PIONEER EMERGING MARKETS FUND, 497, 1997-09-12

PIONEER EMERGING MARKETS FUND
497, 1997-09-12

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[Pioneer Logo]

Pioneer
Emerging Markets
Fund

Class A, Class B and Class C Shares
Prospectus

March 27, 1997
(revised September 15, 1997)

Pioneer Emerging Markets Fund (the "Fund") seeks longterm growth of
capital by investing primarily in securities of issuers in countries with
emerging economies or securities markets. Any current income generated from
these securities is incidental to the investment objective of the Fund. The
Fund is a diversified open-end investment company designed for investors
seeking to achieve capital growth and diversification through foreign
investments. There is no assurance that the Fund will achieve its investment
objective.
In pursuit of its objective, the Fund may employ active investment
management techniques, including futures and options, in an attempt to hedge
the foreign currency and other risks associated with the Fund's investments.
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.
Investing in countries with emerging economies or securities markets may
offer significant investment opportunities. However, investments in foreign
securities, particularly in emerging markets, entail significant risks in
addition to those customarily associated with investing in U.S. securities. The
Fund is intended for investors who can accept the risks associated with its
investments and may not be suitable for all investors. See "Investment
Objective and Policies" for a discussion of these risks.

This Prospectus provides information about the Fund that you should know
before investing. Please read and retain it for your future reference. More
information about the Fund is included in the Statement of Additional
Information, also dated September 15, 1997 which is incorporated into this
Prospectus by reference. A copy of the Statement of Additional Information may
be obtained free of charge by calling Shareholder Services at 1-800-225-6292 or
by written request to the Fund at 60 State Street, Boston, Massachusetts 02109.
Additional information about the Fund has been filed with the Securities and
Exchange Commission (the "SEC") and is available upon request and without
charge.

<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
------------------------------------------------------- -----
<S> <C> <C>
I. EXPENSE INFORMATION ................................. 2
II. FINANCIAL HIGHLIGHTS ................................. 3
III. INVESTMENT OBJECTIVE AND POLICIES .................. 6
IV. MANAGEMENT OF THE FUND .............................. 9
V. FUND SHARE ALTERNATIVES .............................. 10
VI. SHARE PRICE .......................................... 10
VII. HOW TO BUY FUND SHARES .............................. 11
VIII. HOW TO SELL FUND SHARES .............................. 14
IX. HOW TO EXCHANGE FUND SHARES ........................ 15
X. DISTRIBUTION PLANS ................................. 16
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION ............... 17
XII. SHAREHOLDER SERVICES ................................. 17
Account and Confirmation Statements ............... 17
Additional Investments .............................. 18
Automatic Investment Plans ........................ 18
Financial Reports and Tax Information ............... 18
Distribution Options .............................. 18
Directed Dividends ................................. 18
Direct Deposit .................................... 18
Voluntary Tax Withholding ........................... 18
Telephone Transactions and Related Liabilities ...... 18
FactFoneSM ......................................... 18
Retirement Plans .................................... 19
Telecommunications Device for the Deaf (TDD) ...... 19
Systematic Withdrawal Plans ........................ 19
Reinstatement Privilege (Class A Shares Only) ...... 19
XIII. THE FUND ............................................. 19
XIV. INVESTMENT RESULTS ................................. 20
APPENDIX--CERTAIN INVESTMENT PRACTICES ............... 21
</TABLE>

--------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>

I. EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses
that you, as a shareholder, will bear directly or indirectly when you invest in
the Fund. The table reflects annual operating expenses of Class A and Class B
shares based on actual expenses incurred for the fiscal year ended November 30,
1996. For Class C shares, operating expenses are based on expenses that would
have been incurred if Class C shares had been outstanding for the entire fiscal
year ended November 30, 1996.

<TABLE>
<CAPTION>
Class A Class B Class C
------------ --------- --------
<S> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Initial Sales Charge on Purchases
(as a percentage of offering price) ......... 5.75%(1) None None
Maximum Sales Charge on Reinvestment of
Dividends .................................... None None None
Maximum Deferred Sales Charge
(as a percentage of purchase price or redemption
proceeds, as applicable) ..................... None(1) 4.00% 1.00%
Redemption fee(2) ............................... None None None
Exchange fee ................................. None None None
Annual Operating Expenses
(as a percentage of average net assets):
Management fee (after fee reduction)(3) ....... 0.55% 0.55% 0.55%
12b-1 Fees .................................... 0.25% 1.00% 1.00%
Other Expenses (including accounting and transfer
agent fees, custodian fees and printing
expenses)
(after expense reduction)(3) ................ 1.45% 1.41% 1.31%
--------- ------ ------
Total Operating Expenses
(after reductions):(3) ......................... 2.25% 2.96% 2.86%
========= ====== ======
</TABLE>

- ---------
(1) Purchases of $1 million or more and purchases by participants in certain
group plans are not subject to an initial sales charge but may be subject
to a contingent deferred sales charge ("CDSC"). See "How to Sell Fund
Shares."
(2) Separate fees (currently $10 and $20, respectively) apply to domestic and
international wire transfers of redemption proceeds.
(3) Pioneering Management Corporation ("PMC") agreed not to impose all or a
portion of its management fee and to make other arrangements, if necessary,
to limit the operating expenses of the Fund as listed below. The portion of
Fund-wide expenses attributable to Class B and Class C shares will be
reduced only to the extent such expenses are reduced for the Class A shares
of the Fund. This agreement is voluntary and temporary and may be revised
or terminated at any time.

<TABLE>
<CAPTION>
Class A Class B Class C
--------- --------- --------
<S> <C> <C> <C>
Expenses Absent Reductions
Management Fee ............... 1.25% 1.25% 1.25%
Total Operating Expenses ...... 2.95% 3.66% 3.56%
</TABLE>

Example:

You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return, reinvestment of all dividends and distributions and that the
percentage amounts listed under "Annual Operating Expenses" remain the same
each year.

<TABLE>
<CAPTION>
One Year Three Years Five Years Ten Years
---------- ------------- ------------ ----------
<S> <C> <C> <C> <C>
Class A Shares ...... $79 $124 $171 $301
Class B Shares
--Assuming complete
redemption at end
of period ...... $70 $122 $176 $311*
--Assuming no
redemption ...... $30 $ 92 $156 $311*
Class C Shares**
--Assuming complete
redemption at the
end of period ... $39 $ 89 $151 $319
--Assuming no
redemption ...... $29 $ 89 $151 $319
</TABLE>

- ---------
*Class B shares convert to Class A shares eight years after purchase;
therefore, Class A share expenses are used after year eight.
**Class C shares redeemed during the first year after purchase are subject to a
1% CDSC.

THE EXAMPLE IS DESIGNED FOR INFORMATION PURPOSES ONLY, AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURNS. ACTUAL FUND
EXPENSES AND RETURNS VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN
THOSE SHOWN.

For further information regarding management fees, 12b-1 fees and other
expenses of the Fund, see "Management of the Fund," "Distribution Plans" and
"How to Buy Fund Shares" in this Prospectus and "Management of the Fund,"
"Principal Underwriter" 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 Conduct Rules of the National Association of
Securities Dealers, Inc. ("NASD").

The maximum initial sales charge is reduced on purchases of specified
larger amounts of Class A shares and the value of shares owned in other Pioneer
mutual funds is taken into account in determining the applicable initial sales
charge. See "How to Buy Fund Shares." No sales charge is applied to exchanges
of shares of the Fund for shares of other publicly available Pioneer mutual
funds. See "How to Exchange Fund Shares."

2
<PAGE>

II. FINANCIAL HIGHLIGHTS
The following information has been audited by Arthur Andersen LLP,
independent public accountants. Arthur Andersen LLP's report on the Fund's
financial statements as of November 30, 1996 appears in the Fund's Annual
Report, which is incorporated by reference into the Statement of Additional
Information. The information listed below should be read in conjunction with
those financial statements. 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 EMERGING MARKETS FUND

Selected Data for a Class A Share Outstanding for Each Period Presented+:

<TABLE>
<CAPTION>
For the Year Ended
November 30,
-------------------------------
1996 1995
<S> <C> <C>
Net asset value, beginning of period ................................................... $ 11.56 $ 12.24
------------ ------------
Increase (decrease) from investment operations:
Net investment income (loss) ......................................................... $ (0.07) $ 0.04
Net realized and unrealized gain (loss) on investments and other foreign currency
related transactions .................................................................. 2.45 (0.53)
------------ ------------
Net increase (decrease) from investment operations .................................... $ 2.38 $ (0.49)
Distribution to shareholders from:
Net investment income .................................................................. -- (0.06)
Net realized gain ..................................................................... -- $ (0.13)
------------ ------------
Net increase (decrease) in net asset value ............................................. $ 2.38 $ (0.68)
------------ ------------
Net asset value, end of period ......................................................... $ 13.94 $ 11.56
============ ============
Total return* ........................................................................... 20.59% (4.07%)
Ratio of net operating expenses to average net assets ................................. 2.28%++ 2.27%++
Ratio of net investment income (loss) to average net assets ........................... (0.61%)++ 0.24%++
Portfolio turnover rate ............................................................... 143% 246.68%
Average commission rate paid (1) ...................................................... $0.0003 $ --
Net assets, end of period (in thousands) ................................................ $56,465 $15,411
Ratios assuming no reduction of fees or expenses by PMC and no reduction of fees paid
indirectly:
Net expenses ........................................................................... 3.00% 3.95%
Net investment loss .................................................................. (1.33%) (1.44%)
Ratios assuming a reduction of fees and expenses by PMC and a reduction for fees paid
indirectly:
Net expenses ........................................................................... 2.25% 2.25%
Net investment loss .................................................................. (0.58%) 0.27%

<CAPTION>
6/23/94
(Commencement of
Operations) to
11/30/94
<S> <C>
Net asset value, beginning of period ................................................... $ 12.50
------------
Increase (decrease) from investment operations:
Net investment income (loss) ......................................................... $ 0.08
Net realized and unrealized gain (loss) on investments and other foreign currency
related transactions .................................................................. (0.34)
------------
Net increase (decrease) from investment operations .................................... $ (0.26)
Distribution to shareholders from:
Net investment income .................................................................. --
Net realized gain ..................................................................... --
------------
Net increase (decrease) in net asset value ............................................. $ (0.26)
------------
Net asset value, end of period ......................................................... $ 12.24
============
Total return* ........................................................................... (2.08%)
Ratio of net operating expenses to average net assets ................................. 2.25%**
Ratio of net investment income (loss) to average net assets ........................... 1.85%**
Portfolio turnover rate ............................................................... 259.22%**
Average commission rate paid (1) ...................................................... $ --
Net assets, end of period (in thousands) ................................................ $17,067
Ratios assuming no reduction of fees or expenses by PMC and no reduction of fees paid
indirectly:
Net expenses ........................................................................... 4.13%**
Net investment loss .................................................................. (0.03%)**
Ratios assuming a reduction of fees and expenses by PMC and a reduction for fees paid
indirectly:
Net expenses ........................................................................... --
Net investment loss .................................................................. --
</TABLE>

- ---------
+ The per share data presented above is based upon average shares outstanding
and average net assets for the period presented.
++ Ratios assuming no reduction for fees paid indirectly.
* Assumes initial investment at net asset value at the beginning of the
period, reinvestment of all distributions, the complete redemption of the
investment at 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.
(1) Amount represents the rate of commission paid per share. Amount may
fluctuate from period to period as a result of portfolio transactions
executed in different markets where trading practices and commission rate
structures may vary.

3
<PAGE>

II. FINANCIAL HIGHLIGHTS (continued)
Selected Data for a Class B Share Outstanding for Each Period Presented+:

<TABLE>
<CAPTION>
For the Year Ended
November 30,
-------------------------------
1996 1995
<S> <C> <C>
Net asset value, beginning of period ................................................... $ 11.47 $12.19
------------ ------------
Increase (decrease) from investment operations:
Net investment income (loss) ......................................................... $ (0.03) $(0.04)
Net realized and unrealized gain (loss) on investments and other foreign currency
related transactions ................................................................. 2.29 (0.52)
------------ ------------
Net increase (decrease) from investment operations .................................... $ 2.26 $(0.56)
Distribution to shareholders from:
Net investment income .................................................................. -- (0.03)
Net realized gain ..................................................................... -- (0.13)
------------ ------------
Net increase (decrease) in net asset value ............................................. $ 2.26 $(0.72)
------------ ------------
Net asset value, end of period ......................................................... $ 13.73 $11.47
============ ============
Total return* ........................................................................... 19.70% (4.62%)
Ratio of net operating expenses to average net assets ................................. 3.00%++ 3.00%++
Ratio of net investment income (loss) to average net assets ........................... (1.47%)++ (0.47%)++
Portfolio turnover rate ............................................................... 143% 246.68%
Average commission rate paid (1) ...................................................... $0.0003 $ --
Net assets, end of period (in thousands) ................................................ $39,893 $5,658
Ratios assuming no reduction of fees or expenses by PMC and no reduction of fees paid
indirectly:
Net expenses ........................................................................... 3.66% 4.57%
Net investment loss .................................................................. (2.13%) (2.05%)
Ratios assuming a reduction of fees and expenses by PMC and a reduction for fees paid
indirectly:
Net expenses ........................................................................... 2.96% 2.96%
Net investment loss .................................................................. (1.43%) (0.43%)

<CAPTION>
6/23/94
(Commencement of
Operations) to
11/30/94
<S> <C>
Net asset value, beginning of period ................................................... $12.50
------------
Increase (decrease) from investment operations:
Net investment income (loss) ......................................................... $ 0.02
Net realized and unrealized gain (loss) on investments and other foreign currency
related transactions .................................................................. (0.33)
------------
Net increase (decrease) from investment operations .................................... $(0.31)
Distribution to shareholders from:
Net investment income .................................................................. --
Net realized gain ..................................................................... --
------------
Net increase (decrease) in net asset value ............................................. $(0.31)
------------
Net asset value, end of period ......................................................... $12.19
============
Total return* ........................................................................... (2.48%)
Ratio of net operating expenses to average net assets ................................. 3.33%**
Ratio of net investment income (loss) to average net assets ........................... 0.77%**
Portfolio turnover rate ............................................................... 259.22%**
Average commission rate paid (1) ...................................................... $ --
Net assets, end of period (in thousands) ................................................ $4,319
Ratios assuming no reduction of fees or expenses by PMC and no reduction of fees paid
indirectly:
Net expenses ........................................................................... 5.21%**
Net investment loss .................................................................. (1.11%)**
Ratios assuming a reduction of fees and expenses by PMC and a reduction for fees paid
indirectly:
Net expenses ........................................................................... --
Net investment loss .................................................................. --
</TABLE>

4
<PAGE>

II. FINANCIAL HIGHLIGHTS (continued)
Selected Data for a Class C Share Outstanding for Each Period Presented+:

<TABLE>
<CAPTION>
1/31/96 to
11/30/96
<S> <C>
Net asset value, beginning of period ................................................... $ 13.22
-----------
Increase (decrease) from investment operations:
Net investment income (loss) ......................................................... $ (0.09)
Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.60
-----------

Net increase (decrease) in net asset value ............................................. $ 0.51
-----------
Net asset value, end of period ......................................................... $ 13.73
===========
Total return* ........................................................................... 3.86%
Ratio of net expenses to average net assets ............................................. 2.91%**++
Ratio of net investment loss to average net assets .................................... (1.51%)**++
Portfolio turnover rate ............................................................... 143%**
Average commission rate paid (1) ...................................................... $0.0003
Net assets end of period (in thousands) ................................................ $ 5,566
Ratios assuming no reduction of fees or expenses by PMC and no reduction of fees paid
indirectly:
Net expenses ........................................................................... 3.48%
Net investment gain (loss) ............................................................ (2.08%)
Ratios assuming reduction for fees paid indirectly:
Net expenses ........................................................................... 2.86%**
Net investment gain (loss) ............................................................ (1.46)%**
</TABLE>

- ---------
+ The per share data presented above is based upon average shares outstanding
and average net assets for the period presented.
++ Ratios assuming no reduction for fees paid indirectly.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
(1) Amount represents the rate of commission paid per share. Amount may
fluctuate from period to period as a result of portfolio transactions
executed in different markets where trading practices and commission rate
structures may vary.

5
<PAGE>

III. INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is long-term growth of capital. The Fund
pursues this objective by investing in securities of issuers in countries with
emerging economies or securities markets.

Under normal circumstances, at least 65% of the Fund's total assets are
invested in securities of companies that are domiciled or primarily doing
business in emerging countries and securities of these countries' governmental
issuers. For purpose of the Fund's investments, "emerging countries" are
countries with economies or securities markets that are not considered by
Pioneering Management Corporation ("PMC") to be developed. Currently, emerging
countries include: Algeria, Argentina, Bangladesh, Brazil, Bulgaria, Chile,
China, Columbia, Costa Rica, Czech Republic, Ecuador, Egypt, Ghana, Greece,
Hong Kong, Hungary, India, Indonesia, Israel, Jamaica, Jordan, Kenya, Kuwait,
Malaysia, Mexico, Morocco, Nigeria, Pakistan, Peru, the Philippines, Poland,
Portugal, Russia, South Africa, South Korea, Sri Lanka, Taiwan, Thailand,
Turkey, Uruguay, Venezuela, Vietnam and Zimbabwe. At PMC's discretion, the Fund
may invest in other emerging countries.

A company is considered to be domiciled in an emerging country if it is
organized under the laws of, or has a principal office in, such country. A
company is considered by PMC as primarily doing business in an emerging country
if that company derives at least 50% of its gross revenues or profits from
either (i) goods or services produced in emerging countries or (ii) sales made
in emerging countries.

Under normal circumstances, the Fund maintains investments in at least six
emerging countries. Except for temporary defensive purposes, the Fund will not
invest 25% or more of its total assets in securities of issuers in any one
country, emerging or developed. From time to time, the Fund may invest more
than 25% of its total assets investments in a particular region.

The Fund may also invest up to 35% of its total assets in equity and debt
securities of companies in any developed country, other than the United States
("U.S."), and of such countries' governmental issuers and in short-term
investments (as described below). See "Other Eligible Investments."

Although the Fund may invest in both equity and debt securities, PMC
expects that equity and equity-related securities will ordinarily offer the
greatest potential for long- term growth of capital and will constitute the
majority of the Fund's assets. The equity and equity-related securities of
companies in which the Fund invests consist of common stock and securities with
common stock characteristics, such as preferred stock, equity interests in
other unincorporated entities, warrants, rights or debt securities convertible
into common stock, and depositary receipts for these securities. The Fund will
also invest in call options on such securities.

The Fund may also invest in debt securities of corporate and governmental
issuers that PMC believes offer opportunities for long-term capital
appreciation due to favorable credit quality, interest rate or currency
exchange rate changes. Debt securities in which the Fund invests may be of any
quality or maturity. Many of the debt securities available in emerging market
countries are of poor credit quality and may be in default. However, the Fund
will not invest more than 10% of its total assets in debt securities rated
below investment grade or unrated securities of comparable quality. See
"Lower-Rated Debt Securities and Associated Risk Factors" in the Appendix to
this Prospectus. The value of debt securities, particularly those with longer
maturities, can generally be expected to rise as interest rates decline and to
fall as interest rates rise. Movements in currency exchange rates may offset or
amplify such fluctuations, as measured in U.S. dollars.

In pursuit of its objective, the Fund may employ certain active investment
management techniques including forward foreign currency exchange contracts,
options contracts on securities and securities indices, futures contracts on
currencies and securities indices and options on these futures contracts. These
techniques may be employed in an attempt to hedge foreign currency and other
risks associated with the Fund's portfolio securities. The Fund may also enter
into repurchase agreements and invest in restricted and illiquid securities.
See the Appendix to this Prospectus and the Statement of Additional Information
for a description of these investment practices and securities and associated
risks.

For temporary defensive purposes, the Fund may invest up to 100% of its
total assets in short-term investments (as described below). The Fund will
assume a temporary defensive posture when political and economic factors affect
securities markets to such an extent that PMC believes there to be
extraordinary risks in being substantially invested in emerging countries.

In selecting securities for investment by the Fund, PMC assesses the
general attractiveness of specific countries based on an analysis of internal
conditions, including political stability, financial practices, market
practices, economic growth prospects, levels of interest rates and inflation,
general market valuations and potential changes in currency relationships.
Based on the relative return and risk among countries, a target weighting is
set for the allocation of the Fund's assets among emerging countries. As a
parallel process, which involves many of the same factors as, and influences
the outcome of, country allocation, PMC performs a fundamental analysis of each
company being considered for inclusion in the Fund's portfolio. In performing
this fundamental analysis, PMC considers a variety of factors, including
financial condition, growth prospects, asset valuation, management expertise,
existing or potential dividend payments, stock liquidity and the market
valuation of the company. The specific size of the Fund's investment in any one
company is determined by the relationship of the relative return and risk among
individual investments. Because current income is not the Fund's investment
objective, the Fund will not restrict its investments to securities of issuers
with a record of timely dividend payments.

While investing in emerging countries involves substantial risks, as
discussed below, PMC believes investments in such countries offer opportunities
for capital growth. Certain emerg-

6
<PAGE>

ing countries have at times experienced economic growth rates well in excess of
those of the more developed countries, including the United States. By
carefully selecting securities of issuers in emerging countries for the Fund's
portfolio, PMC seeks to provide, over the long term, a higher rate of capital
appreciation than would generally be possible by investing in securities of
issuers in developed countries. Of course there can be no assurance that the
Fund will achieve this objective.

Risk Factors

Investing in the Fund entails a substantial degree of risk. Because of the
special risks associated with investing in emerging countries, an investment in
the Fund may not be suitable for all investors and should not be considered an
overall investment program. Investors are strongly advised to consider
carefully the special risks involved in investing in emerging countries, which
are in addition to the usual risks of investing in developed countries around
the world. See the Appendix to this Prospectus for additional risks associated
with an investment in the Fund.

The political and economic structures in many emerging countries are
expected to undergo significant evolution and rapid development, and such
countries may lack the social, political and economic stability characteristic
of more developed countries. Unanticipated political or social developments may
affect the values of the Fund's investments and the availability to the Fund of
additional investments in such countries. The small size and limited history of
the securities markets in certain of such countries and the limited volume of
trading in securities in those countries makes the Fund's investments in such
countries less liquid and more volatile than investments in countries with more
developed securities markets, such as the U.S., Japan and most Western European
countries.

Investing in emerging countries involves the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging country, the Fund could lose its entire investment in that country.

Economies in individual emerging countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross domestic
product, rates of inflation, currency valuation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Many emerging countries
have experienced substantial, and in some cases extremely high, rates of
inflation for many years. Inflation and rapid fluctuations in inflation rates
have had, and may continue to have, very negative effects on the economies and
securities markets of certain emerging countries.

Economies in emerging countries generally are dependent heavily upon
international trade and, accordingly, have been and may continue to be affected
adversely by trade barriers, exchange controls, managed adjustments in relative
currency values and other protectionist measures imposed or negotiated by the
countries with which they trade. These economies also have been, and may
continue to be, affected adversely by economic conditions in the countries with
which they trade.

The securities markets of many emerging countries are substantially
smaller, less developed, less liquid and more volatile than the securities
markets of developed countries. Disclosure and regulatory standards in many
respects are less stringent than in the U.S. and other major markets. There
also may be a lower level of monitoring and regulation of emerging securities
markets and the activities of investors in such markets, and enforcement of
existing regulations has been extremely limited.

There may be less publicly available information about international
securities and issuers than is available with respect to U.S. securities and
issuers. International companies generally are not subject to uniform
accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to U.S. companies. The Fund's net
investment income and/or capital gains from its international investment
activities may be subject to foreign withholding and other taxes.

In addition, the value of securities denominated or quoted in
international currencies may also be adversely affected by fluctuations in the
relative rates of exchange between the currencies of different nations and by
exchange control regulations. The Fund's investment performance may be
negatively affected by a devaluation of a currency in which the Fund's
investments are denominated or quoted. Further, the Fund's investment
performance may be significantly affected, either positively or negatively, by
currency exchange rates because the U.S. dollar value of securities denominated
or quoted in another currency will increase or decrease in response to changes
in the value of such currency in relation to the U.S. dollar.

Brokerage commissions, custodial services and other costs relating to
investment in international securities markets generally are more expensive
than in the U.S.; this is particularly true with respect to securities markets
in emerging countries. Such markets have settlement and clearance procedures
that differ from those of more developed markets. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Fund to make intended securities purchases due to settlement
problems could cause the Fund to miss attractive investment opportunities.
Inability to dispose of a portfolio security caused by settlement problems
could result either in losses to the Fund due to a subsequent decline in value
of the portfolio security or, if the Fund has entered into a contract to sell
the security, could result in possible liability to the Fund.

In addition, security settlement and clearance procedures in some emerging
countries may not fully protect the Fund against loss or theft of its assets in
situations that may arise that may not be foreseeable. By way of example and
without limitation, a fraudulent or otherwise deficient security settlement or
a conversion, theft or default by a broker, dealer or other intermediary could
result in losses to the Fund. Neither PMC nor the Fund's custodian is liable to
the Fund or its shareholders for such

7
<PAGE>

losses incurred by the Fund in the absence of willful misfeasance, bad faith or
gross negligence in the performance of their respective duties.

Most of the emerging market companies in which the Fund invests are
relatively small, lesser-known companies. Although many such companies offer
greater growth potential than larger, more mature, better-known companies,
investing in the securities of such companies also involves greater risk and
the possibility of greater portfolio price volatility. Among the reasons for
the greater price volatility of these smaller companies are the lower degree of
liquidity in the markets for such stocks and the greater sensitivity of small
companies to changing economic conditions. These companies may have higher
investment risk than that associated with larger companies due to greater
business risks of small size and limited product lines, markets, distribution
channels and financial and managerial resources.

In addition to risks associated with investments in foreign private
issuers, investments in foreign governmental securities entail risk that the
foreign government will repudiate its underlying obligation or alter any
favorable tax treatment associated with the obligation. There may be difficulty
in enforcing outside the U.S. legal rights against foreign governments.

Other Eligible Investments

Under normal circumstances, the Fund may invest up to 35% of its total
assets in the investments described in this section.

Securities of Developed Country Issuers. The Fund may invest in equity and
debt securities of companies that are domiciled or primarily doing business in
developed countries, other than the U.S., and of such countries' governmental
issuers.

Short-Term Investments. For temporary defensive or cash management
purposes 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 international or domestic companies with similar securities
outstanding that are rated Prime-1, Aa or better by Moody's Investors Service,
Inc. ("Moody's") or A-1, AA or better by Standard and Poor's Ratings Group
("Standard & Poor's"); obligations (including certificates of deposit, time
deposits, demand deposits and bankers' acceptances) of banks (located in the
United States or foreign countries) with securities outstanding that are rated
Prime-1, Aa or better by Moody's, or A-1, AA or better by Standard and Poor's;
obligations of comparable quality issued or guaranteed by the U.S. Government
or the government of a foreign country or their respective agencies or
instrumentalities; and repurchase agreements.

Investments in Depositary Receipts

The Fund may hold securities of foreign issuers in the form of American
Depositary Receipts ("ADRs"), Global Depositary Receipts ("GDRs") and other
similar instruments or other securities convertible into securities of eligible
issuers. Generally, ADRs in registered form are designed for use in U.S.
securities markets, and GDRs and other similar global instruments in bearer
form are designed for use in non-U.S. securities markets.

ADRs are denominated in U.S. dollars and represent an interest in the
right to receive securities of foreign issuers deposited in a U.S. bank or
correspondent bank. ADRs do not eliminate all the risk inherent in investing in
the securities of non-U.S. issuers. However, by investing in ADRs rather than
directly in equity securities of non-U.S. issuers, the Fund will avoid currency
risks during the settlement period for either purchases or sales. GDRs are not
necessarily denominated in the same currency as the underlying securities which
they represent.

Russian Depositary Trust Certificates ("RDCs") are offered through a unit
trust with one or more sub-trusts in which each RDC represents a fractional
undivided beneficial interest in a specific sub-trust. Each sub-trust holds as
its only assets the shares of a single Russian issuer. RDCs are generally not
denominated in the same currency as the underlying security that they
represent. Voting rights for an RDC holder of any Russian company are not
direct and the trust votes in accordance with the wishes of the majority of the
RDC holders of such company. RDCs are subject to the risks inherent in a direct
investment in any Russian issuer's shares, including the possibility of adverse
changes in the Russian government and Russian securities regulations, and
certain RDC-specific risks such as custodial, title and registration risk and
the volatility of the Russian secondary securities market. RDCs are considered
to be Rule 144A securities under the Securities Act of 1933.

For purposes of the Fund's investment policies, investments in ADRs, GDRs,
RDCs and similar instruments will be deemed to be investments in the underlying
equity securities of the foreign issuers. The Fund may acquire depositary
receipts from banks that do not have a contractual relationship with the issuer
of the security underlying the depositary receipt to issue and secure such
depositary receipt. To the extent the Fund invests in such unsponsored
depositary receipts there may be an increased possibility that the Fund may not
become aware of events affecting the underlying security and thus the value of
the related depositary receipt. In addition, certain benefits (i.e., rights
offerings) which may be associated with the security underlying the depositary
receipt may not inure to the benefit of the holder of such depositary receipt.

Brady Bonds

The Fund may invest in so-called "Brady Bonds" and other sovereign debt
securities of countries that have restructured or are in the process of
restructuring sovereign debt pursuant to the "Brady Plan." Brady Bonds are debt
securities issued under the framework of the Brady Plan as a mechanism for
debtor nations to restructure their outstanding external indebtedness
(generally, commercial bank debt). In restructuring its external debt under the
Brady Plan framework, a debtor nation negotiates with its existing bank lenders
as well as multilateral institutions such as the World Bank and the
International Monetary Fund (the "IMF"). The Brady Plan framework, as it has
developed, contemplates the exchange of commercial bank debt for newly issued
bonds (Brady Bonds).

Brady Bonds may involve a high degree of risk, may be in default or
present the risk of default. Investors should recognize

8
<PAGE>

that Brady Bonds have been issued only recently, and, accordingly, they do not
have a long payment history. Agreements implemented under the Brady Plan to
date are designed to achieve debt and debt-service reduction through specific
options negotiated by a debtor nation with its creditors. As a result, the
financial packages offered by each country differ.

Portfolio Turnover

The Fund will be substantially fully invested at all times, except as
described above. However, the volatility of certain emerging markets and the
need for PMC to allocate and reallocate the Fund's investments among several
markets can be expected to generate a portfolio turnover rate higher than that
of funds investing in equity securities of issuers in the U.S. or other
developed countries. 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 rate. A high rate of
portfolio turnover (100% or more) involves correspondingly greater transaction
costs which must be borne by the Fund and its shareholders and may, under
certain circumstances, make it more difficult for the Fund to qualify as a
regulated investment company under the Internal Revenue Code of 1986, as
amended (the "Code"). See "Dividends, Distributions and Taxation."

The Fund's investment objective and certain investment restrictions
designated as fundamental in the Statement of Additional Information may be
changed by the Board of Trustees only with shareholder approval.

IV. MANAGEMENT OF THE FUND

The Fund's Board of Trustees has overall responsibility for management and
supervision of the Fund. There are currently nine Trustees, seven of whom are
not "interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended (the "1940 Act"). The Board meets at least quarterly. By
virtue of the functions performed by PMC as investment adviser, the Fund
requires no employees other than its executive officers, all of whom receive
their compensation from PMC or other sources. The Statement of Additional
Information contains the names and general business and professional background
of each Trustee and executive officer of the Fund.

The Fund is managed under a contract with PMC, which serves as investment
adviser to the Fund and is responsible for the overall management of the Fund's
business affairs, subject only to the authority of the Board of Trustees. PMC
is a wholly owned subsidiary of The Pioneer Group, Inc. ("PGI"), a Delaware
corporation. Pioneer Funds Distributor, Inc. ("PFD"), an indirect subsidiary of
PGI, is the principal underwriter of shares of the Fund. John F. Cogan, Jr.,
Chairman and President of the Fund, Chairman and a Director of the Manager,
Chairman of PFD, and President and a Director of PGI, beneficially owned
approximately 14% of the outstanding capital stock of PGI as of the date of
this Prospectus.

Mr. David Tripple, President and Chief Investment Officer of PMC and
Executive Vice President of each Pioneer mutual fund, has general
responsibility for PMC's investment operations and chairs a committee of PMC's
international equity managers which reviews PMC's research and portfolio
operations, including those of the Fund. Mr. Tripple joined PMC in 1974.

Research and management of the Fund is the responsibility of a team of
portfolio managers and analysts focusing on non-U.S. securities. Members of the
team meet regularly to discuss holdings, prospective investments and portfolio
composition. Dr. Norman Kurland, a Senior Vice President of PMC and Vice
President of the Fund, is the senior member of the team. Dr. Kurland joined PMC
in 1990.

Day-to-day management of the Fund has been the responsibility of Mr. Mark
Madden, a Vice President of the Fund and PMC, since June, 1994. Mr. Madden
joined PMC in 1990 and has 12 years investment experience.

In addition to the Fund, PMC also manages and serves as the investment
adviser for other mutual funds and is an investment adviser to certain other
institutional accounts. PMC's and PFD's executive offices are located at 60
State Street, Boston, Massachusetts 02109. In an effort to avoid conflicts of
interest with the Fund, the Fund and PMC have adopted a Code of Ethics that is
designed to maintain a high standard of personal conduct by directing that all
personnel defer to the interests of the Fund and its shareholders in making
personal securities transactions.

Investment advisory services are provided to the Fund by PMC pursuant to a
management contract between PMC and the Fund. PMC assists in the management of
the Fund and is authorized in its discretion to buy and sell securities for the
account of the Fund. PMC pays all the ordinary operating expenses, including
executive salaries and the rental of office space relating to its services for
the Fund with the exception of the following which are to be paid by the Fund:
(a) charges and expenses for fund accounting, pricing and appraisal services
and related overhead, including, to the extent such services are performed by
personnel of PMC, or its affiliates, office space and facilities and personnel
compensation, training and benefits; (b) the charges and expenses of auditors;
(c) the charges and expenses of any custodian, transfer agent, plan agent,
dividend disbursing agent and registrar appointed by the Fund; (d) issue and
transfer taxes, chargeable to the Fund in connection with securities
transactions to which the Fund is a party; (e) insurance premiums, interest
charges, dues and fees for membership in trade associations and all taxes and
corporate fees payable by the Fund to federal, state or other governmental
agencies; (f) fees and expenses involved in registering and maintaining
registrations of the Fund and/or its shares with regulatory agencies, state or
blue sky securities agencies and foreign countries, including the preparation
of prospectuses and statements of additional information for filing with
regulatory agencies; (g) all expenses of shareholders' and Trustees' meetings
and of preparing, printing and distributing prospectuses, notices, proxy
statements and all reports to shareholders and to governmental agencies; (h)
charges and expenses of legal counsel to the Fund and the Trustees; (i)
distribution fees paid by the Fund in accordance with Rule 12b-1 promulgated by
the SEC pursuant to the 1940 Act; (j) compensation of those Trustees of the
Fund who are not affiliated with or interested

9
<PAGE>

persons of PMC, the Fund (other than as Trustees), PGI or PFD; (k) the cost of
preparing and printing share certificates; and (l) interest on borrowed money,
if any. In addition to the expenses described above, the Fund pays all brokers'
and underwriting commissions chargeable to the Fund in connection with
securities transactions to which the Fund is a party.

Orders for the Fund's portfolio securities transactions are placed by PMC,
which strives to obtain the best price and execution for each transaction. In
circumstances in which two or more broker-dealers are in a position to offer
comparable prices and execution, consideration may be given to whether the
broker-dealer provides investment research or brokerage services or sells
shares of any Pioneer mutual fund or other funds for which PMC or its
affiliates serves as investment adviser or manager. See the Statement of
Additional Information for a further description of PMC's brokerage allocation
practices.

As compensation for its management services and certain expenses which PMC
incurs, PMC is entitled to a management fee equal to 1.25% per annum of the
Fund's average daily net assets. The fee is normally computed daily and paid
monthly. See "Expense Information" in the Prospectus and "Investment Adviser"
in the Statement of Additional Information.

PMC has agreed not to impose all or a portion of its management fee and to
make other arrangements, if necessary, to limit other expenses of the Fund to
the extent required to reduce operating Class A expenses to 2.25% of the
average daily net assets attributable to the Class A shares; the portion of the
Fund-wide expenses attributable to Class B and Class C shares will be reduced
only to the extent such expenses are reduced for Class A shares. This agreement
is voluntary and temporary and may be revised or terminated by PMC at any time.
See the Statement of Additional Information for more information.

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% 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 per share dividends, to the extent dividends are paid,
than Class A shares. Class B shares will automatically convert to Class A
shares, based on relative net asset value, eight years after the initial
purchase.

Class C Shares. Class C shares are sold without an initial sales charge,
but are subject to a 1% CDSC if they are redeemed within the first year after
purchase. Class C shares are subject to distribution and service fees at a
combined annual rate of up to 1% of the Fund's average daily net assets
attributable to Class C shares. Your entire investment in Class C shares is
available to work for you from the time you make your investment, but the
higher distribution fee paid by Class C shares will cause your Class C shares
to have a higher expense ratio and to pay lower dividends, to the extent
dividends are paid, than Class A shares. Class C shares have no conversion
feature.

Selecting a Class of Shares. The decision as to which Class to purchase
depends on the amount you invest, the intended length of the investment and
your personal situation. If you are making an investment that qualifies for
reduced sales charges, you might consider Class A shares. If you prefer not to
pay an initial sales charge on an investment of $250,000 or less and you plan
to hold the investment for at least six years, you might consider Class B
shares. If you prefer not to pay an initial sales charge and you plan to hold
your investment for one to eight years, you may prefer Class C shares.

Investment dealers and 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 Pioneer mutual 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 the applicable sales charge. Net asset value per
share of each Class of the Fund is determined by dividing the fair market value
of its assets, less liabilities attributable to that Class, by the number of
shares of that Class outstanding. The net asset value is computed once daily,
on each day the New York Stock Exchange (the "Exchange") is open, as of the
close of regular trading on the Exchange.

Securities are valued at the last sale price on the principal exchange or
market where they are traded. Securities which have not traded on the date of
valuation, or securities for which sales prices are not generally reported, are
valued at the mean between the current bid and asked prices. Securities

10
<PAGE>

quoted in international currencies are converted to U.S. dollars utilizing
foreign exchange rates employed by the Fund's independent pricing services.
Generally, trading in international securities is substantially completed each
day at various times prior to the close of regular trading on the Exchange. The
values of such securities used in computing the net asset value of the Fund's
shares are determined as of such times. Foreign currency exchange rates are
also generally determined prior to the close of regular trading on the
Exchange. Occasionally, events which affect the values of such securities and
such exchange rates may occur between the times at which they are determined
and the close of regular trading on the Exchange and will therefore not be
reflected in the computation of the Fund's net asset value. If events
materially affecting the value of such securities occur during such period,
then these securities are valued at their fair value as determined in good
faith in accordance with procedures approved 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 in accordance with procedures
approved by the Trustees.

VII. HOW TO BUY FUND SHARES

You may buy Fund shares from any securities broker-dealer which has a
selling agreement with PFD. If you do not have a securities broker-dealer,
please call 1-800-225-6292. Shares will be purchased at the public offering
price, that is, the net asset value per share plus any applicable sales charge,
next computed after receipt of a purchase order, except as set forth below.

The minimum initial investment is $1,000 for Class A, Class B and Class C
shares except as specified below. The minimum initial investment is $50 for
Class A accounts being established to utilize monthly bank drafts, government
allotments, payroll deduction and other similar automatic investment plans.
Separate minimum investment requirements apply to retirement plans and to
telephone and wire orders placed by broker-dealers; no sales charges or minimum
requirements apply to the reinvestment of dividends or capital gains
distributions. The minimum subsequent investment is $50 for Class A shares and
$500 for Class B and Class C shares, except that the subsequent minimum
investment amount for Class B and Class C share accounts may be as little as
$50 if an automatic investment plan (see "Automatic Investment Plans") is
established.

Telephone Purchases. Your account is automatically authorized to have the
telephone purchase privilege unless you indicate otherwise on your Account
Application or by writing to Pioneering Services Corporation ("PSC"). The
telephone purchase option may be used to purchase additional shares for an
existing Pioneer mutual fund account; it may not be used to establish a new
account. Proper account identification will be required for each telephone
purchase. A maximum of $25,000 per account may be purchased by telephone each
day. The telephone purchase privilege is available to Individual Retirement
Accounts ("IRAs") but may not be available to other types of retirement plan
accounts. Call PSC for more information.

You are strongly urged to consult with your financial representative prior
to requesting a telephone purchase. To purchase shares by telephone, you must
establish your bank account of record by completing the appropriate section of
your Account Application or an Account Options Form. PSC will electronically
debit the amount of each purchase from this predesignated bank account.
Telephone purchases may not be made for 30 days after the establishment of your
bank of record or any change to your bank information.

Telephone purchases will be priced at the net asset value plus any
applicable sales charge next determined after PSC's receipt of a telephone
purchase instruction and receipt of good funds (usually three days after the
purchase instruction). You may always elect to deliver purchases to PSC by
mail. See "Telephone Transactions and Related Liabilities" for additional
information.

Class A Shares

You may buy Class A shares at the public offering price, including a sales
charge as follows:

<TABLE>
<CAPTION>
Sales Charge as a Dealer
Percentage of Allowance
--------------------- as a
Net Percentage of
Offering Amount Offering
Amount of Purchase Price Invested Price
- -------------------------------- ---------- ---------- --------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.50 4.71 4.00
$100,000 but less than
$250,000 3.50 3.63 3.00
$250,000 but less than
$500,000 2.50 2.56 2.00
$500,000 but less than
$1,000,000 2.00 2.04 1.75
$1,000,000 or more -0- -0- see below

</TABLE>

The schedule of sales charges above is applicable to purchases of Class A
shares of the Fund by (i) an individual, (ii) an individual and his or her
spouse and children under the age of 21 and (iii) a trustee or other fiduciary
of a trust estate or fiduciary account or related trusts or accounts including
pension, profit-sharing and other employee benefit trusts qualified under
Section 401 or 408 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. At the sole discretion of
PFD, holdings of funds domiciled outside the U.S., but which are managed by
affiliates of PMC, may be included for this purpose.

No sales charge is payable at the time of purchase on investments of $1
million or more or for purchases by certain group plans (described below)
subject to a CDSC of 1% which may be imposed in the event of a redemption of
Class A shares within 12 months of purchase. See "How to Sell Fund Shares." PFD
may, in its discretion, pay a commission to broker-dealers who initiate and are
responsible for such purchases as follows: 1% on the first $5 million invested;
0.50% on the next $45 million;

11
<PAGE>

and 0.25% on the excess over $50 million. These commissions will not be paid if
the purchaser is affiliated with the broker-dealer or if the purchase
represents the reinvestment of a redemption made during the previous 12
calendar months. Broker-dealers who receive a commission in connection with
Class A share purchases at net asset value by 401(a) or 401(k) retirement plans
with 1,000 or more eligible participants or with at least $10 million in plan
assets will be required to return any commission paid or a pro rata portion
thereof if the retirement plan redeems its shares within 12 months of purchase.
See also "How to Sell Fund Shares." In connection with PGI's acquisition of
Mutual of Omaha Fund Management Company and contingent upon the achievement of
certain sales objectives, PFD may pay to Mutual of Omaha Investor Services,
Inc. 50% of PFD's retention of any sales commission on sales of the Fund's
Class A shares through such dealer. From time to time, PFD may elect to reallow
the entire initial sales charge to participating dealers for all sales of Class
A shares with respect to which orders are placed during a particular period.
Dealers to whom substantially the entire sales charge is reallowed may be
deemed to be underwriters under the federal securities laws.

Qualifying for a Reduced Sales Charge. Class A shares of the Fund may be
sold at a reduced or eliminated sales charge to certain group plans ("Group
Plans") under which a sponsoring organization makes recommendations to, permits
group solicitation of, or otherwise facilitates purchases by, its employees,
members or participants. Class A shares of the Fund may be sold at net asset
value without a sales charge to 401(k) retirement plans with 100 or more
participants or at least $500,000 in plan assets. Information about such
arrangements is available from PFD.

Class A shares of the Fund may be sold at net asset value without a sales
charge to: (a) current or former Trustees and officers of the Fund and partners
and employees of its legal counsel; (b) current or former directors, officers,
employees or sales representatives of PGI or its subsidiaries; (c) current or
former directors, officers, employees or sales representatives of any
subadviser or predecessor investment adviser to any investment company for
which PMC serves as investment adviser, and the subsidiaries or affiliates of
such persons; (d) current or former officers, partners, employees or registered
representatives of broker-dealers which have entered into selling agreements
with PFD; (e) members of the immediate families of any of the persons above;
(f) any trust, custodian, pension, profit-sharing or other benefit plan of the
foregoing persons; (g) insurance company separate accounts; (h) certain "wrap
accounts" for the benefit of clients of financial planners adhering to
standards established by PFD; (i) other funds and accounts for which PMC or any
of its affiliates serves as investment adviser or manager; and (j) certain unit
investment trusts. Shares so purchased are purchased for investment purposes
and may not be resold except through redemption or repurchase by or on behalf
of the Fund. The availability of this privilege is conditioned upon the receipt
by PFD of written notification of eligibility. Class A shares of a Fund may be
sold at net asset value per share without a sales charge to Optional Retirement
Program (the "Program") participants if (i) the employer has authorized a
limited number of investment providers for the Program, (ii) all authorized
providers offer their shares to Program participants at net asset value, (iii)
the employer has agreed in writing to actively promote the authorized
investment providers to Program participants and (iv) the Program provides for
a matching contribution for each participant contribution. Class A shares 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 are available for purchases of $50,000 or more of
Class A shares (excluding any reinvestments of dividends and capital gains
distributions) made within a 13-month period pursuant to a Letter of Intent
("LOI") which may be established by completing the Letter of Intent section of
the Account Application. The reduced sales charge will be the charge that would
be applicable to the purchase of the specified amount of Class A shares as if
the shares had all been purchased at the same time. A purchase not made
pursuant to an LOI may be included if the LOI is submitted to PSC within 90
days of such purchase. You may also obtain the reduced sales charge by
including the value (at current offering price) of all your Class A shares in
the Fund and all other Pioneer mutual funds held of record as of the date of
your LOI in the amount used to determine the applicable sales charge for the
Class A shares to be purchased under the LOI. Five percent of your total
intended purchase amount will be held in escrow by PSC, registered in your
name, until the terms of the LOI are fulfilled.

You are not obligated to purchase the amount specified in your LOI. If,
however, the amount actually purchased during the 13-month period is more or
less than that indicated in your LOI, an adjustment in the sales charge will be
made. If a payment to cover actual sales charges is due, it must be paid to PFD
within 20 days after PFD or your dealer sends you a written request otherwise
PFD will direct PSC to liquidate sufficient shares from your escrow account to
cover the amount due. See the Statement of Additional Information for more
information.

Investors who are clients of a broker-dealer with a current sales
agreement with PFD may purchase Class A shares of the Fund at net asset value,
without a sales charge, to the extent that the purchase price is paid out of
proceeds from one or more redemptions by the investor of shares of certain
other mutual funds. In order for a purchase to qualify for this privilege, the
investor must document to the broker-dealer that the redemption occurred within
the 60 days immediately preceding the purchase of Class A shares; that the
client paid a sales charge on the original purchase of the shares redeemed; and
that the mutual fund whose shares were redeemed also offers net asset value
purchases to redeeming shareholders of any of the Pioneer mutual funds. Further
details may be obtained from PFD.

Class B Shares

You may buy Class B shares at the net asset value per share next computed
after receipt of a purchase order without the imposition of an initial sales
charge. However, Class B shares redeemed within six years of purchase will be
subject to a CDSC at the rates shown in the table below. The charge will be
assessed on the amount equal to the lesser

12
<PAGE>

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.

The CDSC for Class B shares subject to a CDSC upon redemption will be
determined as follows:

<TABLE>
<CAPTION>
Year Since CDSC as a Percentage of Dollar
Purchase Amount Subject to CDSC
- ------------------------ -------------------------------
<S> <C>
First 4.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter none
</TABLE>

Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class B shares, including the payment of
compensation to broker-dealers.

Class B shares will automatically convert into Class A shares at the end
of the calendar quarter that is eight years after the purchase date, except as
noted below. Class B shares acquired by exchange from Class B shares of another
Pioneer mutual fund will convert into Class A shares based on the date of the
initial purchase and the applicable CDSC. Class B shares acquired through
reinvestment of distributions will convert into Class A shares based on the
date of the initial purchase of the shares 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"), for which the Fund is
applying, or an opinion of counsel that such conversions will not constitute
taxable events for federal tax purposes. There can be no assurance that such
ruling or opinion will be available. The conversion of Class B shares to Class
A shares will not occur if such ruling or opinion is not available and,
therefore, Class B shares would continue to be subject to higher expenses than
Class A shares for an indeterminate period.

Class C Shares

You may buy Class C shares at 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%. 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 other trust accounts, waiver applies upon the
death of all beneficial owners) or a total and permanent disability (as defined
in Section 72 of the Code ) of all registered owners occurring after the
purchase of the shares being redeemed or (b) the redemption is made in
connection with limited automatic redemptions as set forth in "Systematic
Withdrawal Plans" (limited in any year to 10% of the value of the account in
the Fund at the time the withdrawal plan is established).

The CDSC on Class B shares may be waived or reduced for retirement plan
accounts if: (a) the redemption results from the death or a total and permanent
disability (as defined in Section 72 of the Code) occurring after the purchase
of the shares being redeemed of a shareholder or participant in an
employer-sponsored retirement plan; (b) the distribution is to a participant in
an IRA, 403(b) or employer-sponsored retirement plan, is part of a series of
substantially equal payments made over the life expectancy of the participant
or the joint life expectancy of the participant and his or her beneficiary or
as scheduled periodic payments to a participant (limited in any year to 10% of
the value of the participant's account at the time the distribution amount is
established; a required minimum distribution due to the participant's
attainment of age 70-1/2 may exceed the 10% limit only if the distribution
amount is based on plan assets held by Pioneer); (c) the distribution is from a
401(a) or 401(k) retirement plan and is a return of excess employee deferrals
or employee contributions or a qualifying hardship distribution as defined by
the Code or results from a termination of employment (limited with respect to a
termination to 10% per year of the value of the plan's assets in the Fund as of
the later of the prior December 31 or the date the account was established
unless the plan's assets are being rolled over to or reinvested in the same
class of shares of a Pioneer mutual fund subject to the CDSC of the shares
originally held); (d) the distribution is from an IRA, 403(b) or
employer-sponsored retirement plan

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<PAGE>

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); (b)
if the redemption results from the death or a total and permanent disability
(as defined in Section 72 of the Code) occurring after the purchase of the
shares being redeemed of a shareholder or participant in an employer-sponsored
retirement plan; (c) if the distribution is part of a series of substantially
equal payments made over the life expectancy of the participant or the joint
life expectancy of the participant and his or her beneficiary; or (d) if the
distribution is to a participant in an employer-sponsored retirement plan and
is (i) a return of excess employee deferrals or contributions, (ii) a
qualifying hardship distribution as defined by the Code, (iii) from a
termination of employment, (iv) in the form of a loan to a participant in a
plan which permits loans, or (v) from a qualified defined contribution plan and
represents a participant's directed transfer (provided that this privilege has
been pre-authorized through a prior agreement with PFD regarding participant
directed transfers).

The CDSC on any shares subject to a CDSC may be waived or reduced for
either non-retirement or retirement plan accounts if the redemption is made
pursuant to the Fund's right to liquidate or involuntarily redeem shares in a
shareholder's account. The CDSC on any shares subject to a CDSC will not be
applicable if the selling broker-dealer elects, with PFD's approval, to waive
receipt of the commission normally paid at the time of the sale.

Broker-Dealers

An order for any Class of Fund shares received by PFD from a broker-dealer
prior to the close of regular trading on the Exchange is confirmed at the price
appropriate for that Class as determined at the close of regular trading on the
Exchange on the day the order is received, provided the order is received by
PFD prior to PFD's close of business (usually, 5:30 p.m. Eastern Time). It is
the responsibility of broker-dealers to transmit orders so that they will be
received by PFD prior to its close of business. PFD or its affiliates may
provide additional compensation to certain dealers or such dealers' affiliates
based on certain objective criteria established from time to time by PFD. All
such payments are made out of PFD's or the affiliate's own assets. These
payments will not change the price an investor will pay for shares or the
amount that the Fund will receive from such sale.

General

The Fund reserves the right in its sole discretion to withdraw all or any
part of the offering of shares when, in the judgment of the Fund's management,
such withdrawal is in the best interest of the Fund. An order to purchase
shares is not binding on, and may be rejected by, PFD until it has been
confirmed in writing by PFD and payment has been received.

VIII. HOW TO SELL FUND SHARES

You can arrange to sell (redeem) Fund shares on any day the Exchange is
open by selling either some or all of your shares to the Fund.

You may sell your shares either through your broker-dealer or directly to
the Fund. Please note the following:

[bullet] If you are selling shares from a retirement account, other than an
IRA, you must make your request in writing (except for exchanges to other
Pioneer mutual funds which can be requested by phone or in writing). Call
1-800-622-0176 for more information.

[bullet] If you are selling shares from a non-retirement account or IRA,
you may use any of the methods described below.

Your shares will be sold at the share price next calculated after your
order is received in good order less any applicable CDSC. Sale proceeds
generally will be sent to you in cash, normally within seven days after your
order is received in good order. The Fund reserves the right to withhold
payment of the sale proceeds until checks received by the Fund in payment for
the shares being sold have cleared, which may take up to 15 calendar days from
the purchase date.

In Writing. You may sell your shares by delivering a written request,
signed by all registered owners, in good order to PSC, however, you must use a
written request, including a signature guarantee, to sell your shares if any of
the following applies:

[bullet] you wish to sell over $100,000 worth of shares,

[bullet] your account registration or address has changed within the last
30 days,

[bullet] the check is not being mailed to the address on your account
(address of record),

[bullet] the check is not being made out to the account owners, or

[bullet] the sale proceeds are being transferred to a Pioneer mutual fund
account with a different registration.

Your request should include your name, the Fund's name, your fund account
number, the Class of shares to be redeemed, the dollar amount or number of
shares to be redeemed, and any other applicable requirements as described
below. Unless instructed otherwise, PSC will send the proceeds of the sale to
the address of record. Fiduciaries and corporations are required to submit
additional documents. For more information, contact PSC at 1-800-225-6292.

Written requests will not be processed until they are received in good
order by PSC. Good order means that there are no outstanding claims or requests
to hold redemptions on the account, any certificates are endorsed by the record

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<PAGE>

owner(s) exactly as the shares are registered and the signature(s) are
guaranteed by an eligible guarantor. You should be able to obtain a signature
guarantee from a bank, broker, dealer, credit union (if authorized under state
law), securities exchange or association, clearing agency or savings
association. A notary public cannot provide a signature guarantee. Signature
guarantees are not accepted by facsimile ("fax"). For additional information
about the necessary documentation for redemption by mail, please contact PSC at
1-800-225-6292.

By Telephone or by Fax. Your account is automatically authorized to have
the telephone redemption privilege unless you indicate otherwise on your
Account Application or by writing to PSC. Proper account identification will be
required for each telephone redemption. The telephone redemption option is not
available to retirement plan accounts, except IRAs. You may redeem up to
$100,000 per account per day of your shares by telephone or fax and receive the
proceeds by check or bank wire or electronic funds transfer. To receive the
proceeds by check: the check must be made payable exactly as the account is
registered and the check must be sent to the address of record which must not
have changed in the last 30 days. To receive the proceeds by bank wire or
electronic funds transfer: the proceeds must be sent to your bank address of
record which must have been properly predesignated either on your Account
Application or on an Account Options Form and which must not have changed in
the last 30 days. To redeem by fax send your redemption request to
1-800-225-4240. You may always elect to deliver redemption instructions to PSC
by mail. See "Telephone Transactions and Related Liabilities" below. Telephone
and fax redemptions will be priced as described above. You are strongly urged
to consult with your financial representative prior to requesting a telephone
redemption.

Selling Shares Through Your Broker-Dealer. The Fund has authorized PFD to
act as its agent in the repurchase of shares of the Fund from qualified
broker-dealers and reserves the right to terminate this procedure at any time.
Your broker-dealer must receive your request before the close of business on
the Exchange and transmit it to PFD before PFD's close of business to receive
that day's redemption price. Your broker-dealer is responsible for providing
all necessary documentation to PFD and may charge you for its services.

Small Accounts. The minimum account value is $500. If you hold shares of
the Fund in an account with a net asset value of less than the minimum required
amount due to redemptions or exchanges, the Fund may redeem the shares held in
this account at net asset value if you have not increased the net asset value
of the account to at least the minimum required amount within six months of
notice by the Fund to you of the Fund's intention to redeem the shares.

CDSC on Class A Shares. Purchases of Class A shares of $1 million or more,
or by participants in a Group Plan which were not subject to an initial sales
charge, may be subject to a CDSC upon redemption. A CDSC is payable to PFD on
these investments in the event of a share redemption within 12 months following
the share purchase, at the rate of 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividend and capital gain distributions) or
the total cost of such shares. Shares subject to the CDSC which are exchanged
into another Pioneer mutual fund will continue to be subject to the CDSC of the
shares originally held until the original 12-month period expires. However, no
CDSC is payable upon redemption with respect to Class A shares purchased by
401(a) or 401(k) retirement plans with 1,000 or more eligible participants or
with at least $10 million in plan assets.

General. Redemptions may be suspended or payment postponed during any
period in which any of the following conditions exist: the Exchange is closed
or trading on the Exchange is restricted; an emergency exists as a result of
which disposal by the Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Fund to fairly
determine the value of the net assets of its portfolio; or the SEC, by order,
so permits.

Redemptions and repurchases are taxable transactions to shareholders. The
net asset value per share received upon redemption or repurchase may be more or
less than the cost of shares to an investor, depending on the market value of
the portfolio at the time of redemption or repurchase.

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
Pioneer mutual fund out of which you wish to exchange and the name of the
Pioneer mutual fund into which you wish to exchange, your fund account
number(s), the Class of shares to be exchanged and the dollar amount or number
of shares to be exchanged. Written exchange requests must be signed by all
record owner(s) exactly as the shares are registered.

Telephone Exchanges. Your account is automatically authorized to have the
telephone exchange privilege unless you indicate otherwise on your Account
Application or by writing to the PSC. Proper account identification will be
required for each telephone exchange. Telephone exchanges may not exceed
$500,000 per account per day. Each telephone exchange request, whether by voice
or by FactFoneSM, will be recorded. You are strongly urged to consult with your
financial representative prior to requesting a telephone exchange. See
"Telephone Transactions and Related Liabilities" below.

Automatic Exchanges. You may automatically exchange shares from one
Pioneer mutual fund account for shares of the same Class in another Pioneer
mutual fund account on a monthly or quarterly basis. The accounts must have
identical registrations and the originating account must have a minimum balance
of $5,000. The exchange will be effective on the day of the month designated on
your Account Application or Account Options Form.

General. Exchanges must be at least $1,000. You may exchange your
investment from one Class of Fund shares at net asset value, without a sales
charge, for shares of the same Class of any other Pioneer mutual fund. Not all
Pioneer mutual funds offer more than one Class of shares. A new Pioneer mutual
fund account opened through an exchange must have a registration identical to
that on the original account.

Shares which would normally be subject to a CDSC upon redemption will not
be charged the applicable CDSC at the

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<PAGE>

time of the exchange. Shares acquired in an exchange will be subject to the
CDSC of the shares originally held. For purposes of determining the amount of
any applicable CDSC, the length of time you have owned Class B shares acquired
by exchange will be measured from the date you acquired the original shares and
will not be affected by any subsequent exchange.

Exchange requests received by PSC before 4:00 p.m. Eastern Time, will be
effective on that day if the requirements above have been met, otherwise, they
will be effective on the next business day. PSC will process exchanges only
after receiving an exchange request in good order. There are currently no fees
or sales charges imposed at the time of an exchange. An exchange of shares may
be made only in states where legally permitted. For federal and (generally)
state income tax purposes, an exchange is considered to be a sale of the shares
of the fund exchanged and a purchase of shares in another Pioneer mutual fund.
Therefore, an exchange could result in a gain or loss on the shares sold,
depending on the cost basis of these shares and the timing of the transaction,
and special tax rules may apply.

You should consider the differences in objectives and policies of the
Pioneer mutual funds, as described in each fund's current prospectus, before
making any exchange. For the protection of the Fund's performance and
shareholders, the Fund and PFD reserve the right to refuse any exchange request
or restrict, at any time without notice, the number and/or frequency of
exchanges to prevent abuses of the exchange privilege. Such abuses may arise
from frequent trading in response to short-term market fluctuations, a pattern
of trading by an individual or group that appears to be an attempt to "time the
market," or any other exchange request which, in the view of management, will
have a detrimental effect on the Fund's portfolio management strategy or its
operations. In addition, the Fund and PFD reserve the right to charge a fee for
exchanges or to modify, limit, suspend or discontinue the exchange privilege
with notice to shareholders as required by law.

X. DISTRIBUTION PLANS

The Fund has adopted a Plan of Distribution for each Class of shares (the
"Class A Plan," "Class B Plan," and "Class C Plan") in accordance with Rule
12b-1 under the 1940 Act pursuant to which certain distribution and service
fees are paid.

Pursuant to the Class A Plan, the Fund reimburses PFD for its actual
expenditures to finance any activity primarily intended to result in the sale
of Class A shares or to provide services to holders of Class A shares, provided
the categories of expenses for which reimbursement is made are approved by the
Fund's Board of Trustees. As of the date of this Prospectus, the Board of
Trustees has approved the following categories of expenses for Class A shares
of the Fund: (i) a service fee to be paid to qualified broker-dealers in an
amount not to exceed 0.25% per annum of the Fund's daily net assets
attributable to Class A shares; (ii) reimbursement to PFD for its expenditures
for broker-dealer commissions and employee compensation on certain sales of the
Fund's Class A shares with no initial sales charge (See "How to Buy Fund
Shares"); and (iii) reimbursement to PFD for expenses incurred in providing
services to Class A shareholders and supporting broker-dealers and other
organizations (such as banks and trust companies) in their efforts to provide
such services. Banks are currently prohibited under the Glass-Steagall Act from
providing certain underwriting or distribution services. If a bank was
prohibited from acting in any capacity or providing any of the described
services, management would consider what action, if any, would be appropriate.

Expenditures of the Fund pursuant to the Class A Plan are accrued daily
and may not exceed 0.25% of the Fund's average daily net assets attributable to
Class A shares. Distribution expenses of PFD are expected to substantially
exceed the distribution fees paid by the Fund in a given year. The Class A Plan
may not be amended to increase materially the annual percentage limitation of
average net assets which may be spent for the services described therein
without approval of the shareholders of the Fund. The Class A Plan does not
provide for the carryover of reimbursable expenses beyond twelve months from
the time the Fund is first invoiced for an expense. The limited carryover
provision in the Class A Plan may result in an expense invoiced to the Fund in
one fiscal year being paid in the subsequent fiscal year and thus being treated
for purposes of calculating the maximum expenditures of the Fund as having been
incurred in the subsequent fiscal year. In the event of termination or non-
continuance of the Class A Plan, the Fund has 12 months to reimburse any
expense which it incurs prior to such termination or non-continuance, provided
that payments by the Fund during such twelve-month period shall not exceed
0.25% of the Fund's average daily net assets attributable to the Class A shares
during such period. For the calendar year ended December 31, 1996, there was an
allowable carryover of distribution expenses reimbursable to PFD of $50,522
(less than 0.10% of the net assets attributable to the Class A shares of the
Fund).

Both the Class B Plan and the Class C Plan provide that the Fund will pay
a distribution fee at the annual rate of 0.75% of the Fund's average daily net
assets attributable to the applicable Class of shares and will pay PFD a
service fee at the annual rate of 0.25% of the Fund's average daily net assets
attributable to that Class of shares. The distribution fee is intended to
compensate PFD for its distribution services to the Fund. The service fee is
intended to be additional compensation for personal services and/or account
maintenance services with respect to Class B 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%, equal to 3.75% of the amount invested and a first
year's service fee equal to 0.25% of the amount invested in Class B shares, are
paid to broker-dealers who have selling agreements with PFD. PFD may advance to
dealers the first year service fee at a rate up to 0.25% of the purchase price
of such shares and, as compensation therefor, PFD may retain the service fee
paid by the Fund with respect to such shares for the first year after purchase.
Dealers will become eligible for additional service fees with respect to such
shares commencing in the 13th month following the purchase.

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<PAGE>

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 service fees of up to 0.75% and 0.25%,
respectively, of the net asset value of such shares.

When a broker-dealer sells Class B or Class C shares and elects, with
PFD's approval, to waive its right to receive the commission normally paid at
the time of the sale, PFD may cause all or a portion of the distribution fees
described above to be paid to the broker dealer.

Dealers may from time to time be required to meet certain criteria in
order to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan or the Class C Plan for which there
is no dealer of record or for which qualification standards have not been met
as partial consideration for personal services and/or account maintenance
services performed by PFD or its affiliates for shareholder accounts.

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 tax on income and capital gains
distributed to shareholders as required under the Code.

Under the Code, the Fund will be subject to a nondeductible 4% federal
excise tax on a portion of its undistributed ordinary income and capital gains
if it fails to meet certain distribution requirements with respect to each
calendar year. The Fund intends to make distributions in a timely manner and
accordingly does not expect to be subject to the excise tax. Generally,
dividends from the Fund's net investment income, marked discount income,
certain net foreign exchange gains and net short-term capital gains are taxable
as ordinary income, and dividends from the Fund's net long-term capital gains
are taxable as long-term capital gains. For federal income tax purposes, all
dividends are taxable as described above whether a shareholder takes them in
cash or reinvests them in additional shares of the Fund.

The Fund pays dividends from net investment income and distributes its net
realized short and long-term capital gains, if any, annually, usually in
December. Dividends from income and/or capital gains may also be paid at such
other times as may be necessary for the Fund to avoid federal income or excise
tax. Unless shareholders specify otherwise, all distributions will be
automatically reinvested in additional full and fractional shares of the Fund.
Information as to the federal tax status of dividends and distributions will be
provided to shareholders annually. For further information on the distribution
options available to shareholders, see "Distribution Options" and "Directed
Dividends" below.

The Fund's dividends and distributions generally will not qualify for any
dividends-received deduction available to corporate shareholders.

The Fund may be subject to foreign withholding taxes or other foreign
taxes on income (possibly including, in some cases, capital gains) on certain
of its foreign investments which will reduce the yield on or return from those
investments. In any year in which the Fund qualifies, it may make an election
that would permit certain of its shareholders to take a credit or a deduction
for qualified foreign taxes paid by the Fund. Each shareholder would then
include in gross income (in addition to dividends actually received) his or her
share of the amount of qualified foreign taxes paid by the Fund. If this
election is made, the Fund will notify its shareholders annually as to their
share of the amount of qualified foreign taxes paid and the foreign source
income of the Fund.

Dividends and other distributions and the proceeds of redemptions,
exchanges or repurchases of Fund shares paid to individuals and other
non-exempt payees will be subject to 31% backup withholding of federal income
tax if the Fund is not provided with the shareholder's correct taxpayer
identification number and certification that the number is correct and that the
shareholder is not subject to backup withholding or the Fund receives notice
from the IRS or a broker that such withholding applies. Please refer to the
Account Application for additional information.

The description above relates only to U.S. federal income tax consequences
for shareholders who are U.S. persons, i.e., U.S. citizens or residents or U.S.
corporations, partnerships, trust or estates, and who are subject to U.S.
federal income tax. Non-U.S. shareholders and tax-exempt shareholders are
subject to different tax treatment that is not described above. Shareholders
should consult their own tax advisors regarding state, local and other
applicable tax laws.

XII. SHAREHOLDER SERVICES

PSC is the shareholder services and transfer agent for shares of the Fund.
PSC, a Massachusetts corporation, is a wholly owned subsidiary of PGI. PSC's
offices are located at 60 State Street, Boston, Massachusetts 02109, and
inquiries to PSC should be mailed to Pioneering Services Corporation, P.O. Box
9014, Boston, Massachusetts 02205-9014. Brown Brothers Harriman & Co. (the
"Custodian") serves as custodian of the Fund's portfolio securities. The
principal business address of the mutual fund division of the Custodian is 40
Water Street, Boston, Massachusetts 02109. The Custodian oversees a network of
subcustodians and depositories in the countries in which the Fund may invest.

Account and Confirmation Statements

PSC maintains an account for each shareholder and all transactions of the
shareholder are recorded in this account. Confirmation statements showing
details of transactions are sent to shareholders as transactions occur except
Automatic Investment Plan transactions which are confirmed quarterly. The
Pioneer Combined Account Statement, mailed quarterly, is available to
shareholders who have more than one Pioneer mutual fund account.

Shareholders whose shares are held in the name of an investment
broker-dealer or other party will not normally have

17
<PAGE>

an account with the Fund and might not be able to utilize some of the services
available to shareholders of record. Examples of services which might not be
available are purchases, exchanges or redemptions of shares by mail or
telephone, automatic reinvestment of dividends and capital gains distributions,
withdrawal plans, Letters of Intention, Rights of Accumulation and newsletters.

Additional Investments

You may add to your account by sending a check (minimum of $50 for Class A
shares and $500 for Class B and Class C shares) to PSC (account number and
Class of shares should be clearly indicated). The bottom portion of a
confirmation statement may be used as a remittance slip to make additional
investments. Additions to your account, whether by check or through a Pioneer
Investomatic Plan, are invested in full and fractional shares of the Fund at
the applicable offering price in effect as of the close of regular trading on
the Exchange on the day of receipt.

Automatic Investment Plans

You may arrange for regular automatic investments of $50 or more through
government/military allotments, payroll deduction or through a Pioneer
Investomatic Plan. A Pioneer Investomatic Plan provides for a monthly or
quarterly investment by means of a pre-authorized electronic funds transfer or
draft drawn on a checking account. Pioneer Investomatic Plan investments are
voluntary, and you may discontinue the plan at any time without penalty upon 30
days' written notice. PSC acts as agent for the purchaser, the broker-dealer
and PFD in maintaining these plans.

Financial Reports and Tax Information

As a shareholder, you will receive financial reports at least
semiannually. In January of each year, the Fund will mail to you information
about the tax status of dividends and distributions.

Distribution Options

Dividends and capital gains distributions, if any, will automatically be
invested in additional shares of the Fund, at the applicable net asset value
per share, unless you indicate another option on the Account Application. Two
other options available are (a) dividends in cash and capital gains
distributions in additional shares; and (b) all dividends and capital gains
distributions in cash. These two options are not available, however, for
retirement plans or for an account with a net asset value of less than $500.
Changes in your distribution options may be made by written request to PSC.

If you elect to receive either dividends or capital gains or both in cash
and a distribution check issued to you is returned by the U.S. Postal Service
as not deliverable or a distribution check remains uncashed for six months or
more, the amount of the check may be reinvested in your account. Such
additional shares will be purchased at the then current net asset value.
Furthermore, the distribution option on the account will automatically be
changed to the reinvestment option until such time as you request a different
option by writing to PSC.

Directed Dividends

You may elect (in writing) to have the dividends paid by one Pioneer
mutual fund account invested in a second Pioneer mutual fund account. The value
of this second account must be at least $1,000 ($500 for Pioneer Fund or
Pioneer II). Invested dividends may be in any amount, and there are no fees or
charges for this service. Retirement plan shareholders may only direct
dividends to accounts with identical registrations, i.e., 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 gains distributions paid from your account (before any reinvestment)
and forward the amount withheld to the IRS as a credit against your federal
income taxes. This option is not available for retirement plan accounts or for
accounts subject to backup withholding.

Telephone Transactions and Related Liabilities

Your account is automatically authorized to have telephone transaction
privileges unless you indicate otherwise on your Account Application or by
writing to PSC. You may purchase, sell or exchange Fund shares by telephone.
See "How to Buy Fund Shares," "How to Sell Fund Shares" and "How to Exchange
Fund Shares" for more information. For personal assistance, call 1-800-225-6292
between 8:00 a.m. and 9:00 p.m. Eastern Time on weekdays. Computer-assisted
transactions may be available to shareholders who have pre-recorded certain
bank information (see "FactFoneSM"). You are strongly urged to consult with
your financial representative prior to requesting any telephone transaction.

To confirm that each transaction instruction received by telephone is
genuine, PSC will record each telephone transaction, require you to provide
your personal identification number ("PIN") and send you a written confirmation
of each telephone transaction. Different procedures may apply to accounts that
are registered to non-U.S. citizens or that are held in the name of an
institution or in the name of an investment broker-dealer or other third-party.
If reasonable procedures, such as those described above, are not followed, the
Fund may be liable for any loss due to unauthorized or fraudulent instructions.
The Fund may implement other procedures from time to time. In all other cases,
neither the Fund nor PSC nor PFD will be responsible for the authenticity of
instructions received by telephone; therefore, you bear the risk of loss for
unauthorized or fraudulent telephone transactions.

During times of economic turmoil or market volatility or as a result of
severe weather or a natural disaster, it may be difficult to contact the Fund
by telephone to institute a redemption or exchange. You should communicate with
the Fund in writing if you are unable to reach the Fund by telephone.

FactFoneSM

FactFoneSM is an automated inquiry and telephone transaction system
available to mutual fund shareholders by dialing

18
<PAGE>

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

You should contact the Retirement Plans Department of PSC at
1-800-622-0176 for information relating to retirement plans for businesses,
age-weighted profit sharing plans, Simplified Employee Pension Plans, IRAs, and
Section 403(b) retirement plans for employees of certain non-profit
organizations and public school systems, all of which are available in
conjunction with investments in the Fund. The Account Application enclosed with
this Prospectus should not be used to establish any of these plans. Separate
applications are required.

Telecommunications Device for the Deaf (TDD)

If you have a hearing disability and access to TDD keyboard equipment, you
can call our TDD number toll-free at 1-800-225-1997, weekdays from 8:30 a.m. to
5:30 p.m. Eastern Time to contact our telephone representatives with questions
about your account.

Systematic Withdrawal Plans

If your account has a total value of at least $10,000 you may establish a
Systematic Withdrawal Plan ("SWP") providing for fixed payments at regular
intervals. Withdrawals from Class B and Class C shares accounts are limited to
10% of the value of the account at the time the SWP is implemented. See "Waiver
or Reduction of Contingent Deferred Sales Charge" for more information.

Periodic payments of $50 or more will be sent to you, or any person
designated by you, monthly or quarterly and your periodic redemptions may be
taxable to you. Payments can be made either by check or electronic transfer to
a bank account designated by you. If you direct that withdrawal payments be
made to another person after you have opened your account, a signature
guarantee must accompany your instructions. Purchases of Class A shares of the
Fund at a time when you have a SWP in effect may result in the payment
of unnecessary sales charges and may, therefore, be disadvantageous.

You may obtain additional information by calling PSC at 1-800-225-6292 or
by referring to the Statement of Additional Information.

Reinstatement Privilege (Class A Shares Only)

If you redeem all or part of your Class A shares of the Fund, you may
reinvest all or part of the redemption proceeds without a sales charge in Class
A shares of the Fund if you send a written request to PSC not more than 90 days
after your shares were redeemed. Your redemption proceeds will be reinvested at
the next determined net asset value of the Class A shares of the Fund in effect
immediately after receipt of the written request for reinstatement. You may
realize a gain or loss for federal income tax purposes as a result of the
redemption, and special tax rules may apply if a reinstatement occurs. In
addition, if a redemption resulted in a loss and an investment is made in
shares of the Fund within 30 days before or after the redemption, you may not
be able to recognize the loss for federal income tax purposes. Subject to the
provisions outlined under "How to Exchange Fund Shares" above, you may also
reinvest in Class A shares of other Pioneer mutual funds; in this case, you
must meet the minimum investment requirement for each fund you enter.

The 90-day reinstatement period may be extended by PFD for periods of up
to one year for shareholders living in areas that have experienced a natural
disaster, such as a flood, hurricane, tornado or earthquake.

---------------------

The options and services available to shareholders, including the terms of
the Exchange Privilege and the Pioneer Investomatic Plan, may be revised,
suspended or terminated at any time by PFD or by the Fund. You may establish
the services described in this section when you open your account. You may also
establish or revise many of them on an existing account by completing an
Account Options Form, which you may request by calling 1-800-225-6292.

XIII. THE FUND

Pioneer Emerging Markets Fund is a diversified, open-end management
investment company (commonly referred to as a mutual fund) organized as a
Delaware business trust on March 23, 1994. The Fund has authorized an unlimited
number of shares of beneficial interest. As an open-end management investment
company, the Fund continuously offers its shares to the public and under normal
conditions must redeem its shares upon the demand of any shareholder at the
then current net asset value per share, less any applicable CDSC. See "How to
Sell Fund Shares." The Fund is not required, and does not intend, to hold
annual shareholder meetings, although special meetings may be called for the
purposes of electing or removing Trustees, changing fundamental investment
restrictions or approving a management or subadvisory contract.

The Trustees have the authority, without further shareholder approval, to
classify and reclassify the shares of the Fund, or any additional series of the
Fund, into one or more classes. As of the date of this Prospectus, the Trustees
have authorized the issuance of 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

19
<PAGE>

shares in connection with the distribution of shares. The Fund reserves the
right to create and issue additional series and classes of shares.

In addition to the requirements under Delaware law, the Declaration of
Trust provides that a shareholder of the Fund may bring a derivative action on
behalf of the Fund only if the following conditions are met: (a) shareholders
eligible to bring such derivative action under Delaware law who hold at least
10% of the outstanding shares of the Fund, or 10% of the outstanding shares of
the series or class to which such action relates, shall join in the request for
the Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such shareholder request and investigate
the basis of such claim. The Trustees shall be entitled to retain counsel or
other advisers in considering the merits of the request and shall require an
undertaking by the shareholders making such request to reimburse the Fund for
the expense of any such advisers in the event that the Trustees determine not
to bring such action.

When issued and paid for in accordance with the terms of the Prospectus
and Statement of Additional Information, shares of the Fund are fully paid and
non-assessable by the Fund. Shares will remain on deposit with the Fund's
transfer agent and certificates will not normally be issued. The Fund reserves
the right to charge a fee for the issuance of Class A share certificates;
certificates will not be issued for Class B and Class C shares.

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 indices,
indicators of economic activity or averages of mutual funds results may be
cited or compared with the investment results of the Fund. Rankings or listings
by magazines, newspapers or independent statistical or rating services, such as
Lipper Analytical Services, Inc., may also be referenced.

The Fund's investment results will vary from time to time depending on
market conditions, the composition of the Fund's portfolio and operating
expenses of the Fund. All quoted investment results are historical and should
not be considered representative of what an investment in the Fund may earn in
any future period. For further information about the calculation methods and
uses of the Fund's investment results, see the Statement of Additional
Information.

20
<PAGE>

APPENDIX

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
Objective and Policies" in this Prospectus and "Investment Policies and
Restrictions" in the Statement of Additional Information.

Lower-Rated Debt Securities and Associated Risk Factors

Although the Fund invests primarily in equity and equity-related securities,
the Fund may also invest in debt securities of corporate and governmental
issuers which are considered by PMC to offer the potential for long-term growth
of capital. The Fund may invest in debt securities of any maturity or quality
including those not currently paying interest or in default. However, the Fund
will not invest more than 10% of its total assets in debt securities which are
rated at the time of investment below investment grade by Moody's or by
Standard & Poor's or, if unrated, judged by PMC to be of comparable credit
quality. Debt securities in the lowest investment grade (those rated Baa by
Moody's or BBB by Standard & Poor's or comparable unrated securities) have
speculative characteristics and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make interest
payments and repay principal than is the case with higher grade debt
securities. In addition, debt securities rated Ba or below by Moody's or BB or
below by Standard & Poor's (or comparable unrated securities), commonly called
"junk bonds," are considered speculative, and payments of interest thereon and
repayment of principal may be questionable. In some cases, such securities may
be highly speculative, have poor prospects for reaching investment grade
standing and be in default. As a result, investment in such debt securities
will entail greater speculative risks than those associated with investment in
investment-grade debt securities (i.e., debt securities rated Baa or higher by
Moody's or BBB or higher by Standard & Poor's).

Corporate debt securities are subject to the risk of an issuer's inability
to meet principal and interest payments on the obligations (credit risk) and
may also be subject to price volatility due to such factors as interest rate
sensitivity, market perception of the creditworthiness of the issuer and
general market liquidity (market risk). Lower rated or unrated (i.e., junk
bond) debt securities are more likely to react to developments affecting market
and credit risk than are more highly rated securities, which react primarily to
movements in the general level of interest rates. PMC considers both credit
risk and market risk in making investment decisions for the Fund.

Options on Securities and Securities Indices

The Fund may purchase put and call options on securities indices that are
composed of securities in which it may invest to manage cash flow. In addition,
to enhance return, the Fund may write (sell) "covered" call options on
securities in which it may invest. Call options are "covered" by the Fund when
it owns the underlying securities, or owns securities convertible into or
carrying rights to acquire such securities without payment of additional
consideration, which the option holder has the right to purchase. The Fund
receives a premium from writing a call option, which increases the Fund's gross
income in the event the option expires unexercised or is closed out at a
profit. By writing a call option, the Fund limits its opportunity to profit
from any increase in the market value of the underlying security above the
exercise price of the option.

The Fund will write and purchase options to manage its exposure to foreign
stocks and stock markets instead of, or in addition to, buying and selling
stock. The Fund may also write or purchase options in an attempt to hedge
market-wide price fluctuations. Distributions to shareholders of any gains from
options transactions will be taxable. Options on securities that are written or
purchased by the Fund will be entered into on U.S. exchanges or the exchanges
of other established markets and in related over-the-counter markets. Over-the-
counter transactions involve certain risks which may not be present in a
transaction on an exchange. The staff of the SEC has taken the position that
over-the-counter options and assets used to cover over-the-counter options are
illiquid and, therefore, together with other illiquid securities, cannot exceed
15% of the Fund's net assets.

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 security
or securities index, the amount of the payment it would receive upon exercising
the option would depend on the extent of any decline in the value of the
security or 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 value of the security or 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 and securities indices in
order to remain fully invested in a particular stock market or to lock in a
favorable price on securities that it intends to buy in the future. If the Fund
purchases a call option on a security or securities index, the amount of the
payment it receives upon exercising the option depends on the extent of an
increase in the value of the security or securities index 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 value of the
security or 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.

21
<PAGE>

The Fund may also allow options to expire unexercised, which would result in
the loss of the premium paid.

The risks associated with the use of options are more fully described
below. The Fund pays brokerage commissions or spreads in connection with its
options transactions. The writing of options could significantly increase the
Fund's portfolio turnover rate.

Forward Foreign Currency Exchange Contracts and Options on Foreign Currencies

The Fund has the ability to hold a portion of its assets in foreign
currencies and to enter into forward foreign currency contracts to facilitate
settlement of foreign securities transactions or to protect against changes in
foreign currency exchange rates. The Fund might sell a foreign currency on
either a spot or forward basis to seek to hedge against an anticipated decline
in the dollar value of securities in its portfolio or securities it intends or
has contracted to sell or to preserve the U.S. dollar value of dividends,
interest or other amounts it expects to receive. Although this strategy could
minimize the risk of loss due to a decline in the value of the hedged foreign
currency, it could also limit any potential gain which might result from an
increase in the value of the currency. Alternatively, the Fund might purchase a
foreign currency or enter into a forward purchase contract for the currency to
preserve the U.S. dollar price of securities it is authorized to purchase or
has contracted to purchase.

If the Fund enters into a forward contract to buy foreign currency for any
purpose, the Fund will be required to place cash or liquid, high grade debt
securities in a segregated account of the Fund maintained by the Fund's
custodian in an amount equal to the value of the Fund's total assets committed
to the consummation of the forward contract.

The Fund may purchase put and call options on foreign currencies for the
purpose of protecting against declines in the dollar value of foreign portfolio
securities and against increases in the U.S. dollar cost of foreign securities
to be acquired. The purchase of an option on a foreign currency may constitute
an effective hedge against exchange rate fluctuations.

Futures Contracts and Options on Futures Contracts

To hedge against changes in securities prices, currency exchange rates or
interest rates, the Fund may purchase and sell various kinds of futures
contracts, and purchase and write call and put options on any of such futures
contracts. The Fund may also enter into closing purchase and sale transactions
with respect to any of such contracts and options. The futures contracts may be
based on various stock and other securities indices, foreign currencies and
other financial instruments and indices. The Fund may engage in futures and
related options transactions for hedging and other non-speculative purposes
permitted by regulations of the Commodity Futures Trading Commission. These
transactions involve brokerage costs, require margin deposits and, in the case
of contracts and options obligating the Fund to purchase securities or
currencies, require the Fund to segregate assets to cover such contracts and
options.

Risks and Limitations Associated with Transactions in Options, Futures
Contracts and Forward Foreign Currency Exchange Contracts

The Fund may employ certain active investment management techniques
including options on securities indices, options on currency, futures contracts
and options on futures, forward foreign currency exchange contracts and
currency swaps. Each of these active management techniques involves (1)
liquidity risk that contractual positions cannot be easily closed out in the
event of market changes or generally in the absence of a liquid secondary
market, (2) correlation risk that changes in the value of hedging positions may
not match the securities market and foreign currency fluctuations intended to
be hedged, and (3) market risk that an incorrect prediction of securities
prices or exchange rates by PMC may cause the Fund to perform less favorably
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 use of options, futures and forward foreign currency exchange
contracts are highly specialized activities which involve investment techniques
and risks that are different from those associated with ordinary portfolio
transactions. The Fund may not enter into futures contracts and options on
futures contracts for speculative purposes. There is no limit on the percentage
of the Fund's assets that may be subject to futures contracts and options on
such contracts entered into for bona fide hedging purposes or forward foreign
currency exchange contracts. The loss that may be incurred by the Fund in
entering into futures contracts and written options thereon and forward foreign
currency exchange contracts is potentially unlimited. The Fund may not invest
more than 5% of its total assets in purchased options other than protective put
options.

The Fund's transactions in options, forward foreign currency exchange
contracts, futures contracts and options on futures contracts may be limited by
the requirements for qualification of the Fund as a regulated investment
company for tax purposes. See "Tax Status" in the Statement of Additional
Information.

Repurchase Agreements

The Fund may enter into repurchase agreements not exceeding seven days in
duration. In a repurchase agreement, an investor (e.g., the Fund) purchases a
debt security from a seller which undertakes to repurchase the security at a
specified resale price on an agreed future date (ordinarily a week or less).
The resale price generally exceeds the purchase price by an amount which
reflects an agreed-upon market interest rate for the term of the repurchase
agreement. Repurchase agreements entered into by the Fund will be fully
collateralized with U.S. Treasury and/or U.S. Government agency obligations
with a market value of not less than 100% of the obligation, valued daily.
Collateral will be held in a segregated, safekeeping account for the benefit of
the Fund. In the event that a repurchase agreement is not fulfilled, the Fund
could suffer a loss to the extent that the value of the collateral falls below
the repurchase price or if the Fund is prevented from realizing the value of
the collateral by reason of an order of a court with jurisdiction over an
insolvency pro-

22
<PAGE>

ceeding with respect to the other party to the repurchase agreement.

Restricted and Illiquid Securities

The Fund may invest in restricted securities (i.e., securities that would
be required to be registered prior to distribution to the public), including
restricted securities eligible for resale to certain institutional investors
pursuant to Rule 144A under the Securities Act of 1933. In addition, the Fund
may invest up to 15% of its net assets in restricted securities sold and
offered under Rule 144A that are illiquid either as a result of legal or
contractual restrictions or the absence of a trading market.

The Board of Trustees of the Fund has adopted guidelines and delegated to
PMC the daily function of determining and monitoring the liquidity of
restricted securities. The Board, however, retains sufficient oversight and is
ultimately responsible for the determinations. Since it is not possible to
predict with assurance exactly how the market for restricted securities sold
and offered under Rule 144A will develop, the Board carefully monitors the
Fund's investments in these securities, focusing on such important factors,
among others, as valuation, liquidity and availability of information. This
investment practice could have the effect of increasing the level of
illiquidity in the Fund to the extent that qualified institutional buyers
become for a time uninterested in purchasing these restricted securities.
Securities of non-U.S. issuers that the Fund acquires in Rule 144A
transactions, but which the Fund may resell publicly in a non-U.S. securities
market, are not considered restricted securities.

23
<PAGE>

[Pioneer logo]

Pioneer
Emerging Markets
Fund

60 State Street
Boston, Massachusetts 02109

OFFICERS

JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
NORMAN KURLAND, Ph.D., Vice President
MARK MADDEN, Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary

PRINCIPAL UNDERWRITER

PIONEER FUNDS DISTRIBUTOR, INC.

CUSTODIAN

BROWN BROTHERS HARRIMAN & CO.

INDEPENDENT PUBLIC ACCOUNTANTS

ARTHUR ANDERSEN LLP

LEGAL COUNSEL

HALE AND DORR LLP

INVESTMENT ADVISER

PIONEERING MANAGEMENT CORPORATION

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 and 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

0997-4476

<PAGE>

PIONEER EMERGING MARKETS FUND
60 State Street
Boston, Massachusetts 02109

STATEMENT OF ADDITIONAL INFORMATION

CLASS A, CLASS B AND CLASS C SHARES

March 27, 1997

(revised September 15, 1997)

This Statement of Additional Information is not a Prospectus, but should be
read in conjunction with the Fund's Prospectus (the "Prospectus") dated March
27, 1997 (revised September 15, 1997), as amended and/or supplemented from time
to time, of Pioneer Emerging Markets Fund (the "Fund"). A copy of the Prospectus
can be obtained free of charge by calling Shareholder Services at 1-800-225-6292
or by written request to the Fund at 60 State Street, Boston, Massachusetts
02109. The Fund's most recent Annual Report to Shareholders is attached to, and
is hereby incorporated by reference into, this Statement of Additional
Information.

TABLE OF CONTENTS
Page

1. Investment Policies, Restrictions and Associated Risks................. 2
2. Management of the Fund.................................................14
3. Investment Adviser.....................................................18
4. Principal Underwriter..................................................19
5. Distribution Plans.....................................................20
6. Shareholder Servicing/Transfer Agent...................................22
7. Custodian..............................................................23
8. Independent Public Accountants.........................................23
9. Portfolio Transactions.................................................23
10. Tax Status.............................................................25
11. Description of Shares..................................................28
12. Certain Liabilities....................................................28
13. Determination of Net Asset Value.......................................29
14. Systematic Withdrawal Plan.............................................30
15. Letter of Intent.......................................................30
16. Investment Results.....................................................31
17. Financial Statements...................................................33
APPENDIX A -- Description of Bond Ratings..............................34
APPENDIX B -- Comparative and Performance Statistics...................48
APPENDIX C -- Other Pioneer Information................................48

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS
AND IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF
PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.

<PAGE>

1. INVESTMENT POLICIES, RESTRICTIONS AND ASSOCIATED RISKS

The Fund's Prospectus identifies the investment objective and the
principal investment policies of the Fund and the risk factors associated with
the Fund's investments. Other investment policies of the Fund and associated
risk factors are set forth below. This Statement of Additional Information
should be read in conjunction with the Prospectus. Capitalized terms not
otherwise defined herein have the meaning given to them in the Prospectus.

EMERGING MARKETS AND ASSOCIATED RISK

Emerging Countries. Investing in securities of issuers in emerging
countries may entail greater risks than investing in securities of issuers in
developed countries. These risks include (i) less social, political and economic
stability; (ii) the small current size of the markets for such securities and
the currently low or nonexistent volume of trading, which result in a lack of
liquidity and in greater price volatility; (iii) certain national policies which
may restrict the Fund's investment opportunities, including restrictions on
investment in issuers or industries deemed sensitive to national interests; (iv)
foreign taxation; and (v) the absence of developed structures governing private
or foreign investment or allowing for judicial redress for injury to private
property.

Political and Economic Risks. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment and on repatriation of capital invested. In the event of such
expropriation, nationalization or other confiscation by any country, the Fund
could lose its entire investment in any such country.

In addition, even though opportunities for investment may exist in
emerging markets, any change in the leadership or policies of the governments of
those countries or in the leadership or policies of any other government which
exercises a significant influence over those countries, may halt the expansion
of or reverse the liberalization of foreign investment policies now occurring
and thereby eliminate any investment opportunities which may currently exist.

Investors should note that upon the accession to power of authoritarian
regimes, the governments of a number of Latin American countries previously
expropriated large quantities of real and personal property similar to the
property which will be represented by the securities purchased by the Fund. The
claims of property owners against those governments were never finally settled.
There can be no assurance that any property represented by securities purchased
by the Fund will not also be expropriated, nationalized, or otherwise
confiscated. If such confiscation were to occur, the Fund could lose a
substantial portion of its investments in such countries. The Fund's investments
would similarly be adversely affected by exchange control regulation in any of
those countries.

Religious, Political and Ethnic Instability. Certain countries in which
the Fund may invest may have vocal minorities that advocate radical religious or
revolutionary philosophies or support ethnic independence. Any disturbance on
the part of such individuals could carry the potential for widespread
destruction or confiscation of property owned by individuals and entities
foreign to such country and could cause the loss of the Fund's investment in
those countries.

Foreign Investment Restrictions. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Fund. As illustrations,
certain countries require

-2-
<PAGE>

governmental approval prior to investments by foreign persons, or limit the
amount of investment by foreign persons in a particular company, or limit the
investment by foreign persons to only a specific class of securities of a
company that may have less advantageous terms than securities of the company
available for purchase by nationals. Moreover, the national policies of certain
countries may restrict investment opportunities in issuers or industries deemed
sensitive to national interests. In addition, some countries require
governmental approval for the repatriation of investment income, capital or the
proceeds of securities sales by foreign investors. The Fund could be adversely
affected by delays in, or a refusal to grant, any required governmental approval
for repatriation, as well as by the application to it of other restrictions on
investments.

Non-Uniform Corporate Disclosure Standards and Governmental Regulation.
Foreign companies are subject to accounting, auditing and financial standards
and requirements that differ, in some cases significantly, from those applicable
to U.S. companies. In particular, the assets, liabilities and profits appearing
on the financial statements of such a company may not reflect its financial
position or results of operations in the way they would be reflected had such
financial statements been prepared in accordance with U.S. generally accepted
accounting principles. Most of the securities held by the Fund will not be
registered with the Securities and Exchange Commission (the "Commission") and
such issuers thereof will not be subject to the Commission's reporting
requirements. Thus, there will be less available information concerning foreign
issuers of securities held by the Fund than is available concerning U.S.
issuers. In instances where the financial statements of an issuer are not deemed
to reflect accurately the financial situation of the issuer, the Fund's
investment adviser, Pioneering Management Corporation ("PMC"), will take
appropriate steps to evaluate the proposed investment, which may include on-site
inspection of the issuer, interviews with its management and consultations with
accountants, bankers and other specialists. There is substantially less publicly
available information about foreign companies than there are reports and ratings
published about U.S. companies and the U.S. government. In addition, where
public information is available, it may be less reliable than such information
regarding U.S.
issuers.

Currency Fluctuations. Because the Fund, under normal circumstances,
will invest a substantial portion of its total assets in the securities which
are denominated or quoted in foreign currencies, the strength or weakness of the
U.S. dollar against such currencies will account for part of the Fund's
investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of the
Fund's holdings of securities denominated in such currency and, therefore, will
cause an overall decline in the Fund's net asset value and any net investment
income and capital gains to be distributed in the U.S. dollars to shareholders
of the Fund.

The rate of exchange between the U.S. dollar and other currencies is
determined by several factors including the supply and demand for particular
currencies, central bank efforts to support particular currencies, the movement
of interest rates, the pace of business activity in certain other countries, and
the U.S., and other economic and financial conditions affecting the world
economy.

Although the Fund values its assets daily in terms of U.S. dollars, the
Fund does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. The Fund may do so from time to time, and investors
should be aware of the costs of currency conversion. Although currency dealers
do not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.

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Adverse Market Characteristics. Securities of many emerging country
issuers may be less liquid and their prices more volatile than securities of
comparable U.S. issuers. In addition, foreign securities exchanges and brokers
are generally subject to less governmental supervision and regulation than in
the U.S., and foreign securities exchange transactions are usually subject to
fixed commissions, which are generally higher than negotiated commissions on
U.S. transactions. In addition, foreign securities exchange transactions may be
subject to difficulties associated with the settlement of such transactions.
Delays in settlement could result in temporary periods when assets of the Fund
are uninvested and no return is earned thereon. The inability of the Fund to
make intended security purchases due to settlement problems could cause the Fund
to miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to the Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to sell the security could result in possible
liability to the purchaser. PMC will consider such difficulties when determining
the allocation of the Fund's assets, although PMC does not believe that such
difficulties will have a material adverse effect on the Fund's portfolio trading
activities.

Non-U.S. Withholding Taxes. The Fund's investment income or, in some
cases, capital gains from foreign issuers may be subject to foreign withholding
or other taxes, thereby reducing the Fund's net investment income and/or net
realized capital gains. See "Tax Status."

RULE 144A ILLIQUID SECURITIES

The Fund may invest up to 15% of its net assets in illiquid securities
including restricted securities sold and offered pursuant to Rule 144A under the
Securities Act of 1933, as amended (the "1933 Act"), that are illiquid. See
"Restricted and Illiquid Securities" in the Prospectus. Generally, a security
may be considered illiquid if the Fund is unable to dispose of such security
within seven days at approximately the price at which it values such security.
Securities may also be considered illiquid as a result of certain legal or
contractual restriction on resale. The sale of illiquid securities, if they can
be sold at all, generally will require more time and result in higher brokerage
charges and other selling expenses than will the sale of liquid securities, such
as securities eligible for trading on U.S. securities exchanges or in the
over-the-counter markets. Moreover, restricted securities (i.e., securities that
would be required to be registered prior to distribution to the general public),
such as securities eligible for resale pursuant to Rule 144A ("144A
securities"), which may be illiquid for purposes of this limitation, often sell,
if at all, at a price lower than similar securities that are not subject to
restrictions on resale.

With respect to liquidity determinations generally, the Board of
Trustees has the ultimate responsibility for determining whether specific
securities, including Rule 144A securities are liquid or illiquid. The Board has
delegated the function of making day to day determinations of liquidity to PMC,
pursuant to guidelines reviewed by the Trustees. PMC takes into account a number
of factors in reaching liquidity decisions. These factors may include, but are
not limited to: (i) the frequency of trading in the security; (ii) the number of
dealers who make quotes for the security; (iii) the number of dealers who have
undertaken to make a market in the security; (iv) the number of other potential
purchasers; and (v) the nature of the security and how trading is effected
(e.g., the time needed to sell the security, how offers are solicited and the
mechanics of transfer). PMC will monitor the liquidity of securities in the
Fund's portfolio and report periodically on such decisions to the Trustees.

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<PAGE>

OPTIONS ON SECURITIES

The Fund may write (sell) covered call options on certain portfolio
securities. As the writer of a call option, the Fund receives a premium less
commission, and, in exchange, foregoes the opportunity to profit from increases
in the market value of the security covering the call above the sum of the
premium and the exercise price of the option during the life of the option. The
purchaser of such a call written by the Fund has the option of purchasing the
security from the Fund at the option price during the life of the option.
Portfolio securities on which options may be written are purchased solely on the
basis of investment considerations consistent with the Fund's investment
objectives. All call options written by the Fund are covered; the Fund may cover
a call option by owning the securities subject to the option so long as the
option is outstanding or using the other methods described below. In addition, a
written call option may be covered by purchasing an offsetting option or any
other option which, by virtue of its exercise price or otherwise, covers the
Fund's net exposure on its written option position. The Fund does not consider a
security covered by a call option to be "pledged" as that term is used in the
Fund's policy which limits the pledging or mortgaging of its assets.

The Fund may purchase call options on securities for purposes of
entering into a "closing purchase transaction," i.e., a purchase of a call
option on the same security with the same exercise price and expiration date as
a "covered" call already written by the Fund. These closing purchase
transactions enable the Fund to immediately realize gains or minimize losses on
its options positions. There is no assurance that the Fund will be able to
effect such closing purchase transactions at a favorable price. If the Fund
cannot enter into such a transaction it may be required to hold a security that
it might otherwise have sold. The Fund's portfolio turnover may increase through
the exercise of options if the market price of the underlying securities goes up
and the Fund has not entered into a closing purchase transaction. The commission
on purchase or sale of a call option is higher in relation to the premium than
the commission in relation to the price on purchase or sale of the underlying
security.

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. The Fund will not invest in securities index options for speculative
purposes.

Currently, options on stock indices are traded only on national
securities exchanges and over-the-counter, both in the United States and in
foreign countries. A securities index fluctuates with changes in the market
values of the securities included in the index. For example, some stock index
options are based on a broad market index such as the S&P 500 or the Value Line
Composite Index in the U.S., the Nikkei in Japan or the FTSE 100 in the United
Kingdom. Index options may also be based on a narrower market index.

The Fund may purchase put options in order to hedge against an
anticipated decline in securities prices that might adversely affect the value
of the Fund's portfolio securities. If the Fund purchases a put option on a
securities index, the amount of the payment it would receive upon exercising the
option would depend on the extent of any decline in the level of the securities
index below the exercise price. Such payments would tend to offset a decline in
the value of the Fund's portfolio securities. However, if the level of the
securities index increases and remains above the exercise price while the put
option is outstanding, the Fund will not be able to profitably exercise the
option and will lose the amount of the premium and any transaction costs. Such
loss may be partially offset by an increase in the value of the Fund's portfolio
securities.

The Fund may purchase call options on securities indices in order to
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 may 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 any 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.

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<PAGE>

FORWARD FOREIGN CURRENCY TRANSACTIONS

The foreign currency transactions of the Fund may be conducted on a
spot, i.e. cash basis at the spot rate for purchasing or selling currency
prevailing in the foreign exchange market. The Fund also has authority to deal
in forward foreign currency exchange contracts involving currencies of the
different countries in which it will invest as a hedge against possible
variations in the foreign exchange rate between these currencies and the U.S.
dollar. This is accomplished through contractual agreements to purchase or sell
a specified currency at a specified future date and price set at the time of the
contract. The Fund's dealings in forward foreign currency contracts will be
limited to hedging either specific transactions or portfolio positions.
Transaction hedging is the purchase or sale of forward foreign currency
contracts with respect to specific receivables or payables of the Fund accruing
in connection with the purchase and sale of its portfolio securities denominated
in foreign currencies. Portfolio hedging is the use of forward foreign currency
contracts to offset portfolio security positions denominated or quoted in such
foreign currencies. There is no guarantee that the Fund will be engaged in
hedging activities when adverse exchange rate movements occur. The Fund may not
necessarily attempt to hedge all of its foreign portfolio positions and will
enter into such transactions only to the extent, if any, deemed appropriate by
PMC. The Fund will not enter into speculative forward foreign currency
contracts.

If the Fund enters into a forward contract to purchase foreign
currency, its custodian bank will segregate cash or liquid securities in a
separate account of the Fund in an amount equal to the value of the Fund's total
assets committed to the consummation of such forward contract. Those assets will
be valued at market daily and if the value of the assets in the separate account
declines or the amount of the Fund's obligation on such forward contract
increases, additional cash or liquid securities will be placed in the account so
that the value of the account will equal the amount of the Fund's commitment
with respect to such contracts.

Although the Fund has no current intention of doing so in the coming
year, the Fund may engage in cross-hedging by using forward contracts in one
currency to hedge against fluctuations in the value of securities denominated in
a different currency, if PMC determines that there is a pattern of correlation
between the two currencies. Cross-hedging may also include entering into a
forward transaction involving two foreign currencies, using one foreign currency
as a proxy for the U.S. dollar to hedge against variations in the other foreign
currency, if PMC determines that there is a pattern of correlation between the
proxy currency and the U.S.
dollar.

Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also limit the opportunity
for gain if the value of the hedged currency should rise. Moreover, it may not
be possible for the Fund to hedge against a devaluation that is so generally
anticipated that the Fund is not able to contract to sell the currency at a
price above the devaluation level it anticipates.

The cost to the Fund of engaging in foreign currency transactions
varies with such factors as the currency involved, the size of the contract, the
length of the contract period and the market conditions then prevailing. Since
transactions in foreign currency and forward contracts are usually conducted on
a principal basis, no fees or commissions are involved. The Fund may close out a
forward position in a currency by selling the forward contract or entering into
an offsetting forward contract.

OPTIONS ON FOREIGN CURRENCIES

The Fund may purchase options on foreign currencies for hedging
purposes in a manner similar to that of transactions in forward contracts. For
example, a decline in the dollar value of a foreign currency in which portfolio
securities are denominated will reduce the dollar value of such securities, even
if their value in the foreign currency

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<PAGE>

remains constant. In order to protect against such decreases in the value of
portfolio securities, the Fund may purchase put options on the foreign currency.
If the value of the currency declines, the Fund will have the right to sell such
currency for a fixed amount of dollars which exceeds the market value of such
currency. This would result in a gain that may offset, in whole or in part, the
negative effect of currency depreciation on the value of the Fund's securities
denominated in that currency.

Conversely, if a rise in the dollar value of a currency is projected
for those securities to be acquired, thereby increasing the cost of such
securities, the Fund may purchase call options on such currency. If the value of
such currency increased, the purchase of such call options would enable the Fund
to purchase currency for a fixed amount of dollars which is less than the market
value of such currency. Such a purchase would result in a gain that may offset,
at least partially, the effect of any currency related increase in the price of
securities the Fund intends to acquire. As in the case of other types of options
transactions, however, the benefit the Fund derives from purchasing foreign
currency options will be reduced by the amount of the premium and related
transaction costs. In addition, if currency exchange rates do not move in the
direction or to the extent anticipated, the Fund could sustain losses on
transactions in foreign currency options which would deprive it of a portion or
all of the benefits of advantageous changes in such rates.

The Fund may close out its position in a currency option by either
selling the option it has purchased or entering into an offsetting option.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

To hedge against changes in securities prices or currency exchange
rates, the Fund may purchase and sell various kinds of futures contracts, and
purchase and write (sell) call and put options on any of such futures contracts.
The Fund may also enter into closing purchase and sale transactions with respect
to any of such contracts and options. The futures contracts may be based on
various securities (such as U.S. government securities), securities indices,
foreign currencies and other financial instruments and indices. The Fund will
engage in futures and related options transactions only for hedging purposes.
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.

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<PAGE>

FUTURES CONTRACTS. A futures contract may generally be described as an
agreement between two parties to buy and sell particular financial instruments
for an agreed price during a designated month (or to deliver the final cash
settlement price, in the case of a contract relating to an index or otherwise
not calling for physical delivery at the end of trading in the contract).

When interest rates are rising or securities prices are falling, the
Fund can seek to offset a decline in the value of its current portfolio
securities through the sale of futures contracts. When interest rates are
falling or securities prices are rising, the Fund, through the purchase of
futures contracts, can attempt to secure better rates or prices than might later
be available in the market when it effects anticipated purchases. Similarly, the
Fund can sell futures contracts on a specified currency to seek to protect
against a decline in the value of such currency and a decline in the value of
its portfolio securities which are denominated in such currency. The Fund can
purchase futures contracts on foreign currency to establish the price in U.S.
dollars of a security denominated in such currency that the Fund has acquired or
expects to acquire.

Positions taken in the futures markets are not normally held to
maturity but are instead liquidated through offsetting transactions which may
result in a profit or a loss. While futures contracts on securities or currency
will usually be liquidated in this manner, the Fund may instead make, or take,
delivery of the underlying securities or currency whenever it appears
economically advantageous to do so. A clearing corporation associated with the
exchange on which futures on securities or currency are traded guarantees that,
if still open, the sale or purchase will be performed on the settlement date.

The Fund will be required, in connection with transactions in futures
contracts and the writing of options on futures, to make margin deposits, which
will be held by the Fund's custodian for the benefit of the futures commission
merchant through whom the Fund engages in such futures contracts and options
transactions. In the case of futures contracts or options requiring the Fund to
purchase securities or currencies, the Fund must place cash or liquid securities
in a segregated account maintained by the custodian and marked to market daily
to cover such futures contracts and options.

HEDGING STRATEGIES. Hedging, by use of futures contracts, seeks to
establish with more certainty the effective price, rate of return and currency
exchange rate on portfolio securities and securities that the Fund owns or
proposes to acquire. The Fund may, for example, take a "short" position in the
futures market by selling futures contracts in an attempt to hedge against an
anticipated rise in interest rates or a decline in market prices or foreign
currency rates that would adversely affect the value of the Fund's portfolio
securities. Such futures contracts may include contracts for the future delivery
of securities held by the Fund or securities with characteristics similar to
those of the Fund's portfolio securities. Similarly, the Fund may sell futures
contracts in currency in which its portfolio securities are denominated or in
one currency to seek to hedge against fluctuations in the value of securities
denominated in a different currency if there is an established historical
pattern of correlation between the two currencies. If, in the opinion of PMC,
there is a sufficient degree of correlation between price trends for the Fund's
portfolio securities and futures contracts based on other financial instruments,
securities indices or other indices, the Fund may also enter into such futures
contracts as part of its hedging strategy. Although under some circumstances
prices of securities in the Fund's portfolio may be more or less volatile than
prices of such futures contracts, PMC will attempt to estimate the extent of
this volatility difference based on historical patterns and compensate for any
such differential by having the Fund enter into a greater or lesser number of
futures contracts or by attempting to achieve only a partial hedge against price
changes affecting the Fund's securities portfolio. When hedging of this
character is successful, any depreciation in
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<PAGE>

the value of portfolio securities will be substantially offset by appreciation
in the value of the futures position. On the other hand, any unanticipated
appreciation in the value of the Fund's portfolio securities would be
substantially offset by a decline in the value of the futures position.

On other occasions, the Fund may take a "long" position by purchasing
futures contracts. This would be done, for example, when the Fund anticipates
the subsequent purchase of particular securities when it has the necessary cash,
but expects the prices or currency exchange rates then available in the
applicable market to be less favorable than prices or rates that are currently
available.

OPTIONS ON FUTURES CONTRACTS. The acquisition of put and call options
on futures contracts will give the Fund the right (but not the obligation) for a
specified price to sell or to purchase, respectively, the underlying futures
contract at any time during the option period. As the purchaser of an option on
a futures contract, the Fund obtains the benefit of the futures position if
prices move in a favorable direction but limits its risk of loss in the event of
an unfavorable price movement to the loss of the premium and transaction costs.

The writing of a call option on a futures contract generates a premium
which may partially offset a decline in the value of the Fund's assets. By
writing a call option, the Fund becomes obligated, in exchange for the premium,
to sell a futures contract if the option is exercised, which may have a value
higher than the exercise price. Conversely, the writing of a put option on a
futures contract generates a premium which may partially offset an increase in
the price of securities that the Fund intends to purchase. However, the Fund
becomes obligated to purchase a futures contract if the option is exercised,
which may have a value lower than the exercise price. Thus, the loss incurred by
the Fund in writing call options on futures (and in entering into futures
transactions) is potentially unlimited and may exceed the amount of the premium
received. The Fund will incur transaction costs in connection with the writing
of options on futures.

The holder or writer of an option on a futures contract may terminate
its position by selling or purchasing an offsetting option on the same
securities. There is no guarantee that such closing transactions can be
effected. The Fund's ability to establish and close out positions on such
options will be subject to the development and maintenance of a liquid market.

The Fund may use options on futures contracts only for hedging
purposes.

OTHER CONSIDERATIONS. As noted above, the Fund may engage in futures
and related options transactions only for hedging purposes. CFTC regulations
permit principals of an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), to engage in such transactions
for bona fide hedging (as defined in such regulations) and certain other limited
purposes 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 contracts
used for hedging purposes are substantially related to price fluctuations in
securities held by the Fund or which it expects to purchase. Except as stated
below, the Fund's futures transactions will be entered into for traditional
hedging purposes -- i.e., futures contracts will be sold to seek to protect
against a decline in the price of securities (or the currency in which they are
denominated) that the Fund owns, or futures contracts will be purchased to
protect the Fund against an increase in the price of securities (or the currency
in which they are denominated) it intends to purchase. As evidence of this
hedging intent, the Fund expects that on 75% or more of the occasions on which
it takes a long futures or option position (involving the purchase of futures
contracts), the Fund will have purchased, or will be in the process of
purchasing, equivalent amounts of related securities or assets denominated in
the related currency in the cash market at the time when the futures or option
position is closed out. However, in particular cases, when it is economically
advantageous for the Fund to do so, a long futures position may be terminated or
an option may expire without the corresponding purchase of securities or other
assets.

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<PAGE>

As an alternative to literal compliance with the bona fide hedging
definition, a CFTC regulation permits the Fund to elect to comply with a
different test, under which the sum of the amounts of initial margin deposits on
the Fund's existing futures contracts and premiums paid for options on futures
entered into for the purpose of seeking to increase total return (net of the
amount the positions are "in the money") would not exceed 5% of the market value
of the Fund's net assets. The Fund will engage in transactions in futures
contracts and related options only to the extent such transactions are
consistent with the requirements of the Internal Revenue Code of 1986, as
amended (the "Code"), for maintaining its qualification as a regulated
investment company for federal income tax purposes.

Transaction costs associated with futures contracts and related options
involve brokerage costs, require margin deposits and, in the case of contracts
and options obligating the Fund to purchase securities or currencies, require
the Fund to segregate assets to cover such contracts and options.

While transactions in futures contracts and options on futures may
reduce certain risks, such transactions themselves entail certain other risks.
Thus, while the Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates, securities prices or currency exchange
rates may result in a poorer overall performance for the Fund than if it had not
entered into any futures contracts or options transactions. In the event of an
imperfect correlation between a futures position and a portfolio position which
is intended to be protected, the desired protection may not be obtained and the
Fund may be exposed to risk of loss.

Perfect correlation between the Fund's futures positions and portfolio
positions will be difficult to achieve because no futures contracts based on
foreign corporate equity securities are currently available. The only futures
contracts available to hedge the Fund's portfolio are various futures on U.S.
Government securities and foreign currencies, futures on a municipal securities
index and stock index futures. In addition, it is not possible to hedge fully or
perfectly against the effect of currency fluctuations on the value of foreign
securities because currency movements impact the value of different securities
in differing degrees.

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements with "primary dealers" in
U.S. government securities and banks 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 associated with repurchase agreements is that, if
the seller defaults, the Fund might suffer a loss to the extent that the
proceeds from the sale of the underlying securities and other collateral held by
the Fund in connection with the related repurchase agreement are less than the
repurchase price. Another risk is that, in the event of bankruptcy of the
seller, the Fund could be delayed or prohibited from disposing of the underlying
securities and other collateral held by the Fund in connection with the related
repurchase agreement pending court proceedings. In evaluating whether to enter a
repurchase agreement, PMC will carefully consider the creditworthiness of the
seller pursuant to procedures reviewed and approved by the Trustees. See
"Repurchase Agreements" in the Prospectus.

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<PAGE>

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 outstanding voting securities (as defined in the 1940 Act). 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 1933 Act.

(5)......Purchase or sell real estate, except that the Fund may (i)
lease office space for its own use, (ii) invest in securities of issuers that
invest in real estate or interests therein, (iii) invest in securities that are
secured by real estate or interests therein, (iv) purchase and sell
mortgage-related securities and (v) hold and sell real estate acquired by the
Fund as a result of the ownership of securities.

(6)......Make loans, except that the Fund may lend portfolio securities
in accordance with the Fund's investment policies and may purchase or invests in
repurchase agreements, bank certificates of deposit, a portion of an issue of
publicly distributed bonds, bank loan participation agreements, bankers'
acceptances, debentures or other securities, whether or not the purchase is made
upon the original issuance of the securities.

(7)......Invest in commodities or commodity contracts or in puts,
calls, or combinations of both, except interest rate futures contracts, options
on securities, securities indices, currency and other financial instruments,
futures contracts on securities, securities indices, currency and other
financial instruments and options on such futures contracts, forward foreign
currency exchange contracts, forward commitments, securities index put or call
warrants and repurchase agreements entered into in accordance with the Fund's
investment policies.

(8)......With respect to 75% of its total assets, purchase securities
of an issuer (other than the U.S. Government, its agencies or
instrumentalities), if

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<PAGE>

(a) such purchase would cause more than 5% of the
Fund's total assets, taken at market value, to be invested in
the securities of such issuer, or

(b) such purchase would at the time result in more
than 10% of the outstanding voting securities of such issuer
being held by the Fund.

In addition, although the Fund is not currently registered in Germany,
the following restrictions will apply, to the extent required, upon such
registration. If and so long as the Fund is registered in Germany, the following
investment restrictions will apply which may not be changed without the prior
approval of the Fund's shareholders. The Fund may not:

(i) invest in the securities of any other domestic or foreign
investment company or investment fund, except in connection with a plan of
merger or consolidation with or acquisition of substantially all the assets of
such other investment company or investment fund;

(ii) purchase or sell real estate, or any interest therein, and real
estate mortgage loans, except that the Fund may invest in securities of
corporate or governmental entities secured by real estate or marketable
interests therein or securities issued by companies (other than real estate
limited partnerships, real estate investment trusts and real estate funds) that
invest in real estate or interests therein;

(iii) borrow money in amounts exceeding 10% of the Fund's total assets
(including the amount borrowed) taken at market value;

(iv) pledge, mortgage or hypothecate its assets in amounts exceeding
10% of the Fund's total assets taken at market value;

(v) purchase securities on margin or make short sales; or

(vi) redeem its securities in-kind.

It is a fundamental policy of the Fund not to concentrate its
investments in securities of companies in any particular industry. Following the
current opinion of the Commission, investments are concentrated in a particular
industry if such investments aggregate 25% or more of the Fund's total assets.
The Fund's policy does not apply to investments in U.S. government securities.

The Fund does not intend to enter into any reverse repurchase
agreement, lend portfolio securities or invest in securities index put and call
warrants, as described in fundamental investment restrictions (2), (6) and (7)
above, during the coming year.

In addition, as a matter of non-fundamental 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

-12-
<PAGE>

amount to the securities sold and, if the right is conditional, the sale is made
upon the same conditions, except that the 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, options, futures contracts and options on
futures contracts.

(c) Purchase a security if, as a result, (i) more than 10% of the
Fund's total assets would be invested in securities of closed-end investment
companies, (ii) such purchase would result in more than 3% of the total
outstanding voting securities of any one such closed-end investment company
being held by the Fund, or (iii) more than 5% of the Fund's total assets would
be invested in any one such closed-end investment company; provided, however,
the Fund may only purchase securities of registered closed-end investment
companies and such securities may only be purchased in the open market where no
commission or profit to a sponsor or dealer results from the purchase other than
the customary brokers commission and 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.

(d) Invest more than 5% of its total assets in the securities of any
issuer which, together with its predecessors, has been in operation for less
than three years.

(e) Invest more than 15% of its total assets in restricted securities,
including securities eligible for resale pursuant to Rule 144A under the 1933
Act.

(f) Invest for the purpose of exercising control over or management of
any company.

(g) Purchase warrants of any issuer, if, as a result of such purchases,
more than 5% of the value of the Fund's net assets would be invested in
warrants, whether or not listed on the New York Stock Exchange, the American
Stock Exchange or comparable international exchanges. 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.

(h) 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.

(i) 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.

(j) Purchase any security which is illiquid, if more than 15% of the
net assets of the Fund, taken at market value, would be invested in such
securities. The Fund may not invest in repurchase agreements maturing in more
than seven days. The Fund currently intends to limit its investments in illiquid
securities to illiquid Rule 144A securities.

(k) Write covered calls or put options with respect to more than 25% of
the value of its total assets or invest more than 5% of its total assets in
puts, calls, spreads, or straddles, other than protective put options.

(l) Invest in real estate limited partnerships.

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<PAGE>

2. MANAGEMENT OF THE FUND

The Fund's Board of Trustees provides broad supervision over the
affairs of the Fund. The officers of the Fund are responsible for the Fund's
operations. The Trustees and executive officers of the Fund are listed below,
together with their principal occupations during the past five years. An
asterisk indicates those Trustees who are interested persons of the Fund within
the meaning of the 1940 Act.

JOHN F. COGAN, JR.*, CHAIRMAN OF THE BOARD, PRESIDENT AND TRUSTEE, DOB: JUNE
1926

President, Chief Executive Officer and a Director of The Pioneer Group,
Inc. ("PGI"); Chairman and a Director of PMC and Pioneer Funds Distributor, Inc.
("PFD"); Director of Pioneering Services Corporation ("PSC"), Pioneer Capital
Corporation ("PCC") and Forest-Starma (a Russian timber joint venture; President
and Director of Pioneer Plans Corporation ("PPC"), Pioneer Investment Corp.
("PIC"), Pioneer Metals and Technology, Inc. ("PMT"), Pioneer International
Corp. ("PIntl"), Luscina, Inc., Pioneer First Russia, Inc. ("First Russia") and
Pioneer Omega, Inc. ("Omega") and Theta Enterprises, Inc.; Chairman of the Board
and Director of Pioneer Goldfields Limited ("PGL") and Teberebie Goldfields
Limited; Chairman of the Supervisory Board of Pioneer Fonds Marketing, GmbH
("Pioneer GmbH"); Member of the Supervisory Board of Pioneer First Polish Trust
Fund Joint Stock Company ("PFPT"); Chairman, President and Trustee of all of the
Pioneer mutual funds and Partner, Hale and Dorr LLP (counsel to the Fund).

MARY K. BUSH, Trustee, DOB: April 1948
4201 Cathedral Ave. NW, Washington, DC 20016
President, Bush & Co., an International Financial Advisory firm, since
1991; Director/Trustee of Mortgage Guaranty Insurance Corporation, Novecon
Management Company, Hoover Institution, Folger Shakespeare Library, March of
Dimes, Project 2000, Inc., Small Enterprise Assistance Fund and Wilberforce
University; Advisory Board member, Washington Mutual Investors Fund, a
registered investment company; U.S. Alternate Executive Director, International
Monetary Fund (1984-1988); and Managing Director, Federal Housing Finance Board
(1989-1991).

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, since
1988; 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.

-14-
<PAGE>

JOHN W. KENDRICK, TRUSTEE, DOB: JULY 1917
6363 Waterway Drive, Falls Church, VA 22044
Professor Emeritus and Adjunct Scholar, George Washington University;
Economic Consultant and Director, American Productivity and Quality Center;
American Enterprise Institute and Trustee of all of the Pioneer mutual funds,
except Pioneer Variable Contracts Trust.

MARGUERITE A. PIRET, TRUSTEE, DOB: MAY 1948
One Boston Place, Suite 2635, Boston, MA 02108
President, Newbury, Piret & Company, Inc. (merchant banking firm) and
Trustee of all of the Pioneer mutual funds.

DAVID D. TRIPPLE*, TRUSTEE AND EXECUTIVE VICE PRESIDENT, DOB: FEBRUARY 1944
Executive Vice President and a Director of PGI; President, Chief
Investment Officer and a Director of PMC; Director of PFD, PCC, PIC, PIntl ,
First Russia, Omega and Pioneer SBIC Corporation, Executive Vice President and
Trustee of all of the Pioneer mutual funds.

STEPHEN K. WEST, TRUSTEE, DOB: SEPTEMBER 1928
125 Broad Street, New York, NY 10004
Partner, Sullivan & Cromwell (law firm); Trustee, The Winthrop Focus
Funds (mutual funds) and Trustee of all of the Pioneer mutual funds.

JOHN WINTHROP, TRUSTEE, DOB: JUNE 1936
One North Adgers Wharf, Charleston, SC 29401
President, John Winthrop & Co., Inc. (private investment firm);
Director of NUI Corp.; Trustee of Alliance Capital Reserves, Alliance Government
Reserves and Alliance Tax Exempt Reserves and Trustee of all of the Pioneer
mutual funds, except Pioneer Variable Contracts Trust.

WILLIAM H. KEOUGH, TREASURER, DOB: APRIL 1937
Senior Vice President, Chief Financial Officer and Treasurer of PGI;
Treasurer of PFD, PMC, PSC, PCC, PIC, PIntl, PMT, PGL, First Russia, Omega and
Pioneer SBIC Corporation; Treasurer and Director of PPC and Treasurer of all of
the Pioneer mutual funds.

JOSEPH P. BARRI, SECRETARY, DOB: AUGUST 1946

Secretary of PGI, PMC, PPC, PIC, PIntl, PMT, First Russia, Omega and
PCC; Clerk of PFD and PSC; Partner, Hale and Dorr LLP (counsel to the Fund) and
Secretary of all of the Pioneer mutual funds.

ERIC W. RECKARD, ASSISTANT TREASURER, DOB: JUNE 1956
Manager of Fund Accounting of PMC since May 1994, Manager of Auditing,
Compliance and Business Analysis for PGI prior to May 1994 and Assistant
Treasurer of all of the Pioneer mutual funds.

ROBERT P. NAULT, ASSISTANT SECRETARY, DOB: MARCH 1964

General Counsel and Assistant Secretary of PGI since 1995; Assistant
Secretary of PMC, PIntl, PGL, First Russia, Omega and all of the Pioneer mutual
funds; Assistant Clerk of PFD and PSC: and formerly of Hale and Dorr LLP
(counsel to the Fund) where he most recently served as junior partner.

NORMAN KURLAND, VICE PRESIDENT, DOB: NOVEMBER 1949
Senior Vice President of PMC since 1993; Vice President of PMC from
1990 to 1993; Vice President of Pioneer India Fund, Pioneer Europe Fund and
Pioneer International Growth Fund.

-15-
<PAGE>

MARK MADDEN, VICE PRESIDENT, DOB: APRIL 1957 Vice President of PMC
since 1993. Vice President of Pioneer India Fund.

The Fund's Agreement and Declaration of Trust (the "Declaration of
Trust") provides that the holders of two-thirds of its outstanding shares may
vote to remove a Trustee of the Fund at any meeting of shareholders. See
"Description of Shares" below. The business address of all officers is 60 State
Street, Boston, Massachusetts 02109.

All of the outstanding capital stock of PFD, PMC and PSC is owned,
directly or indirectly, by PGI, a publicly-owned Delaware corporation. PMC, the
Fund's investment adviser, serves as the investment adviser for the Pioneer
mutual funds listed below and manages the investments of certain institutional
accounts.

The table below lists all the Pioneer mutual funds currently offered to
the public and the investment adviser and principal underwriter for each fund.

Investment Principal
Fund Name Adviser Underwriter
- --------- ------- -----------

Pioneer World Equity Fund PMC PFD
Pioneer International Growth Fund PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
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 Micro-Cap Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Balanced Fund PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer Interest Shares, Inc. PMC Note 1
Pioneer Variable Contracts Trust PMC Note 2

Note 1 This fund is a closed-end fund.

Note 2 This is a series of eight separate portfolios designed to serve as
investment vehicles for the variable annuity and variable life
insurance contracts of various insurance companies or for certain
qualified pension and retirement plans.

-16-
<PAGE>

PMC also manages the investments of certain institutional private
accounts. All of the outstanding capital stock of PMC and PSC is owned by PGI, a
Delaware corporation. All of the capital stock of PFD is owned by PMC. Messrs.
Cogan, Tripple, Keough, Nault and Barri, officers and/or Trustees of the Fund,
are also officers and/or directors of PFD, PMC, PSC (except Mr. Tripple) and
PGI. To the knowledge of the Fund, no officer or Trustee of the Fund owned 5% or
more of the issued and outstanding shares of PGI as of the date of this
Statement of Additional Information, except Mr. Cogan who then owned
approximately 14% of such shares.

As of the date of this Statement of Additional Information, the
Trustees and officers of the Fund owned beneficially in the aggregate less than
1% of the outstanding shares of the Fund. As of February 28, 1997, MLPF&S., 4800
Deer Lake Drive East 3rd FL, Jacksonville, FL 32249-6484 owned approximately
10.11% (504,803) of the outstanding Class A shares of the Fund; 26.22%
(1,014,715) of the outstanding Class B shares of the Fund and 59.20% (364,247)
of the outstanding Class C shares of the Fund.

The Fund pays no salaries or compensation to any of its officers,
however, the Fund pays an annual trustees' fee to each Trustee who is not
affiliated with PGI, PMC, PFD or PSC consisting of two components: (a) a base
fee of $500 and (b) a variable fee, calculated on the basis of average net
assets of the Fund. 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 Trustees who serve as members of
committees established to act on behalf of one or more of the 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 will receive an annual fee equal to 10% of the aggregate
annual trustees' fee, except the Committee Chairperson who receives an annual
fee equal to 20% of the aggregate annual trustees' fee. Members of the Pricing
Committee for the Pioneer mutual funds, as well as any other committee which
renders material functional services to the Board of Trustees for the Pioneer
mutual funds, receive an annual fee equal to 5% of the annual fee, except the
Committee Chairperson who receives an annual trustees' fee equal to 10% of the
annual trustees' fee. Any such fees paid to affiliates or interested persons of
PGI, PMC, PFD or PSC are reimbursed to the Fund under its management contract.

-17-
<PAGE>

The following table sets forth certain information with respect to the
compensation of each Trustee of the Fund:

Total Compensa-
tion from the
Pension or Fund and other
Aggregate Retirement funds in the
Compensation Benefits Pioneer Family
Trustee From the Fund Accrued of Mutual Funds**
- ------- ------------- ------- -----------------

Mary K. Bush+ $ 0 $0 $ 0
John F. Cogan, Jr. 500* 0 11,083
Richard H. Egdahl, M.D. 1,861 0 59,858
Margaret B.W. Graham 1,961 0 59,858
John W. Kendrick 1,961 0 59,858
Marguerite A. Piret 2,217 0 79,842
David D. Tripple 500* 0 11,083
Stephen K. West 2,077 0 67,850
John Winthrop 2,059 0 66,442
--------------------------------------------

Totals $13,136 $0 $417,052
=============================================

--------

* For the fiscal year ended November 1, 1996.

** For the calendar year ended December 31, 1996, there were 23 mutual
funds in the Pioneer Family of Funds.

+ Mary K. Bush became a Trustee on June 23, 1997.

3. INVESTMENT ADVISER

As stated in the Prospectus, PMC, 60 State Street, Boston,
Massachusetts, serves as the Fund's investment adviser. The Fund's management
contract with PMC is renewable annually 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 management services and expenses incurred,
PMC is entitled to a management fee at the rate of 1.25% 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 all or a portion of its management fee
and to make other arrangements, if necessary, to limit certain other expenses of
the Fund to the extent required to limit total Class A expenses to 2.25% of the
average daily net assets attributable to the Class A shares; the Fund-wide
expenses attributable to the Class B and Class C shares will be reduced only to
the extent such expenses are reduced for the Class A shares. This agreement is
voluntary and temporary and may be revised or terminated by PMC at any time. For
the fiscal years ended November 30, 1994, November 30, 1995 and November 30,
1996, the Fund paid to PMC $0, $0, and $325,325 in management fees. The Fund
would have incurred management fees payable to PMC of $84,871, $251,891 and
$734,703 respectively, had the fee reduction agreement not been in place.

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<PAGE>

4. PRINCIPAL UNDERWRITER

PFD serves as the principal underwriter in connection with the
continuous offering of the shares of the Fund pursuant to an Underwriting
Agreement, dated June 23, 1994. The Trustees who were not "interested persons"
(as defined in the 1940 Act) of the Fund approved the Underwriting Agreement,
which will continue in effect from year to year, if annually approved by the
Trustees, in conjunction with the continuance of the Plans of Distribution. See
"Distribution Plans" below. The Underwriting Agreement provides that PFD will
bear certain distribution expenses not borne by the Fund. During the fiscal
years ended November 30, 1994, 1995 and 1996, net underwriting commissions
earned by PFD were approximately $12,044, $185,668 and $86,393 respectively.
Commissions reallowed to dealers during such periods were approximately
$536,877, $24,653 and $793,089 respectively.

PFD bears all expenses it incurs in providing services under the
Underwriting Agreement. Such expenses include compensation to its employees and
representatives and to securities dealers for distribution related services. PFD
also pays certain expenses in connection with the distribution of the Fund's
shares, including the cost of preparing, printing and distributing advertising
or promotional materials, and the cost of printing and distributing prospectuses
and supplements to prospective shareholders. The Fund bears the cost of
registering its shares under federal, state and foreign securities law. See
"Distribution Plans" below.

The Fund and PFD have agreed to indemnify each other against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
Under the Underwriting Agreement, PFD will use its best efforts in rendering
services to the Fund.

The Fund will not generally issue Fund shares for consideration other
than cash. At the Fund's sole discretion, however, the Fund may issue shares for
consideration other than cash in connection with a reorganization, statutory
merger or other acquisition of portfolio securities.

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.

5. DISTRIBUTION PLANS

The Fund has adopted plans of distribution pursuant to Rule 12b-1
promulgated by the Commission under the 1940 Act with respect to its Class A,
Class B and Class C shares (the "Class A Plan", the "Class B Plan" and the
"Class C Plan") (together, the "Plans").

Class A Plan

Pursuant to the Class A Plan the Fund reimburses PFD for its
expenditures in financing certain activities primarily intended to result in the
sale of the Class A shares. Certain categories of such expenditures have been

-19-
<PAGE>

approved by the Board of Trustees and are set forth in the Prospectus. See
"Distribution Plans" in the Prospectus. The expenses of the Fund pursuant to the
Class A Plan are accrued daily at a rate which may not exceed the annual rate of
0.25% of the Fund's average daily net assets attributable to Class A shares.

Class B Plan

The Class B Plan provides that the Fund shall pay PFD, as the Fund's
distributor for its Class B shares, a distribution fee equal on an annual basis
to 0.75% of the Fund's average daily net assets attributable to Class B shares
and will pay PFD a service fee equal to 0.25% of the Fund's average daily net
assets attributable to Class B shares (which PFD will in turn pay to securities
dealers which enter into a sales agreement with PFD at a rate of up to 0.25% of
the Fund's average daily net assets attributable to Class B shares owned by
investors for whom that securities dealer is the holder or dealer of record).
This service fee is intended to be consideration for personal services and/or
account maintenance services rendered by the dealer with respect to Class B
shares. PFD will advance to dealers the first year's service fee at a rate equal
to 0.25% of the amount invested. As compensation therefor, PFD may retain the
service fee paid by the Fund with respect to such shares for the first year
after purchase. Dealers will become eligible for additional service fees with
respect to such shares commencing in the thirteenth month following purchase.
Dealers may from time to time be required to meet certain other criteria in
order to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.

The purpose of distribution payments to PFD under the Class B
Plan is to compensate PFD for its distribution services to the Fund. PFD pays
commissions to dealers as well as expenses of printing prospectuses and reports
used for sales purposes, expenses with respect to the preparation and printing
of sales literature and other distribution-related services, including, without
limitation, the cost necessary to provide distribution-related services or
personnel, travel, office expenses and equipment. The Class B Plan also provides
that PFD will receive all contingent deferred sales charges ("CDSCs")
attributable to Class B shares. (See "Distribution Plans" in the Prospectus.).
When the broker-dealer effecting the sale of Class B shares waives its right to
receive commissions on such sales, PFD may cause the distribution fees described
above to be paid to that broker-dealer.

-20-
<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 then-current value of the amount invested. As
compensation therefor, PFD may retain the service fee paid by the Fund with
respect to such shares for the first year after purchase. Commencing in the
thirteenth month following a purchase of Class C shares, dealers will become
eligible for additional service fees at a rate of up to 0.25% of the amount
invested and additional compensation at a rate of up to 0.75% of the 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.).
When the broker-dealer effecting the sale of Class C shares waives its right to
receive commissions on such sales, PFD may cause the distribution fees described
above to be paid to that broker-dealer.

General

In accordance with the terms of the Plans, PFD provides to the Fund
for review by the Trustees a quarterly written report of the amounts expended
under the respective Plan and the purpose for which such expenditures were made.
In the Trustees' quarterly review of the Plans, they will consider the continued
appropriateness and the level of reimbursement or compensation the Plans
provide.

No interested person of the Fund, nor any Trustee of the Fund who is
not an interested person of the Fund, has any direct or indirect financial
interest in the operation of the Plans except to the extent that PFD and certain
of its employees may be deemed to have such an interest as a result of receiving
a portion of the amounts expended under the Plans by the Fund and except to the
extent certain officers may have an interest in PFD's ultimate parent, PGI.

The Plans were adopted by a majority vote of the Board of Trustees,
including all of the Trustees who are not, and were not at the time they voted,
interested persons of the Fund, as defined in the 1940 Act (none of whom has or
have any direct or indirect financial interest in the operation of the Plans)
(the "Qualified Trustees"), cast in person at a meeting called for the purpose
of voting on the Plans. In approving the Plans, the Trustees identified and
considered a number of potential benefits which the Plans may provide. The Board
of Trustees believes that there is a reasonable likelihood that the Plans will
benefit the Fund and its current and future shareholders. Under their terms, the
Plans remain in effect from year to year provided such continuance is approved
annually by vote of

-21-
<PAGE>

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 who have no direct or indirect financial interest in the operations of the
Plan, or by a vote of a majority of the outstanding voting securities of the
respective Class of the Fund (as defined in the 1940 Act). A Plan will
automatically terminate in the event of its assignment (as defined in the 1940
Act). In the Trustees' quarterly review of the Plans, they will consider the
Plans' continued appropriateness and the level of compensation they provide.

During the fiscal year ended November 30,1996, the Fund incurred total
distribution fees pursuant to the Fund's Class A Plan, Class B Plan, and Class C
Plan respectively, as follows: $86,365, $206,898 and $23,551. The distribution
fees were paid by the Fund to PFD in reimbursement of expenses related to
servicing of shareholder accounts and to compensating dealers and sales
personnel.

Upon redemption, Class A shares may be subject to a 1% CDSC, Class B
shares are subject to a CDSC at a rate declining from a maximum of 4% of the
lower of the cost or market value of the shares and Class C shares are subject
to a 1% CDSC. During the fiscal year ended November 30, 1996, CDSCs, in the
amount of approximately $46,478 were paid to PFD in reimbursement of expenses
related to servicing of shareholders' accounts and compensation paid to dealers
and sales personnel.

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 an annual fee of $22.75 per Class A, Class B and Class C
shareholder account from the Fund as compensation for the services described
above. PSC is also reimbursed by the Fund for its out-of-pocket expenditures.
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. The Fund may compensate
entities which have agreed to provide certain sub-accounting services such as
specific transaction processing and recordkeeping services.

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7. CUSTODIAN

Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts
02109 (the "Custodian"), is the custodian of the Fund's assets. The Custodian's
responsibilities include safekeeping and controlling the Fund's cash and
securities in the United States as well as in foreign countries, handling the
receipt and delivery of securities, and collecting interest and dividends on the
Fund's investments. The Custodian fulfills its function in foreign countries
through a network of subcustodian banks located in the foreign countries (the
"Subcustodians"). The Custodian also provides fund accounting, bookkeeping and
pricing assistance to the Fund and assistance in arranging for forward currency
exchange contracts as described above under "Investment Policies, Restrictions
and Risk Factors."

The Custodian does not determine the investment policies of the Fund
or decide which securities it will buy or sell. The Fund may invest in
securities issued by the Custodian or any of the Subcustodians, deposit cash in
the Custodian or any Subcustodian and deal with the Custodian or any of the
Subcustodians as a principal in securities transactions. Portfolio securities
may be deposited into the Federal Reserve-Treasury Department Book Entry System
or the Depository Trust Company in the United States or in recognized central
depositories in foreign countries. In selecting Brown Brothers Harriman & Co.
and its network of foreign subcustodians as the custodians for foreign countries
securities, the Board of Trustees made certain determinations required by Rule
17f-5 promulgated under the 1940 Act. The Trustees annually review and approve
the continuations of its international subcustodian arrangements.

8. INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen LLP, 225 Franklin Street,, Boston, Massachusetts
02110, 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.

9. PORTFOLIO TRANSACTIONS

All orders for the purchase or sale of portfolio securities are
placed on behalf of the Fund by PMC pursuant to authority contained in the
Management Contract. In selecting brokers or dealers, PMC considers other
factors relating to best execution, including, but not limited to, the size and
type of the transaction; the nature and character of the markets of the security
to be purchased or sold; the execution efficiency, settlement capability, and
financial condition of the dealer; the dealer's execution services rendered on a
continuing basis; and the reasonableness of any dealer spreads. Most
transactions in foreign equity securities are executed by broker-dealers in
foreign countries in which commission rates are fixed and, therefore, are not
negotiable (as such rates are in the United States) and are generally higher
than in the United States.

PMC may select broker-dealers which provide brokerage and/or research
services to the Fund and/or other investment companies or accounts managed by
PMC. Such services may include advice concerning the value of securities; the
advisability of investing in, purchasing or selling securities; the availability
of securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors and
trends, portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance and
settlement). PMC maintains a listing of broker-dealers who provide such services
on a regular basis. However, because many transactions on behalf of the Fund and
other investment companies or accounts managed by PMC are placed with
broker-dealers (including broker-dealers on the listing) without regard to the
furnishing of such services, it is not possible to estimate the proportion

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of such transactions directed to such dealers solely because such services were
provided. Management believes that no exact dollar value can be calculated for
such services.

The research received from broker-dealers may be useful to PMC in
rendering investment management services to the Fund as well as to other
investment companies or accounts managed by PMC, although not all of such
research may be useful to the Fund. Conversely, such information provided by
brokers or dealers who have executed transaction orders on behalf of such other
accounts may be useful to PMC in carrying out its obligations to the Fund. The
receipt of such research has not reduced PMC's normal independent research
activities; however, it enables PMC to avoid the additional expenses which might
otherwise be incurred if it was to attempt to develop comparable information
through its own staff.

In circumstances where two or more broker-dealers offer comparable
prices and executions, preference may be given to a broker-dealer which has sold
shares of the Fund as well as shares of other investment companies or accounts
managed by PMC. This policy does not imply a commitment to execute all portfolio
transactions through all broker-dealers that sell shares of the Fund. In
addition, if PMC determines in good faith that the amount of commissions charged
by a broker is reasonable in relation to the value of the brokerage and research
services provided by such broker, the Fund may pay commissions to such broker in
an amount greater than the amount another firm may charge. For the fiscal years
ended November 30, 1994, 1995 and 1996, the Fund paid or accrued aggregate
brokerage commissions of $136,329, $355,039 and $897,000 respectively.

In addition to the Fund, PMC acts as investment adviser to the other
Pioneer mutual funds and certain private accounts with investment objectives
similar to those of the Fund. As such, securities may meet investment objectives
of the Fund, such other mutual funds and such private accounts. In such cases,
the decision to recommend a purchase for one mutual fund or account rather than
another is based on a number of factors. The determining factors in most cases
are the amount of securities of the issuer then outstanding, the value of those
securities and the market for them. Other factors considered in the investment
recommendations include other investments which each company presently has in a
particular industry or country and the availability of investment funds in each
mutual fund or account.

It is possible that, at times, identical securities will be held by
more than one mutual fund and/or account. However, the position of any mutual
fund or account in the same issue may vary and the length of time that any
mutual fund or account may choose to hold its investment in the same issue may
likewise vary. To the extent that the Fund, another Pioneer mutual fund or a
private account managed by PMC seeks to acquire the same security at about the
same time, the Fund may not be able to acquire as large a position in such
security as it desires or it may have to pay a higher price for the security.
Similarly, the Fund may not be able to obtain as large an execution of an order
to sell or as high a price for any particular portfolio security if PMC decides
to sell on behalf of another account the same portfolio security at the same
time. On the other hand, if the same securities are bought or sold at the same
time by more than one account, the resulting participation in volume
transactions could produce better executions for the Fund or other account. In
the event that more than one account purchases or sells the same security on a
given date, the purchases and sales will normally be made as nearly as
practicable on a pro rata basis in proportion to the amounts desired to be
purchased or sold by each.

The Trustees periodically review PMC's performance of its
responsibilities in connection with portfolio transactions on behalf of the
Fund.

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10. TAX STATUS

It is the Fund's policy to meet the requirements of Subchapter M of the
Code for qualification as a regulated investment company. These requirements
relate to the sources of the Fund's income, the diversification of its assets
and the distribution of its income to shareholders. If the Fund meets all such
requirements and distributes to its shareholders, in accordance with the Code's
timing requirements, all investment company taxable income and net capital gain,
if any, which it earns, the Fund will be relieved of the necessity of paying
federal income tax.

In order to qualify as a regulated investment company under Subchapter
M, the Fund must, among other things, derive at least 90% of its annual gross
income from dividends, interest, gains from the sale or other disposition of
stock, securities or foreign currencies, or other income (including gains from
options, futures and forward contracts) derived with respect to its business of
investing in such stock, securities or currencies (the "90% income test"), limit
its gains from the sale of stock, securities and certain other positions held
for less than three months to less than 30% of its annual gross income (the "30%
test") and satisfy certain annual distribution and quarterly diversification
requirements. For purposes of the 90% income test, income the Fund earns from
equity interests in certain entities that are not treated as corporations (e.g.,
are treated as partnerships or trusts) for U.S. tax purposes will generally have
the same character for the Fund as in the hands of such entities; consequently,
the Fund may be required to limit its equity investments in such entities that
earn fee income, rental income, or other nonqualifying income.

Dividends from investment company taxable income, which includes net
investment income, net short-term capital gain in excess of net long-term
capital loss, and certain net foreign exchange gains, are taxable as ordinary
income, whether received in cash or reinvested in additional shares. Dividends
from net long-term capital gain in excess of net short-term capital loss, if
any, whether received in cash or reinvested in additional shares, are taxable to
the Fund's shareholders as long-term capital gains for federal income tax
purposes without regard to the length of time shares of the Fund have been held.
The federal income tax status of all distributions will be reported to
shareholders annually.

Any dividend declared by the Fund in October, November or December as
of a record date in such a month and paid during the following January will be
treated for federal income tax purposes as received by shareholders on December
31 of the calendar year in which it is declared.

Foreign exchange gains and losses realized by the Fund in connection
with certain transactions involving foreign currency-denominated debt
securities, certain options and futures contracts relating to foreign currency,
foreign currency forward contracts, foreign currencies, or payables or
receivables denominated in a foreign currency are subject to Section 988 of the
Code, which generally causes such gains and losses to be treated as ordinary
income and losses and may affect the amount, timing and character of
distributions to shareholders. Any such transactions that are not directly
related to the Fund's investments in stock or securities (or its options or
futures contracts with respect to stock or securities) may need to be limited in
order to enable the Fund to satisfy the limitations described in the second
paragraph above that are applicable to the income or gains recognized by a
regulated investment company. If the net foreign exchange loss for a year were
to exceed the Fund's investment company taxable income (computed without regard
to such loss), the resulting ordinary loss for such year would not be deductible
by the Fund or its shareholders in future years.

If the Fund acquires any equity interest (under proposed regulations,
generally including not only stock but also an option to acquire stock) in
certain foreign corporations that receive at least 75% of their annual gross
income from passive sources (such as interest, dividends, rents, royalties or
capital gain) or hold at least 50% of their assets in investments producing such
passive income ("passive foreign investment companies"), the Fund could be
subject to federal income tax and additional interest charges on "excess
distributions" received from such companies or gain from the sale of stock in
such companies, even if all income or gain actually received by the Fund is
timely distributed to its shareholders. The Fund would not be able to pass
through to its shareholders any credit or deduction for such a tax. Certain
elections may, if available, ameliorate these adverse tax consequences, but any
such election would require the Fund to recognize taxable income or gain without
the concurrent receipt of cash. The Fund may limit and/or manage its holdings in
passive foreign investment companies to minimize its tax liability or maximize
its return from these investments.

The Fund may invest in debt obligations that are in the lowest rating
categories or are unrated, including debt obligations of issuers not currently
paying interest or who are in default. Investments in debt obligations that are
at risk of or in default present special tax issues for the Fund. Tax rules are
not entirely clear about issues such as when the Fund may cease to accrue
interest, original issue discount, or market discount, when and to what extent
deductions may be taken for bad debts or worthless securities, how payments
received on obligations in default should be allocated between principal and
income, and whether exchanges of debt obligations in a workout context are
taxable. These and other issues will be addressed by the Fund, in the event it
invests in such securities, in order to seek to ensure that it distributes
sufficient income to preserve its status as a regulated investment company and
does not become subject to federal income or excise tax.

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If the Fund invests in certain pay-in-kind securities ("PIKs"), zero
coupon securities, deferred interest securities or, in general, any other
securities with original issue discount (or with market discount if the Fund
elects to include market discount in income currently), the Fund must accrue
income on such investments for each taxable year, which generally will be prior
to the receipt of the corresponding cash payments. However, the Fund must
distribute, at least annually, all or substantially all of its net income,
including such accrued income, to shareholders to qualify as a regulated
investment company under the Code and avoid Federal income and excise taxes.
Therefore, the Fund may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash, or may have to leverage itself
by borrowing the cash, to satisfy distribution requirements.

For federal income tax purposes, the Fund is permitted to carry forward
a net capital loss for any year to offset its capital gains, if any, during the
eight years following the year of the loss. To the extent subsequent capital
gains are offset by such losses, they would not result in federal income tax
liability to the Fund and therefore are not expected to be distributed as such
to shareholders. As of the end of its most recent taxable year, the Fund had no
capital loss carryforwards.

At the time of an investor's purchase of Fund shares, a portion of the
purchase price may be attributable to realized or unrealized appreciation in the
Fund's portfolio or undistributed taxable income of the Fund. Consequently,
subsequent distributions on these shares from such appreciation or income may be
taxable to such investor even if the net asset value of the investor's shares
is, as a result of the distributions, reduced below the investor's cost for such
shares and the distributions economically represent a return of a portion of the
investment.

Redemptions and exchanges are taxable events. Any loss realized by a
shareholder upon the redemption, exchange or other disposition of shares with a
tax holding period of six months or less will be treated as a long-term capital
loss to the extent of any amounts treated as distributions of long-term capital
gain with respect to such shares.

In addition, if Class A shares redeemed or exchanged have been held for
less than 91 days, (1) in the case of a reinvestment at net asset value pursuant
to the reinvestment privilege, the sales charge paid on such shares is not
included in their tax basis under the Code, and (2) in the case of an exchange,
all or a portion of the sales charge paid on such shares is not included in
their tax basis under the Code, to the extent a sales charge that would
otherwise apply to the shares received is reduced pursuant to the exchange
privilege. In either case, the portion of the sales charge not included in the
tax basis of the shares redeemed or surrendered in an exchange is included in
the tax basis of the shares acquired in the reinvestment or exchange. Losses on
redemptions or other dispositions of shares may be disallowed under "wash sale"
rules in the event of other investments in the Fund (including those made
pursuant to reinvestment of dividends and/or capital gain distributions) within
a period of 61 days beginning 30 days before and ending 30 days after a
redemption or other disposition of shares. In such a case, the disallowed
portion of any loss would be included in the federal tax basis of the shares
acquired in the other investments.

Options written or purchased and futures contracts entered into by the
Fund on certain securities, indices and foreign currencies, as well as certain
foreign currency forward contracts, may cause the Fund to recognize gains or
losses from marking-to-market at the end of its taxable year even though such
options may not have lapsed, been closed out, or exercised or such futures or
forward contracts may not have been performed or closed out. The tax rules
applicable to these contracts may affect the characterization as long-term or
short-term of some capital gains and losses realized by the Fund. Certain
options, futures and forward contracts relating to foreign currency may be
subject to Section 988, as described above, and may accordingly produce ordinary
income or loss. Losses on certain options, futures or forward contracts and/or
offsetting positions (portfolio securities or other positions with respect to
which the Fund's risk of loss is substantially diminished by one or more
options, futures or forward contracts) may also be deferred under the tax
straddle rules of the Code, which may also affect the characterization of
capital gains or losses from straddle positions and certain successor positions
as long-term or short-term. Certain tax elections may be available that would
enable the Fund to ameliorate some adverse effects of the tax rules described in
this paragraph. The tax rules applicable to options, futures or forward
contracts and straddles may affect the amount, timing and character of the
Fund's income and losses and hence of its distributions to shareholders.

The Fund's dividends and distributions will generally not qualify to
any material extent for any dividends-received deduction that might otherwise be
available for certain dividends received by shareholders that are corporations.

The Fund may be subject to withholding and other taxes imposed by
foreign countries, including taxes on interest, dividends and capital gains,
with respect to its investments in those countries. Tax conventions between
certain countries and the U.S. may reduce or eliminate such taxes in some cases.
If more than 50% of the Fund's total assets at the close of any taxable year
consists of stock or securities of foreign corporations, the Fund may elect to
pass through to its shareholders their pro rata shares of qualified foreign
taxes paid by the Fund, with the result that shareholders would be required to
include such taxes in their gross incomes (in addition to dividends and
distributions they actually received), would treat such taxes as foreign taxes
paid by them, and may be entitled to a tax deduction or credit for such taxes,
subject to certain limitations under the Code.

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Qualified foreign taxes generally include taxes that would be treated
as income taxes under U.S. tax regulations but do not include most other taxes,
such as stamp taxes, securities transaction taxes, and similar taxes. If the
Fund makes the election described above, shareholders may deduct their pro rata
portion of qualified foreign taxes paid by the Fund in computing their income
subject to U.S. federal income taxation or, alternatively, use them as foreign
tax credits, subject to applicable limitations under the Code, against their
U.S. federal income taxes. Shareholders who do not itemize deductions for
federal income tax purposes will not, however, be able to deduct their pro rata
portion of qualified foreign taxes paid by the Fund, although such shareholders
will be required to include their shares of such taxes in gross income if the
Fund makes the election described above.

If the Fund makes this election and a shareholder chooses to take a
credit for the foreign taxes deemed paid by such shareholder, the amount of the
credit that may be claimed in any year may not exceed the same proportion of the
U.S. tax against which such credit is taken which the shareholder's taxable
income from foreign sources (but not in excess of the shareholder's entire
taxable income) bears to his entire taxable income. For this purpose, long-term
and short-term capital gains the Fund realizes and distributes to shareholders
will generally not be treated as income from foreign sources in their hands, nor
will distributions of certain foreign currency gains subject to Section 988 of
the Code and of any other income realized by the Fund that is deemed, under the
Code, to be U.S.-source income in the hands of the Fund. This foreign tax credit
limitation may also be applied separately to certain specific categories of
foreign-source income and the related foreign taxes. As a result of these rules,
which have different effects depending upon each shareholder's particular tax
situation, certain shareholders may not be able to claim a credit for the full
amount of their proportionate share of the foreign taxes paid by the Fund.
Shareholders who are not liable for U.S. federal income taxes, including
tax-exempt shareholders, will ordinarily not benefit from this election. If the
Fund does make the election, it will provide required tax information to
shareholders. If the Fund does not make the election, it may deduct such taxes
in computing its income available for distribution to shareholders to satisfy
applicable tax distribution requirements.

Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions, and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their tax
advisers for more information.

Federal law requires that the Fund withhold (as "backup withholding")
31% of reportable payments, including dividends, capital gain dividends and the
proceeds of redemptions (including exchanges) and repurchases to shareholders
who have not complied with Internal Revenue Service ("IRS") regulations. In
order to avoid this withholding requirement, shareholders must certify on their
Account Applications, or on separate IRS Forms W-9, that the Social Security
Number or other Taxpayer Identification Number they provide is their correct
number and that they are not currently subject to backup withholding, or that
they are exempt from backup withholding. The Fund may nevertheless be required
to withhold if it receives notice from the IRS or a broker that the number
provided is incorrect or backup withholding is applicable as a result of
previous underreporting of interest or dividend income.

If, as anticipated, the Fund qualifies as a regulated investment
company under the Code, it will not be required to pay any Massachusetts income,
corporate excise or franchise taxes or any Delaware corporation income tax.

The description of certain federal tax provisions above relates only to
U.S. federal income tax consequences for shareholders who are U.S. persons, i.e.
U.S. citizens or residents or U.S. corporations, partnerships, trusts or
estates, and who are subject to U.S. federal income tax. This description does
not address the special tax rules that may be applicable to particular types of
investors, such as financial institutions, insurance companies, securities
dealers, or tax-exempt or tax-deferred plans, accounts or entities. Investors
other than U.S. persons may be subject to different U.S. tax treatment,
including a possible 30% non-resident alien U.S. withholding tax (or
non-resident alien withholding tax at a lower treaty rate) on amounts treated as
ordinary dividends from the Fund and, unless an effective IRS Form W-8 or
authorized substitute for Form W-8 is on file, to 31% backup withholding on
certain other payments from the Fund. Shareholders should consult their own tax
advisers on these matters and on state, local and other applicable tax laws.

11. DESCRIPTION OF SHARES

The Fund's Declaration of Trust permits the Board of Trustees to
authorize the issuance of an unlimited number of full and fractional shares of
beneficial interest (without par value) which may be divided into such separate
series as the Trustees may establish. Currently, the Fund consists of only one
series. The Trustees may, however, establish additional series of shares in the
future, and may divide or combine the shares into a greater or

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lesser number of shares without thereby changing the proportionate beneficial
interests in the Fund. The Declaration of Trust further authorizes the Trustees
to classify or reclassify any series of the shares into one or more classes.
Pursuant thereto, the Trustees have authorized the issuance of three classes of
shares of the Fund, Class A, 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 meetings of
shareholders. Although Trustees are not elected annually by the shareholders,
shareholders have, under certain circumstances, the right to remove one or more
Trustees. No amendment adversely affecting the rights of shareholders may be
made to the Fund's Declaration of Trust without the affirmative vote of a
majority of its shares. Shares have no preemptive or conversion rights. Shares
are fully paid and non-assessable by the Trust, except as stated below.

12. CERTAIN LIABILITIES

As a Delaware business trust, the Fund's operations are governed by
its Declaration of Trust dated March 23, 1994. A copy of the Fund's Certificate
of Trust, also dated March 23, 1994, is on file with the Office of the Secretary
of State of the State of Delaware. 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 Trust's Declaration of Trust expressly provides that the Trust
has been organized under the Delaware Act and that the 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 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 the 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 Declaration of Trust further provides that the Fund shall
indemnify each of its Trustees and officers against liabilities and expenses
reasonably incurred by them, in connection with, or arising out of, any action,
suit or proceeding, threatened against or otherwise involving such Trustee or
officer, directly or indirectly, by reason of being or having been a Trustee or
officer of the Fund. The Declaration of Trust does not authorize the Fund to
indemnify any Trustee or officer against any liability to which he or she would
otherwise be subject by reason of or for willful misfeasance, bad faith, gross
negligence or reckless disregard of such person's duties.

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13. DETERMINATION OF NET ASSET VALUE

The net asset value per share of each class of the Fund is determined
as of the close of regular trading (currently 4:00 p.m., Eastern Time) on each
day on which the New York Stock Exchange (the "Exchange") is open for trading.
As of the date of this Statement of Additional Information, the Exchange is open
for trading every weekday except for the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The net asset value per share of each class
of the Fund is also determined on any other day in which the level of trading in
its portfolio securities is sufficiently high so that the current net asset
value per share might be materially affected by changes in the value of its
portfolio securities. The Fund is not required to determine its net asset value
per share on any day in which no purchase orders for the shares of the Fund
become effective and no shares are tendered for redemption.

The net asset value per share of each class of the Fund is computed
by taking the value of all of the Fund's assets attributable to a class, less
the Fund's liabilities attributable to that class, and dividing it by the number
of outstanding shares of that class. For purposes of determining net asset
value, expenses of the classes of the Fund are accrued daily.

Securities which have not traded on the date of valuation or
securities for which sales prices are not generally reported are valued at the
mean between the last bid and asked prices. Securities for which no market
quotations are readily available (including those the trading of which has been
suspended) will be valued at fair value as determined in good faith by the Board
of Trustees, although the actual computations may be made by persons acting
pursuant to the direction of the Board. The maximum offering price per Class A
share is the net asset value per Class A share, plus the maximum sales charge.
Class B and Class C shares are offered at net asset value without the imposition
of an initial sales charge.

14. SYSTEMATIC WITHDRAWAL PLAN

The Systematic Withdrawal Plan ("SWP") is designed to provide a
convenient method of receiving fixed payments at regular intervals from shares
of the Fund deposited by the applicant under this SWP. The applicant must
deposit or purchase for deposit with PSC shares of the Fund having a total value
of not less than $10,000. Periodic checks of $50 or more will be deposited,
monthly or quarterly, directly into a bank account designated by the applicant,
or will be sent to the applicant, or any person designated by him. A designation
of a third party to receive checks requires an acceptable signature guarantee.
Withdrawals from Class B and Class C share accounts are limited to 10% of the
value of the account at the time the SWP is implemented. See "Waiver or
Reduction of Contingent Deferred Sales Charge" in the Prospectus. Designation of
another person to receive the checks subsequent to opening an account must be
accompanied by a signature guarantee.

Any income dividends or capital gains distributions on shares under
the SWP will be credited to the SWP account on the payment date in full and
fractional shares at the net asset value per share in effect on the record date.

SWP payments are made from the proceeds of the redemption of shares
deposited under the SWP in a SWP account. To the extent that such redemptions
for periodic withdrawals exceed dividend income reinvested in the SWP account,
such redemptions will reduce and may ultimately exhaust the number of shares
deposited in the SWP account. 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.

-29-
<PAGE>

The SWP may be terminated at any time (1) by written notice to PSC or
from PSC to the shareholder; (2) upon receipt by PSC of appropriate evidence of
the shareholder's death; or (3) when all shares under the SWP have been
redeemed.

15. LETTER OF INTENTION (CLASS A SHARES ONLY)

A Letter of Intent (a "Letter") may be established by completing the
Letter of Intent section of the Account Application. When you sign the Account
Application, you agree to irrevocably appoint PSC your attorney-in-fact to
surrender for redemption any or all shares held in escrow with full power of
substitution. A Letter of Intent is not a binding obligation upon the investor
to purchase, or the Fund to sell, the full amount indicated.

If the total purchases, less redemptions, exceed the amount specified
under the Letter of Intention and are in an amount which would qualify for a
further quantity discount, all transactions will be recomputed on the expiration
date of the Letter of Intention to effect the lower sales charge. Any difference
in the sales charge resulting from such recomputation will be either delivered
to you in cash or invested in additional shares at the lower sales charge. The
dealer, by signing the Account Application, agrees to return to PFD, as part of
such retroactive adjustment, the excess of the commission previously reallowed
or paid to the dealer over that which is applicable to the actual amount of the
total purchases under the Letter of Intention.

If the total purchases, less redemptions, are less than the amount specified
under the Letter of Intention, you must remit to PFD any difference between the
sales charge on the amount actually purchased and the amount originally
specified in the Letter of Intention section of the Account Application. When
the difference is paid, the shares held in escrow will be deposited to your
account. If you do not pay the difference in sales charge within 20 days after
written request from PFD or your dealer, PSC, after receiving instructions from
PFD, will redeem the appropriate number of shares held in escrow to realize the
difference and release any excess. See "How to Purchase Fund Shares - Letter of
Intent" in the Prospectus for more information.

16. INVESTMENT RESULTS

One of the primary methods used to measure the performance of a class
of the Fund is "total return." "Total return" will normally represent the
percentage change in value of an account, or of a hypothetical investment in a
class of the Fund, over any period up to the lifetime of that class of the Fund.
Total return calculations will usually assume the reinvestment of all dividends
and capital gains distributions and will be expressed as a percentage increase
or decrease from an initial value, for the entire period or for one or more
specified periods within the entire period. Total return percentages for periods
of less than one year will usually be annualized; total return percentages for
periods longer than one year will usually be accompanied by total return
percentages for each year within the period and/or by the average annual
compounded total return for the period. The income and capital components of a
given return may be separated and portrayed in a variety of ways in order to
illustrate their relative significance. Performance may also be portrayed in
terms of cash or investment values, without percentages. Past performance cannot
guarantee any particular future result.

The Fund's average annual total return quotations for each class of
its shares as that information may appear in the Prospectus, this Statement of
Additional Information or in advertising are calculated by standard methods
prescribed by the Commission.

-30-
<PAGE>

STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS

Average annual total return quotations for each class of shares are
computed by finding the average annual compounded rates of return that would
cause a hypothetical investment in that class made on the first day of a
designated period (assuming all dividends and distributions are reinvested) to
equal the ending redeemable value of such hypothetical investment on the last
day of the designated period in accordance with the following formula:

P(1+T)n = ERV

Where: P = a hypothetical initial payment of $1,000,
less the maximum sales load of $57.50 for
Class A shares or the deduction of any
CDSC applicable to Class B or Class C
shares at the end of the period.

T = average annual total return

n = number of years

ERV = ending redeemable value of the
hypothetical $1,000 initial payment made
at the beginning of the designated period
(or fractional portion thereof)

For purposes of the above computation, it is assumed that the maximum
sales charge of 5.75% was deducted from the initial investment and that all
dividends and distributions made by the Fund are reinvested at net asset value
during the designated period. The average annual total return quotation is
determined to the nearest 1/100 of 1%.

In determining the average annual total return (calculated as
provided above), recurring fees, if any, that are charged to all shareholder
accounts of a particular class are taken into consideration. For any account
fees that vary with the size of the account, the account fee used for purposes
of the above computation is assumed to be the fee that would be charged to the
class' mean account size.

The total returns for each class of shares of the Fund as of November
30, 1996 are as follows:

Average Annual Total Return (%)
Life of Fund
One Year Five Years (6/23/94)

Class A Shares 13.61 N/A 2.72
Class B Shares 19.70 N/A 3.34
Class C Shares N/A N/A 2.86

PMC temporarily agreed to reduce its management fee and made other
arrangements to limit certain other expenses of the Fund. Had PMC not made such
an arrangement, the total returns for the periods would have been lower.
Inception was June 23, 1994 for Class A and Class B shares. Class C Shares were
first offered January 31, 1996.

-31-
<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, total return of
the Fund's classes may be compared to averages or rankings prepared by Lipper
Analytical Services, Inc., a widely recognized independent service which
monitors mutual fund performance; the Europe Australia Far East Index ("EAFE"),
an unmanaged index of international stock markets, Morgan Stanley Capital
International USA Index, an unmanaged index of U.S. domestic stock markets, or
other appropriate indices of Morgan Stanley Capital International ("MSCI"); the
Standard & Poor's 500 Stock Index ("S&P 500"), an unmanaged index of common
stocks; or the Dow Jones Industrial Average, a recognized unmanaged index of
common stocks of 30 industrial companies listed on the New York Stock Exchange.

In addition, the performance of the classes of the Fund may be
compared to alternative investment or savings vehicles and/or to indices or
indicators of economic activity, e.g., inflation or interest rates. Performance
rankings and listings reported in newspapers or national business and financial
publications, such as Barron's, Business Week, Consumer's Digest, Consumer
Reports, Financial World, Forbes, Fortune, Investors Business Daily, Kiplinger's
Personal Finance Magazine, Money Magazine, the New York Times, Smart Money, USA
Today, U.S. News and World Report, The Wall Street Journal and Worth may also be
cited (if the Fund is listed in any such publication) or used for comparison, as
well as performance listings and rankings from various other sources including
Bloomberg Financial Systems, CDA/Wiesenberger Investment Companies Service,
Donoghue's Mutual Fund Almanac, Investment Company Data, Inc., Johnson's Charts,
Kanon Bloch Carre & Co., Micropal, Inc., Morningstar, Inc., Schabacker
Investment Management and Towers Data Systems.

In addition, from time to time, quotations from articles from
financial publications, such as those listed above, may be used in
advertisements, in sales literature or in reports to shareholders of the Fund.

The Fund may also present, from time to time, historical information
depicting the value of a hypothetical account in one or more classes of the Fund
since the Fund's inception.

In presenting investment results, the Fund may also include
references to certain financial planning concepts, including (a) an investor's
need to evaluate his financial assets and obligations to determine how much to
invest; (b) his need to analyze the objectives of various investments to
determine where to invest; and (c) his need to analyze his time frame for future
capital needs to determine how long to invest. The investor controls these three
factors, all of which affect the use of investments in building assets.

AUTOMATED INFORMATION LINE

FactFoneSM, Pioneer's 24-hour automated information line, allows
shareholders to dial toll-free 1-800-225-4321 and hear recorded fund
information, including:

net asset value prices for all Pioneer mutual funds;

annualized 30-day yields on Pioneer's fixed income funds;

annualized 7-day yields and 7-day effective (compound) yields for
Pioneer's money market fund; and

dividends and capital gains distributions on all Pioneer mutual
funds.

-32-
<PAGE>

Yields are calculated in accordance with standard formulas mandated by the
Commission.

In addition, by using a personal identification number (PIN),
shareholders may enter purchases, exchanges and redemptions, access their
account balance and last three transactions and may order a duplicate statement.
See FactFoneSM in the Prospectus for more information.

All performance numbers communicated through FactFoneSM represent
past performance; figures for all quoted bond funds include the maximum
applicable sales charge. A shareholder's actual yield and total return will vary
with changing market conditions. The value of Class A, Class B and Class C
shares (except for Pioneer Cash Reserves Fund, which seek a stable $1.00 share
price) will also vary and may be worth more or less at redemption than their
original cost.

17. FINANCIAL STATEMENTS

The Fund's audited financial statements are included in the Fund's
Annual Report dated November 30, 1996 which is 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. A copy of the Fund's Annual Report may also be obtained
without charge by calling Shareholder Services at 1-800-225-6292 or by written
request to the Fund at 60 State Street, Boston, Massachusetts 02109.

-33-
<PAGE>

APPENDIX A

Description of Bond Ratings1

Moody's Investor's Service, Inc.2

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 bigger 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 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.

- ---------------------------------------------
1 The ratings indicated herein are believed to be the most recent ratings
available at the date of this Prospectus 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.

2 Rates bonds of issuers which have $600,000 or more of debt, except bonds of
educational institutions, projects under construction, enterprises without
established earnings records and situations where current financial data is
unavailable.

-34-
<PAGE>

Standard & Poor's Ratings Group 3

AAA: Bonds rated AAA are highest grade obligations. This rating indicates an
extremely strong capacity to pay principal and interest.

AA: Bonds rated AA also qualify as high-quality obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.

A: Bonds rated A have a strong capacity to pay principal and interest, although
they are more susceptible to the adverse effects of changes in circumstances and
economic conditions.

BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.

- -------------------------------------------------
3 Rates all governmental bodies having $1,000,000 or more of debt outstanding,
unless adequate information is not available.

-35-
<PAGE>

PIONEER EMERGING MARKETS FUND

CLASS A SHARES
<TABLE>
<CAPTION>

DATE INITIAL OFFERING PRICE SALES CHARGE SHARES PURCHASED NET ASSET INITIAL NET ASSET
---- -------- -------------- ------------- ---------------- ---------- -----------------
INVESTMENT INCLUDED VALUE PER SHARE VALUE
---------- -------- --------------- -----
<S> <C> <C> <C> <C> <C> <C>
6/23/94 $10,000.00 $13.26 5.75% 754.148 $12.5000 $9,425

VALUE OF SHARES

DIVIDENDS AND CAPITAL GAINS REINVESTED

DATE FROM INVESTMENT FROM CAP GAINS FROM DIVIDENDS TOTAL VALUE
---- --------------- -------------- -------------- -----------
REINVESTED REINVESTED
---------- ----------

<S> <C> <C> <C> <C>
12/31/94 $8,809 $61 $41 $8,911
12/31/95 8,990 99 42 9,131
12/31/96 9,985 723 46 10,754

</TABLE>

-36-
<PAGE>

PIONEER EMERGING MARKETS FUND

CLASS B SHARES

DATE INITIAL OFFERING PRICE SHARES PURCHASED NET ASSET VALUE INITIAL NET ASSET VALUE
---- -------- -------------- ---------------- ---------------- -----------------------
INVESTMENT PER SHARE
---------- ---------
<S> <C> <C> <C> <C> <C>
6/23/94 $10,000.00 $12.50 800.000 $12.50 $10,000

VALUE OF SHARES

DIVIDENDS AND CAPITAL GAINS REINVESTED

DATE FROM INVESTMENT FROM CAP GAINS FROM DIVIDENDS CONTINGENT TOTAL VALUE IF CDSC PERCENTAGE
---- --------------- --------------- --------------- ----------- --------------- ---------------
REINVESTED REINVESTED DEFERRED SALES REDEEMED
---------- ---------- --------------- --------
CHARGE IF
---------
REDEEMED
--------

<S> <C> <C> <C> <C> <C> <C>
12/31/94 $9,312 $65 $24 $372 $9,029 4.00%
12/31/95 9,456 105 25 378 $9,208 4.00%
12/31/96 10,416 764 27 300 $10,907 3.00%

</TABLE>

-37-
<PAGE>

PIONEER EMERGING MARKETS FUND

CLASS C SHARES
<TABLE>
<CAPTION>

VALUE OF SHARES

DIVIDENDS AND CAPITAL GAINS REINVESTED

<S> <C> <C> <C> <C> <C> <C>
12/31/96 $9,841 $604 $0 $98 $10,347 1.00%

</TABLE>

- --------

-38-
<PAGE>

COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS

The following securities indices are well-known, unmanaged measures of market
performance. Advertisements and sales literature for the Fund may refer to these
indices or may present comparisons between the performance of the Fund and one
or more of the indices. Other indices may be used, if appropriate. The indices
are not available for direct investment. The data presented is not meant to be
indicative of the performance of the Fund, reflects past performance and does
not guarantee future results.

S&P 500
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P Composite Index
includes 500 of the largest stocks (in terms of stock market value) in the
United States; prior to March 1957 it consisted of 90 of the largest stocks.

DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of 30 blue chip stocks.

U.S. SMALL STOCK INDEX
This index is a market value weighted index of the ninth and tenth deciles of
the New York Stock Exchange (NYSE), plus stocks listed on the American Stock
Exchange (AMEX) and over-the-counter (OTC) with the same or less capitalization
as the upper bound of the NYSE ninth decile.

U.S. INFLATION
The Consumer Price Index for All Urban Consumers (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S. Department of Labor, Bureau of Labor Statistics, Washington, DC.

S&P/BARRA INDEXES
The S&P/BARRA Growth and Value Indexes are constructed by dividing the stocks in
the S&P 500 Index according to price-to-book ratios. The Growth Index contains
stocks with higher price-to-book ratios, and the Value Index contains stocks
with lower price-to-book ratios. Both indexes are market capitalization
weighted.

-39-
<PAGE>

COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS

LONG-TERM U.S. GOVERNMENT BONDS
The total returns on long-term government bonds from 1977 to 1991 are
constructed with data from The Wall Street Journal. Over 1926-1976, data are
obtained from the Government bond file at the Center for Research in Security
Prices (CRSP), Graduate School of Business, University of Chicago. Each year, a
one-bond portfolio with a term of approximately 20 years and a reasonably
current coupon was used, and whose returns did not reflect potential tax
benefits, impaired negotiability, or special redemption or call privileges.
Where callable bonds had to be used, the term of the bond was assumed to be a
simple average of the maturity and first call dates minus the current date. The
bond was "held" for the calendar year and returns were computed. Total returns
for 1977-1991 are calculated as the change in the flat price or and-interest
price.

INTERMEDIATE-TERM U.S. GOVERNMENT BONDS
Total returns of the intermediate-term government bonds for 1977-1991 are
calculated from The Wall Street Journal prices, using the change in flat price.
Returns from 1934-1986 are obtained from the CRSP Government Bond File.

Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than 5 years, and this bond is "held"
for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934-1942, almost all bonds
with maturities near 5 years were partially or full tax-exempt and were selected
using the rules described above. Personal tax rates were generally low in that
period, so that yields on tax-exempt bonds were similar to yields on taxable
bonds. From 1926-1933, there are few bonds suitable for construction of a series
with a 5-year maturity. For this period, five year bond yield estimates are
used.

MSCI
Morgan Stanley Capital International Indices, developed by the Capital
International S.A., are based on share prices of some 1470 companies listed on
the stock exchanges around the world.

Countries in the MSCI EAFE Portfolio are:
Australia; Austria; Belgium; Denmark; Finland; France; Germany; Hong Kong;
Italy; Japan; Netherlands; N. Zealand; Norway; Singapore/Malaysia; Spain;
Sweden; Switzerland; United Kingdom.

Countries in the MSCI EMERGING MARKET FREE INDEX are: Argentina, Brazil, Chile,
China, Czech Republic, Colombia, Greece, Hungary, India, Indonesia, Israel,
Jordan, Korea Free (at 50%), Malaysia, Mexico Free, Pakistan, Peru, Philippines
Free, Poland, Portugal, South Africa, Sri Lanka, Taiwan, Thailand, Turkey,
Venezuela Free

-40-
<PAGE>

COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS

6 MONTH CDs
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.

LONG-TERM U.S. CORPORATE BONDS
For 1969-1991, corporate bond total returns are represented by the Salomon
Brothers Long-Term High-Grade Corporate Bond Index. Since most large corporate
bond transactions take place over the counter, a major dealer is the natural
source of these data. The index includes nearly all Aaa- and Aa-rated bonds. If
a bond is downgraded during a particular month, its return for the month is
included in the index before removing the bond from future portfolios.

Over 1926-1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946-1968, Ibbotson
and Sinquefield backdated the Salomon Brothers' index, using Salomon Brothers'
monthly yield data with a methodology similar to that used by Salomon for
1969-1991. Capital appreciation returns were calculated from yields assuming (at
the beginning of each monthly holding period) a 20-year maturity, a bond price
equal to par, and a coupon equal to the beginning-of-period yield. For the
period 1926-1945, the Standard and Poor's monthly High-Grade Corporate Composite
yield data were used, assuming a 4 percent coupon and a 20-year maturity. The
conventional present-value formula for bond price for the beginning and
end-of-month prices was used. (This formula is presented in Ross, Stephen A.,
and Randolph W. Westerfield, Corporate Finance, Times Mirror/Mosby, St. Louis,
1990, p. 97 ["Level-Coupon Bonds"].) The monthly income return was assumed to be
one-twelfth the coupon.

U.S. (30 DAY) TREASURY BILLS
For the U.S. Treasury bill index, data from The Wall Street Journal are used for
1977-1991; the CRSP U.S. Government Bond File is the source until 1976. Each
month a one-bill portfolio containing the shortest-term bill having not less
than one month to maturity is constructed. (The bill's original term to maturity
is not relevant.) To measure holding period returns for the one-bill portfolio,
the bill is priced as of the last trading day of the previous month-end and as
of the last trading day of the current month.

NAREIT-EQUITY INDEX
All of the data is based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMSE and the NASDAQ. The data is
market-value-weighted. Prior to 1987 REITs were added to the index the January
following their listing. Since 1987 Newly formed or listed REITs are added to
the total shares outstanding figure in the month that the shares are issued.
Only common shares issued by the REIT are included in the index. The total
return calculation is based upon the weighing at the beginning of the period.
Only those REITs listed for the entire period are

-41-
<PAGE>

COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS

used in the total return calculation. Dividends are included in the month based
upon their payment date. There is no smoothing of income. Liquidating dividends,
whether full or partial, are treated as income.

RUSSELL 2000 SMALL STOCK INDEX
Index of the 2,000 smallest stocks in the Russell 3000 Index (TM); the smallest
company has a market capitalization of approximately $13 million. The Russell
3000 is comprised of the 3,000 largest US companies as determined by market
capitalization representing approximately 98% of the US equity market. The
largest company in the index has a market capitalization of $67 billion. The
Russell Indexes (TM) are reconstituted annually as of June 1st, based on May 31
market capitalization rankings.

WILSHIRE REAL ESTATE SECURITIES INDEX
The Wilshire Real Estate Securities Index is a market capitalization-weighted
index which measures the performance of more than 85 securities.

The index contains performance data on five major categories of property;
office, retail, industrial, apartment and miscellaneous. Additionally, the Index
has real estate portfolio encumbered by 16% third party mortgages. The companies
in the WRESEC are 79% equity and hybrid 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.

LIPPER BALANCED FUNDS INDEX

Equally-weighted performance indices, adjusted for capital gains distributions
and income dividends of approximately 30 of the largest funds with a primary
objective of conserving principal by maintaining at all times a balanced
portfolio of stocks and bonds. Typically, the stock/bond ratio ranges around
60%/40%.

-42-
<PAGE>

COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS

BANK SAVINGS ACCOUNT
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963-1987 and The Wall Street Journal for the years 1988-1994.

Source: Ibbotson Associates

-43-
<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

-44-
<PAGE>

PERFORMANCE STATISTICS - TOTAL RETURN PERCENT

S&P 500 Dow U.S. Small S&P/ S&P/
Jones Stock U.S. BARRA BARRA
Industrials Index Inflation Growth Value
- --------------------------------------------------------------------------------

Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60
Dec 1994 1.31 5.06 3.11 2.78 3.13 -0.64
Dec 1995 37.43 36.84 34.46 2.74 38.13 36.99

Dec 1996 23.07 28.84 17.62 3.58 23.96 21.99

-45-
<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

-46-
<PAGE>

PERFORMANCE STATISTICS - TOTAL RETURN PERCENT

Dec 1966 3.65 4.69 N/A 5.75 0.20 4.76
Dec 1967 -9.18 1.01 N/A 5.48 -4.95 4.21
Dec 1968 -0.26 4.54 N/A 6.44 2.57 5.21
Dec 1969 -5.07 -0.74 N/A 8.71 -8.09 6.58
Dec 1970 12.11 16.86 -11.66 7.06 18.37 6.52
Dec 1971 13.23 8.72 29.59 5.36 11.01 4.39
Dec 1972 5.69 5.16 36.35 5.38 7.26 3.84
Dec 1973 -1.11 4.61 -14.92 8.60 1.14 6.93
Dec 1974 4.35 5.69 -23.16 10.20 -3.06 8.00
Dec 1975 9.20 7.83 35.39 6.51 14.64 5.80
Dec 1976 16.75 12.87 2.54 5.22 18.65 5.08
Dec 1977 -0.69 1.41 18.06 6.12 1.71 5.12
Dec 1978 -1.18 3.49 32.62 10.21 -0.07 7.18
Dec 1979 -1.23 4.09 4.75 11.90 -4.18 10.38
Dec 1980 -3.95 3.91 22.58 12.33 -2.76 11.24
Dec 1981 1.86 9.45 -2.28 15.50 -1.24 14.71
Dec 1982 40.36 29.1 -1.86 12.18 42.56 10.54
Dec 1983 0.65 7.41 23.69 9.65 6.26 8.80
Dec 1984 15.48 14.02 7.38 10.65 16.86 9.85
Dec 1985 30.97 20.33 56.16 7.82 30.09 7.72
Dec 1986 24.53 15.14 69.44 6.30 19.85 6.16
Dec 1987 -2.71 2.90 24.63 6.58 -0.27 5.47
Dec 1988 9.67 6.10 28.27 8.15 10.70 6.35
Dec 1989 18.11 13.29 10.54 8.27 16.23 8.37
Dec 1990 6.18 9.73 -23.45 7.85 6.78 7.81
Dec 1991 19.3 15.46 12.13 4.95 19.89 5.60
Dec 1992 8.05 7.19 -12.17 3.27 9.39 3.51
Dec 1993 18.24 11.24 32.56 2.88 13.19 2.90
Dec 1994 -7.77 -5.14 7.78 5.40 -5.76 3.90
Dec 1995 31.67 16.8 11.21 5.21 26.39 5.60

Dec 1996 -0.93 2.10 6.05 5.21 1.40 5.21

-47-
<PAGE>

<TABLE>
<CAPTION>
RUSSELL LIPPER MSCI EMERGING
2000 WILSHIRE REAL S&P MIDCAP BALANCED MARKETS FREE BANK
NAREIT-EQUITY INDEX ESTATE 400 FUND INDEX SAVINGS ACCOUNT
SECURITIES INDEX INDEX
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 N/A N/A N/A N/A N/A N/A N/A
Dec 1927 N/A N/A N/A N/A N/A N/A N/A
Dec 1928 N/A N/A N/A N/A N/A N/A N/A
Dec 1929 N/A N/A N/A N/A N/A N/A N/A
Dec 1930 N/A N/A N/A N/A N/A N/A 5.30
Dec 1931 N/A N/A N/A N/A N/A N/A 5.10
Dec 1932 N/A N/A N/A N/A N/A N/A 4.10
Dec 1933 N/A N/A N/A N/A N/A N/A 3.40
Dec 1934 N/A N/A N/A N/A N/A N/A 3.50
Dec 1935 N/A N/A N/A N/A N/A N/A 3.10
Dec 1936 N/A N/A N/A N/A N/A N/A 3.20
Dec 1937 N/A N/A N/A N/A N/A N/A 3.50
Dec 1938 N/A N/A N/A N/A N/A N/A 3.50
Dec 1939 N/A N/A N/A N/A N/A N/A 3.40
Dec 1940 N/A N/A N/A N/A N/A N/A 3.30
Dec 1941 N/A N/A N/A N/A N/A N/A 3.10
Dec 1942 N/A N/A N/A N/A N/A N/A 3.00
Dec 1943 N/A N/A N/A N/A N/A N/A 2.90
Dec 1944 N/A N/A N/A N/A N/A N/A 2.80
Dec 1945 N/A N/A N/A N/A N/A N/A 2.50
Dec 1946 N/A N/A N/A N/A N/A N/A 2.20
Dec 1947 N/A N/A N/A N/A N/A N/A 2.30
Dec 1948 N/A N/A N/A N/A N/A N/A 2.30
Dec 1949 N/A N/A N/A N/A N/A N/A 2.40
Dec 1950 N/A N/A N/A N/A N/A N/A 2.50
Dec 1951 N/A N/A N/A N/A N/A N/A 2.60
Dec 1952 N/A N/A N/A N/A N/A N/A 2.70
Dec 1953 N/A N/A N/A N/A N/A N/A 2.80
Dec 1954 N/A N/A N/A N/A N/A N/A 2.90
Dec 1955 N/A N/A N/A N/A N/A N/A 2.90
Dec 1956 N/A N/A N/A N/A N/A N/A 3.00
Dec 1957 N/A N/A N/A N/A N/A N/A 3.30
Dec 1958 N/A N/A N/A N/A N/A N/A 3.38
Dec 1959 N/A N/A N/A N/A N/A N/A 3.53
Dec 1960 N/A N/A N/A N/A 5.77 N/A 3.86
Dec 1961 N/A N/A N/A N/A 20.59 N/A 3.90
Dec 1962 N/A N/A N/A N/A -6.80 N/A 4.08
Dec 1963 N/A N/A N/A N/A 13.10 N/A 4.17
Dec 1964 N/A N/A N/A N/A 12.36 N/A 4.19
Dec 1965 N/A N/A N/A N/A 9.80 N/A 4.23
Dec 1966 N/A N/A N/A N/A -5.86 N/A 4.45
Dec 1967 N/A N/A N/A N/A 15.09 N/A 4.67
Dec 1968 N/A N/A N/A N/A 13.97 N/A 4.68
Dec 1969 N/A N/A N/A N/A -9.01 N/A 4.80
Dec 1970 N/A N/A N/A N/A 5.62 N/A 5.14
Dec 1971 N/A N/A N/A N/A 13.90 N/A 5.30

-48-
<PAGE>

RUSSELL LIPPER MSCI EMERGING
2000 WILSHIRE REAL S&P MIDCAP BALANCED MARKETS FREE BANK
NAREIT-EQUITY INDEX ESTATE 400 FUND INDEX SAVINGS ACCOUNT
SECURITIES INDEX INDEX
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1972 8.01 N/A N/A N/A 11.13 N/A 5.37
Dec 1973 -15.52 N/A N/A N/A -12.24 N/A 5.51
Dec 1974 -21.40 N/A N/A N/A -18.71 N/A 5.96
Dec 1975 19.30 N/A N/A N/A 27.10 N/A 6.21
Dec 1976 47.59 N/A N/A N/A 26.03 N/A 6.23
Dec 1977 22.42 N/A N/A N/A -0.72 N/A 6.39
Dec 1978 10.34 N/A 13.04 N/A 4.80 N/A 6.56
Dec 1979 35.86 43.09 70.81 N/A 14.67 N/A 7.29
Dec 1980 24.37 38.58 22.08 N/A 19.70 N/A 8.78
Dec 1981 6.00 2.03 7.18 N/A 1.86 N/A 10.71
Dec 1982 21.60 24.95 24.47 22.68 30.63 N/A 11.19
Dec 1983 30.64 29.13 27.61 26.10 17.44 N/A 9.71
Dec 1984 20.93 -7.30 20.64 1.18 7.46 N/A 9.92
Dec 1985 19.10 31.05 22.20 35.58 29.83 N/A 9.02
Dec 1986 19.16 5.68 20.30 16.21 18.43 N/A 7.84
Dec 1987 -3.64 -8.77 -7.86 -2.03 4.13 N/A 6.92
Dec 1988 13.49 24.89 24.18 20.87 11.18 40.43 7.20
Dec 1989 8.84 16.24 2.37 35.54 19.70 64.96 7.91
Dec 1990 -15.35 -19.51 -33.46 -5.12 0.66 10.55 7.80
Dec 1991 35.70 46.05 20.03 50.10 25.83 59.91 4.61
Dec 1992 14.59 18.41 7.36 11.91 7.46 11.40 2.89
Dec 1993 19.65 18.91 15.24 13.96 11.95 74.83 2.73
Dec 1994 3.17 -1.82 1.64 -3.57 -2.05 7.32 4.96
Dec 1995 15.27 28.44 13.65 30.94 24.89 5.21 5.24

Dec 1996 35.26 16.53 36.87 19.20 13.01 6.03 4.95

</TABLE>

Source: Lipper

-49-
<PAGE>

APPENDIX C

OTHER PIONEER INFORMATION

The Pioneer group of mutual funds was established in 1928 with the
creation of Pioneer Fund. Pioneer is one of the oldest and most experienced
money managers in the United States.

As of December 31, 1996, PMC employed a professional investment staff
of 53, with a combined average of twelve years' experience in the financial
services industry.

Total assets of all Pioneer mutual funds at December 31, 1996, were
approximately $15.8 billion representing 1,086,554 shareholder accounts, 722,661
non-retirement accounts and 363,893 retirement accounts.