As filed with the Securities and Exchange Commission on April 9, 1998
File Nos. 33-76894
811-08448
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
---
Pre-Effective Amendment No. __ / /
Post-Effective Amendment No. 6 / X /
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and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 8 / X /
(Check appropriate box or boxes)
PIONEER EMERGING MARKETS FUND
(Exact Name of Registrant as Specified in Charter)
60 State Street, Boston, Massachusetts 02109
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 742-7825
Joseph P. Barri, Hale and Dorr LLP, 60 State Street,
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
X immediately upon filing pursuant to paragraph (b)
---
___ on [date] pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
___ 75 days after filing pursuant to paragraph (a)(2)
___ on [date] pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
___ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest
(without par value)
<PAGE>
PIONEER EMERGING MARKETS FUND
STATEMENT OF INCORPORATION BY REFERENCE
The prospectus describing Class A, Class B and Class C shares filed with
the Commission as part of Post-Effective Amendment No. 5 to the Registrant's
Registration Statement on Form N-1A filed March 30, 1998 (Accession No.
0001016964-98-000021) is incorporated herein by reference.
<PAGE>
PIONEER EMERGING MARKETS FUND
Cross-Reference Sheet Showing Location in Prospectus and Statement of
Additional Information of Information
Required by Items of the Registration Form
Locations noted apply to the Class A, Class B and Class C Prospectus and the
Class Y Prospectus unless otherwise noted
FORM N-1A ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS OR STATEMENT
OF ADDITIONAL INFORMATION
1. Cover Page Prospectus - Cover Page
2. Synopsis Prospectus - Expense Information
3. Condensed Financial Information Prospectus - Financial Highlights
4. General Description of Registrant Prospectus - Cover Page; Investment
Objective and Policies; Management of
the Fund; Fund Share Alternatives
(Class A, Class B and Class C
Prospectus); Fund Shares (Class Y
Prospectus); Share Price; How to Buy
Fund Shares (Class A, Class B and Class
C Prospectus); Purchasing Class Y
Shares (Class Y Prospectus); How to
Sell Fund Shares (Class A, Class B
and Class C Prospectus); Redeeming
Class Y Shares (Class Y Prospectus);
How to Exchange Fund Shares (Class A,
Class B and Class C Prospectus);
Exchanging Class Y Shares (Class Y
Prospectus); The Fund; Appendix--
Certain Investment Practices
5. Management of the Fund Prospectus - Management of the Fund;
Shareholder Services
5A. Management's Discussion of Fund
Performance Not Applicable
6. Capital Stock and Other Securities Prospectus - Investment Objective and
Policies; Management of the Fund; Fund
Share Alternatives (Class A, Class B
and Class C Prospectus); Fund Shares
(Class Y Prospectus); Share Price; How
to Buy Fund Shares (Class A, Class B
and Class C Prospectus); Purchasing
Class Y Shares (Class Y Prospectus);
How to Sell Fund Shares (Class A, Class
B and Class C Prospectus); Redeeming
Class Y Shares (Class Y Prospectus);
How to Exchange Fund Shares (Class A,
Class B and Class C Prospectus);
Exchanging Class Y Shares (Class Y
Prospectus); Dividends, Distributions
and Taxation; The Fund
7. Purchase of Securities Being
Offered Prospectus - Management of the Fund;
Distribution Plans (Class A, Class B
and Class C Prospectus); Distribution
of Class Y Shares (Class Y Prospectus);
Fund Share Alternatives (Class A, Class
B and Class C Prospectus); Fund Shares
(Class Y Prospectus); Share Price; How
to Buy Fund Shares (Class A, Class B
and Class C Prospectus); Purchasing
Class Y Shares (Class Y Prospectus);
How to Exchange Fund Shares (Class A,
Class B and Class C Prospectus);
Exchanging Class Y Shares (Class Y
Prospectus); Shareholder Services
8. Redemption or Repurchase Prospectus - Fund Share Alternatives;
(Class A, Class B and Class C
Prospectus); Fund Shares (Class Y
<PAGE>
Prospectus); How to Sell Fund Shares
(Class A, Class B and Class C
Prospectus); Redeeming Class Y Shares
(Class Y Prospectus); How to Exchange
Fund Shares (Class A, Class B and Class
C Prospectus); Exchanging Class Y
Shares (Class Y Prospectus);
Shareholder Services
9. Pending Legal Proceedings Not Applicable
10. Cover Page Statement of Additional Information -
Cover Page
11. Table of Contents Statement of Additional Information -
Cover Page
12. General Information and History Statement of Additional Information -
Description of Shares
13. Investment Objectives and Policies Statement of Additional Information -
Investment Policies, Restrictions and
Associated Risks; Appendix A
14. Management of the Fund Statement of Additional Information -
Management of the Fund
15. Control Persons and Principal
Holders of Securities Statement of Additional Information -
Management of the Fund
16. Investment Advisory and Other
Services Statement of Additional Information -
Management of the Fund; Investment
Adviser; Underwriting Agreement and
Distribution Plans; Shareholder
Servicing/Transfer Agent; Custodian;
Principal Underwriter; Independent
Public Accountants; Appendix C
17. Brokerage Allocation and Other
Practices Statement of Additional Information -
Portfolio Transactions
18. Capital Stock and Other Securities Statement of Additional Information -
Description of Shares
19. Purchase, Redemption and Pricing
of Securities Being Offered Statement of Additional Information -
Letter of Intent; Systematic Withdrawal
Plan; Determination of Net Asset Value
20. Tax Status Statement of Additional Information -
Tax Status
21. Underwriters Statement of Additional Information -
Underwriting Agreement and Distribution
Plans; Principal Underwriter
22. Calculation of Performance Data Statement of Additional Information -
Investment Results; Appendix B
23. Financial Statements Statement of Additional Information -
Financial Statements
<PAGE>
Pioneer [PIONEER LOGO]
Emerging Markets
Fund
Class Y Shares
Prospectus
April 9, 1998
Pioneer Emerging Markets Fund (the "Fund") seeks long-term 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, dated March 30, 1998, as supplemented or revised from time to
time, which is incorporated into this Prospectus by reference. A copy of the
Statement of Additional Information may be obtained free of charge by calling
Shareholder Services at 1-800-225-6292 or by written request to the Fund at 60
State Street, Boston, Massachusetts 02109. Other information about the Fund has
been filed with the Securities and Exchange Commission (the "SEC") and is
available upon request and without charge by calling 1-800-225-6292 or through
the SEC's Internet web site (http://www.sec.gov).
TABLE OF CONTENTS PAGE
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I. EXPENSE INFORMATION ............................... 2
II. FINANCIAL HIGHLIGHTS .............................. 3
III. INVESTMENT OBJECTIVE AND POLICIES ................. 3
IV. MANAGEMENT OF THE FUND ............................ 6
V. FUND SHARES ....................................... 7
VI. SHARE PRICE ....................................... 7
VII. PURCHASING CLASS Y SHARES ......................... 7
VIII. REDEEMING CLASS Y SHARES .......................... 8
IX. EXCHANGING CLASS Y SHARES ......................... 9
X. DISTRIBUTION OF CLASS Y SHARES .................... 10
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION ............. 10
XII. SHAREHOLDER SERVICES .............................. 11
Account and Confirmation Statements .............. 11
Financial Reports and Tax Information ............ 11
Distribution Options ............................. 11
Telephone Transactions ........................... 11
FactFone(SM) ..................................... 11
XIII. THE FUND .......................................... 11
XIV. INVESTMENT RESULTS ................................ 12
APPENDIX A: Certain Investment Practices .......... 12
--------------------
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 investors understand the charges and
expenses that an investor will bear directly or indirectly when investing in
the Fund. Operating expenses for Class Y shares are based on expenses that
would have been incurred for the fiscal year ended November 30, 1997 had such
shares been outstanding for the entire fiscal year.+
Shareholder Transaction Expenses: Class Y
Maximum Initial Sales Charge on Purchases
(as a percentage of offering price) ..................... None
Maximum Sales Charge on Reinvestment of Dividends ......... None
Maximum Deferred Sales Charge
(as a percentage of original purchase price
or redemption proceeds, as applicable) ................. None
Redemption Fee ............................................ None
Exchange Fee .............................................. None
Annual Operating Expenses
(As a Percentage of Average Net Assets):
Management Fee ............................................ 1.25%
12b-1 Fee ................................................. None
Other Expenses (estimated)
(including accounting and transfer agent fees,
custodian fees and printing expenses) ................... 0.59%
----
Total Operating Expenses ................................... 1.84%
====
- --------------------
+ Class Y shares were first offered April 9, 1998.
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.
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class Y Shares $29 $58 $100 $216
The example is designed for information purposes only, and should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and return vary from year to year and may be higher or lower than
those shown.
For further information regarding management fees and other expenses of
the Fund, see "Management of the Fund" and "Distribution of Class Y Shares" in
this Prospectus and "Management of the Fund" and "Underwriting Agreement and
Distribution Plans" in the Statement of Additional Information.
2
<PAGE>
II. FINANCIAL HIGHLIGHTS
Class Y shares are a new class of shares; financial highlights are not
currently available for Class Y shares. Arthur Andersen LLP's report on the
Fund's audited financial statements as of November 30, 1997 for Class A, Class
B and Class C shares appears in the Fund's Annual Report which is incorporated
by reference into the Statement of Additional Information. 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.
III. INVESTMENT OBJECTIVES 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 purposes 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 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 exper-
3
<PAGE>
tise, 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 emerging countries have at times experienced
economic growth rates well in excess of those of the more developed countries,
including the U.S. 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
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
4
<PAGE>
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 losses incurred by the Fund in the
absence of willful misfea sance, 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 & Poor's Ratings Group
("Standard & Poor's"); obligations (including certificates of deposit, time
deposits, demand deposits and bankers' acceptances) of banks (located in the
U.S. or foreign countries) with securities outstanding that are rated Prime-1,
Aa or better by Moody's, or A-1, AA or better by Standard & 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
5
<PAGE>
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 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 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.
Portfolio turnover rates were 140% and 143% for the fiscal years ended November
30, 1997 and 1996, respectively. A high rate of portfolio turnover (100% or
more) involves correspondingly greater transaction costs which must be borne by
the Fund and its shareholders.
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 the management
and supervision of the Fund. 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 name 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 publicly
traded Delaware corporation. Pioneer Funds Distributor, Inc. ("PFD"), an
indirect wholly owned subsidiary of PGI, is the principal underwriter of the
Fund. John F. Cogan, Jr., Chairman and President of the Fund, Chairman and a
Director of PMC and PFD, and President and a Director of PGI, 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 13 years of 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
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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 Investment Company Act of 1940, as amended (the "1940 Act"); (j)
compensation of those Trustees of the Fund who are not affiliated with or
interested 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 serve 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 and investment advisory 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.
Certain information technology experts currently predict the possibility
of a widespread failure of computer systems and certain other equipment which
will be triggered on or after certain dates--primarily January 1, 2000--due to
a systemic inability to process date-related information. This scenario,
commonly known as the "Year 2000 Problem," could have an adverse impact on
individuals and businesses, including the Fund and other mutual funds and
financial organizations. PMC and its affiliates are taking steps believed to be
adequate to address the Year 2000 Problem with respect to the systems and
equipment controlled by the Fund's investment adviser, broker-dealer and
transfer agent. In addition, other entities providing services to the Fund and
its shareholders are being asked to provide assurances that they have
undertaken similar measures with respect to their systems and equipment.
Although PMC is not expecting any adverse impact to it or its clients from the
Year 2000 Problem, it cannot provide complete assurances that its efforts or
the efforts of its key vendors will be successful.
V. FUND SHARES
The Fund continuously offers four Classes of shares designated as Class A,
Class B, Class C and Class Y shares. Class A, Class B and Class C shares are
offered in a separate prospectus which may be obtained by contacting your sales
representative or by calling Pioneering Services Corporation ("PSC") at
1-800-225-6292.
Class Y shares are sold at net asset value, without either an initial
sales charge or a contingent deferred sales charge. Class Y shares are not
subject to any ongoing service fee or distribution fee and do not convert to
any other class of shares. Class Y shares are described more fully in
"Purchasing Class Y Shares" in this Prospectus.
Investment dealers or their representatives may receive different
compensation depending on which Class of shares they sell. Shares may be
exchanged only for shares of the same Class of another Pioneer mutual fund .
Shares sold outside the U.S. to persons who are not U.S. citizens may be
subject to different sales charges, contingent deferred sales charges and
dealer compensation arrangements in accordance with local laws and business
practices.
VI. SHARE PRICE
Class Y shares of the Fund are sold at the net asset value per share. The
net asset value per share of each Class of the Fund is determined by dividing
the value of its assets, less liabilities attributable to that Class, by the
number of shares of that Class outstanding. The net asset value is computed
once daily, on each day the New York Stock Exchange (the "Exchange") is open,
as of the close of regular trading on the Exchange. The net asset value per
share of Class Y shares will generally be higher than the net asset value per
share of the Fund's other three classes of shares because Class Y shares are
not subject to any ongoing distribution fee, and certain other expenses are
expected to be lower.
Securities are valued at the last sale price on the principal exchange or
market where they are traded. Securities which have not traded on the date of
valuation or securities for which sales prices are not generally reported are
valued at the mean between the current bid and asked prices. Securities quoted
in foreign currencies are converted to U.S. dollars utilizing foreign exchange
rates employed by the Fund's independent pricing services. Generally, trading
in foreign securities is substantially completed each day at various times
prior to the close of regular trading on the Exchange. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also generally
determined prior to the close of regular trading on the Exchange. Occasionally,
events which affect the values of such securities and such exchange rates may
occur between the times at which they are determined and the close of regular
trading on the Exchange and will therefore not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of such
securities occur during such period, then these securities may be valued at
their fair value as determined in good faith by the Trustees. All assets of the
Fund for which there is no other readily available valuation method are valued
at their fair value as determined in good faith by the Trustees.
VII. PURCHASING CLASS Y SHARES
To open an account for an individual or other non-institutional investor,
a completed Account Application must be received by PSC by mail or by fax prior
to the purchase of Class Y shares. All other investors should call PSC at
1-888-294-4480 to obtain an
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account set-up kit and to obtain an account number. A bank wire address of
record (your predesignated bank account) must be provided to PSC at the time an
account is established.
The minimum initial investment for Class Y shares is $5 million which may
be invested in one or more of the Pioneer mutual funds that currently offer
Class Y shares. There is no minimum additional investment amount. Class Y
shares will be purchased at the net asset value per share next computed after
receipt of a purchase order without the imposition of an initial sales charge
and are not subject to a contingent deferred sales charge. All purchases must
be made in U.S. dollars.
The $5 million minimum investment requirement will be waived if:
(i) a trust company or bank trust department is initially investing at least
$1 million in any of the Pioneer mutual funds and, at the time of the
purchase, such assets are held in a fiduciary, advisory, custodial or
similar capacity over which the trust company or bank trust department has
full or shared investment discretion; or
(ii) the investment is made by an employer sponsored retirement plan that meets
the requirements of Sections 401, 403 or 457 of the Code, provided that
the number of employees covered by the plan is 5,000 or more or the plan
has assets of $25 million or more; or
(iii) the investment is at least $1 million in any of the Pioneer mutual funds
and the purchaser is an insurance company separate account; or
(iv) the investment is made by an employer sponsored retirement plan
established for the benefit of (1) employees of PGI or employees of PGI's
affiliates or (2) employees or affiliates of broker-dealers who have a
Class Y shares sales agreement with PFD.
Payment By Wire. Funds may be wired in payment of a request to purchase
Class Y shares provided that such funds are wired to a Class Y shares account.
See above for information on establishing an account. To wire funds in payment
of a request to purchase Class Y shares instruct your bank to wire funds to:
Receiving Bank State Street Bank and Trust Company
Address 225 Franklin Street
Boston, MA 02101
ABA Routing No. 011000028
For further credit to: Shareholder Name
Existing Pioneer Account No.
Pioneer Emerging Markets Fund
A request to purchase shares must be received by PSC or by your
broker-dealer by the close of regular trading on the Exchange (currently 4:00
p.m. Eastern time) in order to purchase shares at the price determined on that
day. Funds wired in payment of such requests must be received by State Street
Bank and Trust Company by 11:00 a.m. Eastern time on the next business day
following receipt of the request to purchase shares. If wired funds are not
received by State Street Bank and Trust Company by 11:00 a.m. on the next
business day following receipt of the request to purchase shares, the
transaction will be canceled at the expense and risk of the purchaser. Wire
transfers normally take two or more hours to complete and a fee may be charged
by the sending bank. Wire transfers may be restricted on holidays and at
certain other times. Questions on wire transfers should be directed to PSC or
your broker-dealer.
By Mail. Purchases of Class Y shares may always be made by mail. For
accounts registered to individuals or non-institutional investors, make your
check payable to Pioneer Emerging Markets Fund and mail a completed Account
Application to PSC at: P.O. Box 9150, Boston, Massachusetts 02205-8573. For
accounts registered to institutions, completed account set-up kit materials
must be sent to PSC with payment. Checks written on non-U.S. banks will delay
purchases until U.S. funds are received and a collection charge may be imposed.
Broker-Dealers. An order for Class Y shares received by a broker-dealer
prior to the close of regular trading on the Exchange is confirmed at the price
for Class Y shares 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 from the broker-dealer prior to PFD's close of business (usually, 5:30 p.m.
Eastern time), except as described above for wire transfers. It is the
responsibility of broker-dealers to transmit orders so that they will be
received by PFD prior to its close of business.
General. The Fund reserves the right in its sole discretion to withdraw
all or any part of the offering of shares when, in the judgment of the Fund's
management, such withdrawal is in the best interest of the Fund. An order to
purchase shares is not binding on, and may be rejected by, PFD until it has
been confirmed in writing by PFD and payment has been received.
VIII. REDEEMING CLASS Y SHARES
Class Y shares will be redeemed at the share price next calculated after a
redemption request is received in good order as described below. Redemption
proceeds generally will be sent to the registered owner by check or by wire
transfer, normally within seven days after the request is received in good
order. The Fund reserves the right to withhold payment of the redemption
proceeds until checks or wire transfers 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. Class Y shares may be redeemed by delivering a written
request, signed by all registered owners, in good order to PSC. A written
request, including a signature guarantee, must be used to redeem Class Y shares
if any of the following applies:
[bullet] the requested redemption is for over $100,000 and there is no record
of a predesignated bank account,
[bullet] the requested redemption is for over $100,000 and the account
registration or address of record has changed within the last 30
days,
[bullet] the requested redemption is for over $5 million,
[bullet] the check for the amount of the redemption proceeds is not being
mailed to the address of record,
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[bullet] the check for the amount of the redemption proceeds is not being
made payable to the account's record owners, or
[bullet] the redemption proceeds are being transferred to a Pioneer mutual
fund account with a different registration.
Include in the request the account's registration name, the Fund's name,
the 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. Redemption requests for accounts registered in the name of a
corporation or other fiduciary must name an authorized person and must be
accompanied by a certified copy of a current corporate resolution, certificate
of incumbency or similar legal document showing that the named individual is
authorized to act on behalf of the record owner. Unless instructed otherwise,
PSC will send the proceeds of the redemption by check to the address of record.
For more information, contact PSC at 1-888-294-4480.
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 share certificates are endorsed by the
record owner(s) exactly as the shares are registered and the signature(s) on
the share certificate are guaranteed by an eligible guarantor. A bank, broker,
dealer, credit union (if authorized under state law), securities exchange or
association, clearing agency or savings association will generally be able to
provide a signature guarantee. 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 1-888-294-4480.
A signature guarantee must also accompany any request to change your
predesignated bank account information.
By Telephone or Fax. Class Y share accounts are automatically authorized
to have the telephone redemption privilege unless indicated otherwise on the
Account Application or by writing to PSC. Proper account identification will be
required for each telephone redemption. A maximum of $5 million per account per
day may be redeemed by telephone or fax if PSC has a predesignated bank account
number on record. If there is no predesignated bank account number on file, a
maximum of $100,000 may be redeemed by telephone or fax. The proceeds of a
telephone or fax redemption may be received by bank wire, electronic funds
transfer or by check. Proceeds of a telephone or fax request will normally be
mailed or transmitted the next business day.
To redeem by telephone, see "Shareholder Services--Telephone Transactions"
for more information.
To redeem by fax, send your redemption request to 1-888-294-4485.
To receive the proceeds by bank wire: the proceeds must be sent to the
bank wire 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 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.
You may always elect to deliver redemption instructions to PSC by mail.
Redeeming Shares Through a 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.
Broker-dealers must receive redemption requests prior to the close of business
of the Exchange and must transmit each redemption request to PFD before PFD's
close of business to receive that day's redemption price. Broker-dealers are
responsible for providing all necessary documentation to PFD and may charge for
their services.
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
unless the account qualifies as tax-exempt. 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. EXCHANGING CLASS Y SHARES
Exchanges of Class Y shares 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 Class Y shares. A new Pioneer mutual fund account
opened through an exchange must have a registration identical to that on the
original account.
PSC will process exchanges only after receiving an exchange request in
good order. Exchange requests received by PSC before the close of the Exchange,
generally 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. There are currently no fees or sales charges imposed at the time
of an exchange. An exchange of shares may be made only in states where legally
permitted. For federal and (generally) state income tax purposes, an exchange
is considered to be a sale of the shares of the Fund exchanged and a purchase
of shares in another Pioneer mutual fund. Therefore, an exchange could result
in a gain or loss on the shares sold, depending on the tax basis of these
shares and the timing of the transaction, and special tax rules may apply.
You should consider the differences in objectives and policies of the
Pioneer mutual funds, as described in each fund's current prospectus, before
making any exchange. For the protection of the Fund's performance and
shareholders, the Fund and PFD reserve the right to refuse any exchange
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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.
Telephone and Fax Exchanges. Class Y share accounts are automatically
authorized to have the telephone exchange privilege unless indicated otherwise
on the Account Application or by writing to PSC. Proper account identification
will be required for each telephone exchange. Telephone exchanges or fax
exchanges of Class Y shares may not exceed $5 million per account per day. Each
telephone exchange request will be recorded. See "Telephone Transactions"
below.
Written Exchanges. Class Y shares may be exchanged by sending a letter of
instruction to PSC. Include in your letter the record name on the account, the
name of the Pioneer mutual fund out of which to exchange and the name of the
Pioneer mutual fund into which to exchange, the 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. Written documentation may be required for
accounts registered in the name of a corporation or fiduciary.
X. DISTRIBUTION OF CLASS Y SHARES
PFD incurs the expenses of distributing the Fund's Class Y shares, none of
which are reimbursed or paid for by the Fund. These expenses include fees paid
to, or on account of, broker-dealers and other qualifying institutions which
have sales agreements with PFD, advertising expenses, the cost of printing and
mailing prospectuses to potential investors and other direct and indirect
expenses associated with the sale of Fund's Class Y shares.
PFD or its affiliates may make payments out of its own resources to
dealers and other persons who distribute shares of the Fund, including Class Y
shares. Such payments may be calculated by reference to the net asset value of
shares sold by such person or otherwise. Dealers and other persons may from
time to time be required to meet certain criteria in order to receive such
payments. 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.
The Fund has adopted a Plan of Distribution for each Class of shares,
other than Class Y shares, in accordance with Rule 12b-1 under the 1940 Act
pursuant to which certain distribution fees are paid to PFD. For more
information, see "Underwriting Agreement and Distribution Plans" in the
Statement of Additional Information.
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
Internal Revenue Code of 1986, as amended, (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.
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. Generally, dividends from the Fund's net investment income, market
discount income, certain net foreign exchange gains and net short-term capital
gains are taxable under the Code as ordinary income, and dividends from the
Fund's net long-term capital gains are taxable as long-term capital gains. The
Fund's distributions of long-term capital gains to individuals or other
noncorporate taxpayers are subject to different maximum tax rates (which will
be indicated in the annual tax information the Fund provides to shareholders),
depending generally upon the sources of, and the Fund's holding periods for the
assets that produce, the gains.
Unless shareholders specify otherwise, all distributions will be
automatically reinvested in additional full and fractional shares of the Fund.
For federal income tax purposes, all dividends are taxable as described above
whether a shareholder takes them in cash or reinvests them in additional shares
of the Fund. Information as to the federal tax status of dividends and
distributions will be provided to shareholders annually. For further
information on the distribution options available to shareholders, see
"Distribution Options" 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 their shares of 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
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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 if the Fund receives notice from the IRS or a broker that such withholding
applies. Please refer to the Account Application for additional information.
The description above relates only to U.S. federal income tax consequences
for shareholders who are U.S. persons, i.e., U.S. citizens or residents or U.S.
corporations, partnerships, trusts or estates and who are subject to U.S.
federal income tax. Non-U.S. shareholders and tax-exempt shareholders are
subject to tax treatment that is not described above. Shareholders should
consult their own tax advisors regarding state, local and other applicable tax
laws, including the effect of recent federal tax legislation, in their
particular circumstances.
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 Shareholder Services, Pioneering Services
Corporation, P.O. Box 9150, Boston, Massachusetts 02205-8573. Brown Brothers
Harriman & Co. (the "Custodian") serves as the custodian of the Fund's
portfolio securities and other assets. The principal business address of the
Mutual Fund Division of the Custodian is 40 Water Street, Boston, Massachusetts
02109.
Account and Confirmation Statements
PSC maintains an account for each shareholder and all transactions of the
shareholder are recorded in this account. Confirmation statements showing the
details of transactions are sent to shareholders as transactions occur.
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 an account with a net asset value of less than $500.
Changes in the distribution option may be made by written request to PSC.
If you elect to receive either dividends or dividends and capital gains 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.
Telephone Transactions
Class Y accounts are automatically authorized to have telephone
transaction privileges as described above . To redeem or exchange Class Y
shares by telephone, call 1-888-294-4480 between the hours of 9:00 a.m. and
6:00 p.m. Eastern time on weekdays. See "Selling Class Y Shares" and
"Exchanging Class Y Shares" for more information.
To confirm that each transaction instruction received by telephone is
genuine, the Fund will record each telephone transaction, require the caller to
provide the personal identification number ("PIN") for the account and send you
a written confirmation of each telephone transaction. Different procedures may
apply to accounts that are registered to non-U.S. citizens or that are held in
the name of an institution or in the name of an investment broker-dealer or
other third party. If reasonable procedures, such as those described above, are
not followed, the Fund may be liable for any loss due to unauthorized or
fraudulent instructions. In all other cases, neither the Fund, PSC nor PFD will
be responsible for the authenticity of instructions received by telephone;
therefore, you bear the risk of loss for unauthorized or fraudulent telephone
transactions. The Fund may implement other procedures from time to time.
During times of economic turmoil or market volatility or as a result of
severe weather or a natural disaster, it may be difficult to contact the Fund
by telephone to institute a redemption or exchange. You should communicate with
the Fund in writing if you are unable to reach the Fund by telephone.
FactFone(SM)
FactFone(SM) is an automated inquiry and telephone transaction system
available to Pioneer shareholders by dialing 1-800-225-4321. FactFone(SM) allows
shareholder access to current information on Pioneer mutual fund accounts and
to the prices and yields of all publicly available Pioneer mutual funds.
Computer assisted telephone purchases, exchanges and redemptions of Class Y
shares are not currently available through FactFone(SM).
The options and services available to shareholders may be revised,
suspended, or terminated at any time by PFD or by the Fund. You may establish
the services described in this section when you open your account. You may also
establish or revise many of them on an existing account by completing an
Account Options Form, which you may obtain by calling 1-888-294-4480.
XIII. THE FUND
The 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 pub-
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lic 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 "Redeeming Class Y 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 Fund reserves the right to create and issue additional series of
shares. 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 four classes of shares, designated
Class A, Class B, Class C and Class Y. The shares of each class represent an
interest in the same portfolio of investments of the Fund. Each class has equal
rights as to voting, redemption, dividends and liquidation, except that each
class bears different distribution and transfer agent fees and may bear other
expenses properly attributable to the particular class. Class A, Class B and
Class C shareholders have exclusive voting rights with respect to the Rule
12b-1 distribution plans adopted by holders of those shares in connection with
the distribution of shares. A Rule 12b-1 distribution plan has not been adopted
with respect to the Class Y shares of the Fund (see "Distribution of Class Y
Shares" for more information).
In addition to the requirements under Delaware law, the Declaration of
Trust provides that a shareholder of the Fund may bring a derivative action on
behalf of the Fund only if the following conditions are met: (a) shareholders
eligible to bring such derivative action under Delaware law who hold at least
10% of the outstanding shares of the Fund, or 10% of the outstanding shares of
the series or class to which such action relates, shall join in the request for
the Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such shareholder request and investigate
the basis of such claim. The Trustees shall be entitled to retain counsel or
other advisers in considering the merits of the request and shall require an
undertaking by the shareholders making such request to reimburse the Fund for
the expense of any such advisers in the event that the Trustees determine not
to bring such action.
When issued and paid for in accordance with the terms of the Prospectus
and Statement of Additional Information, shares of the Fund are fully paid and
non-assessable. Shares will remain on deposit with the Fund's transfer agent
and certificates will not normally be issued. The Fund reserves the right to
charge a fee for the issuance of Class A shares certificates; certificates will
not be issued for Class B, Class C or Class Y 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. 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 fund results may be cited
or compared with the investment results of the Fund. Rankings or listings by
magazines, newspapers or independent statistical or rating services, such as
Lipper Analytical Services, Inc., may also be referenced. The Fund may also
include securities industry or comparative performance information in
advertising or materials marketing the Fund's shares. Such performance
information may include rankings or listings by magazines, newspapers, or
independent statistical or ratings services, such as Lipper Analytical
Services, Inc. or Ibbotson Associates.
The Fund's investment results will vary from time to time depending on
market conditions, the composition of the Fund's portfolio and operating
expenses of the Fund. All quoted investment results are historical and should
not be considered representative of what an investment in the Fund may earn in
any future period. For further information about the calculation methods and
uses of the Fund's investment results, see the Statement of Additional
Information.
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 characteris-
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tics 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 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. 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. A forward foreign currency contract involves
an obligation to purchase or sell a specific currency on a future date at a
price set at the time of the contract. 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
13
<PAGE>
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 counterparty 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 proceeding with respect to the other party to the repurchase
agreement.
Restricted and Illiquid Securities
The Fund may invest in restricted securities (i.e., securities that would
be required to be registered prior to distribution to the public), including
restricted securities eligible for resale to certain institutional investors
pursuant to Rule 144A under the Securities Act of 1933. In addition, the Fund
may invest up to 15% of its net assets in restricted securities sold and
offered under Rule 144A that are illiquid either as a result of legal or
contractual restrictions or the absence of a trading market.
The Board of Trustees of the Fund has adopted guidelines and delegated to
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
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<PAGE>
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.
15
<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: 1-888-294-4480
SERVICE INFORMATION
If you would like information on the following, please call:
Existing and new accounts, prospectuses,
applications, service forms
and telephone transactions................................... 1-888-294-4480
FactFone(SM)
Automated fund yields and automated prices and
account information.......................................... 1-800-225-4321
Toll-free fax................................................. 1-888-294-4485
Visit our website:...................................... www.pioneerfunds.com
0498-5100
(C)Pioneer Funds Distributor, Inc.
<PAGE>
PIONEER EMERGING MARKETS FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
CLASS A, CLASS B, CLASS C AND CLASS Y SHARES
March 30, 1998
(as revised April 9, 1998)
This Statement of Additional Information is not a Prospectus, but
should be read in conjunction with the Class A, Class B and Class C Shares
Prospectus dated March 30, 1998 and the Class Y Shares Prospectus dated April 8,
1998 (each, a "Prospectus," and together, the "Prospectuses"), as amended and/or
supplemented from time to time, of Pioneer Emerging Markets Fund (the "Fund"). A
copy of each 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 Annual Report to Shareholders is
attached to this Statement of Additional Information and is hereby incorporated
in this Statement of Additional Information by reference.
TABLE OF CONTENTS
PAGE
1. Investment Policies, Restrictions and Associated Risks.......... 2
2. Management of the Fund.......................................... 15
3. Investment Adviser.............................................. 19
4. Underwriting Agreement and Distribution Plans................... 20
5. Shareholder Servicing/Transfer Agent............................ 23
6. Custodian....................................................... 23
7. Principal Underwriter........................................... 23
8. Independent Public Accountants.................................. 24
9. Portfolio Transactions.......................................... 24
10. Tax Status...................................................... 26
11. Description of Shares........................................... 30
12. Certain Liabilities............................................. 31
13. Determination of Net Asset Value................................ 31
14. Systematic Withdrawal Plan...................................... 32
15. Letter of Intent................................................ 33
16. Investment Results.............................................. 33
17. Financial Statements............................................ 36
Appendix A -- Description of Short-Term Debt
and Corporate Bond Ratings...................................... 37
Appendix B -- Performance Statistics............................ 42
Appendix C -- Other Pioneer Information......................... 55
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.
1
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1. INVESTMENT POLICIES, RESTRICTIONS AND ASSOCIATED RISKS
The Prospectuses identify 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 Prospectuses. Capitalized terms not otherwise defined
herein have the meaning given to them in the Prospectuses.
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.
2
<PAGE>
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 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 SEC and such issuers thereof will not be subject to the
SEC'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 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
3
<PAGE>
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.
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. 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 investments 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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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
objective. 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 U.S. 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
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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 the securities index 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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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 enter
into 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 transactions 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.
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OPTIONS ON FOREIGN CURRENCIES
The Fund may purchase options on foreign currencies for hedging
purposes in a manner similar to that of transactions in forward contracts. For
example, a decline in the dollar value of a foreign currency in which portfolio
securities are denominated will reduce the dollar value of such securities, even
if their value in the foreign currency remains constant. In an attempt 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 increases, 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.
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
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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 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.
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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 series.
There is no guarantee that such closing transactions can be effected. The Fund's
ability to establish and close out positions on such options will be subject to
the development and maintenance of a liquid market.
The Fund may use options on futures contracts 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 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.
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
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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 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 in or prohibited from disposing of the
underlying securities and other collateral held by the Fund in connection with
the related repurchase agreement pending court proceedings. In evaluating
whether to enter a repurchase agreement, 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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INVESTMENT RESTRICTIONS
The Fund has adopted certain 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) of the Fund. 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 invest in
repurchase agreements, bank certificates of deposit, a portion of an issue of
publicly distributed bonds, bank loan participation agreements, bankers'
acceptances, debentures or other securities, whether or not the purchase is made
upon the original issuance of the securities.
(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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(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 SEC, 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.
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(b)......Purchase securities on margin or make short sales unless by
virtue of its ownership of other securities, the Fund has the right to obtain,
without payment of additional consideration, securities equivalent in kind and
amount to the securities sold and, if the right is conditional, the sale is made
upon the same conditions, except that 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 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.
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(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.
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 Pioneering Management Corporation
("PMC") and Pioneer Funds Distributor, Inc. ("PFD"); Director of Pioneering
Services Corporation ("PSC"), Pioneer Capital Corporation ("PCC"), Pioneer Real
Estate Advisors, Inc., Pioneer Forest, Inc., Pioneer Explorer, Inc., Pioneer
Management (Ireland) Ltd. ("PMIL") and Closed Joint Stock Company
"Forest-Starma"; President and Director of Pioneer Metals and Technology, Inc.
("PMT"), Pioneer International Corp. ("PIntl"), Pioneer First Russia, Inc.
("First Russia") and Pioneer Omega, Inc. ("Omega"); Chairman of the Board and
Director of Pioneer Goldfields Limited ("PGL") and Teberebie Goldfields Limited;
Chairman of the Supervisory Board of Pioneer Fonds Marketing, GmbH, Pioneer
First Polish Investment Fund Joint Stock Company, S.A. and Pioneer Czech
Investment Company, A.S.; Chairman, President and Trustee of all of the Pioneer
mutual funds; Director of Pioneer Global Equity Fund Plc, Pioneer Global Bond
Fund Plc, Pioneer DM Cashfonds Plc, Pioneer European Equity Fund Plc, Pioneer
Central & Eastern Europe Fund Plc and Pioneer US Real Estate Fund Plc; and
Partner, Hale and Dorr LLP (counsel to PGI and the Fund).
MARY K. BUSH, TRUSTEE, DOB: APRIL 1948
4201 CATHEDRAL AVENUE, NW, WASHINGTON, DC 20016
President, Bush & Co., an international financial advisory firm;
Director and/or Trustee of Mortgage Guaranty Insurance Corporation, Novecon
Management Company, Hoover Institution, Folger Shakespeare Library, March of
Dimes, Project 2000, Inc. (not-for-profit educational organization), Small
Enterprise Assistance Fund and Wilberforce University; Advisory Board member,
Washington Mutual Investors Fund, a registered investment company; and Trustee
of all of the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
RICHARD H. EGDAHL, M.D., PH.D., TRUSTEE, DOB: DECEMBER 1926
BOSTON UNIVERSITY HEALTH POLICY INSTITUTE, 53 BAY STATE ROAD, BOSTON, MA 02115
Alexander Graham Bell Professor of Health Care Entrepreneurship, Boston
University; Professor of Management, Boston University School of Management;
Professor of Public Health, Boston University School of Public Health; Professor
of Surgery, Boston University School of Medicine; University Professor, Boston
University; Director, Boston University Health Policy Institute and Boston
University Program for Health Care Entrepreneurship; Director, CORE (management
of workers' compensation and disability costs - NASDAQ); Director, WellSpace
(provider of complementary health
15
<PAGE>
care); Trustee, Boston Medical Center; 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, The Winthrop Group, Inc. (consulting firm); Manager
of Research Operations, Xerox Palo Alto Research Center, from 1991 to 1994;
Professor of Operations Management and Management of Technology and Associate
Dean, Boston University School of Management, from 1989 to 1993; and Trustee of
all of the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
JOHN W. KENDRICK, TRUSTEE, DOB: JULY 1917
6363 WATERWAY DRIVE, FALLS CHURCH, VA 22044
Professor Emeritus, George Washington University; Director, American
Productivity and Quality Center; Adjunct Scholar, American Enterprise Institute;
Economic Consultant; 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);
Trustee of Boston Medical Center; Member of the Board of Governors of the
Investment Company Institute; 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, PIntl, First
Russia, Omega, Pioneer SBIC Corporation ("Pioneer SBIC"), PMIL, Pioneer Global
Equity Fund Plc, Pioneer Global Bond Fund Plc, Pioneer DM Cashfonds Plc, Pioneer
European Equity Fund Plc, Pioneer Central & Eastern Europe Fund Plc and Pioneer
US Real Estate Fund Plc; and 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
Of Counsel to 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. (energy sales, services and distribution); 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, PIntl, PMT, PGL, First Russia, Omega and
Pioneer SBIC; and Treasurer of all of the Pioneer mutual funds.
16
<PAGE>
JOSEPH P. BARRI, SECRETARY, DOB: AUGUST 1946
Corporate Secretary of PGI and most of its subsidiaries; Secretary of
all of the Pioneer mutual funds; and Partner of Hale and Dorr LLP.
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 junior partner of Hale and Dorr LLP
prior to 1995.
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, Pioneer
International Growth Fund, Pioneer World Equity Fund and the International
Portfolio of Pioneer Variable Contracts Trust.
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, dated March 23, 1994
(the "Declaration"), 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 Independence Fund PMC PFD
17
<PAGE>
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 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 ten 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.
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 March 30,
1998, Merrill Lynch Pierce Fenner & Smith, Inc. for the Sole Benefit of its
Customers, 4800 Deer Lake Drive East, 3rd Floor, Jacksonville, FL 32246-6484
owned approximately 37.06% (3,624,597) of the outstanding Class A shares of the
Fund; 29.78% (1,539,790) of the outstanding Class B shares of the Fund; and
48.78% (550,504) of the outstanding Class C shares of the Fund.
COMPENSATION OF OFFICERS AND TRUSTEES
The Fund pays no salaries or compensation to any of its officers. The
Fund will pay 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 will pay a per meeting fee of $120 to each Trustee who is
not affiliated with PGI, PMC, PFD or PSC and will pay an annual trustees' fee of
$500 plus expenses to each Trustee affiliated with PGI, PMC, PFD or PSC. The
Fund will also pay 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 will be 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 will
receive an annual trustees' 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 Boards of
Trustees for the Pioneer mutual funds, will receive an annual fee
18
<PAGE>
equal to 5% of the annual trustees' fee, except the Committee Chairperson
who will receive an annual trustees' fee equal to 10% of the annual trustees'
fee. Each Trustee who is not affiliated with PGI, PMC, PFD or PSC also will
receive $375 per meeting for attendance at meetings of the Non-Interested
Trustees Committee, except for the Committee Chairperson who will receive an
additional $375 per meeting. Any such fees paid to affiliated or interested
persons of PGI, PMC, PFD or PSC are reimbursed to the Fund under its management
contract.
The following table sets forth certain information with respect to the
compensation of each Trustee of the Fund:
<TABLE>
<CAPTION>
PENSION OR RETIREMENT TOTAL COMPENSATION FROM
BENEFITS ACCRUED AS THE FUND AND OTHER
AGGREGATE PART OF FUND EXPENSES PIONEER MUTUAL FUNDS**
COMPENSATION FROM
NAME OF TRUSTEE THE FUND*
<S> <C> <C> <C>
John F. Cogan, Jr. $ 500 $0 $ 12,000
Mary K. Bush 800 0 30,000
Richard H. Egdahl, M.D. 1,889 0 62,000
Margaret B.W. Graham 1,889 0 60,000
John W. Kendrick 1,889 0 55,800
Marguerite A. Piret 2,203 0 80,000
David D. Tripple 500 0 12,000
Stephen K. West 2,020 0 63,800
John Winthrop 2,127 0 69,000
------- - --------
Totals $13,817 $0 $444,600
</TABLE>
*For the fiscal year ended November 30, 1997.
**For the calendar year ended December 31, 1997.
3. INVESTMENT ADVISER
As stated in the Prospectus, PMC, 60 State Street, Boston,
Massachusetts 02109, 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 60
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.
For the fiscal years ended November 30, 1995, November 30, 1996 and November 30,
1997, the Fund paid to PMC $0, $325,325 and $1,970,289 in management fees,
respectively. An expense limitation was in effect during the fiscal years ended
November 30, 1995, November 30, 1996 and November 30, 1997, and in the absence
of that expense
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<PAGE>
limitation, the Fund would have incurred management fees payable to PMC of
$251,891, $734,703 and $1,997,347, respectively, for those periods.
4. UNDERWRITING AGREEMENT AND DISTRIBUTION PLANS
The Fund entered into an underwriting agreement, dated June 23, 1994
with PFD. The underwriting agreement will continue from year to year if annually
approved by the Trustees. The underwriting agreement provides that PFD will bear
expenses for the distribution of the Fund's shares, except for expenses incurred
by PFD for which it is reimbursed or compensated by the Fund under the
distribution plans (discussed below). PFD bears all expenses it incurs in
providing services under the underwriting agreement. Such expenses include
compensation to its employees and representatives and to securities dealers for
distribution related services performed for the Fund. PFD also pays certain
expenses in connection with the distribution of the Fund's shares, including the
cost of preparing, printing and distributing advertising or promotional
materials, and the cost of printing and distributing prospectuses and
supplements to prospective shareholders. The Fund bears the cost of registering
its shares under federal and state securities laws and the laws of certain
foreign countries. The Fund and PFD have agreed to indemnify each other against
certain liabilities, including liabilities under the 1933 Act. Under the
underwriting agreement, PFD will use its best efforts in rendering services to
the Fund.
The Fund has adopted a plan of distribution pursuant to Rule 12b-1
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"). The Fund has not adopted a plan of distribution with respect to its
Class Y shares.
CLASS A PLAN
Pursuant to the Class A Plan the Fund may reimburse PFD for its
expenditures in financing certain activities primarily intended to result in the
sale of the Fund's Class A shares. Certain categories of such expenditures have
been approved by the Board of Trustees and are set forth in the Prospectus. See
"Distribution Plans" in the Prospectus. The expenses of the Fund pursuant to the
Class A Plan are accrued daily at a rate which may not exceed the annual rate of
0.25% of the Fund's average daily net assets attributable to Class A shares.
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 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
20
<PAGE>
as partial consideration for personal services and/or account maintenance
services performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class B Plan is
to compensate PFD for its distribution services with respect to Class B shares
of the Fund. PFD pays commissions to dealers as well as expenses of printing
prospectuses and reports used for sales purposes, expenses with respect to the
preparation and printing of sales literature and other distribution-related
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 CDSCs
attributable to Class B shares. (See "Distribution Plans" in the Prospectus.)
When a broker-dealer sells Class B 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.
CLASS C PLAN
The Class C Plan provides that the Fund will pay PFD, as the Fund's
distributor for its Class C shares, a distribution fee, accrued daily and paid
quarterly, equal on an annual basis to 0.75% of the Fund's average daily net
assets attributable to Class C shares and will pay PFD a service fee equal to
0.25% of the Fund's average daily net assets attributable to Class C shares. PFD
will in turn pay to securities dealers which enter into a sales agreement with
PFD a distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the Fund's average daily net assets attributable to Class C
shares owned by investors for whom that securities dealer is the holder or
dealer of record. The service fee is intended to be in consideration of personal
services and/or account maintenance services rendered by the dealer with respect
to Class C shares. PFD will advance to dealers the first-year service fee at a
rate equal to 0.25% of the amount invested. As compensation therefor, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Commencing in the thirteenth month following a
purchase of Class C shares, dealers will become eligible for additional service
fees at a rate of up to 0.25% of the amount invested and additional compensation
at a rate of up to 0.75% of the net asset value with respect to such shares.
Dealers may from time to time be required to meet certain other criteria in
order to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class C Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class C Plan is
to compensate PFD for its distribution services with respect to the Class C
shares of the Fund. PFD pays commissions to dealers as well as expenses of
printing prospectuses and reports used for sales purposes, expenses with respect
to the preparation and printing of sales literature and other
distribution-related expenses, including, without limitation, the cost necessary
to provide distribution-related services, or personnel, travel, office expenses
and equipment. The Class C Plan also provides that PFD will receive all CDSCs
attributable to Class C shares. (See "Distribution Plans" in the Prospectus.)
When a broker-dealer sells 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.
21
<PAGE>
Class Y Shares
PFD incurs the expenses of distributing the Fund's Class Y shares, none
of which are reimbursed or paid for by the Fund. These expenses include any
commissions or account servicing fees paid to, or on account of, broker-dealers
which have sales agreements with PFD and certain qualifying registered
investment advisers and other financial institutions.
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 Plans 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),
cast in person at a meeting called for the purpose of voting on the Plans. In
approving the Plans, the Trustees identified and considered a number of
potential benefits which the Plans may provide. The Board of Trustees believes
that there is a reasonable likelihood that the Plans will benefit the Fund and
its current and future shareholders. Under their terms, the Plans remain in
effect from year to year provided such continuance is approved annually by vote
of the Trustees in the manner described above. The Plans may not be amended to
increase materially the annual percentage limitation of average net assets which
may be spent for the services described therein without approval of the
shareholders of the class 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 (as defined in the 1940
Act) of the respective Class of the Fund. A Plan will automatically terminate in
the event of its assignment (as defined in the 1940 Act).
During the fiscal year ended November 30,1997, the Fund incurred total
distribution fees pursuant to the Fund's Class A Plan, Class B Plan and Class C
Plan, respectively, as follows: $209,135, $649,336 and $111,999. Distribution
fees were paid by the Fund to PFD in reimbursement of or as compensation for
expenses related to servicing shareholder accounts and to compensate 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, 1997, CDSCs, in the
amount of approximately $145,123 were paid to PFD.
22
<PAGE>
5. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with PSC, 60 State Street, Boston,
Massachusetts 02109, to act as shareholder servicing and transfer agent for the
Fund. This contract may be terminated without penalty by either party upon 90
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 shareholder inquiries.
PSC receives an annual fee of $22.75 per 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 record keeping services. Any such payments by the Fund would be in lieu of
the per account fee which would otherwise be paid by the Fund to PSC.
6. CUSTODIAN
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts
02109, is the custodian (the "Custodian") of the Fund's assets. The Custodian's
responsibilities include safekeeping and controlling the Fund's cash and
securities in the U.S. 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 U.S. or in recognized central
depositories in foreign countries. The Trustees periodically review the Fund's
international subcustodian arrangements.
7. PRINCIPAL UNDERWRITER
PFD, 60 State Street, Boston, Massachusetts 02109, serves as the
principal underwriter for the Fund in connection with the continuous offering of
its shares. During the fiscal years ended November 30, 1995, 1996 and 1997, net
underwriting commissions earned by PFD were approximately $25,000, $86,393 and
$72,117, respectively, in connection with its offering of Class A, Class B and
Class C shares. Commissions reallowed to dealers during such periods were
approximately $161,000,
23
<PAGE>
$793,089 and $949,816, respectively. See "Underwriting Agreement and
Distribution Plans" above for a description of the terms of the underwriting
agreement with PFD.
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 of Trustees deems fair and reasonable.
8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, 225 Franklin Street,, Boston, Massachusetts 02110,
is the Fund's independent public accountants, providing audit services, tax
return review, and assistance and consultation with respect to the preparation
of filings with the SEC.
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 U.S.).
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. In addition, consistent with Section 28(e) of the Securities Act of 1934,
as amended, the Fund may pay commissions to such broker-dealers in an amount
greater than the amount another firm might charge. 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; providing stock price quotation services;
furnishing analyses, manuals and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy, performance of
accounts, comparative fund statistics and credit rating service information; 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
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the proportion of such transactions directed to such dealers solely because such
services were provided. Management believes that no exact dollar value can be
calculated for such services.
The research received from broker-dealers may be useful to PMC in
rendering investment management services to the Fund as well as to other
investment companies or accounts managed by PMC, although not all of such
research may be useful to the Fund. Conversely, such information provided by
brokers or dealers who have executed transaction orders on behalf of such other
PMC clients 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 were 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. For the
fiscal years ended November 30, 1995, 1996 and 1997, the Fund paid or accrued
aggregate brokerage commissions of approximately $355,039 $897,000 and
$1,507,000, respectively. Differences in brokerage commissions reflected above
were due to increased portfolio activity and changes in net assets as a result
of shareholder transactions throughout the respective periods.
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 fund or account presently
has in a particular industry or country and the availability of investment funds
in each fund or account.
It is possible that at times identical securities will be held by more
than one fund and/or account. However, positions in the same issue may vary and
the length of time that any fund or account may choose to hold its investment in
the same issue may likewise vary. To the extent that the Fund, another Pioneer
mutual fund or a private account managed by PMC may not be able to acquire as
large a position in such security as it desires, 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 fund or account, the resulting
participation in volume transactions could produce better executions for the
Fund or the 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, payments with respect to securities loans,
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") 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 ("net
capital gain"), if any, whether received in cash or reinvested in additional
shares, are taxable to the Fund's shareholders as capital gains for federal
income tax purposes without regard to the length of time shares of the Fund have
been held. As a result of the enactment of the Taxpayer Relief Act of 1997 (the
"1997 TRA") on August 5, 1997, gain recognized after May 6, 1997 from the sale
of a capital asset is taxable to individual (noncorporate) investors at
different maximum federal income tax rates, depending generally upon the tax
holding period for the asset, the federal income tax bracket of the taxpayer,
and the dates the asset was acquired and/or sold. The Treasury Department has
issued guidance under the 1997 TRA that (subject to possible modification by
future "technical corrections" legislation) enables the Fund to pass through to
its shareholders the benefits of the capital gains tax rates enacted in the 1997
TRA. The Fund will provide appropriate information to its shareholders about its
distributions, including the tax rate(s) applicable to its distributions from
long-term capital gains, in accordance with this and any future guidance.
Shareholders should consult their own tax advisers on the correct application of
these new rules in their particular circumstances.
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. Under future
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regulations, 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 90% income test. If the net foreign exchange loss for a
year were to exceed the Fund's investment company taxable income (computed
without regard to such loss), the resulting 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 such as
is inherent in a convertible bond) in certain foreign corporations that receive
at least 75% of their annual gross income from passive sources (such as
interest, dividends, certain rents and royalties, or capital gains) 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. An election may generally be available that would
ameliorate these adverse tax consequences, but any such election could require
the Fund to recognize taxable income or gain (subject to tax distribution
requirements) without the concurrent receipt of cash. These investments could
also result in the treatment of associated capital gains as ordinary income. 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.
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.
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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 by the Fund 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 for shareholders that are
subject to tax. Shareholders should consult their own tax advisers with
reference to their individual circumstances to determine whether any particular
transaction in Fund shares is properly treated as a sale for tax purposes, as
the following discussion assumes, and the character of and tax rate applicable
to any gains or losses recognized in such transactions under the new rate
structure enacted in the 1997 TRA. 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 in the Fund 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 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. Additionally, the Fund may be
required to recognize gain if an option, futures contract, forward contract, or
other transaction that is not subject to the mark to market rules is treated as
a "constructive sale" of an "appreciated financial position" held by the Fund
under Section 1259 of the Code. Any net mark to market gains and/or gains from
constructive sales may also have to be distributed to satisfy the distribution
requirements referred to above even though no corresponding cash amounts may
concurrently be received, possibly requiring the disposition of portfolio
securities or borrowing to obtain the necessary cash. 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
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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 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 a holding
period requirement added by the 1997 TRA and other limitations under the Code.
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 (not in excess of the tax
actually owned 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 may 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.
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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 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 continues to qualify 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 Declaration 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, and may divide or
combine the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interests in the Fund. The Declaration
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 four classes of shares of the Fund, Class A, Class B, Class C
and Class Y shares. Each share of a class of the Fund represents an equal
proportionate interest in the assets of the Fund allocable to that class. Upon
liquidation of the Fund, shareholders of each class of the Fund are entitled to
share PRO RATA in the Fund's net assets allocable to such class available for
distribution to shareholders. The Fund reserves the right to create and issue
additional series or classes of shares, in which case the shares of each class
of a series would participate equally in the earnings, dividends and assets
allocable to that class of the particular series.
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Shareholders are entitled to one vote for each share held and may vote
in the election of Trustees and on other matters submitted to 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 Declaration without the affirmative vote of a majority of the Fund's
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 the
Declaration. 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 Declaration
expressly provides that the Trust has been organized under the Delaware Act and
that the Declaration 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 (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 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 does not authorize the Fund to indemnify any Trustee or officer
against any liability to which he or she would otherwise be subject by reason of
or for willful misfeasance, bad faith, gross negligence or reckless disregard of
such person's duties.
13. DETERMINATION OF NET ASSET VALUE
The net asset value per share of each class of the Fund is determined
as of the close of regular trading on the Exchange (currently 4:00 p.m., Eastern
time) on each day on which 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, Martin Luther King,
Jr. Day,
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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 net asset value per share of the Fund is not
determined on any day in which no purchase orders in good order for the shares
of the Fund are received and no shares are tendered for redemption.
The net asset value per share of each class of the Fund is computed by
taking the value of all of the Fund's assets attributable to a class, less the
Fund's liabilities attributable to that class, and dividing the result 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 of Trustees. The maximum offering price per Class A share
is the net asset value per Class A share, plus the maximum applicable sales
charge. Class B and Class C shares are offered at net asset value without the
imposition of an initial sales charge, but are subject to a CDSC. Class Y shares
are offered without an initial sales charge and are not subject to a CDSC. See
"Fund Share Alternatives" in the Prospectus.
14. SYSTEMATIC WITHDRAWAL PLAN (CLASS A, CLASS B AND CLASS C SHARES ONLY)
The Systematic Withdrawal Plan ("SWP") is designed to provide a
convenient method of receiving fixed payments at regular intervals from 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 payments 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 the applicant. Class B
accounts must meet the minimum initial investment requirement prior to
establishing a SWP. 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 established.
See "Waiver or Reduction of Contingent Deferred Sales Charge" in the Prospectus.
Designation of another person to receive the payments 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 potentially 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.
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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 INTENT (CLASS A SHARES ONLY)
A Letter of Intent ( "LOI") may be established by completing the LOI
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. An
LOI 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 LOI and are in an amount which would qualify for a further quantity
discount, all transactions will be recomputed on the expiration date of the LOI
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
LOI.
If the total purchases, less redemptions, are less than the amount specified
under the LOI, you must remit to PFD any difference between the sales charge on
the amount actually purchased and the amount originally specified in the LOI
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 SEC.
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<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[superscript] = 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;
for Class Y shares, no sales load or deduction of a CDSC is
applicable
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 of shares are taken into consideration. For any account fees
that vary with the size of the account, the account fee used for purposes of the
above computation is assumed to be the fee that would be charged to the class'
mean account size.
The average annual total returns for each class of shares of the Fund
as of November 30, 1997 are as follows:
Average Annual Total Return (%)
ONE YEARFIVE YEARS TEN YEARS SINCE INCEPTION*
Class A Shares 4.03 N/A N/A 4.89
Class B Shares 5.61 N/A N/A 5.20
Class C Shares 9.53 N/A N/A 7.30
Class Y Shares N/A N/A N/A N/A
*Inception was June 23, 1994 for Class A and Class B shares; January 31, 1996
for Class C shares; and April 9, 1998 for Class Y shares.
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<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 MORGAN STANLEY CAPITAL INTERNATIONAL
("MSCI") EMERGING MARKETS FREE INDEX, an unmanaged index of emerging stock
markets, MSCI EAFE(R) INDEX, an unmanaged index of international stock markets,
MSCI USA INDEX, an unmanaged index of U.S. domestic stock markets, or other
appropriate indices of MSCI; STANDARD & POOR'S 500 STOCK INDEX (the "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 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:
[bullet] net asset value prices for all Pioneer mutual funds;
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<PAGE>
[bullet] annualized 30-day yields on Pioneer's fixed income funds;
[bullet] annualized 7-day yields and 7-day effective (compound) yields for
Pioneer's money market fund; and
[bullet] dividends and capital gains distributions on all Pioneer mutual funds.
Yields are calculated in accordance with SEC mandated standard formulas.
In addition, by using a personal identification number (PIN),
shareholders may enter purchases, exchanges and redemptions, access their
account balances 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 and 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, Class C and Class Y shares (except for Pioneer Cash
Reserves Fund, which seeks to maintain a stable $1.00 share price) will also
vary, and such shares may be worth more or less at redemption than their
original cost. Certain FactFoneSM features are not available to Class Y
shareholders.
17. FINANCIAL STATEMENTS
The Fund's Annual Report, filed with the SEC on January 28, 1998
(Accession No. 0000921023-98-000003), is incorporated by reference into this
Statement of Additional Information. The financial statements in the Fund's
Annual Report, including the financial highlights, for the period ended November
30, 1997, included or incorporated by reference into the Prospectus for the
Fund's Class A, Class B and Class C shares and this Statement of Additional
Information, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect to the financial
statements, and are included in reliance upon the authority of Arthur Andersen
LLP as experts in accounting and auditing in giving their report.
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<PAGE>
APPENDIX A
DESCRIPTION OF SHORT-TERM DEBT AND CORPORATE BOND RATINGS1
MOODY'S INVESTORS SERVICE, INC. SHORT-TERM PRIME RATING SYSTEM - TAXABLE DEBT
AND DEPOSITS GLOBALLY
Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually senior debt obligations. These obligations have an original maturity
not exceeding one year, unless explicitly noted.
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:
PRIME-1: Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
Leading market positions in well-established industries. High rates of
return on funds employed.
Conservative capitalization structure with moderate reliance on debt
and ample asset protection. Broad margins in earnings coverage of fixed
financial charges and high internal cash generation. Well-established
access to a range of financial markets and assured sources of alternate
liquidity.
PRIME-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
PRIME-3: Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating
categories.
Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating on
a bank's ability to repay senior obligations extends only to branches located in
countries which carry a Moody's Sovereign Rating for Bank Deposits.
- --------
1 The ratings indicated herein are believed to be the most recent ratings
available at the date of this Statement of Additional Information for the
securities listed. Ratings are generally given to securities at the time of
issuance. While the rating agencies may from time to time revise such ratings,
they undertake no obligation to do so, and the ratings indicated do not
necessarily represent ratings which will be given to these securities on the
date of the Fund's fiscal year-end.
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<PAGE>
Such branch obligations are rated at the lower of the bank's rating or
Moody's Sovereign Rating for Bank Deposits for the country in which the branch
is located.
When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings do
not incorporate an opinion as to whether payment of the obligation will be
affected by actions of the government controlling the currency of denomination.
In addition, risks associated with bilateral conflicts between an investor's
home country and either the issuer's home country or the country where an
issuer's branch is located are not incorporated into Moody's short-term debt
ratings.
If an issuer represents to Moody's that its short-term debt obligations are
supported by the credit of another entity or entities, then the name or names of
such supporting entity or entities are listed within the parenthesis beneath the
name of the issuer, or there is a footnote referring the reader to another page
for the name or names of the supporting entity or entities. In assigning ratings
to such issuers, Moody's evaluates the financial strength of the affiliated
corporations, commercial banks, insurance companies, foreign governments or
other entities, but only as one factor in the total rating assessment.
MOODY'S CORPORATE BOND RATINGS
AAA: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA: Bonds which are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
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<PAGE>
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
NOTE: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicated that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicated
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.
STANDARD & POOR'S SHORT-TERM ISSUE CREDIT RATINGS
A-1: A short-term obligation rated A-1 is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity to
meet its financial commitment on these obligations is extremely strong.
A-2: A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.
A-3: A short-term obligation rated A-3 exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
B: A short-term obligation rated B is regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
C: A short-term obligation rated C is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.
D: A short-term obligation rated D is in payment default. The D rating category
is used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
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<PAGE>
STANDARD & POOR'S CORPORATE BOND RATINGS
AAA: An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA: An obligation rated AA differs from the highest-rated obligations only in a
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A: An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB: An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
Obligations rated BB, B, CCC, CC, and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and C
the highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.
BB: An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to the
obligor's capacity to meet its financial commitment on the obligation.
B: An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.
CCC: An obligation rated CCC is currently vulnerable to nonpayment and is
dependent upon favorable business, financial and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial or economic conditions, the obligor is not likely to
have the capacity to meet its financial commitment on the obligation.
CC: An obligation rated CC is currently highly vulnerable to nonpayment.
C: The C rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.
D: An obligation rated D is in payment default. The D rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments are jeopardized.
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<PAGE>
PLUS (+) OR MINUS (-): The rating from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within the major categories.
R: This symbol is attached to the ratings of instruments with significant
noncredit risks. It highlights risks to principal or volatility of expected
returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk, such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.
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<PAGE>
APPENDIX B
PIONEER EMERGING MARKETS FUND
CLASS A SHARES
<TABLE>
<CAPTION>
DATE INITIAL OFFERING PRICE SALES CHARGE SHARES PURCHASED NET ASSET INITIAL NET
- ---- -------- -------------- ------------- ---------------- ---------- -----------
INVESTMENT INCLUDED VALUE PER SHARE ASSET VALUE
---------- -------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
6/23/94 $10,000.00 $13.26 5.75% 754.148 $12.50 $9,425
</TABLE>
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
<TABLE>
<CAPTION>
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
12/31/97 9,940 1,829 46 11,815
</TABLE>
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<PAGE>
PIONEER EMERGING MARKETS FUND
CLASS B SHARES
<TABLE>
<CAPTION>
DATE INITIAL OFFERING PRICE SHARES PURCHASED NET ASSET VALUE INITIAL NET ASSET
INVESTMENT PER SHARE VALUE
<S> <C> <C> <C> <C> <C>
6/23/94 $10,000.00 $12.50 800.000 $12.50 $10,000
</TABLE>
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
<TABLE>
<CAPTION>
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%
12/31/97 10,272 1,929 27 300 11,928 3.00%
</TABLE>
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<PAGE>
PIONEER EMERGING MARKETS FUND
CLASS C SHARES
<TABLE>
<CAPTION>
DATE INITIAL OFFERING PRICE SHARES PURCHASED NET ASSET VALUE INITIAL NET ASSET
INVESTMENT PER SHARE VALUE
<S> <C> <C> <C> <C> <C>
1/31/96 $10,000.00 $13.22 756.429 $13.22 $10,000
</TABLE>
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
<TABLE>
<CAPTION>
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>
12/31/96 $9,841 $ 604 $0 $98 $10,347 1.00%
12/31/97 9,705 1,692 0 0 11,397 0.00%
</TABLE>
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<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 also be used, if appropriate. The
indices are not available for direct investment. The data presented are not
meant to be indicative of the performance of the Fund, do not reflect past
performance and do 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 500 includes 500 of
the largest stocks (in terms of stock market value) in the U.S.
DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of stocks of 30 blue chip
companies widely held by individuals and institutional investors. The 30 stocks
represent about a fifth of the $8 trillion-plus market value of all U.S. stocks
and about a fourth of the value of stocks listed on the New York Stock Exchange
(NYSE).
U.S. SMALL STOCK INDEX
This index is a market value weighted index of the ninth and tenth deciles of
the NYSE, plus stocks listed on the American Stock Exchange and over the counter
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 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.
MERRILL LYNCH MICRO-CAP INDEX
The MERRILL LYNCH MICRO-CAP INDEX represents the performance of 2,036 stocks
ranging in market capitalization from $50 million to $220 million. Index returns
are calculated monthly.
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<PAGE>
LONG-TERM U.S. GOVERNMENT BONDS
The total returns on long-term government bonds after 1977 are constructed with
data from The Wall Street Journal and are calculated as the change in the flat
price or and-interest price. From 1926 to 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.
INTERMEDIATE-TERM U.S. GOVERNMENT BONDS
Total returns of intermediate-term government bonds after 1987 are calculated
from The Wall Street Journal prices, using the change in flat price. Returns
from 1934 to 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 five 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 to 1942, almost all bonds
with maturities near five years were partially or fully 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 to 1933, there are few bonds suitable for construction
of a series with a five-year maturity. For this period, five-year bond yield
estimates are used.
MSCI
MSCI's international indices are based on the share prices of approximately
1,700 companies listed on stock exchanges in the 22 countries that make up the
MSCI World Index. MSCI's emerging market indices are comprised of approximately
1000 stocks from 26 countries.
Countries in the MSCI EAFE INDEX are: Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia,
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland and
United Kingdom.
Countries in the MSCI EMERGING MARKETS FREE INDEX are: Argentina, Brazil, Chile,
China Free, Czech Republic, Colombia, Greece, Hungary, India, Indonesia Free,
Israel, Jordan, Korea (at 50%), Malaysia Free, Mexico Free, Pakistan, Peru,
Philippines Free, Poland, Portugal, South Africa, Sri Lanka, Taiwan (at 50%),
Thailand Free, Turkey and Venezuela.
6-MONTH CDS
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
LONG-TERM U.S. CORPORATE BONDS
Since 1969, corporate bond total returns are represented by the Salomon Brothers
Long-Term High-Grade Corporate Bond Index. As 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 with at
least 10 years to maturity. 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.
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<PAGE>
From 1926 to 1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946 to 1968,
Ibbotson and Sinquefield backdated the Salomon Brothers' index, using Salomon
Brothers' monthly yield data with a methodology similar to that used by Salomon
Brothers for 1969 to 1995. 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 to 1945, Standard & Poor's
monthly high-grade corporate composite yield data were used, assuming a 4%
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 Westerfield, Randolph W., 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
after 1977; the CRSP 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.
NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT TRUSTS ("NAREIT")EQUITY REIT
INDEX
All of the data are based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMEX and NASDAQ. The data are
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 weighting at the beginning of the period.
Only those REITs listed for the entire period are used in the total return
calculation. Dividends are included in the month based upon their payment date.
There is no smoothing of income. Liquidating dividends, whether full or partial,
are treated as income.
RUSSELL U.S. EQUITY INDEXES
The RUSSELL 3000(R) INDEX (the "Russell 3000") is comprised of the 3,000 largest
U.S. companies as determined by market capitalization representing approximately
98% of the U.S. equity market. The average market capitalization is
approximately $2.8 billion. The RUSSELL 2500TM INDEX measures performance of the
2,500 smallest companies in the Russell 3000. The average market capitalization
is approximately $733.4 million, and the largest company in the index has an
approximate market capitalization of $2.9 billion. The RUSSELL 2000(R) INDEX
measures performance of the 2,000 smallest stocks in the Russell 3000; the
largest company in the index has a market capitalization of approximately $1.1
billion. The RUSSELL 1000(R) INDEX (the "Russell 1000") measures the performance
of the 1,000 largest companies in the Russell 3000. The average market
capitalization is approximately $7.6 billion. The smallest company in the index
has an approximate market capitalization of $1.1 billion. The RUSSELL MIDCAPTM
INDEX measures performance of the 800 smallest companies in the Russell 1000.
The largest company in the index has an approximate market capitalization of
$8.0 billion.
The Russell indexes are reconstituted annually as of July 1, based on May 31
market capitalization rankings.
WILSHIRE REAL ESTATE SECURITIES INDEX
The WILSHIRE REAL ESTATE SECURITIES INDEX is a market capitalization weighted
index of 120 publicly traded real estate securities, such as REITs, real estate
operating companies ("REOCs") and partnerships.
47
<PAGE>
The index contains performance data on five major categories of property:
office, retail, industrial, apartment and miscellaneous. The companies in the
index are 91.66% equity and hybrid REITs and 8.33% REOCs.
STANDARD & POOR'S MIDCAP 400 INDEX
The S&P 400 is a market-capitalization-weighted index. The performance data for
the index were calculated by taking the stocks presently in the 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 S&P 400 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.
LIPPER BALANCED FUNDS INDEX
This index represents equally weighted performance, 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%.
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 to 1987; and The Wall Street Journal thereafter.
Sources: Ibbotson Associates, Towers Data Systems, Lipper Analytical Services,
Inc., Merrill Lynch and PGI
48
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
DOW S&P/ S&P/
S&P JONES U.S. SMALL BARRA BARRA MERRILL LYNCH
500 INDUSTRIAL STOCK U.S. 500 500 MICRO-CAP
AVERAGE INDEX INFLATION GROWTH VALUE 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 11.62 N/A 0.28 -1.49 N/A N/A N/A
Dec 1927 37.49 N/A 22.10 -2.08 N/A N/A N/A
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A N/A
Dec 1931 -43.34 -49.02 -49.75 -9.52 N/A N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A N/A
Dec 1933 53.99 73.72 142.87 0.51 N/A N/A N/A
Dec 1934 -1.44 8.08 24.22 2.03 N/A N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A N/A
Dec 1942 20.34 14.13 44.51 9.29 N/A N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A N/A
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
DOW S&P/ S&P/
S&P JONES U.S. SMALL BARRA 500 BARRA MERRILL LYNCH
500 INDUSTRIAL STOCK U.S. GROWTH 500 MICRO-CAP
AVERAGE INDEX INFLATION VALUE INDEX
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A N/A
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38 N/A
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93 N/A
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57 N/A
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16 27.76
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16 43.18
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59 32.32
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02 9.18
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04 33.62
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89 42.44
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52 -14.97
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68 22.89
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67 3.45
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68 -13.84
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67 22.76
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13 8.06
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85 -29.55
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56 57.44
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53 36.62
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60 31.32
Dec 1994 1.31 5.06 3.11 2.67 3.13 -0.64 1.81
Dec 1995 37.43 36.84 34.46 2.54 38.13 36.99 30.70
Dec 1996 23.07 28.84 17.62 3.32 23.96 21.99 13.88
Dec 1997 33.36 24.88 22.78 1.92 36.52 29.98 24.61
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
LONG- INTERMEDIATE- MSCI LONG-
TERM TERM U.S. EAFE 6- TERM U.S. U.S.
U.S. GOV'T GOVERNMENT (Net of MONTH CORPORATE T-BILL
BONDS BONDS Taxes) CDS BONDS (30-Day)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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 0.10 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
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
LONG- INTERMEDIATE- MSCI LONG-
TERM TERM U.S. EAFE 6- TERM U.S. U.S.
U.S. GOV'T GOVERNMENT (Net of MONTH CORPORATE T-BILL
BONDS BONDS Taxes) CDS BONDS (30-Day)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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 4.17 4.77 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 3.93
Dec 1966 3.65 4.69 N/A 5.76 0.20 4.76
Dec 1967 -9.18 1.01 N/A 5.47 -4.95 4.21
Dec 1968 -0.26 4.54 N/A 6.45 2.57 5.21
Dec 1969 -5.07 -0.74 N/A 8.70 -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 5.39 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 6.11 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 29.10 -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 6.59 -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 19.30 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 16.80 11.21 5.21 27.20 5.60
Dec 1996 -0.93 2.10 6.05 5.21 1.40 5.21
Dec 1997 15.85 8.38 1.78 5.71 12.95 5.26
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
NAREIT LIPPER MSCI
EQUITY RUSSELL WILSHIRE BALANCED EMERGING BANK
REIT 2000 REAL ESTATE S&P FUND MARKETS SAVINGS
INDEX INDEX SECURITIES 400 INDEX FREE INDEX ACCOUNT
- -----------------------------------------------------------------------------------------------------------------------
<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
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
NAREIT LIPPER MSCI
EQUITY RUSSELL WILSHIRE BALANCED EMERGING BANK
REIT 2000 REAL ESTATE S&P FUND MARKETS SAVINGS
INDEX INDEX SECURITIES 400 INDEX FREE INDEX ACCOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
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
Dec 1997 20.29 22.36 19.80 32.26 20.05 -11.59 5.17
</TABLE>
54
<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, 1997, PMC employed a professional investment staff of 58,
with a combined average of 12 years' experience in the financial services
industry.
Total assets of all Pioneer mutual funds at December 31, 1997, were
approximately $19.8 billion representing 1,177,148 shareholder accounts, 791,468
non-retirement accounts and 385,680 retirement accounts.
g:\edgar\sai\current\em398sai.doc
55
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
The financial highlights of the Registrant for the fiscal year
ended November 30, 1997 are included in Part A of the Registration
Statement and the financial statements of the Registrant for the
fiscal year ended November 30, 1997 are part of the 1997 Annual
Report to Shareholders (filed electronically on January 28, 1998;
File No. 811-08448; Accession No. 0000921023-98-000003) which is
incorporated by reference into Part B of the Registration
Statement.
(b) Exhibits:
1.1 Agreement and Declaration of Trust.1
1.2 Certificate of Trust.1
1.3 Establishment and Designation of Class A and ClassB
shares of Beneficial Interest.1
1.4 Establishment and Designation of Class A, Class B and
Class C shares of Beneficial Interest.2
1.5 Establishment and Designation of Class A, Class B, Class
C and Class Y shares of Beneficial Interest.+
2. By-Laws.1
2.1 Amendment to By-Laws dated April 15, 1994.3
3. None.
4. None
5. Management Contract between the Registrant and
Pioneering Management Corporation.1
6.1 Underwriting Agreement between the Registrant and
Pioneer Funds Distributor, Inc.1
6.2 Form of Dealer Sales Agreement.2
7. None.
8. Custodian Agreement between the Registrant and
Brown Brothers Harriman & Co.1
C-1
<PAGE>
9. Investment Company Service Agreement between the
Registrant and Pioneering Services Corporation.1
10. Opinion and Consent of Counsel.1
11. Consent of Independent Public Accountants.+
12. None.
13. Share Purchase Agreement.1
14. None.
15.1 Class A Distribution Plan.1
15.2 Class B Distribution Plan.1
15.3 Class C Distribution Plan.2
16. None.
17. Financial Data Schedules.+
18. Multiple Class Plan for Class A, Class B, Class C and
Class Y shares pursuant to Rule 18f-3.+
19 Powers of Attorney.+
- ------------------------
+Filed herewith.
1Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 2 to the Registrant's Registration Statement
(File No. 33-76894) as filed with the Securities and Exchange Commission (the
"SEC") on March 30, 1995 (Accession No. 0000921023-95-000008).
2Previously filed. Incorporated herein by reference from the exhibits
filed with Post-Effective Amendment No. 3 to the Registration Statement as filed
with the SEC on March 28, 1996 (Accession No. 0000921023-96-000009).
3Previously filed. Incorporated herein by reference from the exhibit
filed with Post-Effective Amendment No. 4 to the Registration Statement as filed
with the SEC on March 27, 1997 (Accession No. 0000921023-97-000010).
Item 25. Persons Controlled by or Under Common Control with Registrant
No person is controlled by the Registrant. A common control
relationship could exist from a management perspective because the Chairman and
President of the Registrant owns approximately 14% of the outstanding shares of
C-2
<PAGE>
The Pioneer Group, Inc. (PGI), the parent company of the Registrant's investment
adviser, and certain Trustees or officers of the Registrant (i) hold similar
positions with other investment companies advised by PGI and (ii) are directors
or officers of PGI and/or its direct or indirect subsidiaries. The following
lists all U.S. and the principal non-U.S. subsidiaries of PGI and those
registered investment companies with a common or similar Board of Trustees
advised by PGI.
OWNED PERCENT STATE/COUNTRY OF
COMPANY BY OF SHARES INCORPORATION
Pioneering Management Corp. (PMC) PGI 100% DE
Pioneer Funds Distributor, Inc. (PFD) PMC 100% MA
Pioneer Explorer, Inc. (PEI) PMC 100% DE
Pioneer Fonds Marketing GmbH (GmbH) PFD 100% Germany
Pioneer Forest, Inc. (PFI) PGI 100% DE
CJSC "Forest-Starma" (Forest-Starma) PFI 95% Russia
Pioneer Metals and Technology, Inc. (PMT) PGI 100% DE
Pioneer Capital Corp. (PCC) PGI 100% DE
Pioneer SBIC Corp. PCC 100% MA
Pioneer Real Estate Advisors, Inc. (PREA) PGI 100% DE
Pioneer Management (Ireland) Ltd. (PMIL) PGI 100% Ireland
Pioneer Plans Corporation (PPC) PGI 100% DE
PIOGlobal Corp. (PIOGlobal) PGI 100% DE
Pioneer Investments Corp. (PIC) PGI 100% MA
Pioneer Goldfields Holdings, Inc. (PGH) PGI 100% DE
Pioneer Goldfields Ltd. (PGL) PGH 100% Guernsey
Teberebie Goldfields Ltd. (TGL) PGL 90% Ghana
Pioneer Omega, Inc. (Omega) PGI 100% DE
Pioneer First Russia, Inc. (First Russia) Omega 81.65% DE
Pioneering Services Corp. (PSC) PGI 100% MA
Pioneer International Corp. (PIntl) PGI 100% DE
Pioneer First Polish Investment Fund
JSC, S.A. (First Polish) PIntl 100% Poland
Pioneer Czech Investment Company, A.S.
(Pioneer Czech) PIntl 100% Czech Republic
Registered investment companies that are parties to management contracts with
PMC:
FUNDS BUSINESS TRUST
Pioneer International Growth Fund MA
Pioneer World Equity Fund DE
Pioneer Europe Fund MA
Pioneer Emerging Markets Fund DE
Pioneer India Fund DE
C-3
<PAGE>
Pioneer Growth Trust MA
Pioneer Mid-Cap Fund DE
Pioneer Growth Shares DE
Pioneer Small Company Fund DE
Pioneer Independence Fund DE
Pioneer Fund DE
Pioneer II DE
Pioneer Real Estate Shares DE
Pioneer Short-Term Income Trust MA
Pioneer America Income Trust MA
Pioneer Bond Fund MA
Pioneer Balanced Fund DE
Pioneer Intermediate Tax-Free Fund MA
Pioneer Tax-Free Income Fund DE
Pioneer Money Market Trust DE
Pioneer Variable Contracts Trust DE
Pioneer Interest Shares DE
Pioneer Micro-Cap Fund DE
The following table lists John F. Cogan, Jr.'s positions with the
investment companies, PGI and principal direct or indirect PGI subsidiaries
referenced above and the Registrant's counsel.
TRUSTEE/
ENTITY CHAIRMAN PRESIDENT DIRECTOR OTHER
Pioneer mutual
funds X X X
PGL X X X
PGI X X X
PPC X X
PIC X X
PIntl X X
PMT X X
Omega X X
PIOGlobal X X
First Russia X X
PCC X
PSC X
PMIL X
PEI X
PFI X
PREA X
Forest-Starma X
PMC X X
PFD X X
TGL X X
C-4
<PAGE>
First Polish Chairman of Supervisory
Board
GmbH Chairman of Supervisory
Board
Pioneer Czech Chairman of Supervisory
Board
Hale and Dorr LLP Partner
Item 26. Number of Holders of Securities
(1)
Title of Class (2)
Shares of Beneficial Interest Number of Record Holders
(without par value) as of February 28, 1998
Class A shares 10,466
Class B shares 6,873
Class C shares 1,041
Item 27. Indemnification
Except for the Agreement and Declaration of Trust (the "Declaration"),
dated March 23, 1994, establishing the Registrant as a business trust under
Delaware law, there is no contract, arrangement or statute under which any
Trustee, officer, underwriter or affiliated person of the Registrant is insured
or indemnified. The Declaration provides that no Trustee or officer will be
indemnified against any liability to which the Registrant would otherwise be
subject by reason of or for willful misfeasance, bad faith, gross negligence or
reckless disregard of such person's duties.
Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "1933 Act"), may be available to Trustees, officers
and controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the SEC
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
All of the information required by this item is set forth in the Form
ADV, as amended, of PMC, the Registrant's investment adviser. The following
sections of such Form ADV are incorporated herein by reference:
(a) Items 1 and 2 of Part 2; and
(b) Section 6, Business Background, of each Schedule D.
Item 29. Principal Underwriters
(a) See Item 25 above.
(b) Directors and officers of PFD:
C-5
<PAGE>
POSITIONS AND OFFICES WITH POSITIONS AND OFFICES WITH
NAME UNDERWRITER REGISTRANT
John F. Cogan, Jr. Director and Chairman Chairman of the Board,
President and Trustee
Robert L. Butler Director and President None
David D. Tripple Director Executive Vice President and
Trustee
Steven M. Graziano Senior Vice President None
Stephen W. Long Senior Vice President None
Barry G. Knight Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Elizabeth B. Bennett Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy L. Supovitz Vice President None
Mary Kleeman Vice President None
Steven R. Berke Assistant Vice President None
Steven H. Forss Assistant Vice President None
Mary Sue Hoban Assistant Vice President None
Debra A. Levine Assistant Vice President None
Junior Roy McFarland Assistant Vice President None
Marie E. Moynihan Assistant Vice President None
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
The principal business address of each of these individuals is 60 State Street,
Boston, Massachusetts 02109-1820.
(c) Not applicable.
C-6
<PAGE>
Item 30. Location of Accounts and Records
The accounts and records are maintained at the Registrant's office at
60 State Street, Boston, Massachusetts; contact the Treasurer.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to deliver or cause to be delivered with
the Prospectus, to each person to whom the Prospectus is sent or
given, a copy of the Registrant's report to shareholders furnished
pursuant to and meeting the requirements of Rule 30d-1 under the
Investment Company Act of 1940, as amended, from which the
specified information is incorporated by reference, unless such
person currently holds securities of the Registrant and otherwise
has received a copy of such report, in which case the Registrant
shall state in the Prospectus that it will furnish, without charge,
a copy of such report on request, and the name, address and
telephone number of the person to whom such a request should be
directed.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment No. 6 to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment No. 6 to its Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Boston and Commonwealth of Massachusetts, on the 9th
day of April, 1998.
PIONEER EMERGING MARKETS FUND
By: /s/ Joseph P. Barri
Joseph P. Barri
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 6 to the Registrant's Registration Statement has
been signed below by the following persons in the capacities and on the date
indicated:
Signature Title
John F. Cogan, Jr.* Chairman of the Board )
John F. Cogan, Jr. and President )
(Principal Executive )
Officer) )
)
)
/s/ William H. Keough Chief Financial Officer )
William H. Keough and Treasurer (Principal )
Financial and Accounting )
Officer) )
)
)
Trustees: )
)
)
Mary K. Bush* )
Mary K. Bush )
)
)
John F. Cogan, Jr.* )
John F. Cogan, Jr. )
)
)
Richard H. Egdahl* )
Richard H. Egdahl, M.D., Ph.D. )
<PAGE>
)
)
Margaret B. W. Graham* )
Margaret B. W. Graham )
)
)
John W. Kendrick* )
John W. Kendrick )
)
)
Marguerite A. Piret* )
Marguerite A. Piret )
)
)
David D. Tripple* )
David D. Tripple )
)
)
Stephen K. West* )
Stephen K. West )
)
)
John Winthrop* )
John Winthrop )
)
)
*By: /s/ Joseph P. Barri Dated: April 9, 1998)
Joseph P. Barri
Attorney-in-fact
<PAGE>
Exhibit Index
Exhibit
Number Document Title
1.5 Establishment and Designation of Class A, Class B, Class
C and Class Y shares of Beneficial Interest
11. Consent of Independent Public Accountants
17. Financial Data Schedules
18. Multiple Class Plan for Class A, Class B, Class C and
Class Y shares pursuant to Rule 18f-3
19. Powers of Attorney
PIONEER EMERGING MARKETS FUND
Establishment and Designation
of
Class A Shares, Class B Shares, Class C Shares and Class Y Shares
of Beneficial Interest of
Pioneer Emerging Markets Fund
The undersigned, being a majority of the Trustees of Pioneer Emerging
Markets Fund, a Delaware business trust (the "Fund"), acting pursuant to
Article V, Section 1 of the Agreement and Declaration of Trust dated March 23,
1994 of the Fund (the "Declaration"), do hereby divide the shares of beneficial
interest of the Fund (the "Shares") to create four classes of Shares of the Fund
as follows:
1. The four classes of Shares established and designated hereby are "Class A
Shares," "Class B Shares," "Class C Shares" and "Class Y Shares,"
respectively.
2. Class A Shares, Class B Shares, Class C Shares and Class Y Shares shall
each be entitled to all of the rights and preferences accorded to Shares
under the Declaration.
3. The purchase price of Class A Shares, Class B Shares, Class C Shares and
Class Y Shares, the method of determining the net asset value of Class A
Shares, Class B Shares, Class C Shares and Class Y Shares and the relative
dividend rights of holders of Class A Shares, Class B Shares, Class C
Shares and Class Y Shares shall be established by the Trustees of the Trust
in accordance with the provisions of the Declaration and shall be set forth
in the Trust's Registration Statement on Form N-1A under the Securities Act
of 1933 and/or the Investment Company Act of 1940, as amended and as in
effect at the time of issuing such Shares.
4. The Trustees, acting in their sole discretion, may determine that any
Shares of the Fund issued are Class A Shares, Class B Shares, Class C
Shares, Class Y Shares or Shares of any other class of the Fund hereinafter
established and designated by the Trustees.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument this 1st
day of July, 1996.
/s/ John F. Cogan, Jr. /s/ Marguerite A. Piret
John F. Cogan, Jr. Marguerite A. Piret
as Trustee and not individually as Trustee and not individually
975 Memorial Drive, #802 162 Washington Street
Cambridge, MA 02138 Belmont, MA 02178
/s/ Mary K. Bush /s/ David D. Tripple
Mary K. Bush David D. Tripple
as Trustee and not individually as Trustee and not individually
Health Policy Institute 6 Woodbine Road
53 Bay State Road Belmont, MA 02178
Boston, MA 02215
/s/ Richard H. Egdahl /s/ Stephen K. West
Richard H. Egdahl, M.D. Stephen K. West, Esq.
as Trustee and not individually as Trustee and not individually
Health Policy Institute Sullivan & Cromwell
53 Bay State Road 125 Board Street
Boston, MA 02215 New York, NY 10004
/s/ Margaret B.W. Graham /s/ John Winthrop
Margaret B.W. Graham John Winthrop
as Trustee and not individually as Trustee and not individually
The Keep One Adgers Wharf
P.O. Box 110 Charlestown, SC 29401
Little Deer Isle, ME 04650
/s/ John W. Kendrick
John W. Kendrick
as Trustee and not individually
6363 Waterway Drive
Falls Church, VA 22044
ARTHUR ANDERSEN LLP
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 5, 1998
for Pioneer Emerging Markets Fund and to all references to our firm included
in or made a part of Post-Effective Amendment No. 6 and Amendment No. 8
to registration statement file Nos. 33-76894 and 811-08448, respectively.
/s/ Arthur Andersen LLP
Boston, Massachusetts
April 9, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
ON FORM N-SAR DATED NOVEMBER 30, 1997 FOR PIONEER EMERGING MARKETS FUND AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000921023
<NAME> PIONEER EMERGING MARKETS FUND
<SERIES>
<NUMBER> 001
<NAME> PIONEER EMERGING MARKETS FUND CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 187547771
<INVESTMENTS-AT-VALUE> 172780414
<RECEIVABLES> 581954
<ASSETS-OTHER> 6560
<OTHER-ITEMS-ASSETS> 14670
<TOTAL-ASSETS> 173383598
<PAYABLE-FOR-SECURITIES> 1526643
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1280264
<TOTAL-LIABILITIES> 2806907
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 168833518
<SHARES-COMMON-STOCK> 6077698
<SHARES-COMMON-PRIOR> 4049512
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 16489183
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (14746010)
<NET-ASSETS> 170576691
<DIVIDEND-INCOME> 2466528
<INTEREST-INCOME> 466325
<OTHER-INCOME> 0
<EXPENSES-NET> 4038330
<NET-INVESTMENT-INCOME> (1105477)
<REALIZED-GAINS-CURRENT> 17679306
<APPREC-INCREASE-CURRENT> (9420658)
<NET-CHANGE-FROM-OPS> 7153171
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 3748664
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5408096
<NUMBER-OF-SHARES-REDEEMED> 3627475
<SHARES-REINVESTED> 247565
<NET-CHANGE-IN-ASSETS> 68652652
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 6826288
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1997347
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4127246
<AVERAGE-NET-ASSETS> 83742534
<PER-SHARE-NAV-BEGIN> 13.94
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> 1.40
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .87
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.42
<EXPENSE-RATIO> 2.23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
ON FORM N-SAR DATED NOVEMBER 30, 1997 FOR PIONEER EMERGING MARKETS FUND AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000921023
<NAME> PIONEER EMERGING MARKETS FUND
<SERIES>
<NUMBER> 002
<NAME> PIONEER EMERGING MARKETS FUND CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 187547771
<INVESTMENTS-AT-VALUE> 172780414
<RECEIVABLES> 581954
<ASSETS-OTHER> 6560
<OTHER-ITEMS-ASSETS> 14670
<TOTAL-ASSETS> 173383598
<PAYABLE-FOR-SECURITIES> 1526643
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1280264
<TOTAL-LIABILITIES> 2806907
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 168833518
<SHARES-COMMON-STOCK> 4984824
<SHARES-COMMON-PRIOR> 2904984
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 16489183
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (14746010)
<NET-ASSETS> 170576691
<DIVIDEND-INCOME> 2466528
<INTEREST-INCOME> 466325
<OTHER-INCOME> 0
<EXPENSES-NET> 4038330
<NET-INVESTMENT-INCOME> (1105477)
<REALIZED-GAINS-CURRENT> 17679306
<APPREC-INCREASE-CURRENT> (9420658)
<NET-CHANGE-FROM-OPS> 7153171
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 2760159
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2888466
<NUMBER-OF-SHARES-REDEEMED> 960952
<SHARES-REINVESTED> 152326
<NET-CHANGE-IN-ASSETS> 68652652
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 6826288
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1997347
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4127246
<AVERAGE-NET-ASSETS> 65018983
<PER-SHARE-NAV-BEGIN> 13.73
<PER-SHARE-NII> (.14)
<PER-SHARE-GAIN-APPREC> 1.37
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .87
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.09
<EXPENSE-RATIO> 2.94
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
ON FORM N-SAR DATED NOVEMBER 30, 1997 FOR PIONEER EMERGING MARKETS FUND AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000921023
<NAME> PIONEER EMERGING MARKETS FUND
<SERIES>
<NUMBER> 003
<NAME> PIONEER EMERGING MARKETS FUND CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 187547771
<INVESTMENTS-AT-VALUE> 172780414
<RECEIVABLES> 581954
<ASSETS-OTHER> 6560
<OTHER-ITEMS-ASSETS> 14670
<TOTAL-ASSETS> 173383598
<PAYABLE-FOR-SECURITIES> 1526643
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1280264
<TOTAL-LIABILITIES> 2806907
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 168833518
<SHARES-COMMON-STOCK> 903923
<SHARES-COMMON-PRIOR> 405469
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 16489183
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (14746010)
<NET-ASSETS> 170576691
<DIVIDEND-INCOME> 2466528
<INTEREST-INCOME> 466325
<OTHER-INCOME> 0
<EXPENSES-NET> 4038330
<NET-INVESTMENT-INCOME> (1105477)
<REALIZED-GAINS-CURRENT> 17679306
<APPREC-INCREASE-CURRENT> (9420658)
<NET-CHANGE-FROM-OPS> 7153171
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 402111
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 714579
<NUMBER-OF-SHARES-REDEEMED> 227379
<SHARES-REINVESTED> 11254
<NET-CHANGE-IN-ASSETS> 68652652
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 6826288
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1997347
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4127246
<AVERAGE-NET-ASSETS> 11219847
<PER-SHARE-NAV-BEGIN> 13.73
<PER-SHARE-NII> (.13)
<PER-SHARE-GAIN-APPREC> 1.35
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .87
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.08
<EXPENSE-RATIO> 2.89
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
PIONEER EMERGING MARKETS FUND
ON BEHALF OF
PIONEER EMERGING MARKETS FUND
MULTIPLE CLASS PLAN PURSUANT TO RULE 18F-3
CLASS A SHARES, CLASS B SHARES, CLASS C SHARES AND CLASS Y SHARES
APRIL 9, 1998
Each class of shares of Pioneer Emerging Markets Fund (the "Fund"), a
series of Pioneer Emerging Markets Fund (the "Trust"), will have the same
relative rights and privileges and be subject to the same sales charges, fees
and expenses, except as set forth below. The Board of Trustees may determine in
the future that other distribution arrangements, allocations of expenses
(whether ordinary or extraordinary) or services to be provided to a class of
shares are appropriate and amend this Plan accordingly without the approval of
shareholders of any class. Except as set forth in the Fund's prospectus, shares
may be exchanged only for shares of the same class of another Pioneer mutual
fund.
ARTICLE I. CLASS A SHARES
Class A Shares are sold at net asset value and subject to the initial sales
charge schedule or contingent deferred sales charge ("CDSC") and minimum
purchase requirements as set forth in the Fund's prospectus. Class A Shares
shall be entitled to the shareholder services set forth from time to time in the
Fund's prospectus with respect to Class A Shares. Class A Shares are subject to
fees calculated as a stated percentage of the net assets attributable to Class A
shares under the Fund's Class A Rule 12b-1 Distribution Plan as set forth in
such Distribution Plan. The Class A Shareholders have exclusive voting rights,
if any, with respect to the Class A Rule 12b-1 Distribution Plan. Transfer
agency fees are allocated to Class A Shares on a per account basis except to the
extent, if any, such an allocation would cause the Fund to fail to satisfy any
requirement necessary to obtain or rely on a private letter ruling from the
Internal Revenue Service ("IRS") relating to the issuance of multiple classes of
shares. Class A shares shall bear the costs and expenses associated with
conducting a shareholder meeting for matters relating to Class A shares.
ARTICLE II. CLASS B SHARES
Class B Shares are sold at net asset value per share without the imposition
of an initial sales charge. However, Class B
<PAGE>
shares redeemed within a specified number of years of purchase will be
subject to a CDSC as set forth in the Fund's prospectus. Class B Shares are sold
subject to the minimum purchase requirements set forth in the Fund's prospectus.
Class B Shares shall be entitled to the shareholder services set forth from time
to time in the Fund's prospectus with respect to Class B Shares. Class B Shares
are subject to fees calculated as a stated percentage of the net assets
attributable to Class B shares under the Class B Rule 12b-1 Distribution Plan as
set forth in such Distribution Plan. The Class B Shareholders of the Fund have
exclusive voting rights, if any, with respect to the Fund's Class B Rule 12b-1
Distribution Plan. Transfer agency fees are allocated to Class B Shares on a per
account basis except to the extent, if any, such an allocation would cause the
Fund to fail to satisfy any requirement necessary to obtain or rely on a private
letter ruling from the IRS relating to the issuance of multiple classes of
shares. Class B shares shall bear the costs and expenses associated with
conducting a shareholder meeting for matters relating to Class B shares.
Class B Shares will automatically convert to Class A Shares of the Fund at
the end of a specified number of years after the initial purchase date of
Class B shares, except as provided in the Fund's prospectus. Such conversion
will occur at the relative net asset value per share of each class without the
imposition of any sales charge, fee or other charge. The conversion of Class B
Shares to Class A Shares may be suspended if it is determined that the
conversion constitutes or is likely to constitute a taxable event under federal
income tax law.
The initial purchase date for Class B shares acquired through
(i) reinvestment of dividends on Class B Shares or (ii) exchange from another
Pioneer mutual fund will be deemed to be the date on which the original Class B
shares were purchased.
ARTICLE III. CLASS C SHARES
Class C Shares are sold at net asset value per share without the imposition
of an initial sales charge. However, Class C shares redeemed within one year of
purchase will be subject to a CDSC as set forth in the Fund's prospectus.
Class C Shares are sold subject to the minimum purchase requirements set forth
in the Fund's prospectus. Class C Shares shall be entitled to the shareholder
services set forth from time to time in the Fund's prospectus with respect to
Class C Shares. Class C Shares are subject to fees calculated as a stated
percentage of the net assets attributable to Class C shares under the Class C
Rule 12b-1 Distribution Plan as set forth in such Distribution Plan. The Class C
Shareholders of the Fund have exclusive voting rights, if any, with respect to
the Fund's Class C Rule 12b-1 Distribution Plan. Transfer agency fees are
allocated to Class C Shares on a
-2-
<PAGE>
per account basis except to the extent, if any, such an allocation would
cause the Fund to fail to satisfy any requirement necessary to obtain or rely on
a private letter ruling from the IRS relating to the issuance of multiple
classes of shares. Class C shares shall bear the costs and expenses associated
with conducting a shareholder meeting for matters relating to Class C shares.
The initial purchase date for Class C shares acquired through
(i) reinvestment of dividends on Class C Shares or (ii) exchange from another
Pioneer mutual fund will be deemed to be the date on which the original Class C
shares were purchased.
ARTICLE IV. CLASS Y SHARES
Class Y Shares are sold at net asset value per share without the imposition
of an initial sales charge. Class Y Shares are not subject to a CDSC upon
redemption regardless of the length of the period of time such shares are held.
Class Y Shares are sold subject to the minimum purchase requirements set forth
in the Fund's prospectus. Class Y Shares shall be entitled to the shareholder
services set forth from time to time in the Fund's prospectus with respect to
Class Y Shares. Class Y Shares are not subject to fees payable under a
distribution or other plan adopted to Rule 12b-1. The Class Y Shareholders of
the Fund have exclusive voting rights, if any, with respect to the Fund's
possible future adoption of a Class Y Rule 12b-1 Distribution Plan. Transfer
agency fees are allocated to Class Y Shares on a per account basis except to the
extent, if any, such an allocation would cause the Fund to fail to satisfy any
requirement necessary to obtain or rely on a private letter ruling from the IRS
relating to the issuance of multiple classes of shares. Class Y shares shall
bear the costs and expenses associated with conducting a shareholder meeting for
matters relating to Class Y shares.
The initial purchase date for Class Y shares acquired through
(i) reinvestment of dividends on Class Y Shares or (ii) exchange from another
Pioneer mutual fund will be deemed to be the date on which the original Class Y
shares were purchased.
ARTICLE V. APPROVAL BY BOARD OF TRUSTEES
This Plan shall not take effect until it has been approved by the vote of a
majority (or whatever greater percentage may, from time to time, be required
under Rule 18f-3 under the Investment Company Act of 1940, as amended (the
"Act")) of (a) all of the Trustees of the Trust, on behalf of the Fund, and (b)
those of the Trustees who are not "interested persons" of the Trust, as such
term may be from time to time defined under the Act.
-3-
<PAGE>
ARTICLE VI. AMENDMENTS
No material amendment to the Plan shall be effective unless it is approved
by the Board of Trustees in the same manner as is provided for approval of this
Plan in Article V.
-4-
POWER OF ATTORNEY
We, the undersigned Trustees of Pioneer Emerging Markets Fund, a Delaware
business trust, do hereby severally constitute and appoint John F. Cogan, Jr.,
David D. Tripple, and Joseph P. Barri, and each of them acting singly, to be our
true, sufficient and lawful attorneys, with full power to each of them, and each
of them acting singly, to sign for each of us, in the name of each of us and in
the capacity as trustee, any and all amendments to the Registration Statement on
Form N-1A to be filed by Pioneer Emerging Markets Fund under the Investment
Company Act of 1940, as amended (the "1940 Act"), and under the Securities Act
of 1933, as amended (the "1933 Act"), with the respect to the offering of its
shares of beneficial interest and any and all other documents and papers
relating thereto, and generally to do all such things in the name of each of us
and on behalf of each of us in the capacity as trustee to enable Pioneer
Emerging Markets Fund to comply with the 1940 Act and the 1933 Act, and all
requirements of the Securities and Exchange Commission thereunder, hereby
ratifying and confirming the signature of each of us as it may be signed by said
attorneys or each of them to any and all amendments to said Registration
Statement.
IN WITNESS WHEREOF, we have hereunder set our hands on this Instrument the
16th day of June, 1994.
/s/ John W.Kendrick /s/ Marguerite A. Piret
John W. Kendrick, Trustee Marguerite A. Piret, Trustee
/s/ Richard H. Egdahl /s/ Stephen K. West
Richard H. Egdahl, M.D. , Trustee Stephen K. West, Trustee
/s/ Margaret B.W. Graham /s/ John Winthrop
Margaret B.W. Graham, Trustee John Winthrop, Trustee
<PAGE>
POWER OF ATTORNEY
The undersigned officer and Trustee of Pioneer Emerging Markets Fund, a
Delaware business trust, does hereby severally constitute and appoint John F.
Cogan, Jr. and Joseph P. Barri, and each of them acting singly, to be my true,
sufficient and lawful attorneys, with full power to each of them, and each of
them acting singly, to sign for me, in my name and in the capacities indicated
below, any and all amendments to the Registration Statement on Form N-1A to be
filed by Pioneer Emerging Markets Fund under the Investment Company Act of 1940,
as amended (the "1940 Act"), and under the Securities Act of 1933, as amended
(the "1933 Act"), with respect to the offering of its shares of beneficial
interest and any and all other documents and papers relating thereto, and
generally to do all such things in my name and on my behalf in the capacities
indicated to enable Pioneer Emerging Markets Fund to comply with the 1940 Act
and the 1933 Act, and all requirements of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
said attorneys or each of them to any and all amendments to said Registration
Statement.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument the
25[th] day of March, 1994.
/s/ David D. Tripple
David D. Tripple, Trustee and
Executive Vice President
<PAGE>
POWER OF ATTORNEY
The undersigned officer of Pioneer Emerging Markets Fund, a Delaware
business trust, does hereby severally constitute and appoint John F. Cogan, Jr.,
David D. Tripple and Joseph P. Barri, and each of them acting singly, to be my
true, sufficient and lawful attorneys, with full power to each of them, and each
of them acting singly, to sign for me, in my name and in the capacities
indicated below, any and all amendments to the Registration Statement on Form
N-1A to be filed by Pioneer Emerging Markets Fund under the Investment Company
Act of 1940, as amended (the "1940 Act"), and under the Securities Act of 1933,
as amended (the "1933 Act"), with respect to the offering of its shares of
beneficial interest and any and all other documents and papers relating thereto,
and generally to do all such things in my name and on my behalf in the
capacities indicated to enable Pioneer Emerging Markets Fund to comply with the
1940 Act and the 1933 Act, and all requirements of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by said attorneys or each of them to any and all amendments to said
Registration Statement.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument the
25[th] day of March, 1994.
/s/ William H. Keough
William H. Keough
Chief Financial Officer and Treasurer
<PAGE>
POWER OF ATTORNEY
The undersigned officer and Trustee of Pioneer Emerging Markets Fund, a
Delaware business trust, does hereby severally constitute and appoint David D.
Tripple and Joseph P. Barri, and each of them acting singly, to be my true,
sufficient and lawful attorneys, with full power to each of them, and each of
them acting singly, to sign for me, in my name and in the capacities indicated
below, any and all amendments to the Registration Statement on Form N-1A to be
filed by Pioneer Emerging Markets Fund under the Investment Company Act of 1940,
as amended (the "1940 Act"), and under the Securities Act of 1933, as amended
(the "1933 Act"), with respect to the offering of its shares of beneficial
interest and any and all other documents and papers relating thereto, and
generally to do all such things in my name and on my behalf in the capacities
indicated to enable Pioneer Emerging Markets Fund to comply with the 1940 Act
and the 1933 Act, and all requirements of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
said attorneys or each of them to any and all amendments to said Registration
Statement.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument the
25 day of March, 1994.
/s/ John F. Cogan, Jr.
John F. Cogan, Jr., Chairman,
Trustee and President
<PAGE>
PIONEER EMERGING MARKETS FUND
PIONEER EUROPE FUND
PIONEER GROWTH TRUST
PIONEER INDIA FUND
PIONEER INTERNATIONAL GROWTH FUND
PIONEER WORLD EQUITY FUND
PIONEER GROWTH SHARES
PIONEER MID-CAP FUND
PIONEER SMALL COMPANY FUND
PIONEER MICRO-CAP FUND
PIONEER BALANCED FUND
PIONEER FUND
PIONEER II
PIONEER REAL ESTATE SHARES
PIONEER AMERICA INCOME TRUST
PIONEER BOND FUND
PIONEER SHORT TERM INCOME TRUST
PIONEER INTERMEDIATE TAX-FREE FUND
PIONEER MONEY MARKET TRUST
POWER OF ATTORNEY
Dated October 7, 1997
I, the undersigned Trustee of each of the above-listed registered
investment companies (each a "Fund"), each a Delaware or a Massachusetts
business trust, do hereby constitute and appoint John F. Cogan, Jr., David D.
Tripple, and Joseph P. Barri, and each of them acting singly, to be my true,
sufficient and lawful attorneys, with full power to each of them, and each of
them acting singly, to sign for me, in my name and in my capacity as trustee,
any and all amendments to the Registration Statement on Form N-1A to be filed by
each Fund under the Investment Company Act of 1940, as amended (the "1940 Act"),
and under the Securities Act of 1933, as amended (the "1933 Act"), with respect
to the offering of its shares of beneficial interest and any and all other
documents and papers relating thereto, and generally to do all such things in my
name and on my behalf in my capacity as trustee to enable each Fund to comply
with the 1940 Act and the 1933 Act, and all requirements of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by said attorneys or each of them to any and all amendments to
said Registration Statement.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument as
of the date first written above.
/s/ Mary K. Bush
Mary K. Bush, Trustee
