed on the amount equal to the lesser of the current market value or the
original purchase cost of the shares 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.
<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 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
9
<PAGE>
continue to be in effect at the time any particular conversion would occur.
The conversion of Class B shares to Class A shares will not occur if such
ruling is no longer in effect and such an opinion is not available and,
therefore, Class B shares would continue to be subject to higher expenses
than Class A shares for an indeterminate period.
Waiver or Reduction of Contingent Deferred Sales Charge.The CDSC on Class
B shares and on any Class A shares subject to a CDSC may be waived or reduced
for non-retirement accounts if: (a) the redemption results from the death of
all registered owners of an account (in the case of UGMAs, UTMAs and trust
accounts, waiver applies upon the death of all beneficial owners) or a total
and permanent disability (as defined in Section 72 of the Code) of all
registered owners occurring after the purchase of the shares being redeemed
or (b) the redemption is made in connection with limited automatic
redemptions as set forth in "Systematic Withdrawal Plans" (limited in any
year to 10% of the value of the account in the Fund at the time the
withdrawal plan is established).
The CDSC on Class B shares and on any Class A shares subject to a CDSC may
be waived or reduced for retirement plan accounts if: (a) the redemption
results from the death or a total and permanent disability (as defined in
Section 72 of the Code) occurring after the purchase of the shares being
redeemed of a shareholder or participant in an employer-sponsored retirement
plan; (b) the distribution is to a participant in an IRA, 403(b) or
employer-sponsored retirement plan, is part of a series of substantially
equal payments made over the life expectancy of the participant or the joint
life expectancy of the participant and his or her beneficiary or as scheduled
periodic payments to a participant (limited in any year to 10% of the value
of the participant's account at the time the distribution amount is
established; a required minimum distribution due to the participant's
attainment of age 70-1/2 may exceed the 10% limit only if the distribution
amount is based on plan assets held by Pioneer); (c) the distribution is from
a 401(a) or 401(k) retirement plan and is a return of excess employee
deferrals or employee contributions or a qualifying hardship distribution as
defined by the Code or results from a termination of employment (limited with
respect to a termination to 10% per year of the value of the plan's assets in
the Fund as of the later of the prior December 31 or the date the account was
established unless the plan's assets are being rolled over to or reinvested
in the same class of shares of a Pioneer mutual fund subject to the CDSC of
the shares originally held); (d) the distribution is from an IRA, 403(b) or
employer-sponsored retirement plan and is to be rolled over to or reinvested
in the same class of shares in a Pioneer mutual fund and which will be
subject to the applicable CDSC upon redemption; (e) the distribution is in
the form of a loan to a participant in a plan which permits loans (each
repayment of the loan will constitute a new sale which will be subject to the
applicable CDSC upon redemption); or (f) the distribution is from a qualified
defined contribution plan and represents a participant's directed transfer
(provided that this privilege has been pre-authorized through a prior
agreement with PFD regarding participant directed transfers).
The CDSC on Class B shares and on any Class A shares subject to a CDSC may
be waived or reduced for either non-retirement or retirement plan accounts
if: (a) the redemption is made by any state, county, or city, or any
instrumentality, department, authority, or agency thereof, which is
prohibited by applicable laws from paying a CDSC in connection with the
acquisition of shares of any registered investment management company; or (b)
the redemption is made pursuant to the Fund's right to liquidate or
involuntarily redeem shares in a shareholder's account.
Broker-Dealers. An order for either Class of Fund shares received by PFD
from a broker-dealer prior to the close of regular trading on the Exchange is
confirmed at the price appropriate for that Class as determined at the close
of regular trading on the Exchange on the day the order is received, provided
the order is received prior to PFD's close of business (usually, 5:30 p.m.
Eastern Time). It is the responsibility of broker-dealers to transmit orders
so that they will be received by PFD prior to its close of business.
General. The Fund reserves the right in its sole discretion to withdraw all
or any part of the offering of shares when, in the judgment of the Fund's
management, such withdrawal is in the best interest of the Fund. An order to
purchase shares is not binding on, and may be rejected by, PFD until it has
been confirmed in writing by PFD and payment has been received.
VIII. 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, 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 account, you may
use any of the methods described below.
Your shares will be sold at the share price next calculated after your
order is received and accepted less any applicable CDSC. Sale proceeds
generally will be sent to you in cash, normally within seven days after your
order is accepted. The Fund reserves the right to withhold payment of the
sale proceeds until checks received by the Fund in payment for the shares
being sold have cleared, which may take up to 15 calendar days from the
purchase date.
In Writing. You may sell your shares by delivering a written request,
signed by all registered owners, in good order to PSC, however, you must use
a written request, including a signature guarantee, to sell your shares if
any of the following situations 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,
10
<PAGE>
(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 account with
a different registration.
Your request should include your name, the Fund's name, your fund account
number, the Class of shares to be redeemed, the dollar amount or number of
shares to be redeemed, and any other applicable requirements as described
below. Unless instructed otherwise, Pioneer will send the proceeds of the
sale to the address of record. Fiduciaries or corporations are required to
submit additional documents. For more information, contact PSC at
1-800-225-6292.
Written requests will not be processed until they are received in good
order and accepted by PSC. Good order means that there are no outstanding
claims or requests to hold redemptions on the account, certificates are
endorsed by the record owner(s) exactly as the shares are registered and the
signature(s) are guaranteed by an eligible guarantor. You should be able to
obtain a signature guarantee from a bank, broker, dealer, credit union (if
authorized under state law), securities exchange or association, clearing
agency or savings association. A notary public cannot provide a signature
guarantee. Signature guarantees are not accepted by facsimile ("fax"). For
additional information about the necessary documentation for redemption by
mail, please contact PSC at 1-800-225-6292.
By Telephone or by Fax. Your account is automatically authorized to have
the telephone redemption privilege unless you indicated otherwise on your
Account Application or by writing to PSC. Proper account identification will
be required for each telephone redemption. The telephone redemption option is
not available to retirement plan accounts. A maximum of $50,000 may be
redeemed by telephone or fax and the proceeds may be received by check or by
bank wire or electronic funds transfer. To receive the proceeds by check: the
check must be made payable exactly as the account is registered and the check
must be sent to the address of record which must not have changed in the last
30 days. To receive the proceeds by bank wire or by electronic funds
transfer: the proceeds must be sent to your bank address of record which must
have been properly pre-designated either on your Account Application or on an
Account Options Form and which must not have changed in the last 30 days. To
redeem by fax send your redemption request to 1-800-225-4240. You may always
elect to deliver redemption instructions to PSC by mail. See "Telephone
Transactions and Related Liabilities" below. Telephone and fax redemptions
will be priced as described above. You are strongly urged to consult with
your financial representative prior to requesting a telephone redemption.
Selling Shares Through Your Broker-Dealer. The Fund has authorized PFD to
act as its agent in the repurchase of shares of the Fund from qualified
broker-dealers and reserves the right to terminate this procedure at any
time. Your broker-dealer must receive your request before the close of
business on the Exchange and transmit it to PFD before PFD's close of
business to receive that day's redemption price. Your broker-dealer is
responsible for providing all necessary documentation to PFD and may charge
you for its services.
Small Accounts. The minimum account value is $500. If you hold shares of
the Fund in an account with a net asset value of less than the minimum
required amount due to redemptions or exchanges, the Fund may redeem the
shares held in this account at net asset value if you have not increased the
net asset value of the account to at least the minimum required amount within
six months of notice by the Fund to you of the Fund's intention to redeem the
shares.
CDSC on Class A Shares. Purchases of Class A shares of $1,000,000 or more,
or by participants in a Group Plan which were not subject to an initial sales
charge, may be subject to a CDSC upon redemption. A CDSC is payable to PFD on
these investments in the event of a share redemption within 12 months
following the share purchase, at the rate of 1% of the lesser of the value of
the shares redeemed (exclusive of reinvested dividend and capital gain
distributions) or the total cost of such shares. Shares subject to the CDSC
which are exchanged into another Pioneer 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.
IX. HOW TO EXCHANGE FUND SHARES
Written Exchanges. You may exchange your shares by sending a letter of
instruction to PSC. Your letter should include your name, the name of the
Fund out of which you wish to exchange and the name of the Fund into which
you wish to exchange, your fund account number(s), the Class of 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, will be recorded. You are strongly urged to consult
with your financial representative prior to requesting a telephone
11
<PAGE>
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 18th day of the
month.
General. Exchanges must be at least $1,000. You may exchange your
investment from one Class of Fund shares at net asset value, without a sales
charge, for shares of the same Class of any other Pioneer mutual fund. Not
all Pioneer mutual funds offer more than one Class of shares. A new Pioneer
mutual fund account opened through an exchange must have a registration
identical to that on the original account.
Class A or Class B shares which would normally be subject to a CDSC upon
redemption will not be charged the applicable CDSC at the time of an
exchange. Shares acquired in an exchange will be subject to the CDSC of the
shares originally held. For purposes of determining the amount of any
applicable CDSC, the length of time you have owned Class B shares acquired by
exchange will be measured from the date you acquired the original shares and
will not be affected by any subsequent exchange.
Exchange requests received by PSC before 4:00 p.m. Eastern Time, will be
effective on that day if the requirements above have been met, otherwise,
they will be effective on the next business day. PSC will process exchanges
only after receiving an exchange request in good order. There are currently
no fees or sales charges imposed at the time of an exchange. An exchange of
shares may be made only in states where legally permitted. For federal and
(generally) state income tax purposes, an exchange is considered to be a sale
of the shares of the fund exchanged and a purchase of shares in another fund.
Therefore, an exchange could result in a gain or loss on the shares sold,
depending on the tax basis of these shares and the timing of the transaction,
and special tax rules may apply.
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. To prevent abuse of the exchange privilege to the
detriment of other Fund shareholders, the Fund and PFD reserve the right to
limit the number and/or frequency of exchanges and/or to charge a fee for
exchanges. The exchange privilege may be changed or discontinued and may be
subject to additional limitations, including certain restrictions on
purchases by market timer accounts.
X. DISTRIBUTION PLANS
The Fund has adopted a Plan of Distribution for both Class A shares
("Class A Plan") and Class B shares ("Class B Plan") in accordance with Rule
12b-1 under the 1940 Act pursuant to which certain distribution and service
fees are paid.
Pursuant to the Class A Plan, the Fund reimburses PFD for its actual
expenditures to finance any activity primarily intended to result in the sale
of Class A shares or to provide services to holders of Class A shares,
provided the categories of expenses for which reimbursement is made are
approved by the Fund's Board of Trustees. As of the date of this Prospectus,
the Board of Trustees has approved the following categories of expenses for
Class A shares of the Fund: (i) a service fee to be paid to qualified
broker-dealers in an amount not to exceed 0.25% per annum of the Fund's daily
net assets attributable to Class A shares; (ii) reimbursement to PFD for its
expenditures for broker-dealer commissions and employee compensation on
certain sales of the Fund's Class A shares with no initial sales charge (See
"How to Buy Fund Shares"); and (iii) reimbursement to PFD for expenses
incurred in providing services to Class A shareholders and supporting
broker-dealers and other organizations (such as banks and trust companies) in
their efforts to provide such services. Banks are currently prohibited under
the Glass-Steagall Act from providing certain underwriting or distribution
services. If a bank was prohibited from acting in any capacity or providing
any of the described services, management would consider what action, if any,
would be appropriate.
Expenditures of the Fund pursuant to the Class A Plan are accrued daily
and may not exceed 0.25% of the Fund's average daily net assets attributable
to Class A shares. Distribution expenses of PFD are expected to substantially
exceed the distribution fees paid by the Fund in a given year. The Class A
Plan may not be amended to increase materially the annual percentage
limitation of average net assets which may be spent for the services
described therein without approval of the shareholders of the Fund. The Class
A Plan does not provide for the carryover of reimbursable expenses beyond
twelve months from the time the Fund is first invoiced for an expense. The
limited carryover provision in the Class A Plan may result in an expense
invoiced to the Fund in one fiscal year being paid in the subsequent fiscal
year and thus being treated for purposes of calculating the maximum
expenditures of the Fund as having been incurred in the subsequent fiscal
year. In the event of termination or non-continuance of the Class A Plan,
the Fund has twelve months to reimburse any expense which it incurs prior to
such termination or non-continuance, provided that payments by the Fund
during such twelve-month period shall not exceed 0.25% of the Fund's average
daily net assets attributable to the Class A shares during such period.
The Class B Plan provides that the Fund will pay a distribution fee at the
annual rate of 0.75% of the Fund's average daily net assets attributable to
Class B shares and will pay PFD a service fee at the annual rate of 0.25% of
the Fund's average daily net assets attributable to Class B shares. The
distribution fee is intended to compensate PFD for its distribution services
to the Fund. The service fee is intended to be additional compensation for
personal services and/or account maintenance services with respect to Class B
shares. PFD also receives the proceeds of any CDSC imposed on the redemption
of Class B shares.
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
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of such shares and, 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 become eligible for additional service fees with
respect to such shares commencing in the 13th month following the purchase.
Dealers may from time to time be required to meet certain criteria in order
to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION
The Fund has elected to be treated, has qualified, and intends to qualify
each year as a "regulated investment company" under Subchapter M of the Code,
so that it will not pay federal income taxes on income and capital gains
distributed to shareholders at least annually.
Under the Code, the Fund will be subject to a nondeductible 4% excise tax
on a portion of its undistributed income and capital gains if it fails to
meet certain distribution requirements by the end of the calendar year. The
Fund intends to make distributions in a timely manner and accordingly does
not expect to be subject to the excise tax.
The Fund pays dividends from net investment income and distributes its net
realized short and long-term capital gains, if any, annually, usually in the
month of December, with additional distributions made only as required to
avoid federal income or excise tax. Unless shareholders specify otherwise,
all distributions will be automatically reinvested in additional full and
fractional shares of the Fund. Dividends from the Fund's net investment
income, certain net foreign exchange gains and net short-term capital gains
are taxable as ordinary income, and dividends from the Fund's net long- term
capital gains are taxable as long-term capital gains. For federal income tax
purposes, all dividends are taxable as described above whether a shareholder
takes them in cash or reinvests them in additional shares of the Fund.
Information as to the federal tax status of dividends and distributions will
be provided annually. For further information on the distribution options
available to shareholders, see "Distribution Options" and "Directed
Dividends" below.
In any year in which the Fund qualifies, it may make an election that will
permit certain of its shareholders to take a credit (or, if more
advantageous, a deduction) for foreign income taxes paid by the Fund. Each
shareholder would then treat as an additional dividend his or her appropriate
share of the amount of foreign taxes paid by the Fund. If this election is
made, the Fund will notify its shareholders annually as to their share of the
amount of foreign taxes paid and the foreign source income of the Fund.
Dividends and other distributions and the proceeds of redemptions or
repurchases of Fund shares paid to individuals and other non-exempt payees
will be subject to a 31% 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 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. Shareholders should consult their own tax advisors
regarding state, local and other applicable tax laws.
XII. 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 the countries in which the Fund may
invest.
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 account.
Shareholders whose shares are held in the name of an investment
broker-dealer or other party will not normally have an account with the Fund
and might not be able to utilize some of the services available to
shareholders of record. Examples of services which might not be available are
investment or redemption of shares by mail or telephone, automatic
reinvestment of dividends and capital gains distributions, withdrawal plans,
Letters of Intention, Rights of Accumulation, telephone exchanges, and
newsletters.
Additional Investments
You may add to your account by sending a check (minimum of $50 for Class A
shares and $500 for Class B shares) to PSC (account number and Class of
shares should be clearly indicated). The bottom portion of a confirmation
statement may be used as a remittance slip to make additional investments.
Additions to your account, whether by check or through an Investomatic Plan,
are invested in full and fractional shares of the Fund at the applicable
offering price in effect as of the close of regular trading on the Exchange
on the day of receipt.
Automatic Investment Plans
You may arrange for regular automatic investments of $50 or more through
government/military allotments, payroll deduction or through a Pioneer
Investomatic Plan. A Pioneer Investomatic Plan provides for a monthly or
quarterly investment by means of a pre-authorized draft drawn on a checking
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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.
Directed Dividends
You may elect (in writing) to have the dividends paid by one Pioneer mutal
fund account invested in a second Pioneer fund account. The value of this
second account must be at least $1,000 ($500 for Pioneer Fund or Pioneer II).
Invested dividends may be in any amount, and there are no fees or charges for
this service. Retirement plan shareholders may only direct dividends to
accounts with identical registrations, i.e., PGA IRA Cust for John Smith may
only go into another account registered PGA IRA Cust for John Smith.
Direct Deposit
If you have elected to take distributions, whether dividends or dividends
and capital gains, in cash, or have established a Systematic Withdrawal Plan,
you may choose to have those cash payments deposited directly into your
savings, checking or NOW bank account. You may also establish this service by
completing the appropriate section on the Account Application when opening a
new account or the Account Options Form for an existing account.
Voluntary Tax Withholding
You may request (in writing) that PSC withhold 28% of the dividends and
capital gains distributions paid from your account (before any reinvestment)
and forward the amount withheld to the IRS as a credit against your federal
income taxes. This option is not available for retirement plan accounts or
for accounts subject to backup withholding.
Telephone Transactions and Related Liabilities
Your account is automatically authorized to have telephone transaction
privileges unless you indicated otherwise on your Account Application or by
writing to PSC. You may purchase, sell or exchange Fund shares by telephone.
See "Share Price" 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 FactFone). You are strongly urged
to consult with your financial representative prior to requesting any
telephone transaction. To confirm that each transaction instruction received
by telephone is genuine, the Fund will record each telephone transaction,
require the caller to provide the personal identification number ("PIN") for
the account and send you a written confirmation of each telephone
transaction. Different procedures may apply to accounts that are registered
to non-U.S. citizens or that are held in the name of an institution or in the
name of an investment broker-dealer or other third-party. If reasonable
procedures, such as those described above, are not followed, the Fund may be
liable for any loss due to unauthorized or fraudulent instructions. The Fund
may implement other procedures from time to time. In all other cases, neither
the Fund, PSC nor PFD will be responsible for the authenticity of
instructions received by telephone, therefore, you bear the risk of loss for
unauthorized or fraudulent telephone transactions.
During times of economic turmoil or market volatility or as a result of
severe weather or a natural disaster, it may be difficult to contact the Fund
by telephone to institute a redemption or exchange. You should communicate
with the Fund in writing if you are unable to reach the Fund by telephone.
FactFone(SM)
FactFone is an automated inquiry and telephone transaction system
available to Pioneer shareholders by dialing 1-800-225-4321. FactFone allows
you to obtain current information on your Pioneer mutual fund accounts and to
inquire about the prices and yields of all publicly available Pioneer mutual
funds. In addition, you may use FactFone to make computer-assisted telephone
purchases, exchanges and redemptions from your Pioneer accounts if you have
activated your PIN. Telephone purchases and redemptions require the
establishment of a bank account of record. You are strongly urged to consult
with your financial representative prior to requesting any telephone
transaction. Shareholders whose accounts are registered in the name of a
broker-dealer or other third party may not be able to use FactFone. See "How
to Buy Fund Shares," "How to Exchange Fund Shares," "How to Sell Fund Shares"
and "Telephone Transactions and Related Liabilities." Call PSC for
assistance.
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 contained
in this Prospectus should not be used to establish any of these plans.
Separate applications are required.
Telecommunications Device for the Deaf (TDD)
If you have a hearing disability and you own TDD keyboard equipment, you
can call our TDD number toll-free at 1-800-225-1997, weekdays from 8:30 a.m.
to 5:30 p.m. Eastern Time to contact our telephone representatives with
questions about your account.
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Systematic Withdrawal Plans
If your account has a total value of at least $10,000 you may establish a
Systematic Withdrawal Plan ("SWP") providing for fixed payments at regular
intervals. Withdrawals from Class B share accounts are limited to 10% of the
value of the account at the time the plan is implemented. See "Waiver or
Reduction of Contingent Deferred Sales Charge" 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.
XIII. THE FUND
Pioneer International Growth Fund is an open-end, diversified management
investment company (commonly referred to as a mutual fund) organized as a
Massachusetts business trust on October 26, 1992. 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 fundamental investment restrictions or approving a management or
subadvisory contract.
The Trustees have the authority, without further shareholder approval, to
classify and reclassify the shares of the Fund, or any additional series of
the Fund, into one or more classes. As of the date of this Prospectus, the
Trustees have authorized the issuance of two classes of shares, designated
Class A and Class B. The shares of each class represent an interest in the
same portfolio of investments of the Fund. Each class has equal rights as to
voting, redemption, dividends and liquidation, except that each class bears
different distribution and transfer agent fees and may bear other expenses
properly attributable to the particular class. Class A and Class B
shareholders have exclusive voting rights with respect to the Rule 12b-1
distribution plans adopted by holders of those shares in connection with the
distribution of shares. The Fund reserves the right to create and issue
additional series and classes of shares.
When issued and paid for in accordance with the terms of the Prospectus
and Statement of Additional Information, shares of the Fund are fully-paid
and non-assessable by the Fund. Shares will remain on deposit with the Fund's
transfer agent and certificates will not normally be issued. The Fund
reserves the right to charge a fee for the issuance of certificates.
XIV. INVESTMENT RESULTS
The average annual total return (for a designated period of time) on an
investment in the Fund may be included in advertisements, and furnished to
existing or prospective shareholders. The average annual total return for
each Class is computed in accordance with the SEC's standardized formula. The
calculation for all Classes assumes the reinvestment of all dividends and
distributions at net asset value and does not reflect the impact of federal
or state income taxes. In addition, for Class A shares the calculation
assumes the deduction of the maximum sales charge of 5.75%; for Class B
shares the calculation reflects the deduction of any applicable CDSC. The
periods illustrated would normally include one, five and ten years (or since
the commencement of the public offering of the shares of a Class, if shorter)
through the most recent calendar quarter.
One or more additional measures and assumptions, including but not limited
to historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share
values; or any graphic illustration of such data may also be used. These data
may cover any period of the Fund's existence and may or may not include the
impact of sales charges, taxes or other factors.
Other investments or savings vehicles and/or to unmanaged market indexes,
indicators of economic activity or averages of
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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.
APPENDIX
RISKS AND LIMITATIONS ASSOCIATED WITH TRANSACTIONS IN OPTIONS, FUTURES
CONTRACTS AND FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may employ certain active management techniques including options
on securities indices, options on currencies, futures contracts and options
on futures and forward foreign currency exchange contracts. Each of these
active management techniques involves (1) liquidity risk that contractual
positions cannot be easily closed out in the event of market changes or
generally in the absence of a liquid secondary market, (2) correlation risk
that changes in the value of hedging positions may not match the securities
market and foreign currency fluctuations intended to be hedged, and (3)
market risk that an incorrect prediction of securities prices or exchange
rates by the Manager may cause the Fund to perform less well than if such
positions had not been entered. The ability to terminate over-the-counter
options is more limited than with exchange traded options and may involve the
risk that the counter-party to the option will not fulfill its obligations.
The Fund will treat purchased over-the-counter options as illiquid
securities. The uses of options, futures and forward foreign currency
exchange contracts are highly specialized activities which involve investment
techniques and risks that are different from those associated with ordinary
portfolio transactions. The loss that may be incurred by the Fund in entering
into futures contracts and written options thereon and forward foreign
currency exchange contracts is potentially unlimited. Except as set forth
below under "Futures Contracts and Options on Futures Contracts" there is no
limit on the percentage of the Fund's assets that may be invested in futures
contracts and related options or forward foreign currency exchange contracts.
The Fund may not invest more than 5% of its total assets in purchased options
other than protective put options.
The Fund's transactions in options, forward foreign currency exchange
contracts, futures contracts and options on futures contracts 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.
Options on Securities Indices
The Fund may purchase put and call options on indices that are based on
securities in which it may invest to manage cash flow and to manage its
exposure to foreign and domestic stocks or stock markets instead of, or in
addition to, buying and selling stock. The Fund may also purchase options in
order to hedge against risks of market-wide price fluctuations.
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
exercise the option profitably 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 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
an option which it has purchased. The Fund may also allow options to expire
unexercised, which would result in the loss of the premium paid.
Forward Foreign Currency Exchange Contracts and Options on Foreign Currencies
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. The Fund might sell a foreign currency on
either a spot or forward basis to seek 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 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 pre-
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serve the U.S. dollar price of securities it is authorized to purchase or has
contracted to purchase.
The Fund may also engage in cross-hedging by using forward contracts in
one currency to hedge against fluctuations in the value of securities
denominated in a different currency, if the Manager determines that there is
a pattern of correlation between the two currencies. Cross-hedging may also
include entering into a forward transaction involving two foreign currencies,
using one foreign currency as a proxy for the U.S. dollar to hedge against
variations in the other foreign currency, if the Manager determines that
there is a pattern of correlation between the proxy currency and the U.S.
dollar.
If the Fund enters into a forward contract to buy foreign currency for any
purpose, the Fund will be required to place cash or liquid, high grade
securities in a segregated account of the Fund maintained by 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 purchase put and call options on foreign cur rencies for the
purpose of protecting against declines in the dollar value of foreign
portfolio securities and against increases in the U.S. dollar cost of foreign
securities to be acquired. The Fund may also use options on currency to
cross-hedge. The purchase of an option on a foreign currency may constitute
an effective hedge against exchange rate fluctuations. In addition, the Fund
may purchase call or put options on currency for non-hedging purposes when
the Manager anticipates that the currency will appreciate or depreciate but
the securities denominated in that currency do not present attractive
investment opportunities and are not held in the Fund's portfolio.
Futures Contracts and Options on Futures Contracts
To hedge against changes in securities prices, currency exchange rates, or
interest rates, the Fund may purchase and sell various kinds of futures
contracts, and purchase and write call and put options on any of such futures
contracts. The Fund may also enter into closing purchase and sale
transactions with respect to any of such contracts and options. The futures
contracts may be based on various stock and other securities indices, foreign
currencies and other financial instruments and indices. The Fund will engage
in futures and related options transactions for bona fide hedging or other
non-hedging purposes as are permitted by regulations of the Commodity Futures
Trading Commission.
The Fund may not purchase or sell non-hedging futures contracts or
purchase or sell related non-hedging options, except for closing purchase or
sale transactions, if immediately thereafter the sum of the amount of initial
margin deposits on the Fund's existing non-hedging futures and related
non-hedging options positions and the amount of premiums paid for existing
non-hedging options on futures (net of the amount the positions are "in the
money") would exceed 5% of the market 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 currencies,
require the Fund to segregate assets to cover such contracts and options.
Repurchase Agreements
The Fund may enter into repurchase agreements not exceeding seven days in
duration. In a repurchase agreement, an investor (e.g., the Fund) purchases a
debt security from a seller which undertakes to repurchase the security at a
specified resale price on an agreed future date (ordinarily a week or less).
The resale price generally exceeds the purchase price by an amount which
reflects an agreed-upon market interest rate for the term of the repurchase
agreement. Repurchase agreements entered into by the Fund will be fully
collateralized with U.S. Treasury and/or U.S. government agency obligations
with a market value of not less than 100% of the obligation, valued daily.
Collateral will be held in a segregated, safekeeping account for the benefit
of the Fund. In the event that a repurchase agreement is not fulfilled, the
Fund could suffer a loss to the extent that the value of the collateral falls
below the repurchase price or if the Fund is 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.
Restricted and Illiquid Securities
The Fund may invest in restricted securities (i.e., securities that would
be required to be registered prior to distribution to the public), including
restricted securities eligible for resale to certain institutional investors
pursuant to Rule 144A under the Securities Act of 1933. In addition, the Fund
may invest up to 15% of its net assets in restricted securities sold and
offered under Rule 144A that are illiquid either as a result of legal or
contractual restrictions or the absence of a trading market.
The Board of Trustees of the Fund has adopted guidelines and delegated to
the Manager the daily function of determining and monitoring the liquidity of
restricted securities. The Board, however, retains sufficient oversight and
is ultimately responsible for the determinations. Since it is not possible to
predict with assurance exactly how the market for restricted securities sold
and offered under Rule 144A will develop, the Board carefully monitors the
Fund's investments in these securities, focusing on such important factors,
among others, as valuation, liquidity and availability of information. This
investment practice could have the effect of increasing the level of
illiquidity in the Fund to the extent that qualified institutional buyers
become for a time uninterested in purchasing these restricted securities.
Securities of non-U.S. issuers that the Fund acquires in Rule 144A
transactions, but which the Fund may resell publicly in a non-U.S. securities
market, are not considered restricted securities.
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Notes
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The Pioneer Family of Mutual Funds
International Growth Funds
Pioneer India Fund
Pioneer Emerging Markets Fund
Pioneer International Growth Fund
Pioneer Europe Fund
Growth Funds
Pioneer Gold Shares
Pioneer Growth Shares
Pioneer Capital Growth Fund
Pioneer Small Company Fund
Growth and Income Funds
Pioneer Three
Pioneer II
Pioneer Fund
Pioneer Real Estate Shares
Pioneer Equity-Income Fund
Income Funds
Pioneer Income Fund
Pioneer Bond Fund
Pioneer America Income Trust
Pioneer Short-Term Income Trust
Tax-Free Income Funds
Pioneer California Double Tax-Free Fund*
Pioneer Massachusetts Double Tax-Free Fund*
Pioneer New York Triple Tax-Free Fund*
Pioneer Tax-Free Income Fund*
Pioneer Intermediate Tax-Free Fund*
Money Market Funds
Pioneer Cash Reserves Fund
Pioneer U.S. Government Money Fund
*Not suitable for retirement accounts.
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Pioneer [Logo]
Pioneer
International
Growth Fund
60 State Street
Boston, Massachusetts 02109
OFFICERS
JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
NORMAN KURLAND, Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
INVESTMENT ADVISER
PIONEERING MANAGEMENT CORPORATION
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: 1-800-225-6292
SERVICE INFORMATION
If you would like information on the following, please call:
Existing and new accounts, prospectuses,
applications, service forms
and telephone transactions ................................... 1-800-225-6292
Retirement plans ............................................... 1-800-622-0176
FactFone(SM)
Automated fund yields, automated prices
and account information ...................................... 1-800-225-4321
Toll-free fax .................................................. 1-800-225-4240
Telecommunications Device for the Deaf (TDD) ................... 1-800-225-1997
1295-2942
(C)Pioneer Funds Distributor, Inc.
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PIONEER INTERNATIONAL GROWTH FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
Class A and Class B Shares
March 27, 1995
(revised December 6, 1995)
This Statement of Additional Information (Part B of the Registration Statement)
is not a Prospectus, but should be read in conjunction with the Prospectus (the
"Prospectus") dated March 27, 1995, as supplemented and/or amended from time to
time, of Pioneer International Growth Fund (the "Fund"). A copy of the
Prospectus can be obtained free of charge by calling Shareholder Services at
1-800-225-6292 or by written request to the Fund at 60 State Street, Boston,
Massachusetts 02109.
TABLE OF CONTENTS
Page
1. Investment Policies and Restrictions..................................B-2
2. Management of the Fund................................................B-11
3. Investment Adviser....................................................B-15
4. Principal Underwriter.................................................B-16
5. Distribution Plans....................................................B-17
6. Shareholder Servicing/Transfer Agent..................................B-19
7. Custodian.............................................................B-19
8. Independent Public Accountant.........................................B-20
9. Portfolio Transactions................................................B-20
10. Tax Status............................................................B-21
11. Description of Shares.................................................B-24
12. Certain Liabilities...................................................B-25
13. Determination of Net Asset Value......................................B-26
14. Systematic Withdrawal Plan............................................B-26
15. Letter of Intention...................................................B-27
16. Investment Results....................................................B-27
17. Financial Statements..................................................B-30
APPENDIX A -- Additional General Economic Information.................B-31
APPENDIX B -- Information Regarding Pioneer...........................B-33
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.
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1. INVESTMENT POLICIES AND RESTRICTIONS
The Prospectus of Pioneer International Growth Fund (the "Fund"),
identifies the investment objective and the principal investment policies of the
Fund. Other investment policies of the Fund are set forth below. Capitalized
terms not otherwise defined herein have the meaning given to them in the
Prospectus.
Securities Index Options
The Fund may purchase call and put options on securities indices for
the purpose of hedging against the risk of unfavorable price movements adversely
affecting the value of the Fund's securities or securities the Fund intends to
buy. Securities index options will not be used for speculative purposes.
Currently, options on stock indices are traded only on national
securities exchanges and over-the-counter, both in the United States 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 United States ("U.S."), the Nikkei in Japan or the FTSE
100 in the United Kingdom. Index options may also be based on a narrower market
index such as the S&P 100 or on an industry or market segment such as the AMEX
Oil and Gas Index or the Computer and Business Equipment Index.
The Fund may purchase put options in order to hedge against an
anticipated decline in securities prices that might adversely affect the value
of the Fund's portfolio securities. If the Fund purchases a put option on a
securities index, the amount of the payment it would receive upon exercising the
option would depend on the extent of any decline in the level of the securities
index below the exercise price. Such payments would tend to offset a decline in
the value of the Fund's portfolio securities. However, if the level of the
securities index increases and remains above the exercise price while the put
option is outstanding, the Fund will not be able to profitably exercise the
option and will lose the amount of the premium and any transaction costs. Such
loss may be partially offset by an increase in the value of the Fund's portfolio
securities.
The Fund may purchase call options on securities indices in order to
remain fully invested in a particular foreign stock market or to lock in a
favorable price on securities that it intends to buy in the future. If the Fund
purchases a call option on a securities index, the amount of the payment it
receives upon exercising the option depends on the extent of an increase in the
level of other securities indices above the exercise price. Such payments would
in effect allow the Fund to benefit from securities market appreciation even
though it may not have had sufficient cash to purchase the underlying
securities. Such payments may also offset increases in the price of securities
that the Fund intends to purchase. If, however, the level of the securities
index declines and remains below the exercise price while the call option is
outstanding, the Fund will not be able to exercise the option profitably and
will lose the amount of the premium and transaction costs. Such loss may be
partially offset by a reduction in the price the Fund pays to buy additional
securities for its portfolio.
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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 to immediately 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 transactions. Personnel
of the Fund's investment adviser, Pioneering Management Corporation ("PMC"),
have considerable experience in options transactions.
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.
Forward Foreign Currency Transactions
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 of the
different countries in which it will invest 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 may not
necessarily 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.
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If the Fund enters into a forward contract to purchase foreign
currency, its custodian bank will segregate cash or high grade liquid debt
securities in a separate account of the Fund in an amount equal to the value of
the Fund's total assets committed to the consummation of such forward contract.
Those assets will be valued at market daily and if the value of the assets in
the separate account declines, additional cash or securities will be placed in
the accounts so that the value of the account will equal the amount of the
Fund's commitment with respect to such contracts.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also limit the opportunity
for gain if the value of the hedged currency should rise. Moreover, it may not
be possible for the Fund to hedge against a devaluation that is so generally
anticipated that the Fund is not able to contract to sell the currency at a
price above the devaluation level it anticipates.
The cost to the Fund of engaging in foreign currency transactions
varies with such factors as the currency involved, the size of the contract, the
length of the contract period and the market conditions then prevailing. Since
transactions in foreign currency and forward contracts are usually conducted on
a principal basis, no fees or commissions are involved. The Fund may close out a
forward position in a currency by selling the forward contract or entering into
an offsetting forward contract.
Options on Foreign Currencies
The Fund may purchase 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 increased, 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.
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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 Futures Contracts
To hedge against changes in securities prices or currency exchange
rates, the Fund may purchase and sell various kinds of futures contracts, and
purchase and write (sell) call and put options on any of such futures contracts.
The Fund may also enter into closing purchase and sale transactions with respect
to any of such contracts and options. The futures contracts may be based on
various securities (such as U.S. Government securities), securities indices,
foreign currencies and other financial instruments and indices. The Fund will
engage in futures and related options transactions for bona fide hedging and
non-hedging purposes as described below. All futures contracts entered into by
the Fund are traded on U.S. exchanges or boards of trade that are licensed and
regulated by the Commodity Futures Trading Commission (the "CFTC") or on foreign
exchanges.
Futures Contracts. A futures contract may generally be described as an
agreement between two parties to buy and sell particular financial instruments
for an agreed price during a designated month (or to deliver the final cash
settlement price, in the case of a contract relating to an index or otherwise
not calling for physical delivery at the end of trading in the contract).
When interest rates are rising or securities prices are falling, the
Fund can seek to offset a decline in the value of its current portfolio
securities through the sale of futures contracts. When interest rates are
falling or securities prices are rising, the Fund, through the purchase of
futures contracts, can attempt to secure better rates or prices than might later
be available in the market when it effects anticipated purchases. Similarly, the
Fund can sell futures contracts on a specified currency to protect against a
decline in the value of such currency and a decline in the value of its
portfolio securities which are denominated in such currency. The Fund can
purchase futures contracts on foreign currency to establish the price in U.S.
dollars of a security denominated in such currency that the Fund has acquired or
expects to acquire.
Positions taken in the futures markets are not normally held to
maturity but are instead liquidated through offsetting transactions which may
result in a profit or a loss. While futures contracts on securities or currency
will usually be liquidated in this manner, the Fund may instead make, or take,
delivery of the underlying securities or currency whenever it appears
economically advantageous to do so. A clearing corporation associated with the
exchange on which futures on securities or currency are traded guarantees that,
if still open, the sale or purchase will be performed on the settlement date.
Hedging Strategies. Hedging, by use of futures contracts, seeks to
establish with more certainty the effective price, rate of return and currency
exchange rate on portfolio securities and securities that the Fund owns or
proposes to acquire. The Fund may, for example, take a "short" position in the
futures market by selling futures contracts in order to hedge against an
anticipated rise in interest rates or a decline in market prices or foreign
currency rates that would adversely affect the value of the Fund's portfolio
securities. Such futures contracts may include contracts for the future delivery
of securities held by the Fund or securities with characteristics similar to
those of the Fund's portfolio securities. Similarly, the Fund may sell futures
contracts in currency in which its portfolio securities are denominated or in
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one currency to hedge against fluctuations in the value of securities
denominated in a different currency if there is an established historical
pattern of correlation between the two currencies. If, in the opinion of 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, which may have a value higher than the exercise
price. Conversely, the writing of a put option on a futures contract generates a
premium which may partially offset an increase in the price of securities that
the Fund intends to purchase. However, the Fund becomes obligated to purchase a
futures contract which may have a value lower than the exercise price. Thus, the
loss incurred by the Fund in writing options on futures is potentially unlimited
and may exceed the amount of the premium received. The Fund will incur
transaction costs in connection with the writing of options on futures.
The holder or writer of an option on a futures contract may terminate
its position by selling or purchasing an offsetting option on the same series.
There is no guarantee that such closing transactions can be effected. The Fund's
ability to establish and close out positions on such options will be subject to
the development and maintenance of a liquid market.
The Fund may use options on futures contracts for bona fide hedging or
non-hedging purposes as discussed below.
B-6
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Other Considerations. The Fund will engage in futures and related
options transactions only for bona fide hedging or non-hedging purposes in
accordance with CFTC regulations which permit principals of an investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act") to engage in such transactions without registering as commodity pool
operators. The Fund is not permitted to engage in speculative futures trading.
The Fund will determine that the price fluctuations in the futures contracts and
options on futures used for hedging purposes are substantially related to price
fluctuations in securities held by the Fund or which it expects to purchase.
Except as stated below, the Fund's futures transactions will be entered into for
traditional hedging purposes -- i.e., futures contracts will be sold to protect
against a decline in the price of securities (or the currency in which they are
denominated) that the Fund owns, or futures contracts will be purchased to
protect the Fund against an increase in the price of securities (or the currency
in which they are denominated) it intends to purchase. As evidence of this
hedging intent, the Fund expects that on 75% or more of the occasions on which
it takes a long futures or option position (involving the purchase of futures
contracts), the Fund will have purchased, or will be in the process of
purchasing, equivalent amounts of related securities or assets denominated in
the related currency in the cash market at the time when the futures or option
position is closed out. However, in particular cases, when it is economically
advantageous for the Fund to do so, a long futures position may be terminated or
an option may expire without the corresponding purchase of securities or other
assets.
As an alternative to literal compliance with the bona fide hedging
definition, a CFTC regulation permits the Fund to elect to comply with a
different test, under which the sum of the amounts of initial margin deposits on
the Fund's existing non-hedging futures contracts and premiums paid for
non-hedging options on futures (net of the amount the positions are "in the
money") would exceed 5% of the market value of the Fund's total 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.
Transaction costs associated with futures contracts and related options
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.
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
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securities because currency movements impact the value of different securities
in differing degrees.
Restricted Securities
The Fund may invest no more than 5% of its total assets in "restricted
securities" (i.e., securities that would be required to be registered prior to
distribution to the public), excluding restricted securities eligible for resale
to certain institutional investors pursuant to Rule 144A of the Securities Act
of 1933 or foreign securities which are offered or sold outside the United
States; provided, however, that no more than 15% of the Fund's total assets may
be invested in restricted securities including securities eligible for resale
under Rule 144A. The Board of Trustees may adopt guidelines and delegate to PMC
the daily function of determining and monitoring the liquidity of restricted
securities. The Board, however, will retain sufficient oversight and be
ultimately responsible for the determinations. Since it is not possible to
predict with assurance exactly how this market for restricted securities sold
and offered under Rule 144A will develop, the Board will carefully monitor the
Fund's investments in these securities, focusing on such important factors,
among others, as valuation, liquidity and availability of information. This
investment practice could have the effect of increasing the level of illiquidity
in the Fund to the extent that qualified institutional buyers become for a time
uninterested in purchasing these restricted securities.
Repurchase Agreements
The Fund may enter into repurchase agreements with "primary dealers" in
U.S. Government securities and member banks of the Federal Reserve System which
furnish collateral at least equal in value or market price to the amount of
their repurchase obligation. The Fund may also enter into repurchase agreements
involving certain foreign government securities. In a repurchase agreement, an
investor (e.g., the Fund) purchases a debt security from a seller which
undertakes to repurchase the security at a specified resale price on an agreed
future date (ordinarily a week or less). The resale price generally exceeds the
purchase price by an amount which reflects an agreed-upon market interest rate
for the term of the repurchase agreement. The primary risk is that, if the
seller defaults, the Fund might suffer a loss to the extent that the proceeds
from the sale of the underlying securities and other collateral held by the Fund
in connection with the related repurchase agreement are less than the repurchase
price. Another risk is that, in the event of bankruptcy of the seller, the Fund
could be delayed or prohibited from disposing of the underlying securities and
other collateral held by the Fund in connection with the related repurchase
agreement pending court proceedings. In evaluating whether to enter a repurchase
agreement, PMC will carefully consider the creditworthiness of the seller
pursuant to procedures reviewed and approved by the Trustees.
Investment Restrictions
The Fund has adopted certain additional investment restrictions which
may not be changed without the affirmative vote of the holders of a majority of
the Fund's outstanding voting securities. The Fund may not:
(1) Issue senior securities, except as permitted by paragraphs (2),
(6) and (7) below. For purposes of this restriction, the issuance of shares of
beneficial interest in multiple classes or series, the purchase or sale of
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options, futures contracts and options on futures contracts, forward
commitments, forward foreign exchange contracts, repurchase agreements and
reverse repurchase agreements entered into in accordance with the Fund's
investment policy, and the pledge, mortgage or hypothecation of the Fund's
assets within the meaning of paragraph (3) below are not deemed to be senior
securities.
(2) Borrow money, except from banks as a temporary measure for
extraordinary emergency purposes and except pursuant to reverse repurchase
agreements and then only in amounts not to exceed 33 1/3% of the Fund's total
assets (including the amount borrowed) taken at market value. The Fund will not
use leverage to attempt to increase income. The Fund will not purchase
securities while outstanding borrowings exceed 5% of the Fund's total assets.
(3) Pledge, mortgage, or hypothecate its assets, except to secure
indebtedness permitted by paragraph (2) above and then only if such pledging,
mortgaging or hypothecating does not exceed 33 1/3% of the Fund's total assets
taken at market value.
(4) Act as an underwriter, except to the extent that, in connection
with the disposition of portfolio securities, the Fund may be deemed to be an
underwriter for purposes of the Securities Act of 1933.
(5) Purchase or sell real estate, or any interest therein, and real
estate mortgage loans, except that the Fund may invest in securities of
corporate or governmental entities secured by real estate or marketable
interests therein or securities issued by companies (other than real estate
limited partnerships) that invest in real estate or interests therein.
(6) Make loans, except that the Fund may lend portfolio securities
in accordance with the Fund's investment policies. The Fund does not, for this
purpose, consider the purchase or invest in repurchase agreements, bank
certificates of deposit, a portion of an issue of publicly distributed bonds,
bank loan participation agreements, bankers' acceptances, debentures or other
securities, whether or not the purchase is made upon the original issuance of
the securities, to be the making of a loan.
(7) Invest in commodities or commodity contracts or in puts, calls,
or combinations of both, 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.
(8) With respect to 75% of its total assets, purchase securities of
an issuer (other than the U.S. Government, its agencies or instrumentalities),
if
(a) such purchase would cause more than 5% of the Fund's total
assets taken at market value to be invested in the securities of such
issuer, or
(b) such purchase would at the time result in more than 10% of
the outstanding voting securities of such issuer being held by the
Fund.
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As long as the Fund is registered in the Federal Republic of Germany or
in Austria, the Fund may not without the prior approval of its shareholders:
(i) invest in the securities of any other domestic or foreign
investment company or investment fund, except in connection with a plan of
merger or consolidation with or acquisition of substantially all the assets of
such other investment company or investment fund;
(ii) purchase or sell real estate, or any interest therein, and real
estate mortgage loans, except that the Fund may invest in securities of
corporate or governmental entities secured by real estate or marketable
interests therein or securities issued by companies (other than real estate
limited partnerships, real estate investment trusts and real estate funds) that
invest in real estate or interests therein;
(iii) borrow money in amounts exceeding 10% of the Fund's total assets
(including the amount borrowed) taken at market value;
(iv) pledge, mortgage or hypothecate its assets in amounts exceeding
10% of the Fund's total assets taken at market value;
(v) purchase securities on margin or make short sales; or
(vi) redeem its securities in-kind.
It is the fundamental policy of the Fund not to concentrate its
investments in securities of companies in any particular industry. In the
opinion of the staff of the Securities and Exchange Commission (the
"Commission"), investments are concentrated in a particular industry if such
investments aggregate 25% or more of the Fund's total assets. The Fund's policy
does not apply to investments in U.S. Government Securities.
The Fund does not intend to enter into any reverse repurchase agreement
as described in fundamental investment restriction (2) above, during the current
fiscal year.
In addition, as a matter of nonfundamental investment policy and in
connection with the offering of its shares in various states and foreign
countries, the Fund has agreed not to:
(a)Participate on a joint-and-several basis in any securities trading
account. The "bunching" of orders for the sale or purchase of marketable
portfolio securities with other accounts under the management of the Adviser to
save commissions or to average prices among them is not deemed to result in a
securities trading account.
(b)Purchase securities of any issuer which, together with any
predecessor, has a record of less than three years' continuous operations prior
to the purchase if such purchase would cause investments of the Fund in all such
issuers to exceed 5% of the value of the total assets of the Fund.
(c)Invest for the purpose of exercising control over or management of
any company.
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(d)Purchase warrants of any issuer, if, as a result of such purchases,
more than 2% of the value of the Fund's net assets would be invested in warrants
which are not listed on the New York Stock Exchange or the American Stock
Exchange or more than 5% of the value of the net assets of the Fund would be
invested in warrants generally, whether or not so listed. For these purposes,
warrants are to be valued at the lesser of cost or market, but warrants acquired
by the Fund in units with or attached to debt securities shall be deemed to be
without value.
(e)Knowingly purchase or retain securities of an issuer if one or more
of the Trustees or officers of the Fund or directors or officers of the Adviser
or any investment management subsidiary of the Adviser individually owns
beneficially more than 0.5% and together own beneficially more than 5% of the
securities of such issuer.
(f)Purchase interests in oil, gas or other mineral leases or
exploration programs; however, this policy will not prohibit the acquisition of
securities of companies engaged in the production or transmission of oil, gas or
other minerals. These restrictions may not be changed without the approval of
the regulatory agencies in such states or foreign countries.
(g)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.
(h)Invest more than 5% of its total assets in restricted securities,
excluding restricted securities eligible for resale pursuant to Rule 144A under
the Securities Act of 1933; provided, however, that no more than 15% of the
Fund's total assets may be invested in restricted securities including
restricted securities eligible for resale under Rule 144A.
(i)Write covered calls or put options with respect to more than 25% of
the value of its total assets or invest more than 5% of its total assets in
puts, calls, spreads, or straddles, other than protective put options.
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 Investment Company Act of 1940, as amended (the "1940 Act").
JOHN F. COGAN, JR.*, Chairman of the Board, President and Trustee
President and a Director of The Pioneer Group, Inc. ("PGI"); Chairman and a
Director of Pioneering Management Corporation ("PMC"); Chairman of the Board and
Director of Pioneer Funds Distributor, Inc. ("PFD"); Director of Pioneering
Services Corporation ("PSC"), Pioneer Capital Corporation ("PCC") and
Forest-Starma (a Russian corporation); President and Director of Pioneer Plans
Corporation ("PPC"), Pioneer Investment Corp. ("PIC"), Pioneer Metals &
Technology, Inc. ("PMT"), Pioneer International Corp. ("PIntl"), Luscinia, Inc.,
Pioneer First Russia, Inc. ("First Russia"), Pioneer Omega, Inc. ("Omega") and
Theta Enterprises, Inc.; Chairman, President and a Director of Pioneer
Goldfields Limited ("PGL"); Chairman of the Supervisory Board of Pioneer Fonds
B-11
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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 Chairman and Partner, Hale and
Dorr (counsel to the Fund).
RICHARD H. EGDAHL, M.D., Trustee
Professor of Management, Boston University School of Management, since 1988;
Professor of Public Health, Boston University School of Public Health; Professor
of Surgery, Boston University School of Medicine and Boston University Health
Policy Institute; Director, Boston University Medical Center; Executive Vice
President and Vice Chairman of the Board, University Hospital; Academic Vice
President for Health Affairs, Boston University; Director, Essex Investment
Management Company, Inc. (investment adviser), Health Payment Review, Inc.
(health care containment software firm), Mediplex Group, Inc. (nursing care
utilization management 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.
Boston University Health Policy Institute
53 Bay State Road
Boston, Massachusetts
MARGARET B.W. GRAHAM, Trustee
Founding Director, Winthrop Group Inc., consulting firm since 1982; Manager of
Research Operations, Xerox Palo Alto Research Center, since 1991 and 1994;
Professor of Operations Management and Management of Technology, Boston
University School of Management, between 1989 and 1993 and Trustee of all of the
Pioneer mutual funds, except Pioneer Variable Contracts Trust.
The Keep
Post Office Box 110
Little Deer Isle, Maine
JOHN W. KENDRICK, Trustee
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.
6363 Waterway Drive
Falls Church, Virginia
MARGUERITE A. PIRET, Trustee
President, Newbury, Piret & Company, Inc. (a merchant banking firm) and Trustee
of all of the Pioneer mutual funds.
One Boston Place,
Suite 2635
Boston, Massachusetts
DAVID D. TRIPPLE*, Trustee and Executive Vice President
Executive Vice President and a Director of PGI; Director of PFD; Director of
PCC, PIC, PIntl and Pioneer SBIC Corporation; President, Chief Investment
Officer and a Director of PMC, Executive Vice President and Trustee of all of
the Pioneer mutual funds.
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STEPHEN K. WEST, Trustee
Partner, Sullivan & Cromwell (law firm); Trustee, The Winthrop Focus Funds
(mutual funds) and Trustee of all of the Pioneer mutual funds except Pioneer
Variable Contracts Trust.
125 Broad Street
New York, New York
JOHN WINTHROP, Trustee
President, John Winthrop & Co., Inc. (a 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.
One North Adgers Wharf
Charleston, South Carolina
NORMAN KURLAND, Vice President
Senior Vice President of PMC since 1993; Vice President of PMC from 1990 to
1993; Vice President of Pioneer India Fund, Pioneer Europe Fund, Pioneer
Emerging Markets Fund and Pioneer Variable Contracts Trust; International
Portfolio Manager and Analyst, Keystone Custodian Funds from 1987 to 1990.
WILLIAM H. KEOUGH, Treasurer
Senior Vice President, Chief Financial Officer and Treasurer of PGI and
Treasurer of PFD, PMC, PSC, PCC, PIC, PIntl, PMT, PGL and Pioneer SBIC
Corporation and Treasurer and Director of PPC and Treasurer of all of the
Pioneer mutual funds.
JOSEPH P. BARRI, Secretary
Secretary of PGI, PMC, PPC, PIC, PIntl, PMT and PCC; Clerk of PFD and PSC;
Partner, Hale and Dorr (counsel to the Fund) and Secretary of all of the Pioneer
mutual funds.
ERIC W. RECKARD, Assistant Treasurer
Manager of Fund Accounting and Compliance of PMC since May 1994, Manager of
Auditing and Business Analysis for PGI prior to May 1994 and Assistant Treasurer
of all of the Pioneer mutual funds.
ROBERT P. NAULT, Assistant Secretary
General Counsel of PGI since 1995; formerly of Hale and Dorr (counsel to the
Fund) where he most recently served as junior partner and Assistant Secretary of
all of the Pioneer mutual funds.
Each of the above (except Norman Kurland) is also an officer and/or
Trustee of the other Pioneer mutual funds. 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
private accounts.
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<PAGE>
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 Fund PMC PFD
Pioneer II PMC PFD
Pioneer Three PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer International Growth Fund PMC PFD
Pioneer India Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Short-Term Income Fund PMC PFD
Pioneer Income Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer California Double Tax-Free Fund PMC PFD
Pioneer New York Triple Tax-Free Fund PMC PFD
Pioneer Massachusetts Double Tax-Free Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer U.S. Government Money Fund PMC PFD
Pioneer Interest Shares, Inc. PMC Note 1
Pioneer Variable Contracts Trust PMC Note 2
- -------------
Note 1 This 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.
To the knowledge of the Fund, no officer or Trustee of the Fund owned
5% or more of the issued and outstanding shares of PGI as of the date of this
Statement of Additional Information, except Mr. Cogan who then owned
approximately 15% of such shares.
The Fund pays no salaries or compensation to any of its officers. The
Fund pays an annual trustees' fee of $500 to each Trustee who is not affiliated
with PMC, PFD or PSC as well as an annual fee of $200 to each of the Trustees
who is a member of the Fund's Audit Committee, except for the Chairman of such
Committee, who receives an annual fee of $250. The Fund also pays an annual
trustees' fee of $500 plus expenses to each Trustee affiliated with PMC, PSC or
PFD.
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<PAGE>
Total Compensa-
tion from the
Pension or Fund and other
Aggregate Retirement funds in the
Compensation Benefits Pioneer Family
Director From the Fund Accrued of Funds**
John F. Cogan, Jr. $500* $0 $ 9,000*
Richard H. Egdahl, M.D. 500 0 55,650
Margaret B.W. Graham 500 0 55,650
John W. Kendrick 500 0 55,650
Marguerite A. Piret 750 0 66,650
David D. Tripple 500* 0 9,000*
Stephen K. West 700 0 63,650
John Winthrop 700 0 63,650
---- ------------------------------
Totals $4,650 $0 $378,900
===== =======
- --------
* PMC fully reimbursed the Fund and the other funds in the Pioneer Family
of Mutual Funds for compensation paid to Messrs. Cogan and Tripple.
** For the calendar year ended December 31, 1994. At such time there were
[22 funds in the Pioneer Family of Funds and as of the date of this
Statement of Additional Information, there were 23 funds in the
Pioneer Family of Funds.
Any such fees and expenses paid to affiliates or interested persons of
PMC, PFD or PSC are reimbursed to the Fund under its Management Contract. As of
the date of this Statement of Additional Information, the Trustees and officers
of the Fund owned beneficially in the aggregate less than 1% of the outstanding
shares of the Fund. As of such date, Merrill Lynch Pierce, Fenner & Smith Inc.,
Mutual Fund Operations, 4800 Deer Lake Drive East 3rd FL, Jacksonville, FL
32246-6484 owned 10.98% of the outstanding shares (139,580 shares) of the Fund.
3. INVESTMENT ADVISER
As stated in the Prospectus, PMC, 60 State Street, Boston,
Massachusetts, serves as the Fund's investment adviser. The management contract
expires initially on June 30, 1994, but it is renewable annually after such date
by the vote of a majority of the Board of Trustees of the Fund (including a
majority of the Board of Trustees who are not parties to the contract or
interested persons of any such parties) cast in person at a meeting called for
the purpose of voting on such renewal. This contract terminates if assigned and
may be terminated without penalty by either party by vote of its Board of
Directors or Trustees or a majority of its outstanding voting securities and the
giving of sixty days' written notice.
As compensation for its management services and expenses incurred, PMC
is entitled to a management fee 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 the excess over $500 million. The fee is normally computed daily and
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<PAGE>
paid monthly. PMC voluntarily agreed not to impose its management fee and to
make other arrangements to limit certain other expenses of the Fund to the
extent required to limit the Class A shares' total expenses to 1.75% of the
average daily net assets attributable to such class for the fiscal year ended
November 30, 1993. This agreement expired November 30, 1993.
During the period from April 1, 1993 (commencement of operations) to
November 30, 1993, the Fund did not pay any management fees. The Fund would have
incurred management fees payable to PMC of $227,487 had the fee reduction
agreement not been in place. During the fiscal year ended November 30, 1994, the
Fund incurred management fees of $2,256,822.
PMC has agreed that if in any fiscal year the aggregate expenses of the
Fund exceed the expense limitation established by any state having jurisdiction
over the Fund, PMC will reduce its management fee to the extent required by
state law. The most restrictive state expense limit currently applicable to the
Fund provides that the Fund's expenses in any fiscal year may not exceed 2.5% of
the first $30 million of average daily net assets, 2.0% of the next $70 million
of such assets and 1.5% of such assets in excess of $100 million. In the past,
the relevant state has granted relief for international funds, such as the Fund,
because of their higher operations costs, and the Fund expects to seek such
relief to the extent it becomes necessary to do so.
4. PRINCIPAL UNDERWRITER
PFD serves as the principal underwriter in connection with the
continuous offering of the shares of the Fund pursuant to an Underwriting
Agreement, dated March 25, 1993. 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,
in conjunction with the continuance of the Plans of Distribution. See
"Distribution Plans" below. The Underwriting Agreement provides that PFD will
bear certain distribution expenses not borne by the Fund. During the period from
April 1, 1993 (commencement of operations) to November 30, 1993, net
underwriting commissions earned by PFD were approximately $2,284,595.
Commissions reallowed to dealers during such period were approximately
$2,111,094. During the fiscal year ended November 30, 1994, net underwriting
commissions earned by PFD were approximately $821,023. Commissions reallowed to
dealers during such period were approximately $7,070,381.
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.
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<PAGE>
The Fund will not generally issue Fund shares for consideration other
than cash. At the Fund's sole discretion, however, it may issue Fund shares for
consideration other than cash in connection with a bona fide reorganization,
statutory merger or other acquisition of portfolio securities (other than
municipal debt securities issued by state political subdivisions or their
agencies or instrumentalities) provided (i) the securities meet the investment
objectives and policies of the Fund; (ii) the securities are acquired by the
Fund for investment and not for resale; (ii) the securities are not restricted
as to transfer either by law or liquidity of market; and (iv) the securities
have a value which is readily ascertainable (and not established only by
evaluation procedures) as evidenced by a listing on the American Stock exchange
or the New York Stock Exchange or by quotation under the NASD Automated
Quotation System. An exchange of securities for Fund shares will generally be a
taxable transaction to the shareholder.
5. DISTRIBUTION PLANS
The Fund has adopted a plan of distribution pursuant to Rule 12b-1
promulgated by the SEC under the 1940 Act with respect to Class A shares (the
"Class A Plan") and a plan of distribution with respect to Class B shares (the
"Class B Plan") (together, the "Plans").
Class A Plan
Pursuant to the Class A Plan the Fund may reimburse PFD for its
expenditures in financing any activity primarily intended to result in the sale
of the Class A Plan shares. Certain categories of such expenditures have been
approved by the Board of Trustees and are set forth in the Prospectus. See
"Distribution Plans" in the Prospectus. The expenses of the Fund pursuant to the
Class A Plan are accrued daily at a rate which may not exceed the annual rate of
0.25% of the Fund's average daily net assets attributable to Class A shares. The
Fund commenced accruing expenses under the Class A Plan on January 1, 1994.
During the fiscal period ended November 30, 1994, the Fund did not incur any
expenses pursuant to the Class A Plan.
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 for personal services
and/or account maintenance services rendered by the dealer with respect to Class
B shares. PFD will advance to dealers the first-year service fee at a rate equal
to 0.25% of the amount invested. As compensation therefor, PFD may retain the
service fee paid by the Fund with respect to such shares for the first year
after purchase. Dealers will become eligible for additional service fees with
respect to such shares commencing in the thirteenth month following purchase.
Dealers may from time to time be required to meet certain other criteria in
order to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
B-17
<PAGE>
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 CDSC's attributable to Class B shares. (See
"Distribution Plans" in the Prospectus.)
General
In accordance with the terms of the Plans, PFD provides to the Fund for
review by the Trustees a quarterly written report of the amounts expended under
the respective Plan and the purpose for which such expenditures were made. In
the Trustees' quarterly review of the Plans, they will consider the continued
appropriateness and the level of reimbursement or compensation the Plans
provide.
No interested person of the Fund, nor any Trustee of the Fund who is
not an interested person of the Fund, has any direct or indirect financial
interest in the operation of the Plans except to the extent that PFD and certain
of its employees may be deemed to have such an interest as a result of receiving
a portion of the amounts expended under the Plans by the Fund and except to the
extent certain officers may have an interest in PFD's ultimate parent, PGI.
The Plans were adopted by a majority vote of the Board of Trustees,
including all of the Trustees who are not, and were not at the time they voted,
interested persons of the Fund, as defined in the 1940 Act (none of whom has or
have any direct or indirect financial interest in the operation of the Plans)
(the "Qualified Trustees"), cast in person at a meeting called for the purpose
of voting on the Plans. In approving the Plans, the Trustees identified and
considered a number of potential benefits which the Plans may provide. The Board
of Trustees believes that there is a reasonable likelihood that the Plans will
benefit the Fund and its current and future shareholders. Under their terms, the
Plans remain in effect from year to year provided such continuance is approved
annually by vote of the Trustees in the manner described above. The Plans may
not be amended to increase materially the annual percentage limitation of
average net assets which may be spent for the services described therein without
approval of the shareholders of the Fund affected thereby, and material
amendments of the Plans must also be approved by the Trustees in the manner
described above. A Plan may be terminated at any time, without payment of any
penalty, by vote of the majority of the Trustees who are not interested persons
of the Fund and have no direct or indirect financial interest in the operations
of the Plan, or by a vote of a majority of the outstanding voting securities of
the respective Class of the Fund (as defined in the 1940 Act). A Plan will
automatically terminate in the event of its assignment (as defined in the 1940
Act). In the Trustees' quarterly review of the Plans, they will consider the
Plans' continued appropriateness and the level of compensation they provide.
During the fiscal year ended November 30, 1994, the Fund incurred total
distribution fees of $533,084 and $66,254 pursuant to the Class A Plan and the
Class B Plan, respectively.
B-18
<PAGE>
6. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with Pioneering Services Corporation ("PSC"),
60 State Street, Boston, Massachusetts, to act as shareholder servicing agent
and transfer agent for the Fund. This contract terminates if assigned and may be
terminated without penalty by either party by vote of its Board of Directors or
Trustees or a majority of its outstanding voting securities and the giving of
ninety days' written notice.
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 routine shareholder inquiries.
PSC receives an annual fee of $22.00 per Class A and Class B
shareholder account from the Fund as compensation for the services described
above. This fee is set at an amount determined by vote of a majority of the
Trustees (including a majority of the Trustees who are not parties to the
contract with PSC or interested persons of any such parties) to be comparable to
fees for such services being paid by other investment companies.
7. CUSTODIAN
Brown Brothers Harriman & Co. (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 United States as well as in
Foreign Countries, handling the receipt and delivery of securities, and
collecting interest and dividends on the Fund's investments. The Custodian
fulfills its function in Foreign Countries through a network of subcustodian
banks located in the Foreign Countries (the "Subcustodians"). The Custodian also
provides fund accounting, bookkeeping and pricing assistance to the Fund and
assistance in arranging for forward currency exchange contracts as described
above under "Investment Policies and Restrictions."
The Custodian does not determine the investment policies of the Fund or
decide which securities it will buy or sell. The Fund may invest in securities
issued by the Custodian or any of the Subcustodians, deposit cash in the
Custodian or any Subcustodian and deal with the Custodian or any of the
Subcustodians as a principal in securities transactions. Portfolio securities
may be deposited into the Federal Reserve-Treasury Department Book Entry System
or the Depository Trust Company in the United States or in recognized central
depositories in Foreign Countries. In selecting Brown Brothers Harriman & Co. as
the Custodian for Foreign Countries Securities, the Board of Trustees made
certain determinations required by Rule 17f-5 promulgated under the 1940 Act.
The Trustees will annually review and approve the continuations of its
international subcustodian arrangements.
8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP is the Fund's independent public accountant,
providing audit services, tax return review, and assistance and consultation
with respect to the preparation of filings with the Commission.
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<PAGE>
9. PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of the Fund by PMC pursuant to authority contained in the 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 of 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. Most
transactions in foreign equity securities are executed by broker-dealers in
foreign countries in which commission rates are fixed and, therefore, are not
negotiable (as such rates are in the United States) and are generally higher
than in the United States.
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. 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 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 was to attempt to develop comparable information
through its own staff.
In circumstances where two or more broker-dealers offer comparable
prices and executions, preference may be given to a broker-dealer which has sold
shares of the Fund as well as shares of other investment companies or accounts
managed by PMC. This policy does not imply a commitment to execute all portfolio
transactions through all broker-dealers that sell shares of the Fund. In
addition, if PMC determines in good faith that the amount of commissions charged
by a broker is reasonable in relation to the value of the brokerage and research
services provided by such broker, the Fund may pay commissions to such broker in
an amount greater than the amount another firm may charge.
The Trustees periodically review PMC's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Fund.
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<PAGE>
In addition to the Fund, PMC acts as investment adviser to the other
Pioneer mutual funds and certain private accounts with investment objectives
similar to those of the Fund. As such, securities may meet investment objectives
of the Fund, such other funds and such private accounts. In such cases, the
decision to recommend to purchase for 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 company presently has in a
particular industry or country 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, the position of any fund or account
in the same issue may vary and the length of time that any fund or account may
choose to hold its investment in the same issue may likewise vary. To the extent
that the Fund, another Pioneer mutual fund or a private account managed by PMC
seeks to acquire the same security at about the same time, the Fund may not be
able to acquire as large a position in such security as it desires or it may
have to pay a higher price for the security. Similarly, the Fund may not be able
to obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if 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 account,
the resulting participation in volume transactions could produce better
executions for the Fund or other account. In the event that 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.
During the period from April 1, 1993 (commencement of operations) to
November 30, 1993 and for the fiscal year ended November 30, 1994, the Fund paid
or owed aggregate brokerage commissions of $533,000 and $3,903,539,
respectively.
10. TAX STATUS
It is the Fund's policy to meet the requirements of Subchapter M of the
Code for qualification as a regulated investment company. If the Fund meets all
such requirements and distributes to its shareholders at least annually all
investment company taxable income and net capital gain, if any, which it
receives, the Fund will be relieved of the necessity of paying federal income
tax.
In order to qualify as a regulated investment company under Subchapter
M, the Fund must, among other things, derive at least 90% of its annual gross
income from dividends, interest, gains from the sale or other disposition of
stock, securities or foreign currencies, or other income (including gains from
options, futures and forward contracts) derived with respect to its business of
investing in such stock, securities or currencies (the "90% income test"), limit
its gains from the sale of stock, securities and certain other investments held
for less than three months to less than 30% of its annual gross income (the "30%
test") and satisfy certain annual distribution and quarterly diversification
requirements.
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<PAGE>
Dividends from net investment income, net short-term capital gains, and
certain net foreign exchange gains are taxable as ordinary income, whether
received in cash or in additional shares. Dividends from net long-term capital
gains, if any, whether received in cash or additional shares, are taxable to the
Fund's shareholders as long-term capital gains for federal income tax purposes
without regard to the length of time shares of the Fund have been held. The
federal income tax status of all distributions will be reported to shareholders
annually.
Any dividend declared by the Fund in October, November or December as
of a record date in such a month and paid during the following January will be
treated for federal income tax purposes as received by shareholders on December
31 of the calendar year in which it is declared.
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,
forward foreign currency 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 investment in stock or securities may increase the amount
of gain it is deemed to recognize from the sale of certain investments held for
less than 3 months for purposes of the 30% test and may under future Treasury
regulations produce income not among the types of "qualifying income" for
purposes of the 90% income test. If the net foreign exchange loss for a year
were to exceed the Fund's investment company taxable income (computed without
regard to such loss) the resulting overall ordinary loss for such year would not
be deductible by the Fund or its shareholders in future years.
If the Fund acquires the stock of certain non-U.S. corporations that
receive at least 75% of their annual gross income from passive sources (such as
sources that produce interest, dividend, rental, royalty or capital gain income)
or hold at least 50% of their assets in such passive sources ("passive foreign
investment companies"), the Fund could be subject to federal income tax and
additional interest charges on "excess distributions" received from such
companies or gain from the sale of stock in such companies, even if all income
or gain actually received by the Fund is timely distributed to its shareholders.
The Fund would not be able to pass through to its shareholders any credit or
deduction for such a tax. In certain cases, an election may be available that
would ameliorate these adverse tax consequences. The Fund may limit its
investments in passive foreign investment companies and will undertake
appropriate actions, including consideration of any available elections, to
limit its tax liability, if any, or take other defensive actions with respect to
such investments.
Since, at the time of an investor's purchase of Fund shares, a portion
of the per share net asset value by which the purchase price is determined may
be represented by realized or unrealized appreciation in the Fund's portfolio or
undistributed taxable income of the Fund, subsequent distributions (or portions
thereof) on such shares may be taxable to such investor even if the net asset
value of his shares is, as a result of the distributions, reduced below his cost
for such shares and the distributions (or portions thereof) in reality represent
a return of a portion of his investment.
B-22
<PAGE>
Any loss realized by a shareholder upon the redemption of shares with a
tax holding period at the time of redemption of six months or less will be
treated as a long-term capital loss to the extent of any amounts treated as
distributions of long-term capital gain with respect to such shares.
In addition, as described in the Prospectus, the tax treatment of gains
or losses on the redemption or exchange of certain Class A shares within 90 days
after their purchase may be affected by subsequent investments in the same Fund
or another fund pursuant to a reinvestment or exchange privilege, and losses on
certain redemptions may be disallowed under "wash sale" rules in the event of
other investments in the Fund within 30 days before or after a redemption or
other sale of shares.
For federal income tax purposes, the Fund is permitted to carry forward
a net realized capital loss in any year to offset realized capital gains, if
any, during the eight years following the year of the loss. To the extent
subsequent net realized capital gains are offset by such losses, they would not
result in federal income tax liability to the Fund and are not expected to be
distributed as such to shareholders.
The Fund's dividends normally will not qualify for the 70%
dividends-received deduction available to corporations, because the Fund does
not expect to receive dividends from U.S domestic corporations.
The Fund may be subject to withholding and other taxes imposed by
foreign countries with respect to its investments in those countries. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes. If more than 50% of the 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 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 actually received)
and would treat such taxes as foreign taxes paid by them, for which they may be
entitled to a tax deduction or credit on their own tax returns, subject to
certain limitations under the Code.
Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions, and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their tax
advisers for more information.
The Fund is not subject to Massachusetts corporate excise or franchise
taxes and, provided that the Fund qualifies as a regulated investment company
under the Code, it will not be required to pay any Massachusetts income tax.
Options written or purchased and futures contracts entered into by the
Fund on certain securities, 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 closed out or disposed of and 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 on
foreign currency may be subject to Section 988, described above, and accordingly
B-23
<PAGE>
produce ordinary income or loss. Losses on certain options, futures or forward
contracts and/or offsetting positions (portfolio securities or other positions
with respect to which the Fund's risk of loss is substantially diminished by one
or more options, futures or forward contracts) may also be deferred under the
tax straddle rules of the Code, which may also affect the characterization of
capital gains or losses from straddle positions and certain successor positions
as long-term or short-term. The tax rules applicable to options, futures,
forward contracts and straddles may affect the amount, timing and character of
the Fund's income and loss and hence of distributions to shareholders.
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 IRS regulations. In order to avoid this withholding
requirement, shareholders must certify on their Account Applications, or on
separate W-9 Forms, that their Social Security or other Taxpayer Identification
Number is correct and that they are not currently subject to backup withholding,
or that they are exempt from backup withholding. The Fund may nevertheless be
required to withhold if it receives notice from the IRS or a broker that the
number provided is incorrect or backup withholding is applicable as a result of
previous underreporting of interest or dividend income.
The description above relates only to U.S. federal income tax
consequences for shareholders who are U.S. persons, i.e., U.S. citizens or
residents and U.S. domestic corporations, partnerships, trusts or estates, and
who are subject to U.S. federal income tax. The description does not address
special tax rules applicable to certain classes of investors, such as tax-exempt
entities, insurance companies, and financial institutions. Shareholders should
consult their own tax advisers on these matters and on state, local and other
applicable tax laws. Investors other than U.S. persons may be subject to
different U.S. tax treatment, including a possible 30% U.S. withholding tax (or
a lower treaty rate) on dividends treated as ordinary income.
11. DESCRIPTION OF SHARES
The Fund's Declaration of Trust permits the Board of Trustees to
authorize the issuance of an unlimited number of full and fractional shares of
beneficial interest (without par value) which may be divided into such separate
series as the Trustees may establish. Currently, the Fund consists of only one
series. The Trustees may, however, establish additional series of shares in the
future, and may divide or combine the shares into a greater or lesser number of
shares without thereby changing the proportionate beneficial interests in the
Fund. The Declaration of Trust further authorizes the Trustees to classify or
reclassify any series of the shares into one or more classes. Pursuant thereto,
the Trustees have authorized the issuance of two classes of shares of the Fund,
Class A shares and Class B shares. Each share of a class of the Fund represents
an equal proportionate interest in the assets of the Fund allocable to that
class. Upon liquidation of the Fund, shareholders of each class of the Fund are
entitled to share pro rata in the Fund's net assets allocable to such class
available for distribution to shareholders. The Fund reserves the right to
create and issue additional series or classes of shares, in which case the
shares of each class of a series would participate equally in the earnings,
dividends and assets allocable to that class of the particular series.
B-24
<PAGE>
Shareholders are entitled to one vote for each share held and may vote
in the election of Trustees and on other matters submitted to meetings of
shareholders. Although Trustees are not elected annually by the shareholders,
shareholders have, under certain circumstances, the right to remove one or more
Trustees. No amendment adversely affecting the rights of shareholders may be
made to the Fund's Declaration of Trust without the affirmative vote of a
majority of its shares. Shares have no preemptive or conversion rights. Shares
are fully paid and non-assessable by the Trust, except as stated below. See
"Certain Liabilities."
12. CERTAIN LIABILITIES
As a Massachusetts business trust, the Fund's operations are governed
by its Declaration of Trust dated October 26, 1992, a copy of which is on file
with the Office of the Secretary of State of the Commonwealth of Massachusetts.
Theoretically, shareholders of a Massachusetts business trust may, under certain
circumstances, be held personally liable for the obligations of the trust.
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 will be unable to meet its obligations.
In light of the nature of the Fund's business and the nature and amount of its
assets, the possibility of the Fund's liabilities exceeding its assets, and
therefore a shareholder's risk of personal liability, is remote.
The Declaration 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.
13. 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 (currently 4:00 p.m., Eastern Time) on each
day on which the New York Stock Exchange (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
B-25
<PAGE>
of the Fund is also determined on any other day in which the level of trading in
its portfolio securities is sufficiently high so 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 of that class. For purposes of determining net asset value,
expenses of the classes of the Fund are accrued daily.
Securities which have not traded on the date of valuation or securities
for which sales prices are not generally reported are valued at the mean between
the last bid and asked prices. Securities for which no market quotations are
readily available (including those the trading of which has been suspended) will
be valued at fair value as determined in good faith by the Board of Trustees,
although the actual computations may be made by persons acting pursuant to the
direction of the Board. The maximum offering price per Class A share is the net
asset value per Class A share, plus the maximum sales charge. Class B shares are
offered at net asset value without the imposition of an initial sales charge.
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 checks of $50 or more will be sent to the
applicant, or any person designated by him, monthly or quarterly. A designation
of a third party to receive checks requires an acceptable signature guarantee.
Withdrawals from Class B share accounts are limited to 10% of the value of the
account at the time the SWP is implemented.
Any income dividends or capital gains distributions on shares under the
SWP will be credited to the Plan account on the payment date in full and
fractional shares at the net asset value per share in effect on the record date.
SWP payments are made from the proceeds of the redemption of Class A
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. Redemptions are taxable transactions to
shareholders. In addition, the amounts received by a shareholder cannot be
considered as an actual 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 been redeemed.
B-26
<PAGE>
15. LETTER OF INTENTION
Purchases in the Fund 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 Intention provided by PFD will qualify
for a reduced sales charge. Such reduced sales charge will be the charge that
would be applicable to the purchase of all Class A shares purchased during such
13-month period pursuant to a Letter of Intention had such shares been purchased
all at once. See "How to Buy Fund Shares" in the Prospectus. For example, a
person who signs a Letter of Intention providing for a total investment in Fund
Class A shares of $50,000 over a 13-month period would be charged at the 4.50%
sales charge rate with respect to all purchases during that period. Should the
amount actually purchased during the 13-month period be more or less than that
indicated in the Letter, an adjustment in the sales charge will be made. A
purchase not made pursuant to a Letter of Intention may be included thereafter
if the Letter is filed within 90 days of such purchase. Any shareholder may also
obtain the reduced sales charge by including the value (at current offering
price) of all his shares in the Fund and all other Pioneer mutual funds, except
the Class A shares of Pioneer Money Market Trust, held of record as of the date
of his Letter of Intention as a credit toward determining the applicable scale
of sales charge for the Class A shares to be purchased under the Letter of
Intention.
The Letter of Intention authorizes PSC to escrow shares having a
purchase price equal to 5% of the stated investment in the Letter of Intention.
A Letter of Intention is not a binding obligation upon the investor to purchase,
or the Fund to sell, the full amount indicated and the investor should read the
provisions of the Letter of Intention contained in the Account Application
carefully before signing.
16. INVESTMENT RESULTS
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 class of its
shares as that information may appear in the Prospectus, this Statement of
Additional Information or in advertising are calculated by standard methods
prescribed by the Commission.
Standardized Average Annual Total Return Quotations
B-27
<PAGE>
Average annual total return quotations for Class A and Class B shares
are computed by finding the average annual compounded rates of return that would
cause a hypothetical investment in that 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 shares at the end of the period.
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical
$1000 initial payment made at the
beginning of the designated period (or
fractional portion thereof)
For purposes of the above computation, it is assumed that the maximum sales
charge of 5.75% was deducted from the initial investment and 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 returns for Class A shares and Class B shares
(giving effect to the prior expense limitation) are as follows:
For the fiscal year
ended Life-of- Inception
November 30, 1994 Class Date
Class A Shares 3.68% 24.50% 4/1/93
Class B Shares N/A -2.20% 4/4/94
The total return figures would be reduced if no effect were given to
the expense limitation previously in place.
Other Quotations, Comparisons, and General Information
B-28
<PAGE>
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, Morgan Stanley Capital
International USA Index, an unmanaged index of U.S. domestic stock markets, or
other appropriate indices of Morgan Stanley Capital International ("MSCI"); the
Standard & Poor's 500 Stock Index ("S&P 500"), an unmanaged index of common
stocks; or the Dow Jones Industrial Average, a recognized unmanaged index of
common stocks of 30 industrial companies listed on the New York Stock Exchange.
In addition, the performance of the classes of the Fund may be compared
to alternative investment or savings vehicles and/or to indexes or indicators of
economic activity, e.g., inflation or interest rates. Performance rankings and
listings reported in newspapers or national business and financial publications,
such as Barron's, Business Week, Consumer's Digest, Consumer Reports, Financial
World, Forbes, Fortune, Investors Business Daily, Kiplinger's Personal Finance
Magazine, Money Magazine, the New York Times, Smart Money, USA Today, U.S. News
and World Report, The Wall Street Journal and Worth may also be cited (if the
Fund is listed in any such publication) or used for comparison, as well as
performance listings and rankings from various other sources including Bloomberg
Financial Systems, CDA/Wiesenberger Investment Companies Service, Donoghue's
Mutual Fund Almanac, Investment Company Data, Inc., Johnson's Charts, Kanon
Bloch Carre & Co., Micropal, Inc., Morningstar, Inc., Schabacker Investment
Management and Towers Data Systems.
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.
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;
B-29
<PAGE>
o annualized 7-day yields and 7-day effective (compound) yields
for Pioneer's market funds; and
o dividends and capital gains distributions on all Pioneer
mutual funds.
Yields are calculated in accordance with standard formulas mandated by the
Securities and Exchange Commission.
In addition, by 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; figures for all quoted bond funds include the maximum applicable
sales charge. A shareholder's actual yield and total return will vary with
changing market conditions. The value of Class A and Class B shares (except for
Pioneer money market funds, which seek a stable $1.00 share price) will also
vary and may be worth more or less at redemption than their original cost.
17. FINANCIAL STATEMENTS
The audited financial statements of the Fund for the fiscal year ended
November 30, 1994 are contained in the Fund's annual report which is attached
hereto and incorporated herein by reference.
B-30
<PAGE>
APPENDIX A
ADDITIONAL GENERAL ECONOMIC INFORMATION
Market Capitalization
According to data as of December 31, 1994 supplied by Morgan Stanley Capital
International, capitalization of foreign equity markets has increased
dramatically since 1972. Investors not investing in stocks traded on non-U.S.
markets miss over 60% of the equity investment opportunities available
worldwide.
Market Capitalization
Year Non-U.S. U.S.
1974 44% 56%
1984 46% 54%
1994 64% 36%
2004* 89% 11%
- -----------
* Projection calculated by PFD based on the historical rate of increase
of non-U.S. market capitalization as supplied by data from Morgan
Stanley Capital International.
Foreign and U.S. Market Performance
Overall, the performance of foreign securities markets, such as those
in the United Kingdom, Germany, Japan and France, has outpaced that of U.S.
securities markets. Although prices of international stocks fluctuate, they have
achieved a remarkably consistent long-term performance record. Of course, there
is no guarantee they will continue to perform as well as they have in the past.
B-31
<PAGE>
COMPARATIVE PERFORMANCE STATISTICS-INTERNATIONAL FUNDS
MSCI EAFE MSCI Europe 14 MSCI World IFC Composite S&P500
Net of Taxes Net of Taxes Net of Taxes
%Total Return %Total Return %Total Return %Total Return %TR
- --------------------------------------------------------------------------------
Dec 1970 -11.66 -10.64 -3.09 N/A 4.01
Dec 1971 29.59 26.33 18.36 N/A 14.31
Dec 1972 36.35 14.40 22.48 N/A 18.98
Dec 1973 -14.92 -8.77 -15.24 N/A -14.66
Dec 1974 -23.16 -24.07 -25.47 N/A -26.47
Dec 1975 35.39 41.45 32.80 N/A 37.20
Dec 1976 2.54 -7.80 13.40 N/A 23.84
Dec 1977 18.06 21.90 0.68 N/A -7.18
Dec 1978 32.62 21.88 16.52 N/A 6.56
Dec 1979 4.75 12.31 10.95 N/A 18.44
Dec 1980 22.58 11.90 25.67 N/A 32.42
Dec 1981 -2.28 -12.46 -4.79 N/A -4.91
Dec 1982 -1.86 3.97 9.71 N/A 21.41
Dec 1983 23.69 20.96 21.93 N/A 22.51
Dec 1984 7.38 0.62 4.72 N/A 6.27
Dec 1985 56.16 78.93 40.56 27.74 32.16
Dec 1986 69.44 43.85 41.89 12.81 18.47
Dec 1987 24.63 3.66 16.16 13.53 5.23
Dec 1988 28.27 15.81 23.29 58.25 16.81
Dec 1989 10.54 28.5 16.61 54.67 31.49
Dec 1990 -23.45 -3.5 -17.02 -29.87 -3.17
Dec 1991 12.13 13.11 18.28 17.63 30.55
Dec 1992 -12.17 -4.71 -5.23 0.33 7.67
Dec 1993 32.56 29.28 22.50 68.18 9.99
Dec 1994 7.78 2.28 5.08 -0.76 1.31
Source for MSCI EAFE, IFC Composite, and S&P500: Ibbotson Associates
Source for MSCI Europe 14 and MSCI World: Lipper Analytical Services
B-32
<PAGE>
Pioneer International Growth Fund
<TABLE>
<CAPTION>
Date Initial Investment Offering Price Sales Charge Shares Purchased Net Asset Value Initial Net Asset
Included Per Share Value
<S> <C> <C> <C> <C> <C> <C>
3/25/93 $10,000 $15.92 5.75% 628.141 $15.00 $9,425
</TABLE>
Dividends and Capital Gains Reinvested
Value of Shares
Date From Investment From Cap. Gains From Dividends Total Value
Reinvested Reinvested
3/31/93 $9,422 $0 $0 $9,422
4/30/93 $9,667 $0 $0 $9,667
5/31/93 $10,170 $0 $0 $10,170
6/30/93 $10,584 $0 $0 $10,584
7/31/93 $10,804 $0 $0 $10,804
8/31/93 $11,727 $0 $0 $11,727
9/30/93 $11,715 $0 $0 $11,715
10/31/93 $12,795 $0 $0 $12,795
11/30/93 $13,134 $0 $0 $13,134
12/31/93 $14,020 $928 $20 $14,968
1/31/94 $14,856 $983 $21 $15,860
2/28/94 $14,629 $968 $21 $15,618
3/31/94 $13,436 $889 $19 $14,344
4/30/94 $13,749 $910 $20 $14,679
5/31/94 $13,869 $918 $20 $14,807
6/30/94 $13,190 $873 $19 $14,082
7/31/94 $13,661 $904 $20 $14,585
8/31/94 $14,234 $942 $20 $15,196
9/30/94 $14,102 $933 $20 $15,055
10/31/94 $14,297 $946 $20 $15,263
11/30/94 $13,536 $896 $19 $14,451
B-33
<PAGE>
APPENDIX B
OTHER PIONEER INFORMATION
The Pioneer family of mutual funds was established in 1928 with the creation of
Pioneer Fund. Pioneer is one of the oldest, most respected and successful money
managers in the United States.
As of December 31, 1994, PMC employed a professional investment staff of 46,
with a combined average of 14 years' experience in the financial services
industry.
At December 31, 1994, there were 591,192 non-retirement shareholder accounts and
337,577 retirement shareholder accounts in Pioneer's funds. Total assets for all
Pioneer Funds were $10,038,000,000 representing a total of 928,769 shareholder
accounts.
B-34
