File No. 33-65822
File No. 811-7870
As Filed with the Securities and Exchange Commission on February 29, 1996.
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. 8 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 9 / 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 May 1, 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 most recent fiscal year on or about February
28, 1996.
<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
May 1, 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 AND ASSOCIATED RISKS" 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 May 1, 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 2
II. FINANCIAL HIGHLIGHTS 3
III. INVESTMENT OBJECTIVES AND POLICIES
AND ASSOCIATED RISKS 4
IV. MANAGEMENT OF THE FUND 6
V. FUND SHARE ALTERNATIVES 7
VI. SHARE PRICE 7
VII. HOW TO BUY FUND SHARES 7
VIII. HOW TO SELL FUND SHARES 10
IX. HOW TO EXCHANGE FUND SHARES 12
X. DISTRIBUTION PLANS 12
XI. DIVIDENDS, DISTRIBUTIONS AND
TAXATION 13
XII. SHAREHOLDER SERVICES 13
Account and Confirmation Statements 14
Additional Investments 14
Financial Reports and Tax Information 14
Distribution Options 14
Directed Dividends 14
Direct Deposit 14
Voluntary Tax Withholding 14
Telephone Transactions and Related Liabilities 14
FactFoneSM 15
Retirement Plans 15
Telecommunications Device for the Deaf (TDD) 15
Systematic Withdrawal Plans 15
Reinstatement Privilege (Class A only) 15
XIII. THE FUND 15
XIV. INVESTMENT RESULTS 16
APPENDIX A: Certain Investment Practices 16
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.
<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, 1995. Other expenses
for Class B and Class C shares are based on estimated amounts for the fiscal
period ended December 31, 1995 had such shares been outstanding.
Shareholder 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
(as a percentage of original purchase price
or redemption proceeds, as applicable) None(1) 4.00% 1.00%
Redemption Fee2 None None None
Exchange Fee None None None
Annual Operating Expenses (As a Percentage
of Average Net Assets):
Management Fee
(after fee reduction)3 0.20% 0.20% 0.20%
12b-1 Fees 0.25% 1.00% 1.00%
Other Expenses (including accounting and
transfer agent fees, custodian fees and
printing expenses) 1.30% 1.30% 1.30%
Total Operating Expenses (after fee reduction)3 1.75% 2.30% 2.30%
=====
+Class B and Class C shares were first offered on January 31, 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 necessary 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 and 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:
<PAGE>
Annual Operating Expenses Absent Fee Reduction
(As a Percentage of Average Net Assets)
Management Fee 1.00% 1.00% 1.00%
Total Operating Expenses 1.75% 3.31% 3.31%
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:
One Year Three Years Five Years Ten Years
Class A Shares $74 $109 $147 $252
Class B Shares*
- --Assuming complete
redemption at end of
period $65 $ 57 $153 $265
- --Assuming no redemption $25 $ 77 $133 $265
Class C Shares**
- --Assuming complete
redemption at end of
period $35 $ 77 $133 $284
- --Assuming no redemption $25 $ 77 $133 $284
* 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.
<PAGE>
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."
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 audit of the Fund's financial statements. Arthur Andersen
LLP's report on the Fund's financial statements as of December 31, 1995 appears
in the Fund's Annual Report, which is 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 Report includes more information about the Fund's performance and is
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
July 1, 1994 (commencement
January 1, 1995 through of operations)
through December 31, through
December 31, 1995 1994+ 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 $ 0.32 $ 0.21 $ 0.27
Net realized and unrealized gain (loss) on
investments 1.01 (0.48) (0.45)
---- ------ -------
Total increase (decrease) from
investment operations $ 1.33 $ (0.27) $ (0.18)
Distribution to shareholders from--
Net investment income (0.33) (0.20) (0.27)
In excess of net investment income 0.227
Paid-in capital 0.34 (0.15) (0.03)
Net realized gain ____ (0.02) --
--------- ---------- ------
Net increase (decrease) in net asset
value $ 0.64 $ (0.64) $ (0.48)
-------- -------- --------
Net asset value, end of period $ 11.02 $ 11.38 $ 12.02
------- ------- -------
Total return* 12.11% (2.16%) (1.47%)
Ratio of net operating expenses to
average net assets 1.77%++ 1.75%** 1.71%**
Ratio of net investment income to
average net assets 2.73%** 3.72%** 3.73%**
Portfolio turnover rate 9.63% 17.40%** 23.98%**
Net assets, end of period
(in thousands) $27,491 $28,068 $29,584
Ratios assuming no reduction of fees or expenses--
Net operating expenses 2.59%** 2.27%** 2.15%**
Net investment income 1.91%** 3.20%** 3.28%**
Ratios assuming a reduction of fees and
expenses by PMC and a reduction for
expenses paid indirectly--
Net operating expenses 1.75%
Net investment income 2.75%
+ Subsequent to December 31, 1994, the Fund's fiscal year end was changed
from June 30 to December 31.
++ Ratios include expenses paid indirectly.
* 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
</TABLE>
III. INVESTMENT OBJECTIVES AND POLICIES AND ASSOCIATED RISKS
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,
<PAGE>
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. The risks associated with the Fund's
transactions in options, futures, REMICs, CMOs and other types of
mortgage-backed securities, which are considered to be derivative securities,
may include some or all of the following: market risk, leverage and volatility
risk, correlation risk, credit risk and liquidity and valuation risk. See
Appendix A for a description of these investment practices and securities 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.
<PAGE>
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.
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
<PAGE>
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"), commonly referred to as
junk bonds, 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 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
<PAGE>
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.
<PAGE>
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. ]
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 Manager
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.
<PAGE>
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 includes the subadvisory fee paid to BFS and reflects the added
complexity and additional expenses associated with analyzing real estate
investments and related securities.
During the fiscal period ended December 31, 1995, the Fund incurred expenses of
$685,112, including management fees paid or payable to Pioneer Winthrop Advisors
("PWA") of $__________ for the period from January 1, 1995 through July 17, 1995
and
<PAGE>
management fees paid or payable to PMC of $_________ for the period from July
18, 1995 through December 31, 1995. 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
period ended December 31, 1995, the PMC expense limitation arrangement and a
similar arrangement by PWA resulted in a reduction of expenses for the Fund of
$4,970. This agreement is voluntary and temporary and may be revised or
terminated by PMC at any time.
The Real Estate Subadviser. BFS is an affiliate of the Boston Financial Group
Limited Partnership, a Massachusetts limited partnership ("Boston Financial"),
which together with a predecessor business have been engaged since 1970 in
structuring a variety of real estate investment programs. Several other
affiliates of BFS also provide a variety of financial, consulting and management
services to real estate investors and developers. As of December 31, 1995,
Boston Financial had been responsible for the acquisition of approximately __
million square feet of office space and industrial space, ______ apartment units
and a collection of high quality hotels, resorts and inns located in __ states
and Canada at a cost of more than $__ billion. Boston Financial has __ regional
offices located throughout the U.S. and employs over _____ people, all of whom
are involved in real estate activities. In its capacity as subadviser to the
Fund, BFS (i) identifies and analyzes real estate industry companies, including
real estate properties and other permissible investments for the Fund, (ii)
analyzes market conditions affecting the real estate industry generally and
specific geographical and securities markets in which the Fund may invest or is
invested, (iii) continuously reviews and analyzes the investments in the Fund's
portfolio and (iv) furnishes advisory reports based on such analysis to PMC.
Mr. Fred N. Pratt, Jr. has the ultimate responsibility for overseeing
the provisions of subadvisory services to the Fund. Mr. Pratt is President and
Chief Executive Officer of Boston Financial, a Director of BFS and a Trustee of
the Fund. Mr. Pratt has worked in the real estate industry since 1969. Mr. David
Carter, a Vice President of BFS, has been primarily responsibility for the
day-to-day provision of subadvisory services to the Fund since March __, 1996.
Mr. Carter has worked as a real estate analyst since 19__.
As compensation for its subadvisory services, PMC (and not the Fund)
will pay BFS a subadvisory fee equal to 0.25% per annum of the Fund's average
daily net assets up to $27 million and 0.50% of average daily net assets in
excess of $27 million. After written notice to BFS, the subadvisory fee payable
by PMC to BFS would be reduced proportionally to the extent that the management
fee paid by the Fund to PMC is reduced under PMC's voluntary expense limitation
agreement or to the extent that PMC elects to utilize a portion of the
management fees paid to PMC by the Fund to make payments to third parties.
The executive offices of BFS are located at 101 Arch Street, Boston,
Massachusetts 02110. BFS has not previously served as an investment adviser or
subadviser to a registered investment company, however, on March 5, 1996, at a
Special
<PAGE>
Meeting of the Shareholders BFS was approved as the investment subadviser to the
Real Estate Growth Portfolio of Pioneer Variable Contracts Trust. BFS is a
registered broker-dealer and may act as a broker in connection with the sale of
shares of the Fund under a selling agreement with PFD.
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 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
<PAGE>
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.
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 FROM ANY SECURITIES BROKER- DEALER WHICH HAS A SALES
AGREEMENT WITH PFD. IF YOU DO NOT HAVE A SECURITIES BROKER-DEALER, PLEASE CALL
1-800-225-6292. SHARES WILL BE PURCHASED AT THE PUBLIC OFFERING PRICE, THAT IS,
THE NET ASSET VALUE PER SHARE PLUS ANY APPLICABLE SALES CHARGE, NEXT COMPUTED
AFTER RECEIPT OF A PURCHASE ORDER, EXCEPT AS SET FORTH BELOW.
<PAGE>
The minimum initial investment is $1,000 for Class A, Class B and Class C
shares, except as specified below. The minimum initial investment is $50 for
Class A accounts being established to utilize monthly bank drafts, government
allotments, payroll deduction and other similar automatic investment plans.
Separate minimum investment requirements apply to retirement plans and to
telephone and wire orders placed by broker-dealers; 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 receipt of a telephone purchase
instruction and receipt of good funds (usually three days after the purchase
instruction). You may always elect to deliver purchases to PSC by mail. See
"Telephone Transactions and Related Liabilities" for additional information.
Class A Shares
You may buy Class A shares at the public offering price 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 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 may
pay 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.
<PAGE>
Qualifying for a Reduced Sales Charge. Class A shares of the Fund may be sold at
a reduced or eliminated sales charge to certain group plans ("Group Plans")
under which a sponsoring organization makes recommendations to, permits group
solicitation of, or otherwise facilitates purchases by, its employees, members
or participants. Class A shares of the Fund may be sold at net asset value
without a sales charge to 401(k) retirement plans with 100 or more participants
or at least $500,000 in plan assets. 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 (the "Program") participants if (i) the employer has
authorized a limited number of investment company providers for the Program,
(ii) all authorized investment company providers offer their shares to Program
participants at net asset value, (iii) the employer has agreed in writing to
actively promote the authorized investment 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,
<PAGE>
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%
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
<PAGE>
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 may be waived or reduced for non-retirement accounts if: (a) the
redemption results from the death of all registered owners of an account (in the
case of UGMAs, UTMAs and trust accounts, waiver applies upon the death of all
beneficial owners) or a total and permanent disability (as defined in Section 72
of the Code) of all registered owners occurring after the purchase of the shares
being redeemed or (b) the redemption is made in connection with limited
automatic redemptions as set forth in "Systematic Withdrawal Plans" (limited in
any year to 10% of the value of the account in the Fund at the time the
withdrawal plan is established).
The CDSC on Class B shares may be waived or reduced for retirement plan accounts
if: (a) the redemption results from the death or a total and permanent
disability (as defined in Section 72 of the Code) occurring after the purchase
of the shares being redeemed of a
<PAGE>
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
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 and on any Class A shares subject to a CDSC may be
waived or reduced as follows: (a) for automatic redemptions as described in
"Systematic Withdrawal Plans" (limited to 10% of the value of the account
subject to the CDSC); (b) if the redemption results from the death or a total
and permanent disability (as defined in Section 72 of the Code) occurring after
the purchase of the shares being redeemed of a shareowner or participant in an
employer-sponsored retirement plan; (c) if the distribution is part of a series
of substantially equal payments made over the life expectancy of the participant
or the joint life expectancy of the participant and his or her beneficiary; or
(d) if the distribution is to a participant in an employer-sponsored retirement
plan and is (i) a return of excess employee deferrals or contributions, (ii) a
qualifying hardship distribution as defined by the Code, (iii) from a
termination of employment, (iv) in the form of a loan to a participant in a plan
which permits loans, or (v) from a qualified defined contribution plan and
represents a participant's directed transfer (provided that this privilege has
been pre-authorized through a prior agreement with PFD regarding participant
directed transfers).
The CDSC on 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
<PAGE>
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:
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 in good order less any applicable CDSC. Sale proceeds generally will be
sent to you in cash, normally within seven days after your order is received in
good order. The Fund reserves the right to withhold payment of the sale proceeds
until checks received by the Fund in payment for the shares being sold have
cleared, which may take up to 15 calendar days from the purchase date.
In Writing. You may sell your shares by delivering a written request, signed by
all registered owners, in good order to PSC, however, you must use a written
request, including a signature guarantee, to sell your shares if any of the
following situations applies:
o you wish to sell over $50,000 worth of shares,
<PAGE>
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.
<PAGE>
Selling Shares Through Your Broker-Dealer. The Fund has authorized PFD to act as
its agent in the repurchase of shares of the Fund from qualified broker-dealers
and reserves the right to terminate this procedure at any time. Your
broker-dealer must receive your request before the close of business on the
Exchange and transmit it to PFD before PFD's close of business to receive that
day's redemption price. Your broker-dealer is responsible for providing all
necessary documentation to PFD and may charge you for its services.
Small Accounts. The minimum account value is $500. If you hold shares of the
Fund in an account with a net asset value of less than the minimum required
amount due to redemptions or exchanges, the Fund may redeem the shares held in
this account at net asset value if you have not increased the net asset value of
the account to at least the minimum required amount within six months of notice
by the Fund to you of the Fund's intention to redeem the shares.
CDSC on Class A Shares. Purchases of Class A shares of $1,000,000 or more, or by
participants in a Group Plan which were not subject to an initial sales charge,
may be subject to a CDSC upon redemption. A CDSC is payable to PFD on these
investments in the event of a share redemption within 12 months following the
share purchase, at the rate of 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividend and capital gain distributions) or
the total cost of such shares. Shares subject to the CDSC which are exchanged
into another Pioneer mutual fund will continue to be subject to the CDSC 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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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 net asset value of 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 net asset value of 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
<PAGE>
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 other 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 TO SHAREHOLDERS. 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.
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.
<PAGE>
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 Class C shares) to PSC (account number and Class
of shares should be clearly indicated). The bottom portion of a confirmation
statement may be used as a remittance slip to make additional investments.
Additions to your account, whether by check or through a Pioneer Investomatic
Plan, are invested in full and fractional shares of the Fund at the applicable
offering price in effect as of the close of 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.
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.
<PAGE>
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
<PAGE>
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
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 mutual fund 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 mutual fund accounts if you have
activated your PIN. Telephone purchases and redemptions require the
establishment of a bank account of record. You are strongly urged to consult
with your financial representative prior to requesting any telephone
transaction. Shareholders whose accounts are registered in the name of a
broker-dealer or other third party may not be able to use 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.
<PAGE>
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 will be limited to 10% of the value of the account at the
time the SWP is implemented if a CDSC is applicable. 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
<PAGE>
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.
<PAGE>
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
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
<PAGE>
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.
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.
<PAGE>
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.
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
<PAGE>
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
<PAGE>
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
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.
<PAGE>
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
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.
<PAGE>
[Pioneer logo]
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
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: 1-800-225-6292
SERVICE INFORMATION
If you would like information on the following, please call:
Existing and new accounts, prospectuses,
applications, service forms
and telephone transactions 1-800-225-6292
FactFoneSM
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
0496-XXXX
(C)Pioneer Funds Distributor, Inc.
<PAGE>
THE PIONEER FAMILY OF MUTUAL FUNDS
International Growth Funds
Pioneer International Growth Fund
Pioneer Europe Fund
Pioneer Emerging Markets Fund
Pioneer India Fund
Growth Funds
Pioneer Capital Growth Fund
Pioneer Growth Shares
Pioneer Small Company Fund
Pioneer Gold Shares
Growth and Income Funds
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer II
Pioneer Three
Pioneer Real Estate Shares
Income Funds
Pioneer Short-Term Income Trust
Pioneer America Income Trust
Pioneer Bond Fund
Pioneer Income Fund
Tax-Free Income Funds
Pioneer Intermediate Tax-Free Fund*
Pioneer Tax-Free Income Fund*
Money Market Funds
Pioneer U.S. Government Money Fund
Pioneer Cash Reserves Fund
*Not suitable for retirement accounts
<PAGE>
PIONEER REAL ESTATE SHARES
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
Class A, Class B and Class C Shares
May 1, 1996
This Statement of Additional Information is not a Prospectus, but should be read
in conjunction with the Prospectus dated May 1, 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. The most recent Annual Report to Shareholders is attached
to, and is hereby incorporated into, this Statement of Additional Information.
TABLE OF CONTENTS
Page
1. General Fund Information and History................................ 2
2. Investment Policies and Restrictions................................ 2
3. Management of the Fund.............................................. 10
4. Advisory Services................................................... 14
5. Underwriting Agreement and Distribution Plan........................ 15
6. Shareholder Servicing/Transfer Agent................................ 18
7. Custodian........................................................... 19
8. Principal Underwriter............................................... 19
9. Independent Public Accountant....................................... 20
10. Portfolio Transactions.............................................. 20
11. Tax Status.......................................................... 21
12. Description of Shares............................................... 24
13. Certain Liabilities................................................. 25
14. Determination of Net Asset Value.................................... 26
15. Systematic Withdrawal Plan.......................................... 26
16. Letter of Intention................................................. 27
17. Investment Results.................................................. 27
18. Financial Statements................................................ 30
APPENDIX A - Description of Bond Ratings............................1-A
APPENDIX B - Additional Pioneer Information.........................1-B
APPENDIX C - Securities Indices ....................................1-C
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
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.
-2-
<PAGE>
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
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
-3-
<PAGE>
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.
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
-4-
<PAGE>
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.
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
-5-
<PAGE>
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
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.
-6-
<PAGE>
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
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.
-7-
<PAGE>
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
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.
-8-
<PAGE>
(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
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 ("SEC"),
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
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.
-9-
<PAGE>
(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; provided, however, that the Fund
may invest up to 10% of its total assets in shares of real estate investment
trusts that are illiquid.
(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.
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.
-10-
<PAGE>
JOHN F. COGAN, JR.*, Chairman of the Board, President and Trustee, DOB: June
1926
President, Chief Executive Officer and a Director of The Pioneer Group,
Inc. ("PGI"); Chairman and a Director of PMC and 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"), Pioneer First Russia, Inc. ("First Russia") and Pioneer Omega, Inc.
("Omega"); Chairman of the Board and Director of Pioneer Goldfields Limited
("PGL") and Teberebie Goldfields Limited; Chairman of the Supervisory Board of
Pioneer Fonds Marketing, GmbH ("Pioneer GmbH"); Member of the Supervisory Board
of Pioneer First Polish Trust Fund Joint Stock Company ("PFPT"); Chairman,
President and Trustee of all of the Pioneer mutual funds and Partner, Hale and
Dorr (counsel to the Fund).
RICHARD H. EGDAHL, M.D., Trustee, DOB: December 1926
Boston University Health Policy Institute, 53 Bay State Rd., Boston, MA 02115
Professor of Management, Boston University School of Management; Professor
of Public Health, Boston University School of Public Health; Professor of
Surgery, Boston University School of Medicine; Director, Boston University
Health Policy Institute and Boston University Medical Center; Executive Vice
President and Vice Chairman of the Board, University Hospital; Academic Vice
President for Health Affairs, Boston University; Director, Essex Investment
Management Company, Inc. (investment adviser), Health Payment Review, Inc.
(health care containment software firm), Mediplex Group, Inc. (nursing care
facilities firm), Peer Review Analysis, Inc. (health care facilities firm) and
Springer-Verlag New York, Inc. (publisher); Honorary Trustee, Franciscan
Children's Hospital and Trustee of all of the Pioneer mutual funds.
MARGARET B.W. GRAHAM, Trustee, DOB: May 1947
The Keep, P.O. Box 110. Little Deer Isle, ME 04650
Founding Director, Winthrop Group, Inc. (consulting firm) since 1982;
Manager of Research Operations, Xerox Palo Alto Research Center, from 1991 to
1994; Professor of Operations Management and Management of Technology, Boston
University School of Management ("BUSM"), from 1989 to 1993 and Trustee of all
of the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
JOHN W. KENDRICK, Trustee, DOB: July 1917
6363 Waterway Drive, Falls Church, VA 22044
Professor Emeritus and Adjunct Scholar, George Washington University;
Economic Consultant and Director, American Productivity and Quality Center;
American Enterprise Institute and Trustee of all of the Pioneer mutual funds,
except Pioneer Variable Contracts Trust.
MARGUERITE A. PIRET, Trustee, DOB: May 1948
One Boston Place, Suite 2635, Boston, MA 02108
President, Newbury, Piret & Company, Inc. (merchant banking firm) and
Trustee of all of the Pioneer mutual funds.
-11-
<PAGE>
DAVID D. TRIPPLE*, Trustee and Executive Vice President, DOB: February 1944
Executive Vice President and a Director of PGI; President, Chief
Investment Officer and a Director of PMC; Director of PFD, PCC, PIC, PIntl ,
First Russia, Omega and Pioneer SBIC Corporation, Executive Vice President and
Trustee of all of the Pioneer mutual funds.
STEPHEN K. WEST, Trustee, DOB: September 1928
125 Broad Street, New York, NY 10004
Partner, Sullivan & Cromwell (law firm); Trustee, The Winthrop Focus Funds
(mutual funds) and Trustee of all of the Pioneer mutual funds.
JOHN WINTHROP, Trustee, DOB: June 1936
One North Adgers Wharf, Charleston, SC 29401
President, John Winthrop & Co., Inc. (private investment firm); Director
of NUI Corp.; Trustee of Alliance Capital Reserves, Alliance Government Reserves
and Alliance Tax Exempt Reserves and Trustee of all of the Pioneer mutual funds,
except Pioneer Variable Contracts Trust.
STEPHEN G. KASNET, Trustee and Vice President, DOB: May 1945
Vice President of The Pioneer Group, Inc. and President of Pioneer Real
Estate Advisors, Inc. since 1995; Vice President of Pioneer Variable Contracts
Trust; Managing Director, Winthrop Financial Associates and First Winthrop Corp.
from 1991 to 1995; Executive Vice President, Cabot, Cabot & Forbes from 1989 to
1991.
FRED N. PRATT, JR., Trustee*, DOB:
Boston Financial, 101 Arch Street, Boston, MA 02110
President and Chief Executive Officer of Boston Financial and a Director
of BFS.
ROBERT W. BENSON, Vice President, DOB: April 1947
Senior Vice President of PMC; Vice President of Pioneer Mid-Cap Fund.
-12-
<PAGE>
WILLIAM H. KEOUGH, Treasurer, DOB: April 1937
Senior Vice President, Chief Financial Officer and Treasurer of PGI;
Treasurer of PFD, PMC, PSC, PCC, PIC, PIntl, PMT, PGL, First Russia, Omega and
Pioneer SBIC Corporation; Treasurer and Director of PPC and Treasurer of all of
the Pioneer mutual funds.
JOSEPH P. BARRI, Secretary, DOB: August 1946
Secretary of PGI, PMC, PPC, PIC, PIntl, PMT, First Russia, Omega and PCC;
Clerk of PFD and PSC; Partner, Hale and Dorr (counsel to the Fund) and Secretary
of all of the Pioneer mutual funds.
ERIC W. RECKARD, Assistant Treasurer, DOB: June 1956
Manager of Fund Accounting of PMC since May 1994, Manager of Auditing,
Compliance and Business Analysis for PGI prior to May 1994 and Assistant
Treasurer of all of the Pioneer mutual funds.
ROBERT P. NAULT, Assistant Secretary, DOB: March 1964
General Counsel and Assistant Secretary of PGI since 1995; Assistant
Secretary of PMC, PIntl, PGL, First Russia, Omega and all of the Pioneer mutual
funds; Assistant Clerk of PFD and PSC: and formerly of Hale and Dorr (counsel to
the Fund) where he most recently served as junior partner.
The Fund's Amended and Restated Declaration of Trust (the "Declaration
of Trust") provides that the holders of two-thirds of its outstanding shares may
vote to remove a Trustee of the Fund at any meeting of shareholders. See
"Description of Shares" below. The business address of all officers is 60 State
Street, Boston, Massachusetts 02109.
All of the outstanding capital stock of PFD, PMC and PSC is owned,
directly or indirectly, by PGI, a publicly-owned Delaware corporation. PMC, the
Fund's investment adviser, serves as the investment adviser for the Pioneer
mutual funds listed below and manages the investments of certain institutional
accounts.
The table below lists all the Pioneer mutual funds currently offered to
the public and the investment adviser and principal underwriter for each fund.
-13-
<PAGE>
Investment Principal
Fund Name Adviser Underwriter
Pioneer International Growth Fund PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer India Fund PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Mid-Cap Fund PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer Income Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer New York Triple Tax-Free Fund PMC PFD
Pioneer Massachusetts
Double Tax-Free Fund PMC PFD
Pioneer California Double Tax-Free Fund PMC PFD
Pioneer U.S. Government Money Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer Interest Shares, Inc. PMC Note 1
Pioneer Variable Contracts Trust PMC Note 2
- -----------------
Note 1 This fund is a closed-end fund.
Note 2 This is a series of eight separate portfolios designed to provide
investment vehicles for the variable annuity and variable life
insurance contracts of various insurance companies or for certain
qualified pension plans.
PMC also manages the investments of certain institutional private
accounts. As of January 31, 1996, 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 2.61% of the outstanding Class A shares 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 180,541 (8.03%) Class A shares of the Fund and PFD owned 8,390
Class B shares (100%) and 8,390 Class C shares of the Fund (100%).
-14-
<PAGE>
Remuneration of Trustees
The Fund pays an annual trustees' fee to each Trustee who is not
affiliated with PGI, PMC, PFD or PSC consisting of two components: (a) a base
fee of $500 and (b) a variable fee, calculated on the basis of the Fund's
average net assets, estimated to be approximately $28 for 1996. In addition, the
Fund pays a per meeting fee of $120 to each Trustee who is not affiliated with
PGI, PMC, PFD or PSC. The Fund also pays an annual committee participation fee
to each Trustee who serves as a member of any committees established to act on
behalf of one or more of the of Pioneer mutual funds. Committee fees are
allocated to the Fund on the basis of the Fund's average net assets. Each
Trustee who is a member of the Audit Committee for the Pioneer mutual funds
receives an annual fee equal to 10% of the aggregate annual trustees' fee,
except the Committee Chairperson who receives an annual trustees' fee equal to
20% of the aggregate annual trustees' fee. The 1996 fees for the Audit Committee
members and Chairperson are expected to be approximately $6,000 and $12,000,
respectively. Members of the Pricing Committee for the Pioneer mutual funds, as
well as any other committee which renders material functional services to the
Board of Trustees for the Pioneer mutual funds, receives an annual fee equal to
5% of the annual trustees' fee, except the Committee Chairperson who will
receive an annual trustees' fee equal to 10% of the annual trustees' fee. The
1996 fees for the Pricing Committee members and Chairperson are expected to be
approximately $3,000 and $6,000, respectively. Any such fees paid to affiliates
or interested persons of PGI, PMC, PFD or PSC are reimbursed to the Fund under
its Management Contract. The Fund pays no salaries of compensation to any of its
officers.
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 paid no salaries or
compensation to any of its officers. The Fund paid an annual trustees' fee of
$500 to each Trustee who was not affiliated with PMC, PFD or PSC as well as an
annual fee of $200 to each of the Trustees who was a member of the Fund's Audit
Committee, except for the Chairman of such Committee, who received an annual fee
of $250. The Fund also paid 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 were reimbursed to the Fund
under its Management Contract.
<TABLE>
<CAPTION>
Total Compensa-
tion from the
Pension or Fund and other
Aggregate Retirement funds in the
Compensation Benefits Pioneer Family
TrusteeFrom the Fund* Accrued of Mutual Funds**
<S> <C> <C> <C>
John F. Cogan, Jr.*** $500 0 $11,000
David D. Tripple*** 500 0 11,000
Arthur J. Halleran, Jr._,*** 500 0 500
Stephen G. Kasnet*** 500 0 0
Richard H. Egdahl, M.D. 990 0 63,315
Margaret B.W. Graham 990 0 63,315
John W. Kendrick 990 0 62,398
Marguerite A. Piret 1,232 0 76,704
Stephen K. West 1,159 0 68,180
John Winthrop 1,193 0 71,199
</TABLE>
-15-
<PAGE>
- --------
* As of the Fund's most recent completed fiscal year.
** For the calendar year ended December 31, 1995.
*** Pioneer Winthrop Advisers ("PWA"), which served as the Fund's investment
manager prior to July 17, 1995, or PMC 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 or PMC
fully reimbursed the Fund for compensation paid to Messrs. Halleran and
Kasnet.
_ Mr. Halleran resigned as a Trustee effective July 17, 1995.
4. ADVISORY SERVICES
The Adviser.
As stated in the Prospectus, 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, as the
case may be, or a majority of the Fund's outstanding voting securities and the
giving of sixty days' written notice.
As compensation for its investment advisory and management services and
expenses incurred, PMC is entitled to a management fee at the rate of 1.00% per
annum of the Fund's average daily net assets. 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% of the Fund's
average daily net assets; the portion of the Fund-wide expenses attributable to
Class B and 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 July 17, 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 from October 25, 1993 through June 30, 1994, July 1, 1994
through December 31, 1994 and January 1, 1995 through July 17, 1995, the Fund
would have paid or accrued total management fees to PWA of $103,371, $141,284
and $_______, respectively, but $45,812, $73,158, and $____________,
respectively, of such fees were not imposed pursuant to PWA's voluntary
agreement described above. For the period from July 18, 1995 through December
31, 1995, the Fund would have paid or accrued total management fees to PMC of
$_______, but $____________ of such fees was not imposed pursuant to PMC's
voluntary agreement described above
For the periods from October 25, 1993 through June 30, 1994, July 1, 1994
through December 31, 1994 and January 1, 1995 through July 17, 1995, PWA paid or
accrued total subadvisory fees to PMC and WALP approximately $______, $26,010
and $________, respectively.
-16-
<PAGE>
PMC has agreed that if in any fiscal year the aggregate expenses of the Fund
exceed the expense limitation established by any state having jurisdiction over
the Fund, PMC will reduce its management fee to the extent required by state
law. The most restrictive state expense limit currently applicable to the Fund
provides that the Fund's expenses in any fiscal year may not exceed 2.5% of the
first $30 million of average daily net assets, 2.0% of the next $70 million of
such assets and 1.5% of such assets in excess of $100 million. In the past, the
relevant state has granted relief for 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.
The Subadviser.
Boston Financial Securities, Inc. ("BFS"), 101 Arch Street, Boston,
Massachusetts, serves as the Fund's subadviser. The subadvisory agreement among
the Fund, PMC and BFS expires on May 31, 1997 but 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 of 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, as the case may be, or a majority of the Fund's
outstanding voting securities and the giving of 60 days' written notice.
As compensation for its subadvisory services, PMC will pay BFS a subadvisory
fee equal to 0.25% per annum of the Fund's average daily net assets up to $27
million and 0.50% of average daily net assets in excess of $27 million. The fee
is computed daily and paid monthly. The subadvisory fee payable by PMC to BFS
will be reduced proportionally to the extent that the management fee paid by the
Fund to PMC is reduced under PMC's voluntary expense limitation agreement or to
the extent that PMC, after written notice to BFS, elects to utilize a portion of
the management fees paid to PMC by the Fund to make payments to third parties.
[BFS is a registered broker-dealer and may in the future act as a broker in
connection with the sale of shares of the Fund under a selling agreement with
PFD.]
As of December 31, 1995, the following individuals owned beneficially more
than 10% of the outstanding common stock of BFS: Randolph G Hawthorne (10.53%),
Fred N. Pratt, Jr. (12.17%), William B Haynsworth (10.96%), Alvin H. Howell
(11.29%). The address for each of these individuals is BFS, 101 Arch Street,
Boston, Massachusetts 02110.
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.
-17-
<PAGE>
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
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 reimburses PFD for its expenditures in
financing certain activities 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's service fee at a rate equal to 0.25% of the amount
invested. As compensation therefor, PFD may retain the service fee paid by the
Fund with respect to such shares for the first year after purchase. Commencing
in the thirteenth month following a purchase of Class 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 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.)
-18-
<PAGE>
Class C Plan
The Class C Plan provides that the Fund will pay PFD, as the Fund's
distributor for its Class C shares, a distribution fee accrued daily and paid
quarterly, equal on an annual basis to 0.75% of the Fund's average daily net
assets attributable to Class C shares and will pay PFD a service fee equal to
0.25% of the Fund's average daily net assets attributable to Class C shares. PFD
will in turn pay to securities dealers which enter into a sales agreement with
PFD a distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the Fund's average daily net assets attributable to Class C
shares owned by investors for whom that securities dealer is the holder or
dealer of record. The service fee is intended to be in consideration of personal
services and/or account maintenance services rendered by the dealer with respect
to Class C shares. PFD will advance to dealers the first year's service fee at a
rate equal to 0.25% of the amount invested. As compensation therefor, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Commencing in the thirteenth month following a
purchase of Class C shares, dealers will become eligible for additional service
fees at a rate of up to 0.25% of the net asset value of such shares and
additional compensation at a rate of up to 0.75% of the net asset value of 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 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
-19-
<PAGE>
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 December 31, 1995, the Fund incurred total Class A distribution fees of
$35,321 and $61,755, 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 were first offered on January 31, 1996.
6. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with 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, as the case may be, or a
majority of the Fund's outstanding voting securities and the giving of ninety
days' written notice.
Under the terms of its contract with the Fund, PSC will service shareholder
accounts, and its duties will include: (i) processing sales, redemptions and
exchanges of shares of the Fund; (ii) distributing dividends and capital gains
associated with Fund portfolio accounts; and (iii) maintaining account records
and responding to routine shareholder inquiries.
PSC receives 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").
-20-
<PAGE>
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 immediate 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
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 December 31, 1995, net
underwriting commissions earned by PFD in connection with its offering of Fund
shares were approximately $66,304, $27,497 and $29,766.72. For the same periods,
commissions reallowed to dealers by PFD were approximately $1,124,000, $186,213
and $1187,035.59, 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 Management
Contract with PMC. In selecting brokers or dealers, PMC considers other factors
relating to best execution, including, but not
-21-
<PAGE>
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.
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
-22-
<PAGE>
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 Pioneer mutual fund or a private account managed by PMC seeks
to acquire the same security at about the same time, the Fund may not be able to
acquire as large a position in such security as it desires or it may have to pay
a higher price for the security. Similarly, the Fund may not be able to obtain
as large an execution of an order to sell or as high a price for any particular
portfolio security if PMC decides to sell on behalf of another account the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one account, the resulting
participation in volume transactions could produce better executions for the
Fund or other account. In the event that more than one account purchases or
sells the same security on a given date, the purchases and sales will normally
be made as nearly as practicable on a pro rata basis in proportion to the
amounts desired to be purchased or sold by each.
During the periods from October 25, 1993 through June 30, 1994, July 1, 1994
through December 31, 1994 and January 1, 1995 through December 31, 1995, the
Fund paid or accrued aggregate brokerage and underwriting commissions of
approximately $170,534, $213,710 and $18,000, 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, in accordance with the Code's
timing requirements, 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.
-23-
<PAGE>
For purposes of the 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 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.
-24-
<PAGE>
Since, at the time of an investor's purchase of Fund shares, a portion of the
per share net asset value by which the purchase price is determined may be
represented by realized or unrealized appreciation in the Fund's portfolio or
undistributed taxable income of the Fund, subsequent distributions (or portions
thereof) on such shares may be taxable to such investor even if the net asset
value of his shares is, as a result of the distributions, reduced below his cost
for such shares and the distributions (or portions thereof) in reality represent
a return of a portion of his investment.
Redemptions and exchanges are taxable events. Any loss realized upon the
redemption or other sale of shares with a tax holding period of six months or
less will be treated as a long-term capital loss to the extent of any amounts
treated as distributions of long-term capital gain with respect to such shares.
In addition, if Class A shares redeemed or exchanged have been held for less
than 91 days, (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
(including those made pursuant to automatic dividend reinvestment) 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. As of December 31, 1995, the Fund had a capital loss
carryforward of $584,636 which will expire in 2003.
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,
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
-25-
<PAGE>
straddle rules of the Code, which may also affect the characterization of
capital gains or losses from straddle positions and certain successor positions
as long-term or short-term. The tax rules applicable to options, futures 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 Internal Revenue Service ("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 Number
or other Taxpayer Identification Number they provide is their correct number and
that they are not currently subject to backup withholding, or that they are
exempt from backup withholding. The Fund may nevertheless be required to
withhold if it receives notice from the IRS or a broker that the number provided
is incorrect or backup withholding is applicable as a result of previous
underreporting of interest or dividend income.
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. non-resident alien withholding tax (or
withholding tax at a lower treaty rate) on any amounts 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.
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
-26-
<PAGE>
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.
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.
-27-
<PAGE>
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 are received 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
from Class B and Class C share accounts are limited as described in "Systematic
Withdrawal Plan" in the Prospectus. 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.
-28-
<PAGE>
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.
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.
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
-29-
<PAGE>
("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.
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 = umber of years
ERV = ending redeemable value of the hypothetical
$1000 initial payment made at the beginning of
the designated period (or fractional portion
thereof)
For purposes of the above computation, 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 shares of the Fund for the fiscal
year ended December 31, 1995 were:
1 Year 5 Years 10 Years Life
------ ------- -------- ----
Class A Shares 5.70% N/A N/A 0.86% *
Class B Shares N/A N/A N/A N/A **
Class C Shares N/A N/A N/A N/A **
- -----------
* Commencement of operations, October 25, 1993.
** Commencement of operations, January 31,1996.
Class A share results reflect the maximum sales charge of 5.75
No Class B or Class C shares were outstanding prior to January 31,
1996.
-30-
<PAGE>
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, NAREIT 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.
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 SEC.
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
-31-
<PAGE>
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.
18. FINANCIAL STATEMENTS
The Fund's audited financial statements for the fiscal year ended
December 31, 1995 are included in the Fund's 1995 Annual Report to Shareholders
which is hereby incorporated by reference into this Statement of Additional
Information and attached hereto in reliance upon the report of Arthur Andersen
LLP, independent public accountants, as experts in accounting and auditing.
-32-
<PAGE>
1__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.
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.
<PAGE>
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.
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.
- --------
1 Rates all governmental bodies having $1,000,000 or more of debt outstanding,
unless adequate information is not available.
2-A
<PAGE>
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.
3-A
<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 44,
with a combined average of 15 years' experience in the financial services
industry.
At December 31, 1995, there were 637,060 non-retirement shareholder accounts and
345,309 retirement shareholder accounts in the Pioneer mutual funds. Total
assets for all Pioneer mutual funds as of December 31, 1995 were $12,764,708,124
representing 982,369 shareholder accounts.
1-B
<PAGE>
APPENDIX C
SECURITIES INDICES
Index Descriptions
The following securities indices are well-known, unmanaged measures of market
performance. Advertisements and sales literature for the Fund may refer to these
indices or may present comparisons between the performance of the Fund and one
or more of the indices. Other indices may be used, if appropriate. The indices
Rare not available for direct investment. The data presented is not meant to be
indicative of the performance of the Fund, reflects past performance and does
not guarantee future results.
S&P 500
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P Composite Index
includes 500 of the largest stocks (in terms of stock market value) in the
United States; prior to March 1957 it consisted of 90 of the largest stocks.
DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of 30 blue chip stocks.
U.S. SMALL STOCK INDEX
This index is a market value weighted index of the ninth and tenth deciles of
the New York Stock Exchange (NYSE), plus stocks listed on the American Stock
Exchange (AMEX) and over-the-counter (OTC) with the same or less capitalization
as the upper bound of the NYSE ninth decile.
U.S. INFLATION
The Consumer Price Index for All Urban Consumers (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S. Department of Labor, Bureau of Labor Statistics, Washington, DC.
S&P/BARRA INDEXES
The S&P/BARRA Growth and Value Indexes are constructed by dividing the stocks in
the S&P 500 Index according to price-to-book ratios. The Growth Index contains
stocks with higher price-to-book ratios, and the Value Index contains stocks
with lower price-to-book ratios. Both indexes are market capitalization
weighted.
LONG-TERM U.S. GOVERNMENT BONDS
The total returns on long-term government bonds from 1977 to 1991 are
constructed with data from The Wall Street Journal. Over 1926-1976, data are
obtained from the Government bond file at the Center for Research in Security
Prices (CRSP), Graduate School of Business, University of Chicago. Each year, a
one-bond portfolio with a term of approximately 20 years and a reasonably
<PAGE>
current coupon was used, and whose returns did not reflect potential tax
benefits, impaired negotiability, or special redemption or call privileges.
Where callable bonds had to be used, the term of the bond was assumed to be a
simple average of the maturity and first call dates minus the current date. The
bond was "held" for the calendar year and returns were computed. Total returns
for 1977-1991 are calculated as the change in the flat price or and-interest
price.
INTERMEDIATE-TERM U.S. GOVERNMENT BONDS
Total returns of the intermediate-term government bonds for 1977-1991 are
calculated from The Wall Street Journal prices, using the change in flat price.
Returns from 1934-1986 are obtained from the CRSP Government Bond File.
Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than 5 years, and this bond is "held"
for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934-1942, almost all bonds
with maturities near 5 years were partially or full tax-exempt and were selected
using the rules described above. Personal tax rates were generally low in that
period, so that yields on tax-exempt bonds were similar to yields on taxable
bonds. From 1926-1933, there are few bonds suitable for construction of a series
with a 5-year maturity. For this period, five year bond yield estimates are
used.
MSCI
Morgan Stanley Capital International Indices, developed by the Capital
International S.A., are based on share prices of some 1470 companies listed on
the stock exchanges around the world.
Countries in the MSCI EAFE Portfolio are:
Australia; Austria; Belgium; Denmark; Finland; France; Germany; Hong Kong;
Italy; Japan; Netherlands; New Zealand; Norway; Singapore/Malaysia; Spain;
Sweden; Switzerland; United Kingdom.
6 MONTH CDs
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
LONG-TERM U.S. CORPORATE BONDS
For 1969-1991, corporate bond total returns are represented by the Salomon
Brothers Long-Term High-Grade Corporate Bond Index. Since most large corporate
bond transactions take place over the counter, a major dealer is the natural
source of these data. The index includes nearly all Aaa- and Aa-rated bonds. If
a bond is downgraded during a particular month, its return for the month is
included in the index before removing the bond from future portfolios.
Over 1926-1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946-1968, Ibbotson
and Sinquefield backdated the Salomon Brothers' index, using Salomon Brothers'
monthly yield data with a methodology similar to that used by Salomon for
1969-1991. Capital appreciation returns were calculated from yields assuming (at
the beginning of each monthly holding period) a 20-year maturity, a bond price
equal to par, and a coupon equal to the beginning-of-period yield. For the
period 1926-1945, the Standard and Poor's monthly High-Grade Corporate Composite
yield data were used, assuming a 4 percent coupon and a 20-year maturity. The
conventional present-value formula for bond price for the beginning and
end-of-month prices was used. (This formula is presented in Ross, Stephen A.,
and Randolph W. Westerfield, Corporate Finance, Times Mirror/Mosby, St. Louis,
1990, p. 97 ["Level-Coupon Bonds"].) The monthly income return was assumed to be
one-twelfth the coupon.
<PAGE>
U.S. (30 DAY) TREASURY BILLS
For the U.S. Treasury bill index, data from The Wall Street Journal are used for
1977-1991; the CRSP U.S. Government Bond File is the source until 1976. Each
month a one-bill portfolio containing the shortest-term bill having not less
than one month to maturity is constructed. (The bill's original term to maturity
is not relevant.) To measure holding period returns for the one-bill portfolio,
the bill is priced as of the last trading day of the previous month-end and as
of the last trading day of the current month.
NAREIT-EQUITY INDEX
All of the data is based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMSE and the NASDAQ. The data is
market-value-weighted. Prior to 1987 REITs were added to the index the January
following their listing. Since 1987 Newly formed or listed REITs are added to
the total shares outstanding figure in the month that the shares are issued.
Only common shares issued by the REIT are included in the index. The total
return calculation is based upon the weighing at the beginning of the period.
Only those REITs listed for the entire period are used in the total return
calculation. Dividends are included in the month based upon their payment date.
There is no smoothing of income. Liquidating dividends, whether full or partial,
are treated as income.
RUSSELL 2000 SMALL STOCK INDEX
Index of the 2,000 smallest stocks in the Russell 3000 Index (TM); the smallest
company has a market capitalization of approximately $13 million.
The Russell 30000 is comprised of the 3,000 largest US companies as determined
by market capitalization representing approximately 98% of the US equity market.
The largest company in the index has a market capitalization of $67 billion. The
Russell Indexes (TM) are reconstituted annually as of June 1st, based on May 31
market capitalization rankings.
WILSHIRE REAL ESTATE SECURITIES INDEX
The Wilshire Real Estate Securities Index is a market capitalization-weighted
index which measures the performance of more than 85 securities.
The index contains performance data on five major categories of property;
office, retail, industrial, apartment and miscellaneous. Additionally, the Index
has real estate portfolio encumbered by 16% third party mortgages. The companies
in the WRESEC are 79% equity and hybrid REIT's and 21% real estate operating
companies. The capitalization is 47% NYSE, 33% AMEX and 20% OTC."
STANDARD & POOR'S MIDCAP 400 INDEX
The Standard and Poor's MidCap 400 Index is a market-value-weighted index. The
performance data for the MidCap 400 Index were calculated by taking the stocks
presently in the MidCap 400 Index and tracking them backwards in time as long as
there were prices reported. No attempt was made to determine what stocks "might
have been"
in the MidCap 400 Index five or ten years ago had it existed. Dividends are
reinvested on a monthly basis prior to June 30, 1991, and are reinvested daily
thereafter.
The S&P MidCap 400 Index and the S&P 500 together represent approximately 85% of
the total market capitalization of stocks traded in the United States.
BANK SAVINGS ACCOUNT
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963-1987 and The Wall Street Journal for the years 1988-1994.
Source: Ibbotson Associates
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S&P 500 Dow U.S. Small S&P/ S&P/
Jones Stock U.S. BARRA BARRA
Industrials Index Inflation Growth Value
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A
Dec 1931 -43.34 -49.03 -49.75 -9.52 N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A
Dec 1933 53.99 73.71 142.87 0.51 N/A N/A
Dec 1934 -1.44 8.07 24.22 2.03 N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A
Dec 1942 20.34 14.12 44.51 9.29 N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S&P 500 Dow U.S. Small S&P/ S&P/
Jones Stock U.S. BARRA BARRA
Industrials Index Inflation Growth Value
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60
Dec 1994 1.31 5.06 3.11 2.78 3.13 -0.64
Dec 1995 37.43 36.84 34.46 2.74 38.13 36.99
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Intermediate MSCI Long-
Long-Term -Term U.S. EAFE 6 Term U.S. U.S.
U.S. Gov't Government - Net of MONTH Corporate (30 Day)
Bonds Bonds Taxes CDs Bonds T- Bill
Dec 1925 N/A N/A N/A N/A N/A N/A
Dec 1926 7.77 5.38 N/A N/A 7.37 3.27
Dec 1927 8.93 4.52 N/A N/A 7.44 3.12
Dec 1928 0.1 0.92 N/A N/A 2.84 3.56
Dec 1929 3.42 6.01 N/A N/A 3.27 4.75
Dec 1930 4.66 6.72 N/A N/A 7.98 2.41
Dec 1931 -5.31 -2.32 N/A N/A -1.85 1.07
Dec 1932 16.84 8.81 N/A N/A 10.82 0.96
Dec 1933 -0.07 1.83 N/A N/A 10.38 0.30
Dec 1934 10.03 9.00 N/A N/A 13.84 0.16
Dec 1935 4.98 7.01 N/A N/A 9.61 0.17
Dec 1936 7.52 3.06 N/A N/A 6.74 0.18
Dec 1937 0.23 1.56 N/A N/A 2.75 0.31
Dec 1938 5.53 6.23 N/A N/A 6.13 -0.02
Dec 1939 5.94 4.52 N/A N/A 3.97 0.02
Dec 1940 6.09 2.96 N/A N/A 3.39 0.00
Dec 1941 0.93 0.50 N/A N/A 2.73 0.06
Dec 1942 3.22 1.94 N/A N/A 2.60 0.27
Dec 1943 2.08 2.81 N/A N/A 2.83 0.35
Dec 1944 2.81 1.80 N/A N/A 4.73 0.33
Dec 1945 10.73 2.22 N/A N/A 4.08 0.33
Dec 1946 -0.10 1.00 N/A N/A 1.72 0.35
Dec 1947 -2.62 0.91 N/A N/A -2.34 0.50
Dec 1948 3.40 1.85 N/A N/A 4.14 0.81
Dec 1949 6.45 2.32 N/A N/A 3.31 1.10
Dec 1950 0.06 0.70 N/A N/A 2.12 1.20
Dec 1951 -3.93 0.36 N/A N/A -2.69 1.49
Dec 1952 1.16 1.63 N/A N/A 3.52 1.66
Dec 1953 3.64 3.23 N/A N/A 3.41 1.82
Dec 1954 7.19 2.68 N/A N/A 5.39 0.86
Dec 1955 -1.29 -0.65 N/A N/A 0.48 1.57
Dec 1956 -5.59 -0.42 N/A N/A -6.81 2.46
Dec 1957 7.46 7.84 N/A N/A 8.71 3.14
Dec 1958 -6.09 -1.29 N/A N/A -2.22 1.54
Dec 1959 -2.26 -0.39 N/A N/A -0.97 2.95
Dec 1960 13.78 11.76 N/A N/A 9.07 2.66
Dec 1961 0.97 1.85 N/A N/A 4.82 2.13
Dec 1962 6.89 5.56 N/A N/A 7.95 2.73
Dec 1963 1.21 1.64 N/A N/A 2.19 3.12
Dec 1964 3.51 4.04 N/A 4.18 4.77 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 3.93
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Intermediate MSCI Long-
Long-Term -Term U.S. EAFE 6 Term U.S. U.S.
U.S. Gov't Government - Net of MONTH Corporate (30 Day)
Bonds Bonds Taxes CDs Bonds T- Bill
Dec 1966 3.65 4.69 N/A 5.75 0.20 4.76
Dec 1967 -9.18 1.01 N/A 5.48 -4.95 4.21
Dec 1968 -0.26 4.54 N/A 6.44 2.57 5.21
Dec 1969 -5.07 -0.74 N/A 8.71 -8.09 6.58
Dec 1970 12.11 16.86 -11.66 7.06 18.37 6.52
Dec 1971 13.23 8.72 29.59 5.36 11.01 4.39
Dec 1972 5.69 5.16 36.35 5.38 7.26 3.84
Dec 1973 -1.11 4.61 -14.92 8.60 1.14 6.93
Dec 1974 4.35 5.69 -23.16 10.20 -3.06 8.00
Dec 1975 9.20 7.83 35.39 6.51 14.64 5.80
Dec 1976 16.75 12.87 2.54 5.22 18.65 5.08
Dec 1977 -0.69 1.41 18.06 6.12 1.71 5.12
Dec 1978 -1.18 3.49 32.62 10.21 -0.07 7.18
Dec 1979 -1.23 4.09 4.75 11.90 -4.18 10.38
Dec 1980 -3.95 3.91 22.58 12.33 -2.76 11.24
Dec 1981 1.86 9.45 -2.28 15.50 -1.24 14.71
Dec 1982 40.36 29.1 -1.86 12.18 42.56 10.54
Dec 1983 0.65 7.41 23.69 9.65 6.26 8.80
Dec 1984 15.48 14.02 7.38 10.65 16.86 9.85
Dec 1985 30.97 20.33 56.16 7.82 30.09 7.72
Dec 1986 24.53 15.14 69.44 6.30 19.85 6.16
Dec 1987 -2.71 2.90 24.63 6.58 -0.27 5.47
Dec 1988 9.67 6.10 28.27 8.15 10.70 6.35
Dec 1989 18.11 13.29 10.54 8.27 16.23 8.37
Dec 1990 6.18 9.73 -23.45 7.85 6.78 7.81
Dec 1991 19.3 15.46 12.13 4.95 19.89 5.60
Dec 1992 8.05 7.19 -12.17 3.27 9.39 3.51
Dec 1993 18.24 11.24 32.56 2.88 13.19 2.90
Dec 1994 -7.77 -5.14 7.78 5.40 -5.76 3.90
Dec 1995 31.67 16.8 11.21 5.21 26.39 5.60
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S & P Bank
NAREIT - Russell Wilshire Midcap Savings
Equity 2000 Real Estate 400 Account
Dec 1925 N/A N/A N/A N/A N/A
Dec 1926 N/A N/A N/A N/A N/A
Dec 1927 N/A N/A N/A N/A N/A
Dec 1928 N/A N/A N/A N/A N/A
Dec 1929 N/A N/A N/A N/A N/A
Dec 1930 N/A N/A N/A N/A 5.30
Dec 1931 N/A N/A N/A N/A 5.10
Dec 1932 N/A N/A N/A N/A 4.10
Dec 1933 N/A N/A N/A N/A 3.40
Dec 1934 N/A N/A N/A N/A 3.50
Dec 1935 N/A N/A N/A N/A 3.10
Dec 1936 N/A N/A N/A N/A 3.20
Dec 1937 N/A N/A N/A N/A 3.50
Dec 1938 N/A N/A N/A N/A 3.50
Dec 1939 N/A N/A N/A N/A 3.40
Dec 1940 N/A N/A N/A N/A 3.30
Dec 1941 N/A N/A N/A N/A 3.10
Dec 1942 N/A N/A N/A N/A 3.00
Dec 1943 N/A N/A N/A N/A 2.90
Dec 1944 N/A N/A N/A N/A 2.80
Dec 1945 N/A N/A N/A N/A 2.50
Dec 1946 N/A N/A N/A N/A 2.20
Dec 1947 N/A N/A N/A N/A 2.30
Dec 1948 N/A N/A N/A N/A 2.30
Dec 1949 N/A N/A N/A N/A 2.40
Dec 1950 N/A N/A N/A N/A 2.50
Dec 1951 N/A N/A N/A N/A 2.60
Dec 1952 N/A N/A N/A N/A 2.70
Dec 1953 N/A N/A N/A N/A 2.80
Dec 1954 N/A N/A N/A N/A 2.90
Dec 1955 N/A N/A N/A N/A 2.90
Dec 1956 N/A N/A N/A N/A 3.00
Dec 1957 N/A N/A N/A N/A 3.30
Dec 1958 N/A N/A N/A N/A 3.38
Dec 1959 N/A N/A N/A N/A 3.53
Dec 1960 N/A N/A N/A N/A 3.86
Dec 1961 N/A N/A N/A N/A 3.90
Dec 1962 N/A N/A N/A N/A 4.08
Dec 1963 N/A N/A N/A N/A 4.17
Dec 1964 N/A N/A N/A N/A 4.19
Dec 1965 N/A N/A N/A N/A 4.23
Dec 1966 N/A N/A N/A N/A 4.45
Dec 1967 N/A N/A N/A N/A 4.67
Dec 1968 N/A N/A N/A N/A 4.68
Dec 1969 N/A N/A N/A N/A 4.80
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S & P Bank
NAREIT - Russell Wilshire Midcap Savings
Equity 2000 Real Estate 400 Account
Bank Savings Account
Dec 1970 N/A N/A N/A N/A 5.14
Dec 1971 N/A N/A N/A N/A 5.30
Dec 1972 8.01 N/A N/A N/A 5.37
Dec 1973 -15.52 N/A N/A N/A 5.51
Dec 1974 -21.40 N/A N/A N/A 5.96
Dec 1975 19.30 N/A N/A N/A 6.21
Dec 1976 47.59 N/A N/A N/A 6.23
Dec 1977 22.42 N/A N/A N/A 6.39
Dec 1978 10.34 N/A 13.04 N/A 6.56
Dec 1979 35.86 43.09 70.81 N/A 7.29
Dec 1980 24.37 38.58 22.08 N/A 8.78
Dec 1981 6.00 2.03 7.18 N/A 10.71
Dec 1982 21.60 24.95 24.47 22.68 11.19
Dec 1983 30.64 29.13 27.61 26.10 9.71
Dec 1984 20.93 -7.30 20.64 1.18 9.92
Dec 1985 19.10 31.05 22.20 35.58 9.02
Dec 1986 19.16 5.68 20.30 16.21 7.84
Dec 1987 -3.64 -8.77 -7.86 -2.03 6.92
Dec 1988 13.49 24.89 24.18 20.87 7.20
Dec 1989 8.84 16.24 2.37 35.54 7.91
Dec 1990 -15.35 -19.51 -33.46 -5.12 7.80
Dec 1991 35.7 46.05 20.03 50.1 4.61
Dec 1992 14.59 18.41 7.36 11.91 2.89
Dec 1993 19.65 18.91 15.24 13.96 2.73
Dec 1994 3.17 -1.82 1.64 -3.57 4.96
Dec 1995 15.27 28.44 13.65 30.94 5.24
Source: Ibbotson Associates
<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 fiscal year ended December 31, 1995
(filed with the Securities and Exchange Commission on
February __, 1996, Accession No. ________________.
(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.
5.1. Management Contract between the Registrant and
Pioneering Management Corporation.****
5.2. Form of Subadvisory Agreement by and among the
Registrant, Pioneering Management Corporation and
Boston Financial Securities, Inc.+
6.1. Underwriting Agreement between the Registrant and
Pioneer Funds Distributor, Inc.*
6.2. Form of Dealer Sales Agreement.**
7. None.
C-1
<PAGE>
8. Custodian Agreement between the Registrant and Brown
Brothers Harriman & Co.*
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.* and +
- --------------
+ Filed herewith.
* 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 Post-Effective Amendment No. 6 to the Registration Statement on
November 14, 1995 and incorporated herein by reference.
C-2
<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 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 Mid-Cap
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.
C-3
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
Number of Record Holders
Title of Class as of December 29, 1995
-------------- -----------------------
Class A Shares of Beneficial Interest 2,431
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.
C-4
<PAGE>
The following sections of such Form ADV are incorporated herein by
reference:
(a) Items 1 and 2 of Part 2;
(b) Section IV, Business Background, of
each Schedule D.
ITEM 29. PRINCIPAL UNDERWRITER.
(a) See Item 25 above.
(b) Directors and Officers of PFD:
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
John F. Cogan, Jr. Director and Chairman Chairman of the Board,
Chief Executive
Officer and Trustee
Robert L. Butler Director and President None
David D. Tripple Director Executive Vice
President and Trustee
Steven M. Graziano Senior Vice President None
Stephen W. Long Senior Vice President None
John W. Drachman Vice President None
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
C-5
<PAGE>
Mary Sue Hoban Assistant None
Vice President
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
Mary Kleeman Vice President None
(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.
C-6
<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 28th day of February, 1996.
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 )
)
)
)
Fred N. Pratt, Jr.* )
Fred N. Pratt, Jr. )
)
)
)
David D. Tripple* )
David D. Tripple )
)
)
Stephen K. West* )
Stephen K. West )
)
)
John Winthrop* )
John Winthrop )
- ---------
* By: /s/ Joseph P. Barri February 28, 1996
---------------------
Joseph P. Barri
Attorney-in-fact
<PAGE>
EXHIBIT INDEX
Exhibit
Number Document Title
5.2. Form of Subadvisory Agreement by and among the Registrant,
Pioneering Management Corporation and Boston Financial Securities,
Inc.
11. Consent of Independent Public Accountants
17. Financial Data Schedule
19. Power of Attorney of Fred N. Pratt, Jr.
APPENDIX A
SUBADVISORY AGREEMENT
SUBADVISORY AGREEMENT made as of the ____ day of March, 1996, by and
among PIONEER REAL ESTATE SHARES, a Delaware business trust (the "Fund"),
PIONEERING MANAGEMENT CORPORATION, a Delaware corporation (the "Manager") and
BOSTON FINANCIAL SECURITIES, INC., a Massachusetts corporation (the
"Subadviser").
W I T N E S S E T H
WHEREAS, the Fund is an open-end, management investment company,
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), and the Manager and the Subadviser are investment advisers registered
under the Investment Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, pursuant to authority granted to the Manager by the Fund's
Board of Trustees and pursuant to the provisions of the Management Contract
dated as of September 26, 1995 between the Manager and the Fund (the "Management
Contract"), the Manager has selected the Subadviser to act as a sub-investment
adviser of the Fund and to provide certain other services, as more fully set
forth below, and to perform such services under the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, it is agreed as follow:
1. The Subadviser's Services.
(a) The Subadviser shall, to the extent reasonably required in the
conduct of the business of the Fund and upon request by the Fund or the Manager,
(i) identify, analyze and make investment recommendations regarding real estate
industry companies, including the real estate properties and other permissible
investments of the Fund, (ii) analyze market conditions affecting the real
estate industry generally and specific geographical and securities markets in
which the Fund may invest or is invested, (iii) continuously review and analyze
the investments in the Fund's portfolio, and (iv) furnish to the Manager and the
Fund advisory reports based on such analysis. The Subadviser shall 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
the contents of such reports.
The Subadviser shall use its best efforts to ensure that any
recommendations it makes to the Manager regarding the purchase and sale of
portfolio securities are in compliance with the provisions of the Fund's
Declaration of Trust and By-laws and the 1940 Act, and with the investment
objectives, policies and restrictions (including, without limitation, the
requirements of Subchapter M of the Internal Revenue Code of 1986, as amended,
for qualification as a regulated investment company) of the Fund, as each of the
same shall be from time to time in effect as set forth in the Fund's Prospectus
and Statement of Additional Information, or any investment guidelines or other
instructions received in writing from the Manager, and subject, further, to such
policies and instructions as the Manager may from time to time establish and
deliver to the Subadviser. Notwithstanding the foregoing, pursuant to the terms
of the Management Contract, the Manager is solely responsible for the day-to-day
management of the Fund's investment portfolio and for ensuring that the Fund's
investments comply with the Fund's Declaration of Trust and By-laws and the 1940
Act, and with the investment objectives, policies and restrictions of the Fund.
(b) The Subadviser shall not be responsible for the provision of
administrative, bookkeeping or accounting services to the Fund, except as
otherwise provided herein or as may be necessary for the Subadviser to supply to
the Manager, the Fund or its Trustees the information required to be supplied
under this Agreement.
(c) The Subadviser shall maintain separate books and detailed records
of all matters pertaining to the Fund (the "Fund's Books and Records"). The
Fund's Books and Records shall be available to the Manager at any time upon
request and shall be available for telecopying without delay to the Manager
during any day that the Fund is open for business.
(d) The Subadviser shall also ensure that its Access Persons (as
defined in the Fund's Code of Ethics) comply in all respects with the Fund's
Code of Ethics, as in effect from time to time.
(e) The Subadviser shall inform the Manager and the Fund's Trustees on
a current basis of changes in investment strategy or tactics or in key
personnel. The Subadviser will make its officers and employees available to meet
with the Fund's Trustees at least annually on due notice to review the
investments of the Fund in light of current and prospective economic and market
conditions.
(f) From time to time as the Manager or the Trustees of the Fund may
reasonably request, the Subadviser shall furnish to the Manager and to each of
the Fund's Trustees reports on securities held by the Fund, all in such detail
as the Manager or the Trustees may reasonably request.
(g) It shall be the duty of the Subadviser to furnish to the Trustees
of the Fund such information as may reasonably be necessary in order for the
Trustees to evaluate this Agreement or any proposed amendments thereto for the
purposes of casting a vote pursuant to Section 8 hereof.
2. Allocation of Charges and Expenses. The Subadviser will bear its own
costs of providing services hereunder. Other than as herein specifically
indicated, the Subadviser shall not be responsible for the Fund's or the
Manager's expenses, including brokerage and other expenses incurred in placing
orders for the purchase and sale of securities. Specifically, the Subadviser
will not be responsible for expenses of the Fund or the Manager, as the case may
be, including, but not limited to, the following: (i) charges and expenses for
determining from time to time the value of the Fund's net assets and the keeping
of its books and records and related overhead; (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 Fund; (iv)
brokers' commissions, and issue and transfer taxes, chargeable to the Fund in
connection with securities transactions to which the Fund 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 Fund to federal,
state or other governmental agencies; (vi) fees and expenses involved in
registering and maintaining registrations of the Fund and/or its shares with the
Securities and Exchange Commission (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 Fund and the Trustees; (ix) distribution fees
paid by the Fund in accordance with Rule 12b-1 promulgated by the Commission
pursuant to the 1940 Act; (x) compensation and expenses of Trustees of the Fund.
The
<PAGE>
Fund or the Manager, as the case may be, shall reimburse the Subadviser for any
such expenses or other expenses of the Fund or the Manager, as may be reasonably
incurred by such Subadviser on behalf of the Fund or the Manager. The Subadviser
shall keep and supply to the Fund and the Manager adequate records of all such
expenses.
3. Information supplied by the Manager. The Manager shall provide the
Subadviser with the Fund's Declaration of Trust, By-laws, Prospectus and
Statement of Additional Information, and instructions, as in effect from time to
time; and the Subadviser shall have no responsibility for actions taken in
reliance on any such documents.
4. Representations, Warranties and Covenants. The Subadviser represents
and warrants to each of the Fund and the Manager that it is registered as an
"investment adviser" under the Subadvisers Act and covenants that it will remain
so registered for the duration of this Agreement.
The Subadviser has reviewed the Registration Statement of the Fund as
filed with the Commission and represents and warrants that with respect to
disclosure about the Subadviser or information relating directly or indirectly
to the Subadviser, such Registration Statement contains, as of the date hereof,
no untrue statement of any material fact and does not omit any statement of
material fact which was required to be stated therein or necessary to make the
statements contained therein not misleading.
Except as otherwise provided in Section 1(a) hereof, the Subadviser
agrees to comply with the requirements of the 1940 Act and the Advisers Act and
the respective rules and regulations thereunder, as applicable, as well as with
all other applicable Federal and state laws, rules, regulations and case law
that relate to the services and relationships described hereunder, and with the
provisions of the Registration Statement, as amended or supplemented, of the
Fund.
5. Subadviser's Compensation. The Manager shall pay to the Subadviser,
as compensation for the Subadviser's services hereunder, a fee equal to 0.25%
per annum of the Fund's average daily net assets up to $27 million of such
assets and 0.50% per annum of average daily net assets in excess of $27 million.
Such fee shall be computed daily and paid monthly. The Fund shall have no
responsibility for any fee payable to the Subadviser.
The method of determining net assets of the Fund for purposes hereof
shall be the same as the method of determining net assets for purposes of
establishing the offering and redemption price of Fund shares as described in
the Fund's Prospectus. If this Agreement shall be effective for only a portion
of a month, the aforesaid fee shall be prorated for that portion of such month
during which this Agreement is in effect.
In the event that the advisory fee payable by the Fund to the Manager
shall be reduced or the Manager agrees, after written notice to the Subadviser,
to utilize a portion of the advisory fee to make payments to a third party, the
amount payable to the Subadviser shall be likewise reduced by a proportionate
amount. The Subadviser 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 portion thereof would otherwise accrue). Any such fee reduction may be
discontinued or modified by the Subadviser at any time.
<PAGE>
6. Independent Contractor. In the performance of its duties hereunder,
the Subadviser is and shall be an independent contractor and unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Fund in any way or otherwise be deemed to
be an agent of the Fund or of the Manager.
7. Assignment and Amendments. This Agreement shall automatically
terminate, without the payment of any penalty, in the event of (i) its
assignment, including any change of control of the Manager or the Subadviser, or
(ii) in the event of the termination of the Management Contract; provided that
such termination shall not relieve the Manager or the Subadviser of any
liability incurred hereunder.
The terms of this Agreement shall not be changed unless such change is
approved at a meeting by the affirmative vote of a majority of the outstanding
voting securities of the Fund and unless also approved by the affirmative vote
of a majority of Trustees of the Fund voting in person, including a majority of
the Trustees who are not interested persons of the Fund, the Manager or the
Subadviser, at a meeting called for the purpose of voting on such change.
8. Duration and Termination. This Agreement shall become effective as
of the date first above written and shall remain in full force and effect
continually thereafter unless terminated automatically as set forth in Section 7
hereof or until terminated as follows:
(a) The Fund or the Manager may at any time terminate this Agreement by
not more than sixty (60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to the Subadviser.
Action of the Fund under this Subsection may be taken either (i) by vote of its
Trustees or (ii) by the affirmative vote of a majority of the outstanding voting
securities of the Fund;
(b) The Subadviser may at any time terminate this Agreement by not more
than sixty (60) days' nor less than thirty (30) days' written notice delivered
or mailed by registered mail, postage prepaid, to the Manager; or
(c) This Agreement shall automatically terminate on May 31 of any year
beginning on May 31, 1997, in which its terms and renewal shall not have been
approved by (i) a majority vote of the Trustees of the Fund voting in person,
including a majority of the Trustees who are not interested persons of the Fund,
the Manager or the Subadviser, at a meeting called for the purpose of voting on
such approval or (ii) the affirmative vote of a majority of the outstanding
voting securities of the Fund; provided, however, that if the continuance of
this Agreement is submitted to the shareholders of the Fund for their approval
and such shareholders fail to approve such continuance of this Agreement as
provided herein, the Subadviser may continue to serve hereunder as to the Fund
in a manner consistent with the 1940 Act and the rules and regulations
thereunder.
Termination of this Agreement pursuant to this Section shall be without
payment of any penalty.
In the event of termination of this Agreement for any reason, the
Subadviser shall, immediately upon notice of termination or on such later date
as may be specified in such notice, cease all activity on behalf of the Fund and
with respect to any of its assets, except as expressly directed by the Manager.
In addition, the Subadviser shall deliver the Fund's Books and Records to the
Manager by such means and in accordance with such schedule as the Manager shall
direct and shall otherwise cooperate, as reasonably directed by the Manager, in
the transition of portfolio asset management to any successor of the Subadviser,
including the Manager.
9. Certain Definitions. For the purposes of this Agreement:
(a) "Affirmative vote of a majority of the outstanding voting
securities of the Fund" means the affirmative vote, at an annual or special
meeting of shareholders of the Fund, duly called and held, (a) of 67% or more of
the shares of the Fund present (in person or by proxy) and entitled to vote at
such meeting, if the holders of more than 50% of the outstanding shares of the
Fund entitled to vote at such meeting are present (in person or by proxy), or
(b) of more than 50% of the outstanding shares of the Fund entitled to vote at
such meeting, whichever is less.
(b) "Interested persons" and "Assignment" shall have their respective
meanings as set forth in the 1940 Act, subject, however, to such exemptions as
may be granted by the Commission under said Act.
10. Liability and Indemnification. In the absence of willful
misfeasance, bad faith or gross negligence on the part of the Subadviser, or of
reckless disregard of its obligations and duties hereunder (collectively,
"Malfeasance"), the Subadviser shall not be subject to any liability to the
Manager or the Fund, to any shareholder of the Fund, or to any person, firm or
organization, for any act or omission in the course of, or connected with,
rendering services hereunder. Nothing herein, however, shall derogate from the
Subadviser's obligations under federal and state securities laws (collectively,
the "Securities Laws").
The Manager shall indemnify the Subadviser for all liabilities and
related costs, including reasonable attorney's fees, which the Subadviser may
sustain in connection with the discharge without Malfeasance or negligence of
its obligations hereunder and in accordance with the Securities Laws. The
Subadviser shall indemnify the Manager and the Fund for all liabilities and
related costs, including reasonable attorneys fees, which either of them may
sustain as a result of the Subadviser's Malfeasance or violation of the
Securities Laws.
11. Enforceability. 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 uneforceability 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.
12. Limitation of Liability. The parties to this Agreement acknowledge
and agree that all litigation 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 Fund shall be personally liable for any of
the foregoing liabilities. The Fund'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 Fund'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.
13. Jurisdiction. This Agreement shall be governed by and construed in
accordance with the substantive laws of The Commonwealth of Massachusetts and
the Subadviser consents to the jurisdiction of courts, both state or federal, in
Boston, Massachusetts, with respect to any dispute under this Agreement.
14. Counterparts. 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 instrument to
be signed on their behalf by their duly authorized officers as of the date first
above written.
ATTEST: PIONEER REAL ESTATE SHARES
Name: Joseph P. Barri Name: John F. Cogan, Jr.
Title: Secretary Title: President
ATTEST: PIONEERING MANAGEMENT
CORPORATION
Name: Joseph P. Barri Name: David D. Tripple
Title: Secretary Title: President
ATTEST: BOSTON FINANCIAL SECURITIES, INC.
Name: Name:
Title: Title
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated February 2, 1996 included in Pioneer Real Estate Shares' 1995 Annual
Report (and to all references to our firm) included in or made a part of the
Pioneer Real Estate Shares Post-Effective Amendment No. 8 and Amendment No. 9 to
Registration Statement File Nos. 33-65822 and 811-7870, respectively.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 29, 1996
[ARTICLE] 6
[CIK] 0000908996
[NAME] PIONEER REAL ESTATE SHARES
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-END] DEC-31-1995
[INVESTMENTS-AT-COST] 26249890
[INVESTMENTS-AT-VALUE] 27395773
[RECEIVABLES] 332079
[ASSETS-OTHER] 26190
[OTHER-ITEMS-ASSETS] 116903
[TOTAL-ASSETS] 27870945
[PAYABLE-FOR-SECURITIES] 305548
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 74249
[TOTAL-LIABILITIES] 379797
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 26929924
[SHARES-COMMON-STOCK] 2287136
[SHARES-COMMON-PRIOR] 2467250
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (584636)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 1145860
[NET-ASSETS] 27491148
[DIVIDEND-INCOME] 1167002
[INTEREST-INCOME] 22533
[OTHER-INCOME] 0
[EXPENSES-NET] (463924)
[NET-INVESTMENT-INCOME] 725611
[REALIZED-GAINS-CURRENT] (590962)
[APPREC-INCREASE-CURRENT] 2858800
[NET-CHANGE-FROM-OPS] 2993449
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (725611)
[DISTRIBUTIONS-OF-GAINS] (3966)
[DISTRIBUTIONS-OTHER] (837958)
[NUMBER-OF-SHARES-SOLD] 594169
[NUMBER-OF-SHARES-REDEEMED] 879454
[SHARES-REINVESTED] 105171
[NET-CHANGE-IN-ASSETS] (576954)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 9398
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 265099
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 685112
[AVERAGE-NET-ASSETS] 26435828
[PER-SHARE-NAV-BEGIN] 11.38
[PER-SHARE-NII] .32
[PER-SHARE-GAIN-APPREC] 1.01
[PER-SHARE-DIVIDEND] (0.33)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] (0.36)
[PER-SHARE-NAV-END] 12.02
[EXPENSE-RATIO] 1.77
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
POWER OF ATTORNEY
The undersigned Trustee of Pioneer Real Estate Shares, a Delaware business
trust (the "Trust"), does hereby constitute and appoint John F. Cogan, Jr.,
David D. Tripple, Joseph P. Barri and Robert P. Nault, and each of them acting
singly, to be my true, sufficient and lawful attorneys, with full power to each
of them, and each of them acting singly, to sign in my capacity as Trustee any
and all amendments to the Registration Statement on Form N-1A to be filed by the
Trust under the Investment Company Act of 1940, as amended (the "1940 Act"), and
under the Securities Act of 1933, as amended (the "1933 Act"), with respect to
the offering of the Trust's shares of beneficial interest and any and all other
documents and papers relating thereto, and generally to do all such things in my
name and on my behalf in the capacity as Trustee to enable the Trust to comply
with the 1940 Act and the 1933 Act, and all requirements of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by said attorneys or each of them to any and all amendments to
said Registration Statement.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument on this
28th day of February, 1996.
Fred N. Pratt, Jr., as
Trustee and not individually
