As Filed with the Securities and Exchange Commission on November 14, 1995.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Pre-Effective Amendment No. ___ / /
Post-Effective Amendment No. 6 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 ______
/ X /
Amendment No. 7 / X /
(Check appropriate box or boxes)
PIONEER REAL ESTATE SHARES
(Formerly, Pioneer Winthrop Real Estate Investment Fund)
(Exact name of registrant as specified in charter)
60 State Street, Boston, Massachusetts 02109
(Address of principal executive office) Zip Code
(617) 742-7825
(Registrant's Telephone Number, including Area Code)
Joseph P. Barri, Hale and Dorr, 60 State Street, Boston, MA 02109
(Name and address of agent for service)
It is proposed that this filing will become effective (check appropriate
box):
___ immediately upon filing pursuant to paragraph (b)
___ on [date] pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
_X_ on January __, 1996 pursuant to paragraph (a)(1)
___ 75 days after filing pursuant to paragraph (a)(2)
___ on [date] pursuant to paragraph (a)(2) of Rule 485
The Registrant has registered an indefinite number of shares pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended. The Registrant has
filed its Rule 24f-2 Notice for its current fiscal year on or about February 27,
1995.
<PAGE>
PIONEER REAL ESTATE SHARES
Cross-Reference Sheet Showing Location in Prospectus and
Statement of Additional Information of
Information Required by Items of the Registration Form
Form N-1A Item Number and Caption Location
Part A
1. Cover Page............................ Cover Page
2. Synopsis.............................. Expense Information
3. Condensed Financial Information....... Financial Highlights
4. General Description of Registrant..... Investment Objectives and
Policies; Management of the
Fund; Fund Share Alternatives
5. Management of the Fund................ Management of the Fund
6. Capital Stock and Other Securities.... Investment Objectives and
Policies; Fund Share
Alternatives
7. Purchase of Securities Being Offered.. Fund Share Alternatives;
Distribution Plans; Shareholder
Services; How to Buy Fund Shares
8. Redemption or Repurchase.............. Fund Share Alternatives;
Shareholder Services; How to
Sell Fund Shares
9. Pending Legal Proceedings............. Not Applicable
<PAGE>
Form N-1A Item Number and Caption Location
Part B
10. Cover Page............................ Cover Page
11. Table of Contents..................... Cover Page
12. General Information and History....... Cover Page; General Information
and History; Certain Liabilities
13. Investment Objectives and Policies.... Investment Policies and
Restrictions
14. Management of the Fund................ Management of the Fund; Advisory
Services
15. Control Persons and Principle Holders
of Securities....................... Management of the Fund
16. Investment Advisory and Other
Services............................ Management of the Fund; Advisory
Services; Shareholder
Servicing/Transfer Agent;
Custodian; Independent Public
Accountant
17. Brokerage Allocation and Other
Practices........................... Portfolio Transactions
18. Capital Stock and Other Securities.... Methods of Accounting for
Profits or Losses from the Sale
of Securities; Description of
Shares; Certain Liabilities
19. Purchase Redemption and Pricing of
Securities Being Offered............ Determination of Net Asset
Value; Letter of Intention;
Systematic Withdrawal Plan
20. Tax Status............................ Tax Status
<PAGE>
21. Underwriters.......................... Principal Underwriter;
Underwriting Agreement;
Distribution Plans
22. Calculation of Performance Data....... Investment Results
23. Financial Statements.................. Financial Statements
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>
Pioneer
Real Estate
Shares
Class A, Class B and Class C Shares
Prospectus
January ____, 1996
Pioneer Real Estate Shares (the "Fund") is a non-diversified open-end investment
company seeking primarily long-term growth of capital. Current income is a
secondary objective. The Fund will seek to achieve its investment objectives by
investing at least 75% of its total assets in a portfolio consisting primarily
of equity securities of real estate investment trusts and other real estate
industry companies.
The Fund may also invest up to 25% of its total assets in debt securities of
real estate industry companies, mortgage-backed securities and short-term
investments. In pursuit of its objectives, the Fund may employ active management
techniques (including futures and options) in an attempt to hedge risks
associated with the Fund's investments in real estate equity securities. There
is, of course, no assurance that the Fund will achieve its investment
objectives.
FUND RETURNS AND SHARE PRICES FLUCTUATE AND THE VALUE OF YOUR ACCOUNT UPON
REDEMPTION MAY BE MORE OR LESS THAN YOUR PURCHASE PRICE. SHARES IN THE FUND ARE
NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER
DEPOSITORY INSTITUTION, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENTS IN SECURITIES OF REAL ESTATE INDUSTRY COMPANIES
ENTAIL RISKS IN ADDITION TO THOSE CUSTOMARILY ASSOCIATED WITH INVESTING IN
SECURITIES IN GENERAL. 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 OBJECTIVES AND POLICIES" FOR A DISCUSSION OF THESE RISKS.
This Prospectus provides information about the Fund that you should know
before investing in the Fund. Please read and retain it for your future
reference. More information about the Fund is included in the Statement of
Additional Information, also dated January___, 1996, 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. Other information about the Fund has been filed with the Securities and
Exchange Commission (the "SEC") and is available upon request and without
charge.
TABLE OF CONTENTS PAGE
- -------------------------------------------------------------------------------
I. EXPENSE INFORMATION.............................................
II. FINANCIAL HIGHLIGHTS............................................
III. INVESTMENT OBJECTIVES AND POLICIES .............................
IV. MANAGEMENT OF THE FUND .........................................
V. FUND SHARE ALTERNATIVES.........................................
VI. SHARE PRICE.....................................................
VII. HOW TO BUY FUND SHARES..........................................
Class A.......................................................
Class B.......................................................
Class C.......................................................
VIII. HOW TO SELL FUND SHARES.........................................
IX. HOW TO EXCHANGE FUND SHARES.....................................
X. DISTRIBUTION PLANS .............................................
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION...........................
XII. SHAREHOLDER SERVICES ...........................................
Account and Confirmation Statements ..........................
Additional Investments .......................................
Financial Reports and Tax Information ........................
Distribution Options .........................................
Directed Dividends ...........................................
Direct Deposit ...............................................
Voluntary Tax Withholding ....................................
Telephone Transactions and Related Liabilities ...............
FactFoneSM 12
Telecommunications Device for the Deaf (TDD) .................
Retirement Plans .............................................
Systematic Withdrawal Plans ..................................
Reinstatement Privilege (Class A only) .......................
XIII THE FUND........................................................
XIV. INVESTMENT RESULTS .............................................
APPENDIX A: Certain Investment Practices .......................
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.
[end of cover page]
<PAGE>
I. EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses that you,
as a shareholder, will bear directly or indirectly when you invest in the Fund.
The table reflects annual operating expenses based on the actual Class A
expenses incurred for the fiscal period ended December 31, 1994. Other expenses
for Class B and Class C shares are based on estimated amounts for the fiscal
period ended December 31, 1994 had such shares been outstanding.
Shareowner Transaction Expenses: Class A Class B+ Class C+
Maximum Initial Sales Charge on
Purchases (as a percentage of offering price) 5.75%(1) None None
Maximum Sales Charge on Reinvestment
of Dividends None None None
Maximum Deferred Sales Charge None(1) 4.00% 1.00%
(as a percentage of original purchase
price or redemption proceeds, as
applicable)
Redemption Fee(2) None None None
Exchange Fee None None None
Annual Operating Expenses (As a Percentage of Net Assets):
Management Fee (after expense limitation)3 0.42% 0.42% 0.42%
12b-1 Fees 0.25% 1.00% 1.00%
Other Expenses (including accounting and transfer
agent fees, custodian fees and printing expenses)
1.08% 1.08% 1.08%
Total Operating Expenses
(after expense limitation): 3 1.75% 2.50% 2.50%
+ Class B and Class C shares will first be offered on January ____, 1996.
(1) Purchases of $1 million or more and certain purchases by participants in a
"Group Plan" (as described under "How to Purchase Shares") are not subject to an
initial sales charge. A contingent deferred sales charge of 1.00% may, however,
be charged on redemptions by such accounts of shares held less than 12 months,
as further described under "Redemptions and Repurchases" in this Prospectus.
(2) Separate fees (currently $10 and $20, respectively) apply to domestic and
international bank wire transfers of redemption proceeds.
(3) Pioneering Management Corporation ("PMC") has agreed not to impose a
portion of its management fee and to make other arrangements, if necessary, to
the extent nedessary to limit the operating expenses of the Class A shares of
the Fund to 1.75% of its average daily net assets; the portion of fund-wide
expenses attributable to Class B or Class C shares will be reduced only to the
extent they are reduced for Class A shares. This agreement is voluntary and
temporary and may be revised or terminated at any time. In the absence of this
agreement, annual operating expenses would be as follows:
Annual Operating Expenses Absent Expense Limitation
(As a Percentage of Net Assets )
Management Fee 1.00% 1.00% 1.00%
Total Operating Expenses 2.33% 3.08% 3.08%
Example:
You would pay the following fees and expenses on a $1,000 investment,
assuming a 5% annual return and constant expenses, with or without redemption at
the end of each time period:
-2-
<PAGE>
One Year Three Years Five Years Ten Years
Class A Shares $17 $ 52 $ 90 $195
Class B Shares*
- --Assuming complete
redemption at end of period $66 $109 $155 $268
- --Assuming no redemption $26 $ 79 $135 $268
Class C Shares**
- --Assuming complete
redemption at end of period $36 $ 79 $135 $287
- --Assuming no redemption $26 $ 79 $135 $287
- --------------
* Class B shares convert to Class A shares eight years after purchase;
therefore, Class A expenses are used after year eight.
** Class C shares redeemed during the first year after purchase are subject to
a 1% Contingent Deferred Sales Charge ("CDSC").
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 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 sales charge is reduced on purchases of specified amounts of
Class A shares and the value of shares owned in other Pioneer mutual funds is
taken into account in determining the applicable initial sales charge. See "How
to Buy Fund Shares." No sales charge is applied to exchanges of shares of other
publicly available Pioneer mutual funds. See "How to Exchange Fund Shares."
-3-
<PAGE>
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 December 31, 1994
and June 30, 1995 appear in the Fund's Annual and Semi-Annual Reports, which are
incorporated by reference into the Statement of Additional Information. Class B
and Class C shares are new classes of shares; no financial highlights exist for
either Class B or Class C shares. The Annual and Semi-Annual Reports include
more information about the Fund's performance and are available free of charge
by calling Shareholder Services at 1-800-225-6292.
Pioneer Real Estate Shares
For a Class A Share Outstanding Throughout the Period:
<TABLE>
<CAPTION>
October 25, 1993
January 1, 1995 July 1, 1994 of operations)
through through through
December 31, 1994+ June 30, 1995 June 30, 1994
<S> <C> <C> <C>
Net asset value, beginning of period $11.38 $12.02 $12.50
Increase (decrease) from investment operations--
Net investment income $ 0.33 $ 0.21 $ 0.27
Net realized and unrealized gain (loss) on
investments 0.09 (0.48) (0.45)
Total increase (descrease) from investment operations $ 0.42 $(0.27) $(0.18)
Distribution to shareholders from--
Net investment income (0.33) (0.20) (0.27)
Paid-in capital -- (0.15) (0.03)
Net realized gain -- (0.02) --
Net increase (decrease) in net asset value $ 0.09 $(0.64) $(0.48)
Net asset value, end of period $11.47 $11.38 $12.02
Total return* 3.82% (2.16%) (1.47%)
Ratio of net operating expenses to average
net assets 1.75%** 1.75%** 1.71%**
Ratio of net investment income to average
net assets 5.79%** 3.72%** 3.73%**
Portfolio turnover rate 14.83% 17.40%** 23.98%**
Net assets, end of period (in thousands) $26,655 $28,068 $29,584
Ratios assuming no reduction of fees or
expenses--
Net operating expenses 2.58%** 2.27%** 2.15%**
Net investment income 4.97%** 3.20%** 3.28%**
<FN>
+ Subsequent to December 31, 1994, the Fund's fiscal year end was changed
from June 30 to December 31.
* Assumes initial investment at net asset value at the beginning of period,
reinvestment of all dividends, and the complete redemption of the
investment at the net asset value at the end of the period and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
</FN>
</TABLE>
-4-
<PAGE>
III. INVESTMENT OBJECTIVES AND POLICIES
The Fund's primary investment objective is to seek long-term growth of
capital. Current income is a secondary investment objective. The Fund pursues
these objectives by investing in a non-diversified portfolio consisting
primarily of equity securities of real estate investment trusts and other real
estate industry companies and, to a lesser extent, in debt securities of such
companies and in mortgage-backed securities.
Under normal circumstances, at least 75% of the Fund's total assets are
invested in equity securities of real estate investment trusts ("REITs") and
other real estate industry companies. For purposes of the Fund's investments, a
"real estate industry company" is a company that derives at least 50% of its
gross revenues or net profits from either (a) the ownership, development,
construction, financing, management or sale of commercial, industrial or
residential real estate or (b) products or services related to the real estate
industry like building supplies or mortgage servicing. The equity securities of
real estate industry companies in which the Fund will invest consist of common
stock, shares of beneficial interest of real estate investment trusts and
securities with common stock characteristics, such as preferred stock and debt
securities convertible into common stock ("Real Estate Equity Securities").
The Fund may also invest up to 25% of its total assets in (a) debt securities
of real estate industry companies, (b) mortgage-backed securities, such as
mortgage pass-through certificates, real estate mortgage investment conduit
("REMIC") certificates and collateralized mortgage obligations ("CMOs") and (c)
short-term investments (as listed below). See "Other Eligible Investments."
In pursuit of its objectives, the Fund may employ certain active management
techniques including options on securities indices and futures contracts on
securities and indices and options on such futures contracts. These techniques
may be employed in an attempt to hedge interest rate or other risks associated
with the Fund's portfolio securities. See Appendix A for a description of these
investment practices and associated risks.
For temporary defensive purposes, the Fund may invest up to 100% of its total
assets in short-term investments (as listed below). The Fund will assume a
temporary defensive posture only when economic and other factors affect the real
estate industry market to such an extent that PMC believes there to be
extraordinary risks in being substantially invested in Real Estate Equity
Securities.
As to any specific investment in Real Estate Equity Securities, PMC's
analysis will focus on evaluating the fundamental value of an enterprise. The
Fund will purchase securities for its portfolio when, in the judgment of PMC,
their market price appears to be less than their fundamental value and/or which
offer a high level of current income consistent with reasonable investment risk.
In selecting specific investments, PMC will attempt to identify securities with
significant potential for appreciation relative to their downside exposure
and/or which have a timely record and high level of interest or dividend
payments. In making these determinations, PMC will take into account
price-earnings ratios, cash flow, the relationship of asset value to market
price of the securities, interest or dividend payment history and other factors
which it may determine from time to time to be relevant. PMC will attempt to
allocate the Fund's portfolio investments across regional economies and property
types.
Risk Factors Associated with the Real Estate Industry
Although the Fund does not invest directly in real estate, it does invest
primarily in Real Estate Equity Securities and does concentrate its investments
in the real estate industry, and, therefore, an investment in the Fund may be
subject to certain risks associated with the direct ownership of real estate and
with the real estate industry in general. These risks include, among others:
possible declines in the value of real estate; risks related to general and
local economic conditions; possible lack of availability of mortgage funds;
overbuilding; extended vacancies of properties; increases in competition,
property taxes and operating expenses; changes in zoning laws; costs resulting
from the clean-up of, and liability to third parties for damages resulting from,
environmental problems; casualty or condemnation losses; uninsured damages from
floods, earthquakes or other natural disasters; limitations on and variations in
rents; and changes in interest rates.
-5-
<PAGE>
In addition, if the Fund has rental income or income from the disposition of
real property acquired as a result of a default on securities the Fund owns, the
receipt of such income may adversely affect its ability to retain its tax status
as a regulated investment company. See "Tax Status" in the Statement of
Additional Information. Investments by the Fund in securities of companies
providing mortgage servicing will be subject to the risks associated with
refinancings and their impact on servicing rights.
Real Estate Investment Trusts and Associated Risk Factors
The Fund may invest without limitation in shares of REITs. REITs are pooled
investment vehicles which invest primarily in income producing real estate or
real estate related loans or interests. REITs are generally classified as equity
REITs, mortgage REITs or a combination of equity and mortgage REITs. Equity
REITs invest the majority of their assets directly in real property and derive
income primarily from the collection of rents. Equity REITs can also realize
capital gains by selling properties that have appreciated in value. Mortgage
REITs invest the majority of their assets in real estate mortgages and derive
income from the collection of interest payments. Like investment companies such
as the Fund, REITs are not taxed on income distributed to shareholders provided
they comply with several requirements of the Internal Revenue Code of 1986, as
amended (the "Code"). The Fund will indirectly bear its proportionate share of
any expenses paid by REITs in which it invests in addition to the expenses paid
by the Fund.
Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. Equity REITs
may be affected by changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, and
are subject to the risks of financing projects. REITs are subject to heavy cash
flow dependency, default by borrowers, self-liquidation, and the possibilities
of failing to qualify for the exemption from tax for distributed income under
the Code and failing to maintain their exemptions from the Investment Company
Act of 1940, as amended (the "1940 Act"). REITs whose underlying assets include
long-term health care properties, such as nursing, retirement and assisted
living homes, may be impacted by federal regulations concerning the health care
industry.
REITs (especially mortgage REITs) are also subject to interest rate risks.
When interest rates decline, the value of a REIT's investment in fixed rate
obligations can be expected to rise. Conversely, when interest rates rise, the
value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investments in such loans will gradually
align themselves to reflect changes in market interest rates, causing the value
of such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
Investing in REITs involves risks similar to those associated with investing
in small capitalization companies. REITs may have limited financial resources,
may trade less frequently and in a limited volume and may be subject to more
abrupt or erratic price movements than larger company securities. Historically,
small capitalization stocks, such as REITs, have been more volatile in price
than the larger capitalization stocks included in the Standard & Poor's Index of
500 Common Stocks.
Other Eligible Investments
The Fund may invest up to 25% of its total assets in any of the investments
described in this section.
Debt Securities of Real Estate Industry Companies and Mortgage-Backed
Securities. The Fund may invest in debt securities (including convertible debt
securities) of real estate industry companies. PMC intends to invest no more
than 5% of the Fund's net assets in debt securities rated, at the time of
investment, below Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by
Standard & Poor's Ratings Group ("Standard & Poor's") or, if unrated, judged by
PMC to be of at least comparable quality. Securities rated Baa by Moody's or BBB
by Standard & Poor's and securities of comparable quality, referred to as
"medium grade" obligations, have speculative characteristics, and changes in
economic conditions and other factors are more likely to lead to weakened
capacity to pay principal and interest than is the case for higher rated
investment grade securities. In the event a debt security purchased by the Fund
is subsequently down graded below investment grade, PMC will consider whether
-6-
<PAGE>
the Fund should continue to hold the security. See the Statement of Additional
Information for a description of the corporate debt ratings assigned by Moody's
and Standard & Poor's and the risks associated with lower-rated debt securities.
The Fund may also invest in securities that directly or indirectly represent
participations in, or are collateralized by and payable from, mortgage loans
secured by real property ("Mortgage-Backed Securities"). Investing in
Mortgage-Backed Securities involves certain unique risks in addition to those
associated with investing in the real estate industry in general. These risks
include the failure of a counter-party to meet its commitments, adverse interest
rate changes and the effects of prepayments on mortgage cash flows. See Appendix
A for a more complete description of the characteristics of Mortgage-Backed
Securities and associated risks.
Short-Term Investments. The Fund may invest in short-term investments
consisting of: corporate commercial paper and other short-term commercial
obligations, in each case rated or issued by companies with similar securities
outstanding that are rated Prime-1, Aa or better by Moody's or A-1, AA or better
by Standard & Poor's; obligations (including certificates of deposit, time
deposits, demand deposits and bankers' acceptances) of banks with securities
outstanding that are rated Prime-1, Aa or better by Moody's, or A-1, AA or
better by Standard & Poor's; obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities with remaining maturities not
exceeding 18 months; and repurchase agreements.
Foreign Investments
The Fund may invest up to 5% of its net assets in equity and debt securities
of foreign real estate companies. See "Foreign Real Estate Companies and
Associated Risks" in the Statement of Additional Information for a description
of the risks associated with foreign investments.
Restricted and Illiquid Securities
The Fund may invest up to 5% of its net assets in securities exempt from
registration and up to 15% of its net assets in illiquid investments. See
Appendix A for a description of the risks associated with these securities.
Non-Diversified Status
The Fund is "non-diversified" for purposes of the 1940 Act. As a
non-diversified mutual fund, the Fund may be more susceptible to risks
associated with a single economic, political or regulatory occurrence than a
diversified fund might be. Like most other registered investment companies,
however, the Fund intends to qualify as a "regulated investment company" under
the Code and therefore will be subject to diversification limits, which
generally require that, as of the close of each quarter of its taxable year, (i)
no more than 25% of its assets may be invested in the securities of a single
issuer (except for U.S. Government securities) and (ii) with respect to 50% of
its total assets, no more than 5% of its total assets may be invested in the
securities of a single issuer (except for U.S. Government securities) or
invested in more than 10% of the outstanding voting securities of a single
issuer.
Portfolio Turnover
PMC generally avoids market-timing or speculating on broad market
fluctuations. Therefore, except as described above, the Fund will be
substantially fully invested at all times. 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. See "Financial Highlights" for the Fund's actual turnover rates.
The Fund's investment objectives 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.
-7-
<PAGE>
IV. MANAGEMENT OF THE FUND
The Fund's Board of Trustees has overall responsibility for the management
and supervision of the Fund. There are currently nine Trustees, six of whom are
not "interested persons" of the Fund as defined in the 1940 Act. The Board meets
at least quarterly. By virtue of the functions performed by Pioneering
Management Corporation ("PMC") as investment adviser, the Fund requires no
employees other than its executive officers, all of whom receive their
compensation from PMC or other sources. The Statement of Additional Information
contains the names and general business and professional background of each
Trustee and executive officer of the Fund.
The Fund is managed under an investment advisory contract with PMC. PMC
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. PMC is a wholly owned subsidiary of The Pioneer Group, Inc.
("PGI"), a Delaware corporation. Pioneer Funds Distributor, Inc. ("PFD"), an
indirect wholly-owned subsidiary of PGI, is the principal underwriter of shares
of the Fund. John F. Cogan, Jr., Chairman and Chief Executive Officer of the
Fund, Chairman and a Director of PMC, 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 domestic equity portfolio managed by PMC, including the Fund, is
overseen by the Domestic Equity Portfolio Management Committee, which consists
of PMC's most senior domestic equity professionals and a Portfolio Management
Committee, which consists of PMC's domestic equity portfolio managers. Both
committees are chaired by David D. Tripple, PMC's President and Chief Investment
Officer and Executive Vice President of each Pioneer mutual fund. Mr. Robert
Benson, Senior Vice President of PMC, has been responsible for day-to-day
portfolio decisions since the Fund's inception. Mr. Benson joined PMC in 1974
and is a Vice President of the Fund.
The executive offices of PMC, PGI and PFD are located at 60 State Street,
Boston, Massachusetts 02109.
Under the terms of its contract with the Fund, PMC serves as the Fund's
manager and investment adviser subject to the supervision of the Fund's
Trustees. PMC 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 persons of PMC; (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) fund accounting, pricing and appraisal charges and
related overhead; and (n) distribution fees in accordance with Rule 12b-1. The
Fund also pays all brokerage commissions and any taxes or other charges in
connection with its portfolio transactions. In addition, the expense of
organizing the Fund and initially registering and qualifying its shares under
federal and state securities laws are being charged to the Fund's operations, as
an expense, over a period not to exceed 60 months from the Fund's inception
date.
Orders for the Fund's portfolio securities transactions are placed by PMC,
which strives to obtain the best price and execution for each transaction. In
circumstances in which two or more broker-dealers are in a position to offer
comparable prices and execution, consideration may be given to whether the
broker-dealer provides investment research or brokerage services or sells shares
of the Fund or other Pioneer mutual funds. See the Statement of Additional
Information for a further description of PMC's brokerage allocation practices.
As compensation for its management and investment advisory services and
certain expenses which PMC incurs, PMC is entitled to a management fee equal to
1.00% per annum of the Fund's average daily net assets. The fee is normally
computed daily and paid monthly. The management fee, which is greater than those
paid by most funds, reflects the added complexity and additional expenses
associated with analyzing real estate investments and related securities.
-8-
<PAGE>
During the fiscal periods ended June 30, 1994, December 31, 1994 and June 30,
1995, the Fund incurred expenses of $223,842, $320,405 and $335,514,
respectively, including management fees paid or payable to Pioneer Winthrop
Advisors ("PWA") of $103,371, $141,284 and $130,341, respectively. PWA served as
the Fund's investment adviser from October 23, 1993 through July 17, 1995. PMC
has agreed temporarily to limit its management fee as described in "Expense
Information." During the fiscal periods ended June 30, 1994, December 31, 1994
and June 30, 1995, a similar arrangement by PWA resulted in a reduction of
expenses for the Fund of $45,812, $73,158 and $107,417, respectively. This
agreement is voluntary and temporary and may be revised or terminated at any
time.
V. FUND SHARE ALTERNATIVES
The Fund continuously offers three Classes of shares designated as Class A,
Class B and Class C shares, as described more fully in "How to Buy Fund Shares."
If you do not specify in your instructions to the Fund which Class of shares you
wish to purchase, exchange or redeem, the Fund will assume that your
instructions apply to Class A shares.
Class A Shares. If you invest less than $1 million in Class A shares, you
will pay an initial sales charge. Certain purchases may qualify for reduced
initial sales charges. If you invest $1 million or more in Class A shares, no
sales charge will be imposed at the time of purchase, however, shares redeemed
within 12 months of purchase may be subject to a 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.
Class C Shares. Class C shares are sold without an initial sales charge, but
are subject to a 1% CDSC if they are redeemed within the first year after
purchase. Class C shares are subject to distribution and service fees at a
combined annual rate of up to 1.00% of the Fund's average daily net assets
attributable to Class C shares. Your entire investment in Class C shares is
available to work for you from the time you make your investment, but the higher
distribution fee paid by Class C shares will cause your Class C shares to have a
higher expense ratio and to pay lower dividends, to the extent dividends are
paid, than Class A shares. Class C shares have no conversion feature.
Selecting a Class of Shares. The decision as to which Class to purchase
depends on the amount you invest, the intended length of the investment and your
personal situation. If you are making an investment that qualifies for reduced
sales charges, you might consider Class A shares. If you prefer not to pay an
initial sales charge on an investment of $250,000 or less and you plan to hold
the investment for at least six years, you might consider Class B shares. If you
prefer not to pay an initial sales charge and you plan to hold your investment
for one to eight years, you may prefer Class C shares.
Investment dealers or their representatives may receive different
compensation depending on which Class of shares they sell. Shares may be
exchanged only for shares of the same Class of another Pioneer mutual fund and
shares acquired in the exchange will continue to be subject to any CDSC
applicable to the shares of the Fund originally purchased. Shares sold outside
the U.S. to persons who are not U.S. citizens may be subject to different sales
charges, CDSCs and dealer compensation arrangements in accordance with local
laws and business practices.
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<PAGE>
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. The net asset value per
share of each Class of the Fund shares is determined by dividing the 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 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 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 the Exchange and will therefore not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of such
securities occur during such period, then these securities are valued at their
fair value as determined in good faith by the Trustees. All assets of the Fund
for which there is no other readily available valuation method are valued at
their fair value as determined in good faith by the Trustees.
VII. HOW TO BUY FUND SHARES
You may buy Fund shares at the public offering price from any securities
broker-dealer having 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, B and C shares, except
as specified below. The minimum initial investment is $50 for Class A accounts
being established to utilize monthly bank drafts, government allotments, payroll
deduction and other similar automatic investment plans. Separate minimum
investment requirements apply to retirement plans and to telephone and wire
orders placed by broker-dealers; and no sales charge or minimum investment
requirements apply to the reinvestment of dividends or capital gains
distributions. The minimum subsequent investment is $50 for Class A shares and
$500 for Class B and C shares except that the subsequent minimum investment
amount for Class B and C share accounts may be as little as $50 if an automatic
investment plan (see "Automatic Investment Plans") is established.
Telephone Purchases. Your account is automatically authorized to have the
telephone purchase privilege unless you indicated otherwise on your Account
Application or by writing to Pioneering Services Corporation ("PSC"). The
telephone purchase option may be used to purchase additional shares for an
existing fund account; it may not be used to establish a new account. Proper
account identification will be required for each telephone purchase. A maximum
of $25,000 per account may be purchased by telephone each day. The telephone
purchase privilege is available to IRA accounts but may not be available to
other types of retirement plan accounts. Call PSC for more information.
You are strongly urged to consult with your financial representative prior to
requesting a telephone purchase. To purchase shares by telephone, you must
establish your bank account of record by completing the appropriate section of
your Account Application or an Account Options Form. PSC will electronically
debit the amount of each purchase from this predesignated bank account.
Telephone purchases may not be made for 30 days after the establishment of your
bank of record or any change to your bank information.
Telephone purchases will be priced at the net asset value plus any applicable
sales charge next determined after PSC's acceptance of a telephone purchase
instruction and receipt of good funds (usually three days after the purchase
-10-
<PAGE>
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, the net
asset value per share next computed after receipt of a purchase order, plus a
sales charge as follows:
Sales Charge as a % of
Dealer
Net Allowance
Offering Amount as a % of
Amount of Purchase Price Invested Price
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.50 4.71 4.00
$100,000 but less than $250,000 3.50 3.63 3.00
$250,000 but less than $500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.75
$1 million or more -0- -0- See Below
No sales charge is payable at the time of purchase on investments of $1 million
or more, or for investments by certain group plans ("Group Plans"), but for such
investments a contingent deferred sales charge ("CDSC") of 1.00% is imposed in
the event of a redemption of Class A shares within 12 months of purchase. See
"Redemptions and Repurchases" below. PFD may, in its discretion, pay a
commission to broker-dealers who initiate and are responsible for such purchases
as follows: 1.00% on the first $1 million invested; 0.50% on the next $4 million
invested; and 0.10% on the excess over $5 million invested. These commissions
shall not be payable 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 commissions paid or a pro
rata portion thereof if the retirement plan redeems its shares within 12 months
of purchase. See also "How to Sell Fund Shares." In connection with PGI's
acquisition of Mutual of Omaha Fund Management Company and contingent upon the
achievement of certain sales objectives, PFD pays to Mutual of Omaha Investor
Services, Inc. 50% of PFD's retention of any sales commission on sales of the
Fund's shares through such dealer.
The schedule of sales charges above is applicable to purchases of Class A
shares of the Fund by (i) an individual, (ii) an individual and his or her
spouse and children under the age of 21 and (iii) a trustee or other fiduciary
of a trust estate or fiduciary account or related trusts or accounts including
pension, profit-sharing and other employee benefit trusts qualified under
Section 401 or 408 of the 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 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.
Qualifying for a Reduced Sales Charge. Class A shares of the Fund may be sold
at a reduced or eliminated sales charge to certain group plans ("Group Plans")
under which a sponsoring organization makes recommendations to, permits group
solicitation of, or otherwise facilitates purchases by, its employees, members
or participants. Class A shares of the Fund may be sold at net asset value per
share without a sales charge to state-sponsored Optional Retirement Program
participants if (i) the employer has authorized a limited number of investment
company providers for the Program, (ii) all authorized investment company
providers offer their shares to Program participants at net asset value, (iii)
the employer has agreed in writing to actively promote the authorized investment
-11-
<PAGE>
providers to Program participants and (iv) the Program provides for a matching
contribution for each participant contribution. Information about such
arrangements is available from PFD.
Class A shares of the Fund may also 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, its
subsidiaries; (c) current or former directors, officers, employees or sales
representatives of any subadviser or predecessor investment adviser to any
investment company for which PMC serves as an investment adviser, and the
subsidiaries or affiliates of such persons; (d) current or former officers,
partners, employees or registered representatives of broker-dealers which have
entered into sales agreements with PFD; (e) members of the immediate families of
any of the persons above; (f) any trust, custodian, pension, profit-sharing or
other benefit plan of the foregoing persons; (g) insurance company separate
accounts; (h) certain "wrap accounts" for the benefit of clients of financial
planners adhering to standards established by PFD; (i) other funds and accounts
for which PMC or any of its affiliates serves as investment adviser or manager;
and (j) certain unit investment trusts. Shares so purchased are purchased for
investment purposes and may not be resold except through redemption or
repurchase by or on behalf of the Fund. The availability of this privilege is
conditioned on the receipt by PFD of written notification of eligibility. Class
A shares of the Fund may also be sold at net asset value without a sales charge
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 thirteen-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 on the back of the Account Application as well as 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 60 days immediately preceding the purchase of
Class A shares; that the client paid a sales charge on the original purchase of
the shares redeemed; and that the mutual fund whose shares were redeemed also
offers net asset value purchases to redeeming shareholders of any of the Pioneer
mutual funds. Further details may be obtained from PFD.
Class B Shares
You may buy Class B shares at net asset value without the imposition of an
initial sales charge; however, Class B shares redeemed within six years of
purchase will be subject to a CDSC at the rates shown in the table below. The
charge will be assessed on the amount equal to the lesser of the current market
value or the original purchase cost of the shares being redeemed. No CDSC will
be imposed on increases in account value above the initial purchase price,
including shares derived from the reinvestment of dividends or capital gains
distributions.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of purchase until the time of redemption of Class B shares. For
the purpose of determining the number of years from the time of any purchase,
all payments during a quarter will be aggregated and deemed to have been made on
the first day of that quarter. In processing redemptions of Class B shares, the
Fund will first redeem shares not subject to any CDSC, and then shares held
longest during the six-year period. As a result, you will pay the lowest
possible CDSC.
Year Since CDSC as a Percentage of Dollar
Purchase Amount Subject to CDSC
- -------- ----------------------
First 4.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
-12-
<PAGE>
Sixth 1.0%
Seventh and thereafter none
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class B shares, including the payment of
compensation to broker-dealers.
Class B shares will automatically convert into Class A shares at the end of
the calendar quarter that is eight years after the purchase date, except as
noted below. Class B shares acquired by exchange from Class B shares of another
Pioneer fund will convert into Class A shares based on the date of the initial
purchase and the applicable CDSC. Class B shares acquired through reinvestment
of distributions will convert into Class A shares based on the date of the
initial purchase to which such shares relate. For this purpose, Class B shares
acquired through reinvestment of distributions will be attributed to particular
purchases of Class B shares in accordance with such procedures as the Trustees
may determine from time to time. The conversion of Class B shares to Class A
shares is subject to the continuing availability of a ruling from the Internal
Revenue Service ("IRS") that such conversions will not constitute taxable events
for federal tax purposes. The conversion of Class B shares to Class A shares
will not occur if such ruling is not available and, therefore, Class B shares
would continue to be subject to higher expenses than Class A shares for an
indeterminate period.
Class C Shares
You may buy Class C shares at net asset value without the imposition of an
initial sales charge; however, Class C shares redeemed within one year of
purchase will be subject to a CDSC of 1.00%. The charge will be assessed on the
amount equal to the lesser of the current market value or the original purchase
cost of the shares being redeemed. No CDSC will be imposed on increases in
account value above the initial purchase price, including shares derived from
the reinvestment of dividends or capital gains distributions. Class C shares do
not convert to any other Class of Fund shares.
For the purpose of determining the time of any purchase, all payments during
a quarter will be aggregated and deemed to have been made on the first day of
that quarter. In processing redemptions of Class C shares, the Fund will first
redeem shares not subject to any CDSC, and then shares held for the shortest
period of time during the one-year period. As a result, you will pay the lowest
possible CDSC.
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class C shares, including the payment of
compensation to broker-dealers.
Waiver or Reduction of Contingent Deferred Sales Charge. The CDSC on Class B
shares 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
shareowner or participant in an employer-sponsored retirement plan; (b) the
distribution is to a participant in an Individual Retirement Account ("IRA"),
403(b) or employer-sponsored retirement plan, is part of a series of
substantially equal payments made over the life expectancy of the participant or
the joint life expectancy of the participant and his or her beneficiary or as
scheduled periodic payments to a participant (limited in any year to 10% of the
value of the participant's account at the time the distribution amount is
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<PAGE>
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 C shares may be waived or reduced for either non-retirement
or 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 shareowner or participant
in an employer-sponsored retirement plan. The CDSC on Class C shares may be
waived or reduced for retirement plan accounts if the distribution is to a
participant in an Individual Retirement Account ("IRA") or employer-sponsored
retirement plan and is (a) 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; (b) in the form of scheduled periodic
payments to a participant; (c) a return of excess employee deferrals; (d) a
qualifying hardship distribution as defined by the Code; (e) from a termination
of employment; (f) the distribution is in the form of a loan to a participant in
a plan which permits loans; or (g) 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 and Class C 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 shareowner's account.
Broker-Dealers. An order for any Class of Fund shares received by PFD from a
broker-dealer prior to the close of regular trading on the Exchange is confirmed
at the price appropriate for that Class as determined at the close of regular
trading on the Exchange on the day the order is received, provided the order is
received 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:
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o 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.
o If you are selling shares from a non-retirement account, you may use any of
the methods described below.
Your shares will be sold at the share price next calculated after your order
is received and accepted less any applicable CDSC. Sale proceeds generally will
be sent to you in cash, normally within seven days after your order is accepted.
The Fund reserves the right to withhold payment of the sale proceeds until
checks received by the Fund in payment for the shares being sold have cleared,
which may take up to 15 calendar days from the purchase date.
In Writing. You may sell your shares by delivering a written request, signed
by all registered owners, in good order to PSC, however, you must use a written
request, including a signature guarantee, to sell your shares if any of the
following situations applies:
o you wish to sell over $50,000 worth of shares,
o your account registration or address has changed within the last 30 days,
o the check is not being mailed to the address on your account (address of
record),
o the check is not being made out to the account owners, or
o the sale proceeds are being transferred to a Pioneer mutual fund account
with a different registration.
Your request should include your name, the Fund's name, your Fund account
number, the Class of shares to be redeemed, the dollar amount or number of
shares to be redeemed, and any other applicable requirements as described below.
Unless instructed otherwise, PSC will send the proceeds of the sale to the
address of record. Fiduciaries 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, any certificates are endorsed by
the record owner(s) exactly as the shares are registered and the signature(s)
are guaranteed by 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 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 per account per day 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 electronic funds transfer: the
proceeds must be sent to the bank wire 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 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
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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 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 Pioneer mutual fund into
which you wish to exchange, your fund account number(s), the Class of shares to
be exchanged and the dollar amount or number of shares to be exchanged. Written
exchange requests must be signed by all record owner(s) exactly as the shares
are registered.
Telephone Exchanges. Your account is automatically authorized to have the
telephone exchange privilege unless you indicated otherwise on your Account
Application or by writing to PSC. Proper account identification will be required
for each telephone exchange. Telephone exchanges may not exceed $500,000 per
account per day. Each voice-requested or FactFoneSM telephone exchange request
will be recorded. You are strongly urged to consult with your financial
representative prior to requesting a telephone exchange. See "Telephone
Transactions and Related Liabilities" below.
Automatic Exchanges. You may automatically exchange shares from one Pioneer
account for shares of the same Class in another Pioneer account on a monthly or
quarterly basis. The accounts must have identical registrations and the
originating account must have a minimum balance of $5,000. The exchange will be
effective on the day of the month designated on your Account Application or
Account Options Form.
General. Exchanges must be at least $1,000. You may exchange your investment
from one Class of Fund shares at net asset value, without a sales charge, for
shares of the same Class of any other Pioneer mutual fund. Not all Pioneer
mutual funds offer more than one Class of shares. A new Pioneer account opened
through an exchange must have a registration identical to that on the original
account.
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Any Class of shares which would normally be subject to a CDSC upon redemption
will not be charged the applicable CDSC at the time of an exchange. Shares
acquired in an exchange will be subject to the CDSC of the shares originally
held. For purposes of determining the amount of any applicable CDSC, the length
of time you have owned shares acquired by exchange will be measured from the
date you acquired the original shares and will not be affected by any subsequent
exchange.
Exchange requests received by PSC before 4:00 p.m. Eastern Time will be
effective on that day if the requirements above have been met, otherwise, they
will be effective on the next business day. PSC will process exchanges only
after receiving an exchange request in good order. There are currently no fees
or sales charges imposed at the time of an exchange. An exchange of shares may
be made only in states where legally permitted. For federal and (generally)
state income tax purposes, an exchange is considered to be a sale of the shares
of the Fund exchanged and a purchase of shares in another Pioneer mutual fund.
Therefore, an exchange could result in a gain or loss on the shares sold,
depending on the tax basis of these shares and the timing of the transaction,
and special tax rules may apply.
You should consider the differences in objectives and policies of the Pioneer
mutual funds, as described in each fund's current prospectus, before making any
exchange. For the protection of the Fund's performance and shareholders, the
Fund and PFD reserve the right to refuse any exchange request or restrict, at
any time without notice, the number and/or frequency of exchanges to prevent
abuses of the exchange privilege. Such abuses may arise from frequent trading in
response to short-term market fluctuations, a pattern of trading by an
individual or group that appears to be an attempt to "time the market," or any
other exchange request which, in the view of management, will have a detrimental
effect on the Fund's portfolio management strategy or its operations. In
addition, the Fund and PFD reserve the right to charge a fee for exchanges or to
modify, limit, suspend or discontinue the exchange privilege with notice to
shareholders as required by law.
X. DISTRIBUTION PLANS
The Fund has adopted a Plan of Distribution for each Class of shares (the
"Class A Plan," "Class B Plan," and "Class C Plan") in accordance with Rule
12b-1 under the 1940 Act pursuant to which certain distribution fees are paid to
PFD.
Pursuant to the Class A Plan, the Fund reimburses PFD for its actual
expenditures to finance any activity primarily intended to result in the sale of
Class A shares or to provide services to holders of Class A shares, provided the
categories of expenses for which reimbursement is made are approved by the
Fund's Board of Trustees. As of the date of this Prospectus, the Board of
Trustees has approved the following categories of expenses for Class A shares of
the Fund: (i) a service fee to be paid to qualified broker-dealers in an amount
not to exceed 0.25% per annum of the Fund's daily net assets attributable to
Class A shares; (ii) reimbursement to PFD for its expenditures for broker-dealer
commissions and employee compensation on certain sales of the Fund's Class A
shares with no initial sales charge (See "How to Buy Fund Shares"); and (iii)
reimbursement to PFD for expenses incurred in providing services to Class A
shareholders and supporting broker-dealers and other organizations (such as
banks and trust companies) in their efforts to provide such services. Banks are
currently prohibited under the Glass-Steagall Act from providing certain
underwriting or distribution services. If a bank was prohibited from acting in
any capacity or providing any of the described services, management would
consider what action, if any, would be appropriate.
Expenditures of the Fund pursuant to the Class A Plan are accrued daily and
may not exceed 0.25% of the Fund's average daily net assets attributable to
Class A shares. Distribution expenses of PFD are expected to substantially
exceed the distribution fees paid by the Fund in a given year. The Class A Plan
may not be amended to increase materially the annual percentage limitation of
average net assets which may be spent for the services described therein without
approval of the shareholders of the Fund.
Both the Class B Plan and the Class C Plan provide that the Fund will
compensate PFD by paying a distribution fee at the annual rate of 0.75% of the
Fund's average daily net assets attributable to the applicable Class of shares
and a service fee at the annual rate of 0.25% of the Fund's average daily net
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assets attributable to that Class of shares. The distribution fee is intended to
compensate PFD for its Class B and Class C 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 or Class C shares.
PFD also receives the proceeds of any CDSC imposed on the redemption of Class B
or Class C shares.
Commissions of 4% of the amount invested in Class B shares, equal to 3.75% of
the amount invested and a first year's service fee equal to 0.25% of the amount
invested, are paid to broker-dealers who have selling agreements with PFD. PFD
may advance to dealers the first year service fee at a rate up to 0.25% of the
purchase price of such shares and, as compensation therefore, PFD may retain the
service fee paid by the Fund with respect to such shares for the first year
after purchase. Commencing in the 13th month following the purchase of Class B
shares, dealers will become eligible for additional annual service fees of up to
0.25% of the purchase price with respect to such shares.
Commissions of up to 1% of the amount invested in Class C shares, consisting
of 0.75% of the amount invested and a first year's service fee of 0.25% of the
amount invested, are paid to broker-dealers who have selling agreements with
PFD. PFD may advance to dealers the first year service fee at a rate up to 0.25%
of the purchase price of such shares and, as compensation therefore, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Commencing in the 13th month following the purchase
of Class C shares, dealers will become eligible for additional annual
distribution fees and services fees of up to 0.75% and 0.25%, respectively, of
the purchase price with respect to such shares.
Dealers may from time to time be required to meet certain criteria in order
to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan or the Class C Plan for which there
is no dealer of record or for which qualification standards have not been met as
partial consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareowner 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% federal excise
tax on a portion of its undistributed income and capital gains if it fails to
meet certain distribution requirements with respect to each calendar year. The
Fund intends to make distributions in a timely manner and accordingly does not
expect to be subject to the excise tax.
The Fund's policy is to pay to shareholders dividends from net investment
income, if any, quarterly during the months of March, June, September and
December and to make distributions from net long-term capital gains, if any, in
December. Distributions from net short-term capital gains, if any, may be paid
with such dividends; distributions from income and/or capital gains may also be
made at such times as may be necessary to avoid federal income or excise tax.
Dividends from the Fund's net investment income, net short-term capital gains,
and certain net foreign exchange gains are taxable as ordinary income, and
dividends from the Fund's net long-term capital gains are taxable as long-term
capital gains.
Unless shareholders specify otherwise, all distributions will be
automatically reinvested in additional full and fractional shares of the Fund.
For federal income tax purposes, all dividends are taxable as described above
whether a shareowner 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.
Distributions by the Fund of the dividend income it receives from U.S.
domestic corporations, if any, may qualify for the corporate dividends-received
deduction for corporate shareholders, subject to minimum holding-period
requirements and debt-financing restrictions under the Code.
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Dividends and other distributions and the proceeds of redemptions, exchanges
or repurchases of Fund shares paid to individuals and other non-exempt payees
will be subject to a 31% backup withholding of federal income tax if the Fund is
not provided with the shareowner's correct taxpayer identification number and
certification that the number is correct and the shareowner is not subject to
backup withholding or if 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, trusts or estates and who are subject to U.S.
federal income tax. Non-U.S. shareholders and tax-exempt shareholders are
subject to different tax treatment that is not described above. Shareholders
should consult their own tax advisers 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 the custodian of the Fund's portfolio securities and
other assets. The principal business address of the Mutual Fund Division of the
Custodian is 40 Water Street, Boston, Massachusetts 02109.
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 the
details of transactions are sent to shareholders quarterly for dividend
reinvestment and Investomatic transactions and more frequently for other types
of transactions. The Pioneer Combined Account Statement, mailed quarterly, is
available to all 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 that might not be available are investment or redemption of
shares by mail or telephone, automatic reinvestment of dividends and capital
gains distributions, systematic withdrawal plan, Letters of Intention, Rights of
Accumulation, telephone exchanges and redemptions, and newsletters.
Additional Investments
You may add to your account by sending a check (minimum of $50 for Class A
shares and $500 for Class B and C shares) to PSC (account number and Class of
shares should be clearly indicated). The bottom portion of a confirmation
statement may be used as a remittance slip to make additional investments.
Additions to your account, whether by check or through a Pioneer Investomatic
Plan, are invested in full and fractional shares of the Fund at the applicable
offering price in effect as of the close of 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 monthly or quarterly
investments by means of a preauthorized electronic funds transfer or draft drawn
on a checking account. Pioneer Investomatic Plan investments are voluntary, and
you may discontinue the Plan without penalty upon 30 days' written notice to
PSC. PSC acts as agent for the purchasers, the broker-dealer and PFD in
maintaining Pioneer Investomatic Plans.
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Financial Reports and Tax Information
As a shareowner, you will receive financial reports at least semiannually. In
January of each year the Fund will mail to 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 distributions in
cash. These two options are not available, however, for retirement plans or an
account with a net asset value of less than $500. Changes in the distribution
option may be made by written request to PSC.
Directed Dividends
You may elect (in writing) to have the dividends paid by one Pioneer mutual
fund account invested in a second Pioneer mutual fund. 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. There are no fees or charges for this service.
Retirement plan shareholders may only direct dividends to accounts with
identical registrations; e.g., PGI IRA Cust for John Smith may only go into
another account registered PGI 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 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 gain distributions paid from an account (before any reinvestment) and
forward the amount withheld to the Internal Revenue Service as a credit against
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 your Fund shares by telephone
by calling 1-800- 225-6292 between the hours of 8:00 a.m. and 9:00 p.m. Eastern
Time on weekdays. Computer-assisted transactions are available to shareholders
who have pre-recorded certain bank information (see "FactFoneSM") You are
strongly urged to consult with your financial representative prior to requesting
any telephone transaction. See "Share Price" for more information.
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. In all other cases, neither the Fund, PSC nor PFD will
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be responsible for the authenticity of instructions received by telephone,
therefore, you bear the risk of loss for unauthorized or fraudulent telephone
transactions. The Fund may implement other procedures from time to time.
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.
FactFoneSM
FactFoneSM is an automated inquiry and telephone transaction system available
to Pioneer shareholders by dialing 1-800-225-4321. FactFoneSM allows you to
obtain current information on your Pioneer accounts and to inquire about the
prices and yields of all publicly available Pioneer mutual funds. In addition,
you may use FactFoneSM 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 FactFoneSM. 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
Please contact the Retirement Plans Department of PSC at 1-800-622-0176 for
information relating to retirement plans for business, Simplified Employee
Pension Plans, Individual Retirement Accounts (IRAs), Section 401(k) salary
reduction plans 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
accompanying this Prospectus should not be used to establish such plans.
Separate applications are required.
Telecommunications Device for the Deaf (TDD)
If you have a hearing disability and your own TDD keyboard equipment, you can
call our TDD number toll-free at 1-800- 225-1997, week days from 8:30 a.m. to
5:30 p.m. Eastern Time, to contact our telephone representatives with questions
about your account.
Systematic Withdrawal Plans
If your account has a total value of at least $10,000, you may establish a
Systematic Withdrawal Plan ("SWP") providing for fixed payments at regular
intervals. Withdrawals from Class B share accounts are limited to 10% of the
value of the account at the time the plan is implemented. See "Waiver or
Reduction of Contingent Deferred Sales Charge" for more information. Periodic
checks of $50 or more will be sent to you, or any person designated by you,
monthly or quarterly, and your periodic redemptions of shares may be taxable to
you. Payments can be made either by check or by electronic funds transfer to a
bank account designated by you. If you direct that withdrawal checks be paid 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 commission 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 reinvestment
occurs. You may also reinvest in the Class A shares of certain 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 OBTAIN BY CALLING 1-800-225-6292.
XIII. THE FUND
The Fund, a non-diversified open-end management investment company (commonly
referred to as a mutual fund) was established as a Massachusetts business trust
on July 1, 1993 and was reorganized as a Delaware business trust on April 28,
1995 under an Agreement and Declaration of Trust (the "Declaration of Trust").
Prior to September 1, 1995, the Fund was named "Pioneer Winthrop Real Estate
Investment Fund." The Fund has authorized an unlimited number of shares of
beneficial interest. As an open-end investment company, the Fund continuously
offers its shares to the public and under normal conditions must redeem its
shares upon the demand of any shareowner at the then current net asset value per
share. See "How to Sell Fund Shares." The Fund is not required, and does not
intend, to hold annual shareowner meetings although special meetings may be
called for the purpose of electing or removing Trustees, changing fundamental
investment restrictions or approving a management contract.
The Fund reserves the right to create and issue additional series of shares.
The Trustees have the authority, without further shareowner approval, to
classify and reclassify the shares of the Fund, or any additional series of the
Fund, into one or more classes. As of the date of this Prospectus, the Trustees
have authorized the issuance of three classes of shares, designated Class A,
Class B and Class C. The shares of each class represent an interest in the same
portfolio of investments of the Fund. Each class has equal rights as to voting,
redemption, dividends and liquidation, except that each class bears different
distribution and transfer agent fees and may bear other expenses properly
attributable to the particular class. Class A, Class B and Class C shareholders
have exclusive voting rights with respect to the Rule 12b-1 distribution plans
adopted by holders of those shares in connection with the distribution of
shares.
In addition to the requirements under Delaware law, the Declaration of Trust
provides that a shareholder of the Fund may bring a derivative action on behalf
of the Fund only if the following conditions are met: (a) shareholders eligible
to bring such derivative action under Delaware law who hold at least 10% of the
outstanding shares of the Fund, or 10% of the outstanding shares of the series
or class to which such action relates, shall join in the request for the
Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such shareholder request and investigate
the basis of such claim. The Trustees shall be entitled to retain counsel or
other advisers in considering the merits of the request and shall require an
undertaking by the shareholders making such request to reimburse the Fund for
the expense of any such advisers in the event that the Trustees determine not to
bring such action.
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. Shares will remain on deposit with the Fund's transfer agent and
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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 and Class C shares
the calculation reflects the deduction of any applicable CDSC. The periods
illustrated would normally include one, five and ten years (or since the
commencement of the public offering of the shares of a Class, if shorter)
through the most recent calendar quarter.
One or more additional measures and assumptions, including but not limited to
historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share values;
or any graphic illustration of such data may also be used. These data may cover
any period of the Fund's existence and may or may not include the impact of
sales charges, taxes or other factors.
Other investments or savings vehicles and/or unmanaged market indexes,
indicators of economic activity or averages of mutual fund 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 may also
include securities industry, real estate industry or comparative performance
information in advertising or materials marketing the Fund's shares. Such
performance information may include rankings or listings by magazines,
newspapers, or independent statistical or ratings services, such as Lipper
Analytical Services, Inc. or Ibbotson Associates.
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.
From time to time, the Fund may include in advertisements or other
communications to existing or proposed shareholders its respective "yield" and
"effective yield." Whenever yield information is provided, it includes a
standardized yield calculation computed by dividing the Fund's net investment
income per share for a Class of Fund shares during a base period of 30 days, or
one month, by the maximum offering price per share for that Class of shares on
the last day of such base period. The resulting "30-day yield" is then
annualized as described below. The Fund's net investment income per share for
each Class is determined by dividing the Fund's net investment income for that
Class during the base period by the average number of shares of that Class
entitled to receive dividends during the base period. The Class's 30-day yield
is then "annualized" by a computation that assumes that the Class's net
investment income is earned and reinvested for a six-month period at the same
rate as during the 30-day base period and that the resulting six-month income
will be generated over an additional six months.
For more information about the calculation methods used to compute the Fund's
investment results, see the Statement of Additional Information.
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APPENDIX A: Certain Investment Practices
This Appendix provides a brief description of certain securities in which the
Fund may invest and certain transactions it may make. For a more complete
discussion of these and other securities and practices, see "Investment
Objectives and Policies" in this Prospectus and "Investment Policies and
Restrictions" in the Statement of Additional Information.
Mortgage-Backed Securities and Associated Risks
The Fund may invest up to 25% of its total assets in mortgage pass-through
certificates and multiple-class pass-through securities, such as real estate
mortgage investment conduits ("REMIC") pass-through certificates, collateralized
mortgage obligations ("CMOs") and stripped mortgage-backed securities ("SMBS"),
and other types of Mortgage-Backed Securities that may be available in the
future.
Guaranteed Mortgage Pass-Through Securities. The Fund may invest in
guaranteed mortgage pass-through securities which represent participation
interests in pools of residential mortgage loans and are issued by U.S.
Governmental or private lenders and guaranteed by the U.S. Government or one of
its agencies or instrumentalities, including but not limited to the Government
National Mortgage Association ("Ginnie Mae"), the Federal National Mortgage
Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation
("Freddie Mac"). Ginnie Mae certificates are guaranteed by the full faith and
credit of the United States government for timely payment of principal and
interest on the certificates. Fannie Mae certificates are guaranteed by Fannie
Mae, a federally chartered and privately-owned corporation for full and timely
payment of principal and interest on the certificates. Freddie Mac certificates
are guaranteed by Freddie Mac, a corporate instrumentality of the United States
government, for timely payment of interest and the ultimate collection of all
principal of the related mortgage loans.
Multiple-Class Pass-Through Securities and Collateralized Mortgage
Obligations. The Fund may also invest in CMOs and REMIC pass-through or
participation certificates, which may be issued by, among others, U.S.
Government agencies and instrumentalities as well as private lenders. CMOs and
REMIC certificates are issued in multiple classes and the principal of and
interest on the mortgage assets may be allocated among the several classes of
CMOs or REMIC certificates in various ways. Each class of CMOs or REMIC
certificates, often referred to as a "tranche," is issued at a specific
adjustable or fixed interest rate and must be fully retired no later than its
final distribution date. Generally, interest is paid or accrues on all classes
of CMOs or REMIC certificates on a monthly basis.
Typically, CMOs are collateralized by Ginnie Mae, Fannie Mae or Freddie Mac
certificates but also may be collateralized by other mortgage assets such as
whole loans or private mortgage pass-through securities. Debt service on CMOs is
provided from payments of principal and interest on collateral of mortgaged
assets and any reinvestment income thereon.
A REMIC is a CMO that qualifies for special tax treatment under the Code and
invests in certain mortgages primarily secured by interests in real property and
other permitted investments. Investors may purchase "regular" and "residual"
interest shares of beneficial interest in REMIC trusts although the Fund does
not intend to invest in residual interests.
Risk Factors Associated with Mortgage-Backed Securities. As discussed above,
investing in Mortgage-Backed Securities involves certain unique risks in
addition to those risks associated with investing in the real estate industry in
general. These risks include the failure of a counter-party to meet its
commitments, adverse interest rate changes and the effects of prepayments on
mortgage cash flows. The Fund will not invest in the lowest tranche of CMOs and
REMIC certificates. When interest rates decline, the value of an investment in
fixed rate obligations can be expected to rise. Conversely, when interest rates
rise, the value of an investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on investments in such loans will gradually align
themselves to reflect changes in market interest rates, causing the value of
such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
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<PAGE>
Further, the yield characteristics of Mortgage-Backed Securities, such as
those in which the Fund may invest, differ from those of traditional fixed
income securities. The major differences typically include more frequent
interest and principal payments (usually monthly), the adjustability of interest
rates, and the possibility that prepayments of principal may be made
substantially earlier than their final distribution dates.
Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social and other factors and cannot be
predicted with certainty. Both adjustable rate mortgage loans and fixed rate
mortgage loans may be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of principal
prepayments in an increasing interest rate environment. Under certain interest
rate and prepayment rate scenarios, the Fund may fail to recoup fully its
investment in Mortgage-Backed Securities notwithstanding any direct or indirect
governmental or agency guarantee. When the Fund reinvests amounts representing
payments and unscheduled prepayments of principal, it may receive a rate of
interest that is lower than the rate on existing adjustable rate mortgage
pass-through securities. Thus, Mortgage-Backed Securities, and adjustable rate
mortgage pass-through securities in particular, may be less effective than other
types of U.S. Government securities as a means of "locking in" interest rates.
Repurchase Agreements
The Fund may enter into repurchase agreements, generally not exceeding seven
days. 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
United States 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 up to 5% of its net 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 net assets may be
invested in restricted securities including securities eligible for resale under
Rule 144A. In addition, the Fund may invest up to 15% of its net assets in
illiquid investments, which includes securities that are not readily marketable,
repurchase agreements maturing in more than seven days. 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.
Limitations and Risks Associated with Transactions in Options and Futures
Contracts
The Fund may employ certain active management techniques including options on
securities indices, futures contracts and options on futures contacts. Each of
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<PAGE>
these active management techniques involves transaction costs as well as (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 fluctuations intended to be hedged, and (3)
market risk that an incorrect prediction of securities prices by PMC 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 over-the-counter options
(both purchased and written) as illiquid securities. The use of options and
futures 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 is potentially unlimited.
There is no limit on the percentage of the Fund's assets that may be invested in
futures contracts and related options. 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, 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 securities indices that are based on securities in which
it may invest in an attempt 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 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 an attempt 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.
Futures Contracts and Options on Futures Contracts
To hedge against changes in securities prices 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 securities
and other financial instruments and indices. The Fund will engage in futures and
related options transactions for bona fide 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. These transactions involve brokerage costs, require margin
deposits and, in the case of contracts and options obligating the Fund to
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<PAGE>
purchase securities, require the Fund to segregate assets to cover such
contracts and options. Perfect correlation between the Fund's futures positions
and portfolio positions will be difficult to achieve because no futures
contracts based on corporate fixed-income securities are currently available.
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<PAGE>
Pioneer
Real Estate Shares
60 State Street
Boston, Massachusetts 02109
OFFICERS
JOHN F. COGAN, JR., Chairman and Chief Executive Officer
DAVID D. TRIPPLE, Executive Vice President
ROBERT W. BENSON, Vice President
STEPHEN G. KASNET, Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
INVESTMENT ADVISER
PIONEERING MANAGEMENT CORPORATION
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: 1-800-225-6292
SERVICE INFORMATION
If you would like information on the following, please call...
Existing and new accounts, prospectuses,
applications, service forms, and
telephone transactions ...................................1-800-225-6292
FactFone SM
Automated fund yields, automated prices and
account information .......................................1-800-225-4321
Retirement plans ...........................................1-800-622-0176
Toll-free fax ..............................................1-800-225-4240
Telecommunications Device for the Deaf (TDD) ...............1-800-225-1997
1295-xxxx
(C)Pioneer Funds Distributor, Inc.
-27-
<PAGE>
PIONEER REAL ESTATE SHARES
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
January ___, 1996
This Statement of Additional Information (Part B of the Registration
Statement) is not a Prospectus, but should be read in conjunction with the
Prospectus dated January ___, 1996, as amended and/or supplemented from time to
time (the "Prospectus"), of Pioneer Real Estate Shares (the "Fund"). A copy of
the Prospectus can be obtained free of charge by calling 1-800-225-6292 or by
written request to the Fund at 60 State Street, Boston, Massachusetts 02109.
TABLE OF CONTENTS
Page
1. General Fund Information and History............................B-2
2. Investment Policies and Restrictions............................B-2
3. Management of the Fund..........................................B-12
4. Advisory Services...............................................B-16
5. Underwriting Agreement and
Distribution Plan.............................................B-17
6. Shareholder Servicing/Transfer Agent............................B-20
7. Custodian.......................................................B-21
8. Principal Underwriter...........................................B-21
9. Independent Public Accountant...................................B-22
10. Portfolio Transactions..........................................B-22
11. Tax Status......................................................B-24
12. Description of Shares...........................................B-27
13. Certain Liabilities.............................................B-28
14. Determination of Net Asset Value................................B-29
15. Systematic Withdrawal Plan......................................B-29
16. Letter of Intention.............................................B-30
17. Investment Results..............................................B-31
18. Financial Statements............................................B-34
APPENDIX A - Description of Bond Ratings........................B-35
APPENDIX B - Additional Pioneer Information.....................B-38
APPENDIX C - Securities Indices ................................B-39
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
<PAGE>
1. GENERAL FUND INFORMATION AND HISTORY
Effective September 1, 1995, the Fund changed its name from Pioneer
Winthrop Real Estate Investment Fund to Pioneer Real Estate Shares. On April 28,
1995, the Fund, a Delaware business trust, acquired all the assets and
liabilities of Pioneer Winthrop Real Estate Investment Fund, a Massachusetts
business trust (the "Massachusetts Trust"), in a tax-free reorganization
effected for the sole purpose of changing the Fund's domicile from a
Massachusetts business trust to a Delaware business trust. In connection with
the reorganization, the Fund adopted the Massachusetts Trust's Registration
Statement on Form N-1A.
2. INVESTMENT POLICIES AND RESTRICTIONS
The Prospectus of the Fund, identifies the investment objectives 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.
Lower-Rated Debt Securities and Associated Risks
As described in the Prospectus, the Fund may make a variety of
investments, including corporate debt obligations of real estate industry
companies which may be unrated or rated in the lowest rating categories by
Standard & Poor's Ratings Group ("Standard & Poor's") or by Moody's Investor
Services, Inc. ("Moody's") (i.e., ratings of BB or lower by Standard & Poor's or
Ba or lower by Moody's). Bonds rated BB or Ba or below (or comparable unrated
securities) are commonly referred to as "junk bonds" and are considered
speculative and may be questionable as to principal and interest payments. In
some cases, such bonds may be highly speculative, have poor prospects for
reaching investment standing and be in default. As a result, investment in such
bonds will entail greater speculative risks than those associated with
investment in investment-grade bonds (i.e., bonds rated BBB or better by
Standard & Poor's or Baa or better by Moody's). The Fund will limit its
investment in non-investment grade corporate debt obligations, and comparable
unrated debt obligations, to less than 5% of its net assets. See Appendix A for
a description of the ratings issued by investment rating services.
The amount of junk bond securities outstanding has proliferated in
conjunction with the increase in merger and acquisition and leveraged buyout
activity. An economic downturn could severely affect the ability of highly
leveraged issuers to service their debt obligations or to repay their
obligations upon maturity. Factors having an adverse impact on the market value
of lower rated securities will have an adverse effect on the Fund's net asset
value to the extent it invests in such securities. In addition, the Fund may
incur additional expenses to the extent it is required to seek recovery upon a
default in payment of principal or interest on its portfolio holdings.
The secondary market for junk bond securities, which is concentrated in
relatively few market makers, may not be as liquid as the secondary market for
more highly rated securities, a factor which may have an adverse effect on the
Fund's ability to dispose of a particular security when necessary to meet its
liquidity needs. Under adverse market or economic conditions, the secondary
B-2
<PAGE>
market for junk bond securities could contract further, independent of any
specific adverse changes in the condition of a particular issuer. As a result,
Pioneering Management Corporation ("PMC"), the Fund's investment adviser, could
find it more difficult to sell these securities or may be able to sell the
securities only at prices lower than if such securities were widely traded.
Prices realized upon the sale of such lower rated or unrated securities, under
these circumstances, may be less than the prices used in calculating the Fund's
net asset value.
Certain proposed and recently enacted federal laws including the
required divestiture by federally insured savings and loan associates of their
investments in junk bonds and proposals designed to limit the use, or tax and
other advantages, of junk bond securities could adversely affect the Fund's net
asset value and investment practices. Such proposals could also adversely affect
the secondary market for junk bond securities, the financial condition of
issuers of these securities and the value of outstanding junk bond securities.
The form of such proposed legislation and the probability of such legislation
being passed are uncertain.
Since investors generally perceive that there are greater risks
associated with the medium to lower rated securities of the type in which the
Fund may invest, the yields and prices of such securities may tend to fluctuate
more than those for higher rated securities. In the lower quality segments of
the fixed-income securities market, changes in perceptions of issuers'
creditworthiness tend to occur more frequently and in a more pronounced manner
than do changes in higher quality segments of the fixed-income securities market
resulting in greater yield and price volatility.
Another factor which causes fluctuations in the prices of fixed-income
securities is the supply and demand for similarly rated securities. In addition,
the prices of fixed-income securities fluctuate in response to the general level
of interest rates. Fluctuations in the prices of portfolio securities subsequent
to their acquisition will not affect cash income from such securities but will
be reflected in the Fund's net asset value.
Medium to lower rated and comparable unrated securities tend to offer
higher yields than higher rated securities with the same maturities because the
historical financial condition of the issuers of such securities may not have
been as strong as that of other issuers. Since medium to lower rated securities
generally involve greater risks of loss of income and principal than higher
rated securities, investors should consider carefully the relative risks
associated with investment in securities which carry medium to lower ratings and
in comparable unrated securities. In addition to the risk of default, there are
the related costs of recovery on defaulted issues. PMC will attempt to reduce
these risks through diversification of the Fund's portfolio and by analysis of
each issuer and its ability to make timely payments of income and principal, as
well as broad economic trends in corporate developments.
Foreign Real Estate Companies and Associated Risks
The Fund may invest up to 5% of its net assets in securities of foreign
real estate companies. Such investments involve certain risks which are not
typically associated with investing in securities of domestic real estate
companies. Foreign companies are not subject to uniform accounting, auditing and
B-3
<PAGE>
financial standards and requirements comparable to those applicable to United
States companies. There may also be 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 the Fund by the U.S.
Government or by domestic companies. In addition, there may be the possibility
of expropriation, confiscatory taxation, political, economic or social
instability, or diplomatic developments which could affect assets of the Fund
invested in foreign securities.
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 exchange control regulations. There may be
less publicly available information about foreign companies compared to reports
and ratings published about United States companies. Foreign securities markets
have substantially less trading volume than domestic markets and securities of
some foreign companies are less liquid and more volatile than securities of
comparable United States companies. Transaction costs on foreign securities
exchanges are generally higher than in the U.S.
The Fund's investments in securities denominated in foreign currencies
are also subject to currency risk, as the U.S. dollar value of these securities
may be favorably or unfavorably affected by changes in foreign currency exchange
rates and exchange control regulations. Currency exchange rates may fluctuate
significantly over short periods of time causing, among other factors, the
Fund's net asset value to fluctuate as well. Currency exchange rates are
generally determined by forces of supply and demand and the perceived relative
merits of investments in various countries, but can be affected unpredictable by
intervention from U.S. and foreign governments or central banks, political
events and currency control measures. PMC will take these and other factors into
consideration in managing the Fund's investments.
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.
Options on stock indices are traded 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. 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.
B-4
<PAGE>
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 an attempt
to lock in a favorable price on securities that it intends to buy in the future.
If the Fund purchases a call option on a securities index, the amount of the
payment it receives upon exercising the option depends on the extent of an
increase in the level of other securities indices above the exercise price. Such
payments would in effect allow the Fund to benefit from securities market
appreciation even though it may not have had sufficient cash to purchase the
underlying securities. Such payments may also offset increases in the price of
securities that the Fund intends to purchase. If, however, the level of the
securities index declines and remains below the exercise price while the call
option is outstanding, the Fund will not be able to exercise the option
profitably and will lose the amount of the premium and transaction costs. Such
loss may be partially offset by a reduction in the price the Fund pays to buy
additional securities for its portfolio.
The Fund may sell the securities index option it has purchased or write
a similar offsetting securities index option in order to close out a position in
a securities index option which it has purchased. These closing sale
transactions enable the Fund 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.
B-5
<PAGE>
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.
Futures Contracts and Options on Futures Contracts
To hedge against changes in securities prices, 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 and other financial instruments and
indices. The Fund will engage in futures and related options transactions for
bona fide hedging and, although the Fund has no current intention of doing so,
for 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.
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. A clearing corporation associated with the
exchange on which futures on securities 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 and rate of return 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 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. 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
B-6
<PAGE>
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.
Other Considerations. The Fund may engage in futures and related
options transactions only for bona fide hedging and, although the Fund has no
current intention of doing so, for 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
B-7
<PAGE>
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. 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 that the Fund owns, or futures contracts will be purchased to protect
the Fund against an increase in the price of securities 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 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 not exceed 5% of the market value of the Fund's total assets. As
noted above, the Fund has no current intention of entering into non-hedging
futures contracts and non-hedging options on futures. 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, 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 or securities prices 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. The only futures contracts available to
hedge the Fund's portfolio are various futures on U.S. Government securities,
futures on a municipal securities index and stock index futures.
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. The primary risk is that, if
the seller defaults, the Fund might suffer a loss to the extent that the
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<PAGE>
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
agreed-upon repurchase price. Another risk is that, in the event of bankruptcy
of the seller, the Fund could be delayed in 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, the Manager 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
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 (including reverse repurchase
agreements) 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, including limited partnership
interests, except that the Fund may invest in securities that are secured by
real estate or interests therein and may purchase and sell mortgage-related
securities and may hold and sell real estate acquired by the Fund as a result of
the ownership of securities.
(6) Make loans, except that the Fund may lend portfolio securities in
accordance with the Fund's investment policies and may purchase or invest in
repurchase agreements, bank certificates of deposit, all or a portion of an
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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.
(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.
The Fund will invest 25% or more of its total assets in securities
issued by companies in the real estate industry. Except as noted in the previous
sentence, 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, investments are
concentrated in a particular industry if such investments (but not investments
in U.S. Government securities) aggregate 25% or more of the Fund's total assets.
The Fund does not intend to invest in or to enter into any forward
commitments, forward foreign currency exchange contracts, reverse repurchase
agreements, options on securities or currency or securities index put and call
warrants or to lend portfolio securities as described in fundamental investment
restrictions (1), (2), (6) and (7) 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 PMC to save
commissions or to average prices among them is not deemed to result in a
securities trading account.
(b) Purchase securities on margin or make short sales unless by virtue
of its ownership of other securities, the Fund has the right to obtain, without
payment of additional consideration, securities equivalent in kind and amount to
the securities sold and, if the right is conditional, the sale is made upon the
same conditions, except that a Fund may obtain such short-term credits as may be
necessary for the clearance of purchases and sales of securities and in
connection with transactions involving forward foreign currency exchange
transactions.
(c) Purchase a security if, as a result, (i) more than 10% of the
Fund's assets would be invested in securities of closed-end investment
companies, (ii) such purchase would result in more than 3% of the total
outstanding voting securities of any one such closed-end investment company
being held by the Fund, or (iii) more than 5% of the Fund's assets would be
invested in any one such closed-end investment company; provided, however, the
Fund can exceed such limitations in connection with a plan of merger or
consolidation with or acquisition of substantially all the assets of such other
closed-end investment company. The Fund will not invest in the securities of any
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<PAGE>
open-end investment company, except in connection with a plan of merger or
consolidation with or acquisition of substantially all the assets of such other
open-end investment company.
(d) 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.
(e) Invest for the purpose of exercising control over or management of
any company.
(f) Purchase warrants of any issuer, if, as a result of such purchases,
more than 2% of the value of the Fund's total 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 total 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.
(g) 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 PMC or any
investment management subsidiary of PMC individually owns beneficially more than
0.5% and together own beneficially more than 5% of the securities of such
issuer.
(h) 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.
(i) Purchase any security, including stripped mortgage-backed
securities and 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.
(j) Invest more than 10% 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.
(k) 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.
(l) Invest more than 10% of its total assets in shares of real estate
investment trusts that are not readily marketable.
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3. MANAGEMENT OF THE FUND
The Fund's Board of Trustees provides broad supervision over the
affairs of the Fund. The officers of the Fund are responsible for the Fund's
operations. The Trustees and executive officers of the Fund are listed below,
together with their principal occupations during the past five years. An
asterisk indicates those Trustees who are interested persons of the Fund within
the meaning of the 1940 Act.
JOHN F. COGAN, JR.*, Chairman of the Board, President and Trustee
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 and Technology, Inc. ("PMT"), Pioneer International Corp.
("PIntl"), Luscina, 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 Marketing, GmbH ("Pioneer GmbH");
Member of the Supervisory Board of Pioneer First Polish Trust Fund Joint
Stock Company ("PFPT"); Chairman and President 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 facilities firm), Peer Review
Analysis, Inc. (health care utilization management 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, MA
MARGARET B.W. GRAHAM, Trustee
Manager of Research Operations, Xerox Palo Alto Research Center, since
September, 1991; Professor of Operations Management and Management of
Technology, Boston University School of Management ("BUSM"), since 1989;
Associate Dean, BUSM, 1988 to 1990, and previously, Associate Professor,
Department of Operations Management, BUSM; Trustee of all of the Pioneer
mutual funds. The Keep P.O. Box 110 Little Deer Isle, ME 04650
STEPHEN G. KASNET*, Trustee and Vice President
Managing Director, WFA since 1991; Director and Vice President of PWA since
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1993; Executive Vice President, Cabot, Cabot & Forbes, 1989 to 1991;
Executive Vice President, R.M. Bradley & Co., prior to 1989.
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, VA
MARGUERITE A. PIRET, Trustee
President, Newbury, Piret & Company, Inc. (merchant banking firm) and
Trustee of all of the Pioneer mutual funds. One Boston Place, Suite 2363
Boston, MA
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 and Trustee of all of the Pioneer
mutual funds.
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. 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, except Pioneer Variable Contracts Trust. One North Adgers
Wharf Charleston, South Carolina
ROBERT W. BENSON, Vice President
Senior Vice President of PMC.
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
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<PAGE>
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.
The Fund's Declaration of Trust provides that the holders of two-thirds
of its outstanding shares may vote to remove a Trustee of the Fund at any
meeting of shareholders. The business address of all officers is 60 State
Street, Boston, Massachusetts 02109.
All of the outstanding capital stock of Pioneering Management
Corporation and Pioneering Services Corporation is owned by The Pioneer Group,
Inc., a publicly-owned Delaware corporation. All of the capital stock of Pioneer
Funds Distributor, Inc. is indirectly owned by The Pioneer Group, Inc. The table
below lists all the Pioneer mutual funds, including the Fund, 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 Small Company Fund 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 Europe Fund PMC PFD
Pioneer India Fund Note 1 PFD
Pioneer International Growth Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer Income Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
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<PAGE>
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 Reserve Fund PMC PFD
Pioneer U.S. Government Money Fund PMC PFD
Pioneer Interest Shares, Inc. PMC Note 2
Pioneer Variable Contracts Trust PMC Note 3
Note 1 PMC is the manager of the Fund's investments; ITI Pioneer AMC Ltd. is the
subadviser for the Fund's investments in India.
Note 2 This fund is a closed-end fund.
Note 3 This is a series of eight separate portfolios designed to provide
investment vehicles for the variable annuity and variable life insurance
contracts of various insurance companies or for certain qualified
pension plans.
PMC also manages the investments of certain institutional private
accounts. As of October 31, 1995, 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, except Mr. Cogan who then owned approximately 15% of such shares. As of a
date no earlier than 30 days prior to the date of this Statement of Additional
Information ("SAI"), the Trustees and officers of the Fund owned in the
aggregate x.xx% (xx,xxx shares) of the outstanding securities of the Fund and
there were no shareholders of record who owned 5% or more of the Fund's
outstanding voting securities, except Merrill, Lynch, Pierce, Fenner & Smith
Inc., Mutual Fund Operations, 4800 Deer Lake Drive East, Third Floor,
Jacksonville, Florida 32246-6484 owned xxx,xxx (xx.xx%) shares of the Fund.
Remuneration of Trustees
The following table provides information regarding the compensation
paid by the Fund and the other Pioneer Funds to the Trustees for their services
for the Fund's most recently completed fiscal year. The Fund pays no salaries or
compensation to any of its officers. The Fund pays an annual trustees' fee of
$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. 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.
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<TABLE>
<CAPTION>
Total Compensa-
tion from the
Pension or Fund and other
Aggregate Retirement funds in the
Compensation Benefits Pioneer Family
Trustee From the Fund* Accrued of Mutual Funds**
<S> <C> <C> <C>
John F. Cogan, Jr.*** $250 0 $11,750
David D. Tripple*** 250 0 11,750
Arthur J. Halleran, Jr.+,*** 250 0 250
Stephen G. Kasnet*** 250 0 250
Richard H. Egdahl, M.D. 250 0 55,650
Margaret B.W. Graham 250 0 55,650
John W. Kendrick 250 0 55,650
Marguerite A. Piret 375 0 66,650
Stephen K. West 350 0 63,650
John Winthrop 350 0 63,650
--- --------------------------------
Totals $2,825 $0 $384,900
===== == ========
- --------
* As of the Fund's most recent completed fiscal year.
** For the calendar year ended December 31, 1994.
*** Pioneer Winthrop Advisers ("PWA"), which served as the Fund's investment
manager prior to July 17, 1995, fully reimbursed the Fund and PMC fully
reimbursed the other funds in the Pioneer Family of Mutual Funds for
compensation paid to Messrs. Cogan and Tripple. In addition, PWA fully
reimbursed the Fund for compensation paid to Messrs. Halleran and
Kasnet.
+ Mr. Halleran resigned as of July 17, 1995.
</TABLE>
4. ADVISORY SERVICES
As stated in the Prospectus, Pioneering Management Corporation
("PMC"), 60 State Street, Boston, Massachusetts, serves as the Fund's investment
adviser. The management contract expires on May 31, 1997 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 investment advisory and management
services and expenses incurred, PMC irs entitled to a management fee at the rate
of 1.00% per annum of the Fund's average daily net assets. The fee is normally
computed daily and paid monthly. PMC has voluntarily agreed not to impose a
portion of its management fee and to make other arrangements to the extent
necessary to limit operating expenses of the Class A shares of the Fund to 1.75%
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<PAGE>
of the Fund's average daily net assets; the portion of the Fund-wide expenses
attributable to Class B or Class C shares will be reduced only to the extent
they are reduced for Class A shares. This agreement is voluntary and temporary
and may be revised or terminated at any time. From the Fund's inception through
July17, 1995, PWA served as investment adviser to the Fund and PMC and Winthrop
Advisers Limited Partnership ("WALP") served as subadvisers to the Fund. During
the period that PWA served as adviser, PWA voluntarily agreed not to impose a
portion of its management fee and to make other arrangements to the extent
necessary to limit the Fund's total expenses to 1.75% of the Fund's average
daily net assets.
For the periods October 25, 1993 through June 30, 1994, July
1, 1994 through December 31, 1994 and January 1, 1995 through June 30, 1995, the
Fund would have paid or accrued total management fees to PWA of $103,371,
$141,284 and $130,341, respectively, but $45,812 and $73,158, and $107,417
respectively, of such fee was not imposed pursuant to PWA's voluntary agreement
described above.
For the periods July 1, 1994 through December 31, 1994 and
January 1, 1995 through June 30, 1995, PWA paid or accrued total subadvisory
fees to PMC and WALP approximately $26,010 and $26,010, respectively.
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, PWA 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 real estate investment 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.
In an attempt to avoid any potential conflict with portfolio
transactions for the Fund, PMC and the Fund have adopted extensive restrictions
on personal securities trading by personnel of PMC and its affiliates. These
restrictions include: pre-clearance of all personal securities transactions and
a prohibition of purchasing initial public offerings of securities. These
restrictions are a continuation of the basic principle that the interests of the
Fund and its shareholders come before those of PMC and its employees.
5. UNDERWRITING AGREEMENT AND DISTRIBUTION PLANS
The Fund and Pioneer Funds Distributor, Inc. are parties to an
Underwriting Agreement. See "Principal Underwriter" below. The Trustees who were
not at the time they voted interested persons of the Fund, as defined in the
1940 Act, approved the Underwriting Agreement. The Underwriting Agreement will
continue from year to year if annually approved by the Trustees. The
Underwriting Agreement provides that PFD will bear certain distribution expenses
not borne by the Fund.
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
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<PAGE>
performed for the Fund. 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 and state securities law.
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.
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 Fund 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 on a fiscal year basis and may not exceed, the annual rate of 0.25%
of the Fund's average daily net assets attributable to Class A.
Class B Plan
The Class B Plan provides that the Fund will pay PFD, as the Fund's
distributor for its Class B shares, a distribution fee accrued daily and paid
quarterly, equal on an annual basis to 0.75% of the Fund's average daily net
assets attributable to Class 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 in consideration of personal services and/or account maintenance
services rendered by the dealer with respect to Class B shares. PFD will advance
to dealers the first-year service fee at a rate equal to 0.25% of the amount
invested. As compensation therefor, PFD may retain the service fee paid by the
Fund with respect to such shares for the first year after purchase. Commencing
in the thirteenth month following a purchase of Class B shares, dealers will
become eligible for additional service fees or other compensation with respect
to such shares. Dealers may from time to time be required to meet certain other
criteria in order to receive service fees. PFD or its affiliates are entitled to
retain all service fees payable under the Class B Plan for which there is no
dealer of record or for which qualification standards have not been met as
partial consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class B Plan is
to compensate PFD for its distribution services with respect to the Class B
shares of the Fund. PFD pays commissions to dealers as well as expenses of
printing prospectuses and reports used for sales purposes, expenses with respect
to the preparation and printing of sales literature and other
distribution-related expenses, including, without limitation, the cost necessary
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<PAGE>
to provide distribution-related services, or personnel, travel office expenses
and equipment. The Class B Plan also provides that PFD will receive all CDSCs
attributable to Class B shares. (See "Distributions Plans" in the Prospectus.)
Class C Plan
The Class C Plan provides that the Fund will pay PFD, as the Fund's
distributor for its Class C shares, a distribution fee accrued daily and paid
quarterly, equal on an annual basis to 0.75% of the Fund's average daily net
assets attributable to Class C shares and will pay PFD a service fee equal to
0.25% of the Fund's average daily net assets attributable to Class C shares. PFD
will in turn pay to securities dealers which enter into a sales agreement with
PFD a distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the Fund's average daily net assets attributable to Class C
shares owned by investors for whom that securities dealer is the holder or
dealer of record. The service fee is intended to be in consideration of personal
services and/or account maintenance services rendered by the dealer with respect
to Class C shares. PFD will advance to dealers the first-year service fee at a
rate equal to 0.25% of the amount invested. As compensation therefor, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Commencing in the thirteenth month following a
purchase of Class C shares, dealers will become eligible for additional service
fees at a rate of up to 0.25% of the amount invested and additional compensation
at a rate of up to 0.75% of the amount invested with respect to such shares.
Dealers may from time to time be required to meet certain other criteria in
order to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class C Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class C Plan is
to compensate PFD for its distribution services with respect to the Class C
shares of the Fund. PFD pays commissions to dealers as well as expenses of
printing prospectuses and reports used for sales purposes, expenses with respect
to the preparation and printing of sales literature and other
distribution-related expenses, including, without limitation, the cost necessary
to provide distribution-related services, or personnel, travel office expenses
and equipment. The Class C Plan also provides that PFD will receive all CDSCs
attributable to Class C shares. (See "Distributions Plans" in the Prospectus.)
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
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<PAGE>
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 had or
have any direct or indirect financial interest in the operation of the Plans),
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
their 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 Class or Classes 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).
During the period October 25, 1993 through June 30, 1994, the
Fund did not incur any distribution fees pursuant to the Class A Plan. The Fund
commenced accruing distribution and service fees under the Class A Plan on July
1, 1994. For the periods July 1, 1994 through December 31, 1994 and January 1,
1995 through June 30, 1995, the Fund incurred total Class A distribution fees of
$35,321 and $ 32,585, respectively. Such fees will be paid to PFD in
reimbursement of expenses related to servicing of Class A shareholder accounts
and to compensating dealers and sales personnel. The Fund has not incurred any
distribution fees pursuant to the Class B and Class C Plans. Class B and Class C
shares will first be offered in 1996.
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.
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PSC receives from the Fund an annual fee of $22.00 for each
Class A, Class B and Class C shareholder account 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 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, deposit cash in the Custodian and deal with
the Custodian 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.
8. PRINCIPAL UNDERWRITER
Pioneer Funds Distributor, Inc., 60 State Street, Boston,
Massachusetts, serves as the principal underwriter for the Fund in connection
with the continuous offering of its shares. 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 an acquisition of portfolio securities pursuant to a bona fide
purchase of assets, merger or reorganization provided (i) securities meet the
investment objectives and policies of the Fund; (ii) the securities are acquired
by the Fund for investment and not for resale; (iii) 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.
The redemption price of shares of beneficial interest of the
Fund may, at PMC's discretion, be paid in cash or portfolio securities. The Fund
has, however, elected to be governed by Rule 18f-1 under the 1940 Act pursuant
to which the Fund is obligated to redeem shares solely in cash up to the lesser
of $250,000 or 1% of the Fund's net asset value during any 90-day period for any
one shareholder. Should the amount of redemptions by any shareholder exceed such
limitation, the Fund will have the option of redeeming the excess in cash or
portfolio securities. In the latter case, the securities are taken at their
value employed in determining the Fund's net asset value. A shareholder whose
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shares are redeemed in-kind may incur brokerage charges in selling the
securities received in-kind. The selection of such securities will be made in
such manner as the Board deems fair and reasonable.
During the periods from October 25, 1993 through June 30,
1994, July 1, 1994 through December 31, 1994 and January 1, 1995 through June
30, 1995, net underwriting commissions earned by PFD in connection with its
offering of Fund shares were approximately $66,304, $27,497 and $15,000. For the
same periods, commissions reallowed to dealers by PFD were approximately
$1,124,000, $186,213 and $103,000, respectively.
9. 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.
10. 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
Investment Advisory Contract with PMC. 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 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 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 dealers
(including 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.
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The research received from dealers may be useful to PMC in
rendering investment management services to the Fund as well as to other
investment companies or accounts managed by PMC, although not all of such
research may be useful to the Fund. Conversely, such information provided by
brokers or dealers who have executed transaction orders on behalf of such other
accounts may be useful to PMC in carrying out their 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 they were to attempt to develop comparable information
through their own staffs.
In circumstances where two or more broker-dealers offer
comparable prices and executions, preference may be given to a broker-dealer
which has sold shares of the Fund 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.
In addition to serving as investment subadviser to the Fund,
PMC acts as investment adviser to other mutual funds in the Pioneer group and
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 fund or account 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 fund in the Pioneer group 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
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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.
During the periods from October 25, 1993 through June 30,
1994, July 1, 1994 through December 31, 1994 and January 1, 1995 through June
30, 1995, the Fund paid or accrued aggregate brokerage and underwriting
commissions of approximately $170,534, $213,710 and $118,000, respectively.
11. 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 certain investments
held for less than three months to less than 30% of its annual gross income (the
"30% test") and satisfy certain annual distribution and quarterly
diversification requirements.
Dividends from net investment income, net short-term capital
gains, and certain net foreign exchange gains are taxable as ordinary income,
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.
For purposes of the 70% dividends-received deduction available
to corporations, dividends received by the Fund, if any, from U.S. domestic
corporations in respect of any share of stock with a tax holding period of at
least 46 days (91 days in the case of certain preferred stock) in an unleveraged
position and distributed and designated by the Fund may be treated as qualifying
dividends. Any corporate shareholder should consult its tax adviser regarding
the possibility that its tax basis in its shares may be reduced, for federal
income tax purposes, by reason of "extraordinary dividends" received with
respect to the shares. Corporate shareholders must meet the minimum holding
period requirement stated above (46 or 91 days), taking into account any
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holding-period reductions from certain hedging or other transactions that
diminish risk of loss, with respect to their Fund shares in order to qualify for
the deduction and, if they borrow to acquire Fund shares, may be denied a
portion of the dividends-received deduction. The entire qualifying dividend,
including the otherwise deductible amount, will be included in determining the
excess (if any) of a corporation's adjusted current earnings over its
alternative minimum taxable income, which may increase a corporation's
alternative minimum tax liability.
The Fund may be subject to withholding and other taxes imposed
by foreign countries with respect to investments in those countries. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes. The Fund will not satisfy the requirements for passing through to
shareholders their pro rata shares of foreign taxes paid by the Fund, with the
result that its shareholders will not include such taxes in their gross incomes
and will not be entitled to a tax deduction or credit for such taxes on their
own tax returns.
Foreign exchange gains and losses realized by the Fund in
connection with certain transactions involving foreign currency- denominated
debt securities, 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.
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 action
with respect to such investments.
Investment in debt obligations that are at risk of or in
default presents special tax issues for the Fund. Tax rules are not entirely
clear about issues such as when the Fund may cease to accrue interest, original
issue discount or market discount, when and to what extent deductions may be
taken for bad debts or worthless securities, how payments received on
obligations in default should be allocated between principal and income, and
whether exchanges of debt obligations in a workout context are taxable. These
and other issues will be addressed by the Fund, in the event it invests in such
securities, in order to ensure that it distributes sufficient income to preserve
its status as a regulated investment company and to avoid becoming subject to
federal income or excise tax.
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
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<PAGE>
distributions (or portions thereof) on such shares may be taxable to such
investor even if the net asset value of his shares is, as a result of the
distributions, reduced below his cost for such shares and the distributions (or
portions thereof) in reality represent a return of a portion of his investment.
Any loss realized upon the redemption of shares with a tax
holding period of six months or less will be treated as a long-term capital loss
to the extent of any amounts treated as distributions of long-term capital gain
with respect to such shares.
In addition, if shares redeemed or exchanged have been held
for less than 91 days, (a) in the case of a reinvestment at net asset value the
sales charge paid on such shares is not included in their tax basis under the
Code if a reinvestment occurs, and (2) in a case of an exchange, all or a
portion of the sales charge paid on such shares is not included in their tax
basis under the Code, to the extent a sales charge that would otherwise apply to
the shares received is reduced pursuant to the exchange privilege. In either
case, the portion of the sales charge not included in the tax basis of the
shares redeemed or surrendered in an exchange is included in the tax basis of
the shares acquired in the reinvestment or exchange. Losses on 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.
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.
Provided that the Fund qualifies as a regulated investment
company ("RIC") under the Code, it will not be required to pay any Massachusetts
income, corporate excise or franchise taxes. Provided that the Fund qualifies as
a RIC and meets certain income source requirements under Delaware Law, the Fund
should also not be required to pay Delaware corporation income tax.
Options written or purchased and futures contracts entered
into by the Fund on certain securities and securities indices 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 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. Losses on certain options or futures 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 or futures contracts) may also be deferred under the tax straddle
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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 and straddles may
affect the amount, timing and character of the Fund's income and loss and hence
of its 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 the Social Security or
other Taxpayer Identification Number they provide is their correct number and
that they are not currently subject to backup withholding, or that they are
exempt from backup withholding. The Fund may nevertheless be required to
withhold if it receives notice from the IRS or a broker that the number provided
is incorrect or backup withholding is applicable as a result of previous
underreporting of interest or dividend income.
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
withholding tax at a lower treaty rate) on dividends treated as ordinary income.
12. 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 which may be divided into such separate series as the
Trustees may establish. Currently, the Fund consists of only one series. The
Trustees may, however, establish additional series of shares in the future, and
may divide or combine the shares into a greater or lesser number of shares
without thereby changing the proportionate beneficial interests in the Fund. The
Declaration of Trust further authorizes the Trustees to classify or reclassify
any series of the shares into one or more classes. Pursuant thereto, the
Trustees have authorized the issuance of three classes of shares of the Fund,
designated as Class A, Class B and Class C shares. Each share of a class of the
Fund represents an equal proportionate interest in the assets of the Fund
allocable to that class. Upon liquidation of the Fund, shareholders of each
class of the Fund are entitled to share pro rata in the Fund's net assets
allocable to such class available for distribution to shareholders. The Fund
reserves the right to create and issue additional series or classes of shares,
in 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.
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Shareholders are entitled to one vote for each share held and may vote
in the election of Trustees and on other matters submitted to a meeting of
shareholders. Although Trustees are not elected annually by the shareholders,
shareholders have, under certain circumstances, the right to remove one or more
Trustees.
The series of the Fund are entitled to vote separately to approve
investment advisory agreements or changes in investment restrictions, but
shareholders of all series vote together in the election and selection of
Trustees and accountants. Shares of all series or classes of the Fund vote
together as a class on matters that affect all series or classes of the Fund in
substantially the same manner. As to matters affecting a single series or class,
shares of such series or class will vote separately. No amendment adversely
affecting the rights of shareholders may be made to the Fund's Declaration of
Trust without the affirmative vote of a majority of its shares. Shares have no
preemptive or conversion rights. Shares are fully paid and non-assessable by the
Fund, except as stated below.
13. CERTAIN LIABILITIES
As a Delaware business trust, the Fund's operations are
governed by its Agreement and Declaration of Trust dated March 10, 1995, a copy
of which has been filed with the Fund's registration statement.
Generally, Delaware business trust shareholders are not
personally liable for obligations of the Delaware business trust under Delaware
law. The Delaware Business Trust Act (the "Delaware Act") provides that a
shareholder of a Delaware business trust shall be entitled to the same
limitation of liability extended to shareholders of private for-profit
corporations. The Fund's Agreement and Declaration of Trust expressly provides
that the Fund has been organized under the Delaware Act and that the Agreement
and Declaration of Trust is to be governed by Delaware law. It is nevertheless
possible that a Delaware business trust, such as the Fund, might become a party
to an action in another state whose courts refused to apply Delaware law, in
which case the trust's shareholders could be subject to personal liability.
To guard against this risk, the Agreement and Declaration of
Trust (i) contains an express disclaimer of shareholder liability for acts or
obligations of the Fund and provides that notice of such disclaimer may be given
in each agreement, obligation and instrument entered into or executed by the
Fund or its Trustees, (ii) 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 and (iii) 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
Fund shareholder incurring financial loss beyond his or her investment because
of shareholder liability is limited to circumstances in which all of the
following factors are present: (1) a court refused to apply Delaware law; (2)
the liability arose under tort law or, if not, no contractual limitation of
liability was in effect; and (3) the Fund itself would be unable to meet its
obligations. In light of Delaware law, the nature of the Fund's business and the
nature of its assets, the risk of personal liability to a Fund shareholder is
remote.
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The Agreement and 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 Agreement and 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.
14. 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 regular trading. As of the date of this Statement of Additional Information,
the Exchange is open for trading every weekday except for the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset
value per share of each Class of the Fund is also determined on any other day in
which the level of trading in its portfolio securities is sufficiently high 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 Class's assets, less its liabilities,
and dividing it by the number of outstanding shares for that Class. Expenses of
the Fund are accrued daily. Securities which have not traded on the date of
valuation or securities for which sales prices are not generally reported are
valued at the mean between the last bid and asked prices. Securities for which
no market quotations are readily available (including those the trading of which
has been suspended) will be valued at fair value as determined in good faith by
the Board of Trustees, although the actual computations may be made by persons
acting pursuant to the direction of the Board. The maximum offering price per
Class A share is the net asset value per Class A share, plus the maximum sales
charge. Class B and Class C are offered at net asset value without the
imposition of an initial sales charge, but are subject to a CDSC. See "Fund
Share Alternatives" in the Prospectus.
15. 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 Plan. 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. Withdrawals
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from Class B share accounts are limited to 10% of the value of the account at
the time the SWP is implemented. A designation of a third party to receive
checks requires an acceptable signature guarantee.
Any income dividends or capital gains distributions on shares
under the Systematic Withdrawal Plan 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.
Systematic Withdrawal Plan payments are made from the proceeds
of the redemption of shares deposited under the Plan in a Plan account. To the
extent that such redemptions for periodic withdrawals exceed dividend income
reinvested in the Plan account, such redemptions will reduce and may ultimately
exhaust the number of shares deposited in the Plan 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 Systematic Withdrawal Plan 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 Plan have been redeemed.
16. 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
open-end mutual funds, except direct purchases of 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 Class A
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.
B-30
<PAGE>
17. INVESTMENT RESULTS
One of the primary methods used to measure the Fund's
performance is "total return." "Total return" will normally represent the
percentage change in value of an account, or of a hypothetical investment in the
Fund, over any period up to the lifetime 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 yield quotations and average annual total return
quotations as they may appear in the Prospectus, this Statement of Additional
Information or in advertising are calculated by standard methods prescribed by
the Commission.
Standardized Yield Quotations. The yield for each Class of
Fund shares is computed by dividing the Class's net investment income per share
during a base period of 30 days, or one month, by the maximum offering price per
share of the Class on the last day of such base period in accordance with the
following formula:
a-b
YIELD = 2[ ( ----- +1)6 -1]
cd
Where: a = interest earned during the period
b = net expenses accrued for the period
c = the average daily number of shares outstanding
during the period that were entitled
to receive dividends
d = the maximum offering price per share on the
last day of the period
For purposes of calculating interest earned on debt obligations as
provided in item "a" above:
(i) The yield to maturity of each obligation held by the Fund is
computed based on the market value of the obligation (including actual accrued
interest, if any) at the close of business each day during the 30-day base
B-31
<PAGE>
period, or, with respect to obligations purchased during the month, the purchase
price (plus actual accrued interest, if any) on settlement date, and with
respect to obligations sold during the month the sale price (plus actual accrued
interest, if any) between the trade and settlement dates.
(ii) The yield to maturity of each obligation is then divided by 360
and the resulting quotient is multiplied by the market value of the obligation
(including actual accrued interest, if any) to determine the interest income on
the obligation for each day. The yield to maturity calculation has been made on
each obligation during the 30-day base period.
(iii) Interest earned on all debt obligations during the 30-day or one
month period is then totaled.
(iv) The maturity of an obligation with a call provision(s) is the next
call date on which the obligation reasonably may be expected to be called or, if
none, the maturity date.
With respect to the treatment of discount and premium on mortgage or
other receivables-backed obligations which are expected to be subject to monthly
payments of principal and interest ("pay downs"), the Fund accounts for gain or
loss attributable to actual monthly pay downs as an increase or decrease to
interest income during the period. In addition, the Fund may elect (i) to
amortize the discount or premium remaining on a security, based on the cost of
the security, to the weighted average maturity date, if such information is
available, or to the remaining term of the security, if the weighted average
maturity date is not available, or (ii) not to amortize the remaining discount
or premium on a security.
The Fund's Class A standardized yield was for the 30-day period from
January 1, 1995 through June 30, 1995 was x.xx%. Assuming no fee or expense
reduction, the Fund's Class A standardized yield for the same period would have
been x.xx%. No Class B or Class C shares were outstanding prior to January,
1996.
Standardized Average Annual Total Return Quotations. Average annual
total return quotations for each Class of Fund shares are computed by finding
the average annual compounded rates of return that would cause a hypothetical
investment 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 $1000, less the
maximum sales load of $5.75 for Class A shares or
the deduction of any CDSC applicable to Class B or C
shares as of the end of the period.
T = average annual total return
n = number of years
B-32
<PAGE>
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, 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 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 Fund's mean account size.
The average annual total return for the Class A shares of the Fund for
the periods October 25, 1993 to June 30, 1994, July 1, 1994 to December 31, 1994
and January 1, 1995 to June 30, 1995 were -1.47%, -2.16% and -2.11%,
respectively. The Fund's one-year and life-of-Fund annual total returns as of
June 30, 1995 were -4.23% and -3.40%, respectively. Assuming no fee reductions
or expense limitations, the Fund's annual total return for the same periods
would have been lower. No Class B or Class C shares were outstanding prior to
January, 1996.
Other Quotations, Comparisons, and General Information. From time to
time, in advertisements, in sales literature, or in reports to shareholders, the
past performance of the Fund may be illustrated and/or compared with that of
other mutual funds with similar investment objectives, and to stock or other
relevant indices. For example, the Fund's total return may be compared to
averages or rankings prepared by Lipper Analytical Services, Inc., a widely
recognized independent service which monitors mutual fund performance; 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 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's Report, Financial World,
Forbes, Fortune, Investors Business Daily, Kiplinger's Personal Finance
Magazine, Lipper Real Estate Funds Average, Money Magazine, NARIET All Reit
Index, NAREIT Equity Reit Index, the New York Times, RUSSELL-NACRIEF Index,
Smart Money, USA Today, U.S. News and World Report, The Wall Street Journal,
Wilshire Real Estate Securities Trust 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, Towers Data Systems and Weisenberger Investment Companies Service.
B-33
<PAGE>
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.
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 bond funds;
o annualized 7-day yields and 7-day effective (compound) yields
for Pioneer's money market funds; and
o dividends and capital gains distributions on all Pioneer
mutual funds.
Yields are calculated in accordance with 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, Class B and Class C shares
(except for Pioneer money market funds, which seek a stable $1.00 share price)
will also vary, and they may be worth more or less at redemption than their
original cost.
17. FINANCIAL STATEMENTS
The Fund's financial statements for the period from July 1, 1994
through December 31, 1994 are incorporated by reference into this Statement of
Additional Information included in reliance upon the report of Arthur Andersen
LLP, independent public accountants, as experts in accounting and auditing.
The Fund's financial statements for the period from January 1, 1995
through June 30, 1995 are attached to this Statement of Additional Information
included in reliance upon the report of Arthur Andersen LLP, independent public
accountants, as experts in accounting and auditing.
B-34
<PAGE>
APPENDIX A
DESCRIPTION OF BOND RATINGS
The rating systems described herein are believed to be the most recent
ratings systems available from Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group at the date of this Statement of Additional Information for
the securities listed. Ratings are generally given to securities at the time of
issuance. While the rating agencies may from time to time revise such ratings,
they undertake no obligation to do so, and the ratings indicated do not
necessarily represent ratings which will be given to these securities on the
date of the Fund's fiscal year end.
Moody's Investors Service, Inc.
Aaa: Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
B-35
<PAGE>
Caa: Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
Ca: Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Unrated: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or
companies that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue
or issuer.
4. The issue was privately placed, in which case the rating is
not published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances
arise, the effects of which preclude satisfactory analysis; if there is no
longer available reasonable up-to-date data to permit a judgment to be formed;
if a bond is called for redemption; or for other reasons.
Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's
believe possess the strongest investment attributes are designated by the
symbols Aa1, A1, Baa1 and B1.
Standard & Poor's Ratings Group1
AAA: Bonds rated AAA have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
AA: Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the higher rated issues only in small degree.
- --------
Rates all governmental bodies having $1,000,000 or more of debt
outstanding, unless adequate information is not available.
B-36
<PAGE>
A: Bonds rated A have a very strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than in higher rated categories.
BB, B, CCC, CC, C: Bonds rated BB, B, CCC, CC and C are regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties of major risk exposures to adverse
conditions.
D: Bonds rated D are in payment default. The D rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period.
Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.
Unrated: Indicates that no public rating has been requested, that there
is insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular type of obligations as a matter of policy.
B-37
<PAGE>
APPENDIX B
ADDITIONAL 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 the Pioneer's funds.
Total assets for all Pioneer Funds as of December 31, 1994 were $10,038,000,000
representing 928,769 shareholder accounts.
B-38
<PAGE>
INDEX DESCRIPTIONS
S&P 500 *
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P Composite Index
includes 500 of the largest stocks (in terms of stock market value) in the
United States; prior to March 1957 it consisted of 90 of the largest stocks.
DOW JONES INDUSTRIAL AVERAGE *
This is a total return index based on the performance of 30 blue chip stocks.
SMALL CAPITALIZATION STOCKS *
This index is a market value weighted index of the ninth and tenth deciles of
the New York Stock Exchange (NYSE), plus stocks listed on the American Stock
Exchange (AMEX) and over-the-counter (OTC) with the same or less capitalization
as the upper bound of the NYSE ninth decile.
INFLATION *
The Consumer Price Index for All Urban Consumers (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S. Department of Labor, Bureau of Labor Statistics, Washington, DC.
S&P/BARRA INDEXES *
"The S&P/BARRA Growth and Value Indexes are constructed by dividing the stocks
in the S&P 500 Index according to price-to-book ratios. The Growth Index
contains stocks with higher price-to-book ratios, and the Value Index contains
stocks with lower price-to-book ratios. Both indexes are market capitalization
weighted."
LONG-TERM MUNICIPAL BOND PORTFOLIO *
For 1926-1984, returns are calculated form yields on 20-year prime issues from
Solomon Brothers' Analytical Record of Yields and Yields Spreads, assuming
coupon equals previous year-end yield and a 20-year maturity. For 1985-present,
returns are calculated using Moody's Bond Record, using the December average
municipal yield as the beginning-of-following year coupon (average of Aaa, Aa,
A, Baa grades).
LONG-TERM CORPORATE BONDS *
For 1969-1991, corporate bond total returns are represented by the Salomon
Brothers Long-Term High-Grade Corporate Bond Index. Since most large corporate
bond transactions take place over the counter, a major dealer is the natural
source of these data. The index includes nearly all Aaa- and Aa-rated bonds. If
B-39
<PAGE>
a bond is downgraded during a particular month, its return for the month is
included in the index before removing the bond from future portfolios.
Over 1926-1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946-1968, Ibbotson
and Sinquefield backdated the Salomon Brothers' index, using Salomon Brothers'
monthly yield data with a methodology similar to that used by Salomon for
1969-1991. Capital appreciation returns were calculated from yields assuming (at
the beginning of each monthly holding period) a 20-year maturity, a bond price
equal to par, and a coupon equal to the beginning-of-period yield. For the
period 1926-1945, the Standard and Poor's monthly High-Grade Corporate Composite
yield data were used, assuming a 4 percent coupon and a 20-year maturity. The
conventional present-value formula for bond price for the beginning and
end-of-month prices was used. (This formula is presented in Ross, Stephen A.,
and Randolph W. Westerfield, Corporate Finance, Times Mirror/Mosby, St. Louis,
1990, p. 97 ["Level-Coupon Bonds"].) The monthly income return was assumed to be
one-twelfth the coupon.
LONG-TERM GOVERNMENT BOND TOTAL RETURN *
The total returns on long-term government bonds from 1977 to 1991 are
constructed with data from The Wall Street Journal. Over 1926-1976, data are
obtained from the Government bond file at the Center for Research in Security
Prices (CRSP), Graduate School of Business, University of Chicago. Each year, a
one-bond portfolio with a term of approximately 20 years and a reasonably
current coupon was used, and whose returns did not reflect potential tax
benefits, impaired negotiability, or special redemption or call privileges.
Where callable bonds had to be used, the term of the bond was assumed to be a
simple average of the maturity and first call dates minus the current date. The
bond was "held" for the calendar year and returns were computed. Total returns
for 1977-1991 are calculated as the change in the flat price or and-interest
price.
INTERMEDIATE-TERM GOVERNMENT BONDS TOTAL RETURN *
Total returns of the intermediate-term government bonds for 1977-1991 are
calculated from The Wall Street Journal prices, using the change in flat price.
Returns from 1934-1986 are obtained from the CRSP Government Bond File.
Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than 5 years, and this bond is "held"
for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934-1942, almost all bonds
with maturities near 5 years were partially or full tax-exempt and were selected
using the rules described above. Personal tax rates were generally low in that
period, so that yields on tax-exempt bonds were similar to yields on taxable
bonds. From 1926-1933, there are few bonds suitable for construction of a series
with a 5-year maturity. For this period, five year bond yield estimates are
used.
B-40
<PAGE>
U.S. (30 DAY) TREASURY BILL TOTAL RETURNS *
For the U.S. Treasury bill index, data from The Wall Street Journal are used for
1977-1991; the CRSP U.S. Government Bond File is the source until 1976. Each
month a one-bill portfolio containing the shortest-term bill having not less
than one month to maturity is constructed. (The bill's original term to maturity
is not relevant.) To measure holding period returns for the one-bill portfolio,
the bill is priced as of the last trading day of the previous month-end and as
of the last trading day of the current month.
BANK SAVINGS ACCOUNT **
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963-1987 and The Wall Street Journal for the years 1988-1994.
6 MONTH CD **
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
MSCI
Morgan Stanley Capital International Indices, developed by the Capital
International S.A., are based on share prices of some 1470 companies listed on
the stock exchanges around the world.
Countries in the MSCI EAFE Portfolio *are: Australia; Austria; Belgium; Denmark;
Finland; France; Germany; Hong Kong; Italy; Japan; Netherlands; N. Zealand;
Norway; Singapore/Malaysia; Spain; Sweden; Switzerland; United Kingdom.
Countries in the MSCI EUROPE 14 Portfolio *** are: Austria, Belgium, Denmark,
Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Spain, Sweden,
Switzerland, United Kingdom
Countries in the MSCI WORLD Portfolio *** are: Australia; Austria; Belgium;
Canada; Denmark; Finland; France; Germany; Hong Kong; Italy; Japan; Netherlands;
N. Zealand; Norway; Singapore/Malaysia; Spain; Sweden; Switzerland; United
Kingdom; United States.
INTERNATIONAL FINANCE CORPORATION COMPOSITE *
An index representing the performance of a composite of Latin America
(Argentina, Brazil, Chile, Columbia, Mexico, Peru, Venezuela), East Asia (China,
Korea, Philippines, Taiwan), South Asia (India, Indonesia, Malaysia, Pakistan,
Sri Lanka, Thailand), Europe/Mideast/Africa (Greece, Hungary, Jordan, Nigeria,
Poland, Portugal, Turkey, Zimbabwe).
Sources: * Ibbotson Associates
** Towers Data Systems
*** Lipper Analytical Services
B-41
<PAGE>
<TABLE>
<CAPTION>
EQUITY COMPARATIVE PERFORMANCE STATISTICS
Dow Jones U.S. Small S&P/BARRA S&P/BARRA
S&P500 Ind'l Avg Stock Index U.S. Inflation Growth Value
%TR %TR %TR %TR %TR %TR
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A
Dec 1931 -43.34 -49.03 -49.75 -9.52 N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A
Dec 1933 53.99 73.71 142.87 0.51 N/A N/A
Dec 1934 -1.44 8.07 24.22 2.03 N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A
Dec 1942 20.34 14.12 44.51 9.29 N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A
</TABLE>
B-42
<PAGE>
<TABLE>
<CAPTION>
Dow Jones U.S. Small S&P/BARRA S&P/BARRA
S&P500 Ind'l Avg Stock Index U.S. Inflation Growth Value
%TR %TR %TR %TR %TR %TR
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60
Dec 1994 1.31 5.06 3.11 2.78 3.13 -0.64
</TABLE>
Source: Ibbotson Associates
B-43
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
The financial statements of the Registrant are incorporated by
reference from the Annual Report to Shareholders for the period
ended December 31, 1994 and the 1995 Report to Shareholders for
the period ended June 30, 1995 is incorporated by reference as
filed with the Securities and Exchange Commission on August 25,
1995 Accession No. 0000908996-95-000027.
(b) Exhibits:
1.1 Agreement and Declaration of Trust*
1.2 Certificate of Trust.***
1.3 Amendment to Certificate of Trust.***
1.4 Amendment to Agreement and Declaration of Trust.***
1.5 Establishment and Designation of Classes.+
2. By-Laws.*
3. None.
4. None.
5. Management Contract between the Registrant and Pioneering
Management Corporation.+
6.1 Underwriting Agreement between the Registrant and Pioneer
Funds Distributor, Inc.*
6.2. Form of Dealer Sales Agreement.**
7. None.
8. Custodian Agreement between the Registrant and Brown
Brothers Harriman & Co.*
<PAGE>
9. Investment Company Service Agreement between the Registrant
and Pioneering Services Corporation.*
10. Opinion and Consent of Counsel.***
11. Consent of Independent Public Accountants.+
12. None.
13. Share Purchase Agreement.*
14. None.
15.1 Distribution Plan relating to Class A shares.*
15.2 Distribution Plan relating to Class B shares.+
15.3 Distribution Plan relating to Class C shares.+
16. None.
17. Financial Data Schedule.****
18. Multiple Class Plan pursuant to Rule 18f-3.+
19. Powers of Attorney.*
- --------------
* Filed with Post-Effective Amendment No. 4 to the Registration Statement on
April 25, 1995 and incorporated herein by reference.
** Filed with Pre-Effective Amendment No. 1 on September 20, 1993 and
incorporated herein by reference.
*** Filed with Post-Effective Amendment No. 5 to the Registration Statement on
November 8, 1995 and incorporated herein by reference.
****Filed with Form N-SAR on August 28, 1995 (Accession No.
0000202679-95-000024) and incorporated herein by reference.
+ Filed herewith.
<PAGE>
Item 25. Persons Controlled By or Under
Common Control With Registrant.
The Pioneer Group, Inc., a Delaware corporation ("PGI"), owns 100% of
the outstanding capital stock of Pioneering Management Corporation, a Delaware
corporation ("PMC"), Pioneering Services Corporation ("PSC"), Pioneer Capital
Corporation ("PCC"), Pioneer Fonds Marketing GmbH ("GmbH"), Pioneer SBIC Corp.
("SBIC"), Pioneer Associates, Inc., Pioneer International Corporation, Pioneer
Plans Corporation ("PPC"), Pioneer Goldfields Limited ("PGL"), and Pioneer
Investments Corporation ("PIC"), all Massachusetts corporations. PMC owns 100%
of the outstanding capital stock of Pioneer Funds Distributor, Inc. ("PFD"), a
Massachusetts corporation. PGI also owns 100% of the outstanding capital stock
of Pioneer Metals and Technology, Inc. ("PMT"), a Delaware corporation, and
Pioneer First Polish Trust Fund Joint Stock Company ("First Polish"), a Polish
corporation. PGI owns 90% of the outstanding shares of Teberebie Goldfields
Limited ("TGL"). Pioneer Fund, Pioneer II, Pioneer Three, Pioneer Bond Fund,
Pioneer Intermediate Tax-Free Fund, Pioneer Growth Trust, Pioneer Europe Fund,
Pioneer International Growth Fund, Pioneer Short-Term Income Trust, Pioneer
Tax-Free State Series Trust and Pioneer America Income Trust (each of the
foregoing, a Massachusetts business trust), and Pioneer Interest Shares, Inc. (a
Nebraska corporation) and Pioneer Growth Shares, Pioneer Income Fund, Pioneer
India Fund, Pioneer Tax-Free Income Fund, Pioneer Emerging Markets Fund, Pioneer
Money Market Trust, Pioneer Small Company Fund, Pioneer Variable Contracts Trust
and the Registrant (each of the foregoing, a Delaware business trust) are all
parties to management contracts with PMC. PCC owns 100% of the outstanding
capital stock of SBIC. SBIC is the sole general partner of Pioneer Ventures
Limited Partnership, a Massachusetts limited partnership. John F. Cogan, Jr.
owns approximately 15% of the outstanding shares of PGI. Mr. Cogan is Chairman
of the Board, President and Trustee of the Registrant and of each of the Pioneer
mutual funds; Director and President of PGI; President and Director of PPC, PIC,
Pioneer International Corporation and PMT; Director of PCC and PSC; Chairman of
the Board and Director of PMC, PFD and TGL; Chairman, President and Director of
PGL; Chairman of the Supervisory Board of GmbH; Chairman and Member of
Supervisory Board of First Polish; and Chairman and Partner, Hale and Dorr.
<PAGE>
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Class as of October 31, 1995
-------------- ----------------------
Class A Shares of Beneficial Interest 2,456
Class B Shares of Beneficial Interest 0
Class C Shares of Beneficial Interest 0
Item 27. Indemnification.
Except for the Agreement and Declaration of Trust dated March
10, 1995 establishing the Registrant as a Trust under Delaware law, there is no
contract, arrangement or statute under which any director, officer, underwriter
or affiliated person of the Registrant is insured or indemnified. The Agreement
and Declaration of Trust provides that no Trustee or officer will be indemnified
against any liability to which the Registrant would otherwise be subject by
reason of or for willful misfeasance, bad faith, gross negligence or reckless
disregard of such person's duties.
Insofar as indemnification for liability arising under the
Securities Act of 1933, as amended (the "Act"), may be available to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment of the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser.
The business and other connections of the officers and
directors of the Registrant's investment adviser, Pioneering Management
Corporation, are listed on the Form ADV of Pioneering Management Corporation as
currently on file with the Commission (File No. 801-8255), the text of which is
hereby incorporated by reference.
The following sections of such Form ADV are incorporated
herein by reference:
(a) Items 1 and 2 of Part 2;
<PAGE>
(b) Section IV, Business Background, of
each Schedule D.
Item 29. Principal Underwriter.
(a) See Item 25 above.
(b) Directors and Officers of PFD:
<TABLE>
<CAPTION>
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
<S> <C> <C>
John F. Cogan, Jr. Director and Chairman Chairman of the Board,
Chief Executive
Officer and Trustee
Robert L. Butler Director and President None
David D. Tripple Director Executive Vice
President and Trustee
Steven M. Graziano Senior Vice President None
Stephen W. Long Senior Vice President None
John W. Drachman Vice President None
Barry G. Knight Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Elizabeth B. Rice Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy Supovitz Vice President None
Steven R. Berke Assistant None
Vice President
Mary Sue Hoban Assistant None
Vice President
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
<PAGE>
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
</TABLE>
(c) Not applicable.
Item 30. Location of Accounts and Records.
The accounts and records are maintained at the Registrant's
office at 60 State Street, Boston, Massachusetts; contact the Treasurer.
Item 31. Management Services.
The Registrant is not a party to any management-related
service contract, except as described in the Prospectus and Statement of
Additional Information.
Item 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to deliver, or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given a copy of the Registrant's report to shareholders furnished pursuant to
and meeting the requirements of Rule 30d-1 under the Investment Company Act of
1940 from which the specified information is incorporated by reference, unless
such person currently holds securities of the Registrant and otherwise has
received a copy of such report, in which case the Registrant shall state in the
Prospectus that it will furnish, without charge, a copy of such report on
request, and the name, address and telephone number of the person to whom such a
request should be directed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to its Registration Statement on Form N-1A to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Boston and The Commonwealth of Massachusetts, on the 10th day of November, 1995.
PIONEER REAL ESTATE SHARES
By: /s/ John F. Cogan, Jr.
John F. Cogan, Jr.
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment has been signed below by the following persons in the
capacities and on the date indicated:
Title and Signature Date
Principal Executive Officer: )
)
)
John F. Cogan, Jr.* )
John F. Cogan, Jr., President )
)
)
Principal Financial and )
Accounting Officer: )
)
)
William H. Keough* )
William H. Keough, Treasurer )
)
)
Trustees: )
)
John F. Cogan, Jr.* )
John F. Cogan, Jr. )
)
)
Richard H. Egdahl, M.D.* )
Richard H. Egdahl, M.D. )
)
)
Margaret B. W. Graham* )
Margaret B. W. Graham )
)
)
Stephen G. Kasnet* )
Stephen G. Kasnet )
)
)
John W. Kendrick* )
John W. Kendrick )
)
)
Marguerite A. Piret* )
Marguerite A. Piret )
)
)
David D. Tripple* )
David D. Tripple )
)
)
Stephen K. West* )
Stephen K. West )
)
)
John Winthrop* )
John Winthrop )
- ---------
* By: /s/ Joseph P. Barri November 10, 1995
Joseph P. Barri
Attorney-in-fact
<PAGE>
Exhibit Index
Exhibit
Number Document Title
1.5 Establishment and Designation of Classes.
5. Management Contract between the Registrant and Pioneering Management
Corporation.
11. Consent of Independent Public Accountants.
15.2 Distribution Plan relating to Class B shares.
15.3 Distribution Plan relating to Class C shares.
18. Multiple Class Plan pursuant to Rule 18f-3.
PIONEER REAL ESTATE SHARES
Establishment and Designation
of
Class A Shares, Class B Shares and Class C Shares
of Beneficial Interest of
Pioneer Real Estate Shares
The undersigned, being a majority of the Trustees of Pioneer Real
Estate Shares, a Delaware business trust (the "Fund"), acting pursuant to
Article V, Section 1 of the Agreement and Declaration of Trust dated March 10,
1995 of the Fund (the "Declaration"), do hereby divide the shares of beneficial
interest of the Fund (the "Shares") to create three classes of Shares of the
Fund as follows:
1. The three classes of Shares established and designated hereby are
"Class A Shares," "Class B Shares" and "Class C Shares," respectively.
2. Class A Shares, Class B Shares and Class C Shares shall each be
entitled to all of the rights and preferences accorded to Shares under
the Declaration.
3. The purchase price of Class A Shares, Class B Shares and Class C
Shares, the method of determining the net asset value of Class A Shares,
Class B Shares and Class C Shares and the relative dividend rights of
holders of Class A Shares, Class B Shares and Class C Shares shall be
established by the Trustees of the Trust in accordance with the
provisions of the Declaration and shall be set forth in the Trust's
Registration Statement on Form N-1A under the Securities Act of 1933
and/or the Investment Company Act of 1940, as amended and as in effect
at the time of issuing such Shares.
4. The Trustees, acting in their sole discretion, may determine that
any Shares of the Fund issued are Class A Shares, Class B Shares, Class
C Shares or Shares of any other class of the Fund hereinafter
established and designated by the Trustees.
IN WITNESS WHEREOF, the undersigned have executed this instrument this
7th day of November, 1995.
/s/ John F. Cogan, Jr. /s/ Marguerite A. Piret
John F. Cogan, Jr. Marguerite A. Piret
as Trustee and not individually as Trustee and not individually
975 Memorial Drive, #802 162 Washington Street
Cambridge, MA 02138 Belmont, MA 02178
/s/ Richard H. Egdahl, M.D. /s/ David D. Tripple
Richard H. Egdahl, M.D. David D. Tripple
as Trustee and not individually as Trustee and not individually
Health Policy Institute 6 Woodbine Road
53 Bay State Road Belmont, MA 02178
Boston, MA 02215
/s/ Margaret B.W. Graham /s/ Stephen K. West, Esq.
Margaret B.W. Graham Stephen K. West, Esq.
as Trustee and not individually as Trustee and not individually
The Keep Sullivan & Cromwell
P.O. Box 110 125 Broad Street
Little Deer Isle, ME 04650 New York, NY 10004
/s/ John W. Kendrick /s/ John Winthrop
John W. Kendrick John Winthrop
as Trustee and not individually as Trustee and not individually
6363 Waterway Drive One North Adgers Wharf
Falls Church, VA 22044 Charleston, SC 29401
/s/ Stephen G. Kasnet
Stephen G. Kasnet
as Trustee and not individually
One University Lane
Manchester, MA 01944
MANAGEMENT CONTRACT
THIS AGREEMENT dated this 26th day of September, 1995 between Pioneer Real
Estate Shares, a Delaware business trust (the "Trust"), and Pioneering
Management Corporation, a Delaware corporation (the "Manager").
W I T N E S S E T H
WHEREAS, the Trust is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Registration Statement") for the
purpose of registering its shares for public offering under the Securities Act
of 1933, as amended,
WHEREAS, the Trust currently issues a single series of shares representing
interests in one portfolio (the "Portfolio"),
WHEREAS, the parties hereto deem it mutually advantageous that the Manager
should be engaged, subject to the supervision of the Trust's Board of Trustees
and officers, to manage the Portfolio,
NOW, THEREFORE, in consideration of the mutual covenants and benefits set forth
herein, the Trust and the Manager do hereby agree as follows:
1. (a) The Manager will regularly provide the Portfolio with investment
research, advice and supervision and will furnish continuously an investment
program for the Portfolio consistent with the investment objectives and policies
of the Portfolio. The Manager will determine from time to time what securities
shall be purchased for the Portfolio, what securities shall be held or sold by
the Portfolio and what portion of the Portfolio's assets shall be held
uninvested as cash, subject always to the provisions of the Trust's Declaration
of Trust, By-Laws and its registration statements under the 1940 Act and under
the Securities Act of 1933 covering the Trust's shares, as filed with the
Securities and Exchange Commission, and to the investment objectives, policies
and restrictions of the Portfolio, as each of the same shall be from time to
time in effect, and subject, further, to such policies and instructions as the
Board of Trustees of the Trust may from time to time establish. To carry out
such determinations, the Manager will exercise full discretion and act for the
Portfolio in the same manner and with the same force and effect as the Trust
itself might or could do with respect to purchases, sales or other transactions,
as well as with respect to all other things necessary or incidental to the
<PAGE>
furtherance or conduct of such purchases, sales or other transactions.
(b) The Manager will, to the extent reasonably required in the conduct of
the business of the Portfolio and upon the Trust's request, furnish to the
Portfolio research, statistical and advisory reports upon the industries,
businesses, corporations or securities as to which such requests shall be made,
whether or not the Portfolio shall at the time have any investment in such
industries, businesses, corporations or securities. The Manager will use its
best efforts in the preparation of such reports and will endeavor to consult the
persons and sources believed by it to have information available with respect to
such industries, businesses, corporations or entities.
(c) The Manager will maintain all books and records with respect to the
Portfolio's securities transactions required by sub-paragraphs (b)(5), (6), (9)
and (10) and paragraph (f) of Rule 31a-1 under the 1940 Act (other than those
records being maintained by the custodian or transfer agent appointed by the
Trust with respect to the Portfolio) and preserve such records for the periods
prescribed therefor by Rule 31a-2 of the 1940 Act. The Manager will also provide
to the Board of Trustees such periodic and special reports as the Board may
reasonably request.
2.The Manager recognizes that the Trust may from time to time create
additional portfolios of the Trust, that this agreement relates only to the
management of the assets of the single existing Portfolio of the Trust, and that
the management of the assets of any additional portfolio of the Trust will be
subject to one or more separate investment management agreements.
3. (a) Except as otherwise provided herein, the Manager, at its own
expense, shall furnish to the Trust office space in the offices of the Manager
or in such other place as may be agreed upon from time to time, and all
necessary office facilities, equipment and personnel for managing the affairs
and investments with respect to the Portfolio, and shall arrange, if desired by
the Trust, for members of the Manager's organization to serve as officers or
agents of the Trust.
(b) The Manager shall pay directly or reimburse the Trust for: (i) the
compensation (if any) of the Trustees who are affiliated with, or interested
persons of, the Manager and all officers of the Trust as such; and (ii) all
expenses not hereinafter specifically assumed by the Trust or the Portfolio
where such expenses are incurred by the Manager or by the Trust or the Portfolio
in connection with the management of the affairs of, and the investment and
reinvestment of the assets of, the Portfolio.
2
<PAGE>
(c) The Trust shall assume and shall pay: (i) charges and expenses for fund
accounting, pricing and appraisal services and related overhead, including, to
the extent such services are performed by personnel of the Manager or its
affiliates, office space and facilities and personnel compensation, training and
benefits; (ii) the charges and expenses of auditors; (iii) the charges and
expenses of any custodian, transfer agent, plan agent, dividend disbursing agent
and registrar appointed by the Trust with respect to the Portfolio; (iv) issue
and transfer taxes, chargeable to the Trust in connection with securities
transactions to which the Trust is a party; (v) insurance premiums, interest
charges, dues and fees for membership in trade associations and all taxes and
corporate fees payable by the Trust to federal, state or other governmental
agencies; (vi) fees and expenses involved in registering and maintaining
registrations of the Trust and/or its shares with the Commission, state or blue
sky securities agencies and foreign countries, including the preparation of
Prospectuses and Statements of Additional Information for filing with the
Commission; (vii) all expenses of shareholders' and Trustees' meetings and of
preparing, printing and distributing prospectuses, notices, proxy statements and
all reports to shareholders and to governmental agencies; (viii) charges and
expenses of legal counsel to the Trust and the Trustees; (ix) distribution fees
paid by the Trust in accordance with Rule 12b-1 promulgated by the Commission
pursuant to the 1940 Act; (x) compensation of those Trustees of the Trust who
are not affiliated with or interested persons of the Manager, the Trust (other
than as Trustees), The Pioneer Group, Inc. or Pioneer Funds Distributor, Inc.;
(xi) the cost of preparing and printing share certificates; (xii) interest on
borrowed money, if any; and (xii) organizational expenses of the Trust or
Portfolio.
(d) In addition to the expenses described in Section 3(c) above, the Trust
shall pay all brokers' and underwriting commissions chargeable to the Portfolio
in connection with securities transactions to which the Portfolio is a party.
4.It is understood that the Manager may employ one or more sub-investment
advisers (each a "Subadviser") under written agreements with each such
Subadviser, provided that any such agreement is first approved by the vote of a
majority of the Trustees, including a majority of the Trustees who are not
"interested persons" (as the term "interested person" is defined in the 1940
Act) of the Trust, the Manager or any such Subadviser, at a meeting of Trustees
called for the purpose of voting on such approval and by a vote of a "majority
of the outstanding voting securities" (as defined in the 1940 Act) of the
Portfolio. The authorization given to the Manager in Sections 1 and 7 hereof may
be delegated by it under any such agreement to any of the Subadvisers, provided
that the Subadvisers shall be subject to the same restrictions and limitations
on the investments and brokerage discretion as the Manager. While the Manager
3
<PAGE>
shall be responsible for allocating assets among the Subadvisers and monitoring
their relative performances, the Trust agrees that the Manager should not be
accountable to the Trust or the Portfolio or the Portfolio's shareholders for
any loss or other liability relating to specific investments directed by any
Subadviser (even though the Manager retains the right to reserve any such
investment), because the Trust and the Manager will be relying almost
exclusively on the expertise of the Subadvisers for the selection and monitoring
of specific investments directed by the Subadvisers.
5. (a) The Trust shall pay to the Manager, as compensation for the
Manager's services hereunder, a fee at the rate of 1.00% per annum of the
Portfolio's average daily net assets. The management fee payable hereunder shall
be computed daily and paid monthly in arrears. In the event of termination of
this Agreement, the fee provided in this Section shall be computed on the basis
of the period ending on the last business day on which this Agreement is in
effect subject to a pro rata adjustment based on the number of days elapsed in
the current month as a percentage of the total number of days in such month.
(b) If the operating expenses of the Portfolio in any year exceed the
limits set by state securities laws or regulations in states in which shares of
the Portfolio are sold, the amount payable to the Manager under subsection (a)
above will be reduced (but not below $0), and the Manager shall make other
arrangements concerning expenses but, in each instance, only as and to the
extent required by such laws or regulation. If amounts have already been
advanced to the Manager under this Agreement, the Manager will return such
amounts to the Trust to the extent required by the preceding sentence.
(c) In addition to the foregoing, the Manager may from time to time agree
not to impose all or a portion of its fee otherwise payable hereunder (in
advance of the time such fee or a portion thereof would otherwise accrue) and/or
undertake to pay or reimburse the Trust for all or a portion of its expenses not
otherwise required to be borne or reimbursed by the Manager. Any such fee
reduction or undertaking may be discontinued or modified by the Manager at any
time.
6.The Manager will not be liable for any error of judgment or mistake of
law or for any loss sustained by reason of the adoption of any investment policy
or the purchase, sale, or retention of any security on the recommendation of the
Manager, whether or not such recommendation shall have been based upon its own
investigation and research or upon investigation and research made by any other
individual, firm or corporation, but nothing contained herein will be construed
to protect the Manager against any liability to the Trust or Portfolio or its
shareholders by reason of willful misfeasance, bad faith or gross negligence in
4
<PAGE>
the performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
7. (a) Nothing in this Agreement will in any way limit or restrict the
Manager or any of its officers, directors, or employees from buying, selling or
trading in any securities for its or their own accounts or other accounts. The
Manager may act as an investment advisor to any other person, firm or
corporation, and may perform management and any other services for any other
person, association, corporation, firm or other entity pursuant to any contract
or otherwise, and take any action or do any thing in connection therewith or
related thereto; and no such performance of management or other services or
taking of any such action or doing of any such thing shall be in any manner
restricted or otherwise affected by any aspect of any relationship of the
Manager to or with the Trust or deemed to violate or give rise to any duty or
obligation of the Manager to the Trust except as otherwise imposed by law. The
Trust recognizes that Manager, in effecting transactions for its various
accounts, may not always be able to take or liquidate investment positions in
the same security at the same time and at the same price.
(b) In connection with purchases or sales of portfolio securities for the
account of the Portfolio, neither the Manager nor any of its Directors, officers
or employees will act as a principal or agent or receive any commission except
as permitted by the 1940 Act. The Manager shall arrange for the placing of all
orders for the purchase and sale of portfolio securities for the Portfolio's
account with brokers or dealers selected by the Manager. In the selection of
such brokers or dealers and the placing of such orders, the Manager is directed
at all times to seek for the Portfolio the most favorable execution and net
price available except as described herein. It is also understood that it is
desirable for the Portfolio that the Manager have access to supplemental
investment and market research and security and economic analyses provided by
brokers who may execute brokerage transactions at a higher cost to the Portfolio
than may result when allocating brokerage to other brokers on the basis of
seeking the most favorable price and efficient execution. Therefore, the Manager
is authorized to place orders for the purchase and sale of securities for the
Portfolio with such brokers, subject to review by the Trust's Trustees from time
to time with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to the
Manager in connection with its or its affiliates services to other clients.
(c) On occasions when the Manager deems the purchase or sale of a security
to be in the best interest of the Portfolio as well as other clients, the
Manager, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be sold or purchased in order to obtain the best
5
<PAGE>
execution and lower brokerage commissions, if any. In such event, allocation of
the securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Manager in the manner it considers to be the
most equitable and consistent with its fiduciary obligations to the Portfolio
and to such clients.
8.This Agreement shall become effective on the date hereof and shall remain
in force until May 31, 1997 and from year to year thereafter, but only so long
as its continuance is approved annually by a vote of the Trustees of the Trust
voting in person, including a majority of its Trustees who are not parties to
this Agreement or interested persons (as the term "interested persons" is
defined in the 1940 Act) of any such parties, at a meeting of Trustees called
for the purpose of voting on such approval or by a vote of a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of the Portfolio,
subject to the right of the Trust and the Manager to terminate this contract as
provided in Section 9 hereof.
9.Either party hereto may, without penalty, terminate this Agreement by
vote of its Board of Directors or its Board of Trustees, as the case may be, or
by vote of a "majority of its outstanding voting securities" (as defined in the
1940 Act) of the Portfolio and the giving of 60 days' written notice to the
other party.
10.This Agreement shall automatically terminate in the event of its
assignment. For purposes of this Agreement, the term "assignment" shall have the
meaning given it by Section 2(a)(4) of the 1940 Act.
11. The Trust agrees that in the event that neither the Manager nor any of
its affiliates acts as an investment adviser to the Trust, the name of the
Trust, and any series thereof, will be changed to one that does not contain the
name "Pioneer" or otherwise suggest an affiliation with the Manager.
12.The Manager is an independent contractor and not an employee of the Fund
for any purpose. If any occasion should arise in which the Manager gives any
advice to its clients concerning the shares of the Portfolio, the Manager will
act solely as investment counsel for such clients and not in any way on behalf
of the Trust or Portfolio.
13.This Agreement states the entire agreement of the parties hereto, and is
intended to be the complete and exclusive statement of the terms hereof. It may
not be added to or changed orally, and may not be modified or rescinded except
by a writing signed by the parties hereto and in accordance with the 1940 Act,
when applicable.
6
<PAGE>
14.This Agreement and all performance hereunder shall be governed by the
laws of The Commonwealth of Massachusetts, which apply to contracts made and to
be performed in The Commonwealth of Massachusetts.
15.Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms or provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction.
16.The parties to this Agreement acknowledge and agree that all liabilities
arising hereunder, whether direct or indirect, and of any and every nature
whatsoever shall be satisfied solely out of the assets of the portfolio affected
thereby and that no Trustee, officer or holder of shares of beneficial interest
of the Trust shall be personally liable for any of the foregoing liabilities.
The Trust's Certificate of Trust, as amended from time to time, is on file in
the Office of the Secretary of State of the State of Delaware. Such Certificate
of Trust and the Trust's Declaration of Trust describe in detail the respective
responsibilities and limitations on liability of the Trustees, officers, and
holders of shares of beneficial interest.
17.This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers and their seal to be hereto affixed as of the
day and year first above written.
ATTEST: PIONEER REAL ESTATE SHARES
/s/ Joseph P. Barri /s/ John F. Cogan, Jr.
Joseph P. Barri John F. Cogan, Jr.
Secretary Chief Executive Officer
ATTEST: PIONEERING MANAGEMENT CORPORATION
/s/ Joseph P. Barri /s/ David D. Tripple
Joseph P. Barri David D. Tripple
Secretary President
7
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 21, 1995
and July 28, 1995 for Pioneer Real Estate Shares (formerly Pioneer Winthrop Real
Estate Investment Fund) and to all references to our firm included in or made a
part of Post-Effective Amendment No. 6 and Amendment No. 7 to registration
statement File Nos. 33-65822 and 811-7870, respectively.
/s/ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 10, 1995
FORM OF CLASS B SHARES DISTRIBUTION PLAN
PIONEER REAL ESTATE SHARES
CLASS B SHARES DISTRIBUTION PLAN, dated as of January __, 1996 of PIONEER REAL
ESTATE SHARES, a Delaware business trust (the "Trust").
WITNESSETH
WHEREAS, the Trust is engaged in business as an open-end, non-diversified,
management investment company and is registered under the Investment Company Act
of 1940, as amended (collectively with the rules and regulations promulgated
thereunder, the "1940 Act");
WHEREAS, the Trust intends to distribute shares of beneficial interest (the
"Class B Shares") of the Trust in accordance with Rule 12b-1 promulgated by the
Securities and Exchange Commission under the 1940 Act ("Rule 12b-1"), and
desires to adopt this Class B Shares distribution plan (the "Class B Plan") as a
plan of distribution pursuant to such Rule;
WHEREAS, the Trust desires that Pioneer Funds Distributor, Inc., a Massachusetts
corporation ("PFD"), provide certain distribution services for the Trust's Class
B Shares in connection with the Class B Plan;
WHEREAS, the Trust has entered into an underwriting agreement (in a form
approved by the Trust's Board of Trustees in a manner specified in such Rule
12b-1) with PFD, whereby PFD provides facilities and personnel and renders
services to the Trust in connection with the offering and distribution of Class
B Shares (the "Underwriting Agreement");
WHEREAS, the Trust also recognizes and agrees that (a) PFD may retain the
services of firms or individuals to act as dealers or wholesalers (collectively,
the "Dealers") of the Class B Shares in connection with the offering of Class B
Shares, (b) PFD may compensate any Dealer that sells Class B Shares in the
manner and at the rate or rates to be set forth in an agreement between PFD and
such Dealer and (c) PFD may make such payments to the Dealers for distribution
services out of the fee paid to PFD hereunder, any deferred sales charges
imposed by PFD in connection with the repurchase of Class B Shares, its profits
or any other source available to it;
WHEREAS, the Trust recognizes and agrees that PFD may impose certain deferred
sales charges in connection with the repurchase of Class B Shares by the Trust,
and PFD may retain (or receive from the Trust, as the case may be) all such
deferred sales charges; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the Trust
should adopt and implement this Class B Plan, has evaluated such information as
it deemed necessary to an informed determination whether this Class B Plan
should be adopted and implemented and has considered such pertinent factors as
it deemed necessary to form the basis for a decision to use assets of the Trust
for such purposes, and has determined that there is a reasonable likelihood that
the adoption and implementation of this Class B Plan will benefit the Trust and
its Class B shareholders;
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this Class B
Plan for the Trust as a plan of distribution of Class B Shares in accordance
with Rule 12b-1, on the following terms and conditions:
1. (a) The Trust is authorized to compensate PFD for (1) distribution
services and (2) personal and account maintenance services performed and
expenses incurred by PFD in connection with the Trust's Class B Shares. Such
compensation shall be calculated and accrued daily and paid monthly or at such
other intervals as the Board of Trustees may determine.
(b)The amount of compensation paid during any one year for distribution
services with respect to Class B Shares shall be .75% of the Trust's average
daily net assets attributable to Class B Shares for such year.
(c)Distribution services and expenses for which PFD may be compensated
pursuant to this Plan include, without limitation: compensation to and expenses
(including allocable overhead, travel and telephone expenses) of (i) Dealers,
brokers and other dealers who are members of the National Association of
Securities Dealers, Inc. ("NASD") or their officers, sales representatives and
employees, (ii) PFD and any of its affiliates and any of their respective
officers, sales representatives and employees, (iii) banks and their officers,
sales representatives and employees, who engage in or support distribution of
the Trust's Class B Shares; printing of reports and prospectuses for other than
existing shareholders; and preparation, printing and distribution of sales
literature and advertising materials.
(d)The amount of compensation paid for personal and account maintenance
services and expenses shall be .25% of the Trust's average daily net assets
attributable to Class B Shares for such year. As partial consideration for
personal services and/or account maintenance services provided by PFD to the
Class B Shares, PFD shall be entitled to be paid any fees payable under this
clause (d) with respect to Class B Shares for which no dealer of record exists,
where less than all consideration has been paid to a dealer of record or where
qualification standards have not been met.
(e)Personal and account maintenance services for which PFD or any of its
affiliates, banks or Dealers may be compensated pursuant to this Plan include,
without limitation: payments made to or on account of PFD or any of its
affiliates, banks, other brokers and dealers who are members of the NASD, or
their officers, sales representatives and employees, who respond to inquiries
of, and furnish assistance to, shareholders regarding their ownership of Class B
Shares or their accounts or who provide similar services not otherwise provided
by or on behalf of the Trust.
(f)PFD may impose certain deferred sales charges in connection with the
repurchase of Class B Shares by the Trust and PFD may retain (or receive from
the Trust as the case may be) all such deferred sales charges.
(g)Appropriate adjustments to payments made pursuant to clauses (b) and
(d) of this paragraph 1 shall be made whenever necessary to ensure that no
payment is made by the Trust in excess of the applicable maximum cap imposed on
asset based, front-end and deferred sales charges by subsection (d) of Section
26 of Article III of the Rules of Fair Practice of the NASD.
2.The Trust understands that agreements between PFD and Dealers may provide
for payment of fees to Dealers in connection with the sale of Class B Shares and
the provision of services to shareholders of the Trust. Nothing in this Class B
Plan shall be construed as requiring the Trust to make any payment to any Dealer
or to have any obligations to any Dealer in connection with services as a dealer
of the Class B Shares. PFD shall agree and undertake that any agreement entered
into between PFD and any Dealer shall provide that such Dealer shall look solely
to PFD for compensation for its services thereunder and that in no event shall
such Dealer seek any payment from the Trust.
3.Nothing herein contained shall be deemed to require the Trust to take any
action contrary to its Declaration of Trust, as it may be amended or restated
from time to time, or By-Laws or any applicable statutory or regulatory
requirement to which it is subject or by which it is bound, or to relieve or
deprive the Trust's Board of Trustees of the responsibility for and control of
the conduct of the affairs of the Trust.
4.This Class B Plan shall become effective upon approval by (i) a "majority
of the outstanding voting securities" of Class B of the Trust, (ii) a vote of
the Board of Trustees, and (iii) a vote of a majority of the Trustees who are
not "interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of the Class B Plan or in any agreements
related to the Class B Plan (the "Qualified Trustees"), such votes with respect
to (ii) and (iii) above to be cast in person at a meeting called for the purpose
of voting on this Class B Plan.
5.This Class B Plan will remain in effect indefinitely, provided that such
continuance is "specifically approved at least annually" by a vote of both a
majority of the Trustees of the Trust and a majority of the Qualified Trustees.
If such annual approval is not obtained, this Class B Plan shall expire on April
30 of such year.
6.This Class B Plan may be amended at any time by the Board of Trustees,
provided that this Class B Plan may not be amended to increase materially the
limitations on the annual percentage of average net assets which may be expended
hereunder without the approval of holders of a "majority of the outstanding
voting securities" of Class B of the Trust and may not be materially amended in
any case without a vote of a majority of both the Trustees and the Qualified
Trustees. This Class B Plan may be terminated at any time by a vote of a
majority of the Qualified Trustees or by a vote of the holders of a "majority of
the outstanding voting securities" of Class B of the Trust.
7.The Trust and PFD shall provide to the Trust's Board of Trustees, and the
Board of Trustees shall review, at least quarterly, a written report of the
amounts expended under this Class B Plan and the purposes for which such
expenditures were made.
8.While this Class B Plan is in effect, the selection and nomination of
Qualified Trustees shall be committed to the discretion of the Trustees who are
not "interested persons" of the Trust.
9.For the purposes of this Class B Plan, the terms "assignment,"
"interested persons," "majority of the outstanding voting securities" and
"specifically approved at least annually" are used as defined in the 1940 Act.
10.The Trust shall preserve copies of this Class B Plan, and each agreement
related hereto and each report referred to in Paragraph 7 hereof (collectively,
the "Records"), for a period of not less than six (6) years from the end of the
fiscal year in which such Records were made and for a period of two (2) years,
each of such Records shall be kept in an easily accessible place.
11.This Class B Plan shall be construed in accordance with the laws of The
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.
12.If any provision of this Class B Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Class B Plan
shall not be affected thereby.
FORM OF CLASS C SHARES DISTRIBUTION PLAN
PIONEER REAL ESTATE SHARES
CLASS C SHARES DISTRIBUTION PLAN, dated as of January __, 1996 of PIONEER REAL
ESTATE SHARES, a Delaware business trust (the "Trust").
WITNESSETH
WHEREAS, the Trust is engaged in business as an open-end, non-diversified,
management investment company and is registered under the Investment Company Act
of 1940, as amended (collectively with the rules and regulations promulgated
thereunder, the "1940 Act");
WHEREAS, the Trust intends to distribute shares of beneficial interest (the
"Class C Shares") of the Trust in accordance with Rule 12b-1 promulgated by the
Securities and Exchange Commission under the 1940 Act ("Rule 12b-1"), and
desires to adopt this Class C Shares distribution plan (the "Class C Plan") as a
plan of distribution pursuant to such Rule;
WHEREAS, the Trust desires that Pioneer Funds Distributor, Inc., a Massachusetts
corporation ("PFD"), provide certain distribution services for the Trust's Class
C Shares in connection with the Class C Plan;
WHEREAS, the Trust has entered into an underwriting agreement (in a form
approved by the Trust's Board of Trustees in a manner specified in such Rule
12b-1) with PFD, whereby PFD provides facilities and personnel and renders
services to the Trust in connection with the offering and distribution of Class
C Shares (the "Underwriting Agreement");
WHEREAS, the Trust also recognizes and agrees that (a) PFD may retain the
services of firms or individuals to act as dealers or wholesalers (collectively,
the "Dealers") of the Class C Shares in connection with the offering of Class C
Shares, (b) PFD may compensate any Dealer that sells Class C Shares in the
manner and at the rate or rates to be set forth in an agreement between PFD and
such Dealer and (c) PFD may make such payments to the Dealers for distribution
services out of the fee paid to PFD hereunder, any deferred sales charges
imposed by PFD in connection with the repurchase of Class C Shares, its profits
or any other source available to it;
WHEREAS, the Trust recognizes and agrees that PFD may impose certain deferred
sales charges in connection with the repurchase of Class C Shares by the Trust,
and PFD may retain (or receive from the Trust, as the case may be) all such
deferred sales charges; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the Trust
should adopt and implement this Class C Plan, has evaluated such information as
it deemed necessary to an informed determination whether this Class C Plan
should be adopted and implemented and has considered such pertinent factors as
it deemed necessary to form the basis for a decision to use assets of the Trust
for such purposes, and has determined that there is a reasonable likelihood that
the adoption and implementation of this Class C Plan will benefit the Trust and
its Class C shareholders;
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this Class C
Plan for the Trust as a plan of distribution of Class C Shares in accordance
with Rule 12b-1, on the following terms and conditions:
1. (a) The Trust is authorized to compensate PFD for (1) distribution
services and (2) personal and account maintenance services performed and
expenses incurred by PFD in connection with the Trust's Class C Shares. Such
compensation shall be calculated and accrued daily and paid monthly or at such
other intervals as the Board of Trustees may determine.
(b)The amount of compensation paid during any one year for distribution
services with respect to Class C Shares shall be .75% of the Trust's average
daily net assets attributable to Class C Shares for such year.
(c)Distribution services and expenses for which PFD may be compensated
pursuant to this Plan include, without limitation: compensation to and expenses
(including allocable overhead, travel and telephone expenses) of (i) Dealers,
brokers and other dealers who are members of the National Association of
Securities Dealers, Inc. ("NASD") or their officers, sales representatives and
employees, (ii) PFD and any of its affiliates and any of their respective
officers, sales representatives and employees, (iii) banks and their officers,
sales representatives and employees, who engage in or support distribution of
the Trust's Class C Shares; printing of reports and prospectuses for other than
existing shareholders; and preparation, printing and distribution of sales
literature and advertising materials.
(d)The amount of compensation paid during any one year for personal and
account maintenance services and expenses shall be .25% of the Trust's average
daily net assets attributable to Class C Shares for such year. As partial
consideration for personal services and/or account maintenance services provided
by PFD to the Class C Shares, PFD shall be entitled to be paid any fees payable
under this clause (d) with respect to Class C Shares for which no dealer of
record exists, where less than all consideration has been paid to a dealer of
record or where qualification standards have not been met.
(e)Personal and account maintenance services for which PFD or any of its
affiliates, banks or Dealers may be compensated pursuant to this Plan include,
without limitation: payments made to or on account of PFD or any of its
affiliates, banks, other brokers and dealers who are members of the NASD, or
their officers, sales representatives and employees, who respond to inquiries
of, and furnish assistance to, shareholders regarding their ownership of Class C
Shares or their accounts or who provide similar services not otherwise provided
by or on behalf of the Trust.
(f)PFD may impose certain deferred sales charges in connection with the
repurchase of Class C Shares by the Trust and PFD may retain (or receive from
the Trust as the case may be) all such deferred sales charges.
(g)Appropriate adjustments to payments made pursuant to clauses (b) and
(d) of this paragraph 1 shall be made whenever necessary to ensure that no
payment is made by the Trust in excess of the applicable maximum cap imposed on
asset based, front-end and deferred sales charges by subsection (d) of Section
26 of Article III of the Rules of Fair Practice of the NASD.
2.The Trust understands that agreements between PFD and Dealers may provide
for payment of fees to Dealers in connection with the sale of Class C Shares and
the provision of services to shareholders of the Trust. Nothing in this Class C
Plan shall be construed as requiring the Trust to make any payment to any Dealer
or to have any obligations to any Dealer in connection with services as a dealer
of the Class C Shares. PFD shall agree and undertake that any agreement entered
into between PFD and any Dealer shall provide that such Dealer shall look solely
to PFD for compensation for its services thereunder and that in no event shall
such Dealer seek any payment from the Trust.
3.Nothing herein contained shall be deemed to require the Trust to take any
action contrary to its Declaration of Trust, as it may be amended or restated
from time to time, or By-Laws or any applicable statutory or regulatory
requirement to which it is subject or by which it is bound, or to relieve or
deprive the Trust's Board of Trustees of the responsibility for and control of
the conduct of the affairs of the Trust.
4.This Class C Plan shall become effective upon approval by (i) a "majority
of the outstanding voting securities" of Class C of the Trust, (ii) a vote of
the Board of Trustees, and (iii) a vote of a majority of the Trustees who are
not "interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of the Class C Plan or in any agreements
related to the Class C Plan (the "Qualified Trustees"), such votes with respect
to (ii) and (iii) above to be cast in person at a meeting called for the purpose
of voting on this Class C Plan.
5.This Class C Plan will remain in effect indefinitely, provided that such
continuance is "specifically approved at least annually" by a vote of both a
majority of the Trustees of the Trust and a majority of the Qualified Trustees.
If such annual approval is not obtained, this Class C Plan shall expire on April
30 of such year.
6.This Class C Plan may be amended at any time by the Board of Trustees,
provided that this Class C Plan may not be amended to increase materially the
limitations on the annual percentage of average net assets which may be expended
hereunder without the approval of holders of a "majority of the outstanding
voting securities" of Class C of the Trust and may not be materially amended in
any case without a vote of a majority of both the Trustees and the Qualified
Trustees. This Class C Plan may be terminated at any time by a vote of a
majority of the Qualified Trustees or by a vote of the holders of a "majority of
the outstanding voting securities" of Class C of the Trust.
7.The Trust and PFD shall provide to the Trust's Board of Trustees, and the
Board of Trustees shall review, at least quarterly, a written report of the
amounts expended under this Class C Plan and the purposes for which such
expenditures were made.
8.While this Class C Plan is in effect, the selection and nomination of
Qualified Trustees shall be committed to the discretion of the Trustees who are
not "interested persons" of the Trust.
9.For the purposes of this Class C Plan, the terms "assignment,"
"interested persons," "majority of the outstanding voting securities" and
"specifically approved at least annually" are used as defined in the 1940 Act.
10.The Trust shall preserve copies of this Class C Plan, and each agreement
related hereto and each report referred to in Paragraph 7 hereof (collectively,
the "Records"), for a period of not less than six (6) years from the end of the
fiscal year in which such Records were made and, for a period of two (2) years,
each of such Records shall be kept in an easily accessible place.
11.This Class C Plan shall be construed in accordance with the laws of The
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.
12.If any provision of this Class C Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Class C Plan
shall not be affected thereby.
PIONEER REAL ESTATE SHARES
Multiple Class Plan Pursuant to Rule 18f-3
Class A Shares, Class B Shares and Class C Shares
October 4, 1995
Each class of shares of Pioneer Real Estate Shares, a Delaware business
trust (the "Fund"), will have the same relative rights and privileges and be
subject to the same sales charges, fees and expenses, except as set forth below.
The Board of Trustees may determine in the future that other distribution
arrangements, allocations of expenses (whether ordinary or extraordinary) or
services to be provided to a class of shares are appropriate and amend this Plan
accordingly without the approval of shareholders of any class. Except as set
forth in the Fund's prospectus, shares may be exchanged only for shares of the
same class of another Pioneer mutual fund.
Article I. Class A Shares
Class A Shares are sold at net asset value and subject to the initial sales
charge schedule or contingent deferred sales charge ("CDSC") and minimum
purchase requirements as set forth in the Fund's prospectus. Class A Shares
shall be entitled to the shareholder services set forth from time to time in the
Fund's prospectus with respect to Class A Shares. Class A Shares are subject to
fees calculated as a stated percentage of the net assets attributable to Class A
shares under the Fund's Class A Rule 12b-1 Distribution Plan as set forth in
such Distribution Plan. The Class A Shareholders have exclusive voting rights,
if any, with respect to the Class A Rule 12b-1 Distribution Plan. Transfer
agency fees are allocated to Class A Shares on a per account basis except to the
extent, if any, such an allocation would cause the Fund to fail to satisfy any
requirement necessary to obtain or rely on a private letter ruling from the
Internal Revenue Service ("IRS") relating to the issuance of multiple classes of
shares. Class A shares shall bear the costs and expenses associated with
conducting a shareholder meeting for matters relating to Class A shares.
Article II. Class B Shares
Class B Shares are sold at net asset value per share without the imposition
of an initial sales charge. However, Class B shares redeemed within a specified
number of years of purchase will be subject to a CDSC as set forth in the Fund's
prospectus. Class B Shares are sold subject to the minimum purchase requirements
set forth in the Fund's prospectus. Class B Shares shall be entitled to the
shareholder services set forth from time to time in the Fund's prospectus with
respect to Class B Shares. Class B Shares are subject to fees calculated as a
stated percentage of the net assets attributable to Class B shares under the
Class B Rule 12b-1 Distribution Plan as set forth in such Distribution Plan. The
Class B Shareholders of the Fund have exclusive voting rights, if any, with
respect to the Fund's Class B Rule 12b-1 Distribution Plan. Transfer agency fees
are allocated to Class B Shares on a per account basis except to the extent, if
any, such an allocation would cause the Fund to fail to satisfy any requirement
necessary to obtain or rely on a private letter ruling from the IRS relating to
the issuance of multiple classes of shares. Class B shares shall bear the costs
and expenses associated with conducting a shareholder meeting for matters
relating to Class B shares.
Class B Shares will automatically convert to Class A Shares of the Fund at
the end of a specified number of years after the initial purchase date of Class
B shares, except as provided in the Fund's prospectus. Such conversion will
occur at the relative net asset value per share of each class without the
imposition of any sales charge, fee or other charge. The conversion of Class B
Shares to Class A Shares may be suspended if it is determined that the
conversion constitutes or is likely to constitute a taxable event under federal
income tax law.
The initial purchase date for Class B shares acquired through (i)
reinvestment of dividends on Class B Shares or (ii) exchange from another
Pioneer mutual fund will be deemed to be the date on which the original Class B
shares were purchased.
Article III. Class C Shares
Class C Shares are sold at net asset value per share without the imposition
of an initial sales charge. However, Class C shares redeemed within one year of
purchase will be subject to a CDSC as set forth in the Fund's prospectus. Class
C Shares are sold subject to the minimum purchase requirements set forth in the
Fund's prospectus. Class C Shares shall be entitled to the shareholder services
set forth from time to time in the Fund's prospectus with respect to Class C
Shares. Class C Shares are subject to fees calculated as a stated percentage of
the net assets attributable to Class C shares under the Class C Rule 12b-1
Distribution Plan as set forth in such Distribution Plan. The Class C
Shareholders of the Fund have exclusive voting rights, if any, with respect to
the Fund's Class C Rule 12b-1 Distribution Plan. Transfer agency fees are
allocated to Class C Shares on a per account basis except to the extent, if any,
such an allocation would cause the Fund to fail to satisfy any requirement
necessary to obtain or rely on a private letter ruling from the IRS relating to
the issuance of multiple classes of shares. Class C shares shall bear the costs
and expenses associated with conducting a shareholder meeting for matters
relating to Class C shares.
The initial purchase date for Class C shares acquired through (i)
reinvestment of dividends on Class C Shares or (ii) exchange from another
Pioneer mutual fund will be deemed to be the date on which the original Class C
shares were purchased.
Article IV. Approval by Board of Trustees
This Plan shall not take effect until it has been approved by the vote of a
majority (or whatever greater percentage may, from time to time, be required
under Rule 18f-3 under the Investment Company Act of 1940, as amended (the
"Act")) of (a) all of the Trustees of the Fund, and (b) those of the Trustees
who are not "interested persons" of the Fund, as such term may be from time to
time defined under the Act.
Article V. Amendments
No material amendment to the Plan shall be effective unless it is approved
by the Board of Trustees in the same manner as is provided for approval of this
Plan in Article IV.
