File No. 33-77472
File No. 811-8468
As filed with the Securities and Exchange Commission
on February 28, 1997.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X_/
Post-Effective Amendment No. 4 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT ____
OF 1940 / X /
Amendment No. 6 / X /
(Check appropriate box or boxes)
PIONEER INDIA FUND
(Exact name of registrant as specified in Charter)
60 State Street, Boston, Massachusetts 02109
(Address of principal executive office) Zip Code
(617) 742-7825
(Registrant's Telephone Number, including Area Code)
Joseph P. Barri, Hale and Dorr LLP, 60 State Street, Boston, MA 02109
(Name and address of agent for service)
It is proposed that this filing will become effective (check appropriate box):
x on February 28, 1997 pursuant to Rule 485(b)
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) of the Investment Company Act
of 1940. Registrant filed a Rule 24f-2 Notice for its fiscal year ended October
31, 1996 on December 27, 1996.
<PAGE>
PIONEER INDIA FUND
Cross-Reference Sheet Showing Location in Prospectus and
Statement of Additional Information of Information
Required by Items of the Registration Form
Location in
Prospectus or
Statement of
Additional
Form N-1A Item Number and Caption 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 - Investment
Objective and Policies;
Management of the Fund;
Fund Share Alternatives;
Share Price; How to Buy
Fund Shares; How to Sell
Fund Shares; How to
Exchange Fund Shares; The
Fund
5. Management of the Fund Prospectus - Management
of the Fund
6. Capital Stock and Other Securities Prospectus - Investment
Objective and Policies;
Fund Share Alternatives;
Share Price; How to Buy
Fund Shares; How to Sell
Fund Shares; How to
Exchange Fund Shares; The
Fund
<PAGE>
Location in
Prospectus or
Statement of
Additional
Form N-1A Item Number and Caption Information
- --------------------------------- -----------
7. Purchase of Securities Being
Offered Prospectus - Fund Share
Alternatives; Share
Price; How to Buy Fund
Shares; How to Sell Fund
Shares; How to Exchange
Fund Shares; The Fund;
Shareholder Services;
Distribution Plans
8. Redemption or Repurchase Prospectus - Fund Share
Alternatives; Share
Price; How to Sell Fund
Shares; How to Exchange
Fund Shares; The Fund;
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 - Cover Page;
Description of Shares
13. Investment Objectives and Policies Statement of Additional
Information - Investment
Policies, Restrictions
and Risk Factors
14. Management of the Fund Statement of Additional
Information - Management
of the Fund; Investment
Advisers
<PAGE>
Location in
Prospectus or
Statement of
Additional
Form N-1A Item Number and Caption Information
- --------------------------------- -----------
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
Advisers; Principal
Underwriter; Distribution
Plans; Shareholder
Servicing/Transfer Agent;
Custodian; Independent
Public Accountant
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
Intention; Systematic
Withdrawal Plan;
Determination of Net
Asset Value
20. Tax Status Statement of Additional
Information - Tax Status
and Dividends
<PAGE>
Location in
Prospectus or
Statement of
Additional
Form N-1A Item Number and Caption Information
- --------------------------------- -----------
21. Underwriters Statement of Additional
Information - Principal
Underwriter; Distribution
Plans
22. Calculation of Performance Data Statement of Additional
Information - Investment
Results
23. Financial Statements Statement of Additional
Information - Financial
Statements
<PAGE>
[Pioneer logo]
Pioneer India Fund
Class A, Class B and Class C Shares
Prospectus
February 28, 1997
Pioneer India Fund (the "Fund") seeks long-term growth of capital by
investing in a portfolio consisting primarily of equity securities of
companies in India. 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 long-
term capital growth. There is no assurance that the Fund will achieve its
investment objective.
Pioneering Management Corporation ("PMC") is the Fund's investment
manager. ITI Pioneer AMC Ltd. (the "Indian Adviser") is the Fund's investment
adviser in India and, subject to PMC's supervision, is responsible for
managing the Fund's investments in the Indian securities markets. The Indian
Adviser is a joint venture between PMC and Investment Trust of India Limited
("ITI"), a corporation organized under the laws of India. ITI was established
in 1946 and is one of India's leading providers of financial services. The
Indian Adviser was the first institution to establish locally-registered
private sector mutual funds in India.
Because of economic and political developments in India, both PMC and the
Indian Adviser believe that India's economy has significant potential to
experience growth in the next several years. For these reasons, PMC and the
Indian Adviser also believe that the equity securities of many companies in
India offer significant potential for long-term capital growth.
Investments in India's securities markets entail significant risks in
addition to the risks customarily associated with investing in United States
("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--Risk Factors" for a
discussion of these risks. Because the Fund invests primarily in securities
of companies in India, the Fund is not intended to be a complete investment
program.
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 are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other
government agency. Shares of the Fund involve investment risks, including the
possible loss of some or all of the principal investment.
This Prospectus provides information about the Fund that you should know
before investing. Please read and retain it for your future reference. More
information about the Fund is included in the Statement of Additional
Information also dated February 28, 1997, which is incorporated in this
Prospectus by reference. A copy of the Statement of Additional Information
may be obtained free of charge by calling Shareholder Services at
1-800-225-6292 or by written request to the Fund at 60 State Street, Boston,
Massachusetts 02109. Additional information about the Fund has been filed
with the Securities and Exchange Commission (the "SEC") and is available upon
request and without charge.
TABLE OF CONTENTS PAGE
--------- ------------------------------------------------------ --------
I. EXPENSE INFORMATION 2
II. FINANCIAL HIGHLIGHTS 3
III. INVESTMENT OBJECTIVE AND POLICIES 4
IV. MANAGEMENT OF THE FUND 9
V. FUND SHARE ALTERNATIVES 10
VI. SHARE PRICE 11
VII. HOW TO BUY FUND SHARES 11
VIII. HOW TO SELL FUND SHARES 15
IX. HOW TO EXCHANGE FUND SHARES 16
X. DISTRIBUTION PLANS 17
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION 17
XII. SHAREHOLDER SERVICES 18
Account and Confirmation Statements 18
Additional Investments 19
Automatic Investment Plans 19
Financial Reports and Tax Information 19
Distribution Options 19
Directed Dividends 19
Direct Deposit 19
Voluntary Tax Withholding 19
Telephone Transactions and Related Liabilities 19
FactFone(SM) 20
Retirement Plans 20
Telecommunications Device for the Deaf (TDD) 20
Systematic Withdrawal Plans 20
Reinstatement Privilege (Class A Shares Only) 20
XIII. THE FUND 20
XIV. INVESTMENT RESULTS 21
APPENDIX A: India 21
APPENDIX B: Certain Investment Practices 24
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
I. EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses
that you, as a shareholder, will bear directly or indirectly when you invest
in the Fund. The table reflects annual operating expenses based on actual
expenses of Class A and Class B shares for the period ended October 31, 1995.
For Class C shares, operating expenses are based on expenses that would have
been incurred if Class C shares had been outstanding for the entire fiscal
year ended October 31, 1996.
<TABLE>
<CAPTION>
Class A Class B Class C+
---------- ---------- ------------
<S> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Initial Sales Charge on Purchases (as a
percentage of offering price) 5.75%(1) None None
Maximum Sales Charge on Reinvestment of Dividends None None None
Maximum Deferred Sales Charge (as a percentage of
purchase price or redemption proceeds, as
applicable) None(1) 4.00% 1.00%
Redemption fee2 None None None
Exchange fee None None None
Annual Operating Expenses
(as a percentage of average net assets):
Management fee (after fee reduction)3 0.00% 0.00% 0.00%
12b-1 fees 0.25% 1.00% 1.00%
Other Expenses (including transfer agent fee,
custodian fees and accounting and printing
expenses) (after expense reduction)3 2.00% 2.13% 2.06%
========== ========== ============
Total Operating Expenses
(after fee and expense reductions)3 2.25% 3.13% 3.06%
========== ========== ============
</TABLE>
+ Class C shares were first offered on January 31, 1996.
1 Purchases of $1 million or more and purchases by participants in certain
group plans are not subject to an initial sales charge but may be subject
to a contingent deferred sales charge ("CDSC") as further described in "How
to Sell Fund Shares."
2 Separate fees (currently $10 and $20, respectively) apply to domestic and
international wire transfers of redemption proceeds.
3 PMC has agreed not to impose all or a portion of its management fee and to
make other arrangements, if necessary, to limit the Class A share operating
expenses of the Fund to 2.25% of the Fund's average daily net assets
attributable to Class A shares. The portion of Fund-wide expenses
attributable to Class B and Class C shares will be reduced only to the
extent such expenses were reduced for the Class A shares of the Fund. This
agreement is voluntary and temporary and may be revised or terminated by
PMC at any time.
Class A Class B Class C
-------- -------- ---------
Expenses Absent Fee and Expense Reductions
Management Fee 1.25% 1.25% 1.25%
Other Expenses 2.79% 2.98% 2.38%
Total Operating Expenses 4.29% 5.23% 4.63%
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.
One Year Three Years Five Years Ten Years
--------- ------------ ----------- -----------
Class A Shares $79 $124 $171 $301
Class B Shares
--Assuming complete
redemption at end
of period $72 $127 $184 $324
--Assuming no
redemption $32 $ 97 $164 $324
Class C shares**
--Assuming
complete
redemption at
end of period $41 $ 95 $161 $337
--Assuming no
redemption $31 $ 95 $161 $337
*Class B shares convert to Class A shares eight years after purchase;
therefore, Class A share expenses are used after year eight.
**Class C shares redeemed during the first year after purchase are subject to
a 1% CDSC.
The example is designed for information purposes only, and should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and return vary from year to year and may be higher or lower than
those shown.
For further information regarding management fees, 12b-1 fees and other
expenses of the Fund, see "Management of the Fund," "Distribution Plans" and
"How to Buy Fund Shares" in this Prospectus and "Management of the Fund,"
"Principal Underwriter" and "Distribution Plans" in the Statement of
Additional Information. The Fund's payment of a 12b-1 fee may result in
long-term shareholders indirectly paying more than the economic equivalent of
the maximum initial sales charge permitted under the Conduct Rules of the
National Association of Securities Dealers, Inc. ("NASD").
The maximum initial sales charge is reduced on purchases of specified
larger amounts of Class A shares and the value of shares owned in other
Pioneer mutual funds is taken into account in determining the applicable
initial sales charge. See "How to Buy Fund Shares." No sales charge is
applied to exchanges of shares of the Fund for shares of other publicly
available Pioneer mutual funds. See "How to Exchange Fund Shares."
2
<PAGE>
II. FINANCIAL HIGHLIGHTS
The following information has been audited by Arthur Andersen LLP,
independent public accountants. Arthur Andersen LLP's report on the Fund's
audited financial statements as of October 31, 1996 appears in the Fund's
Annual Report which is incorporated by reference in the Fund's Statement of
Additional Information. The information listed below should be read in
conjunction with the financial statements contained in the Annual Report. The
Annual Report includes more information about the Fund's performance and is
available free of charge by calling Shareholder Services at 1-800-225-6292.
Pioneer India Fund
Selected Data for a Class A Share Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
June 23, 1994
For the Year Ended (Commencement
October 31, of Operations) to
1996 1995 October 31, 1994+
---------- ---------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 8.47 $ 11.28 $ 11.50
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.03 $ (0.01) $ 0.04
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions*** (1.57) (2.78) (0.26)
---------- ---------- ------------------
Net increase (decrease) from investment operations $ (1.54) $ (2.79) $ (0.22)
Distribution to shareholders from net investment income -- (0.02) --
Net increase (decrease) in net asset value (1.54) $ (2.81) $ (0.22)
---------- ---------- ------------------
Net asset value, end of period $ 6.93 $ 8.47 $ 11.28
========== ========== ==================
Total return* (18.18)% (24.78%) (1.91%)
Ratio of net operating expenses to average net assets 2.28%++ 2.28%+++ 2.25%**
Ratio of net investment income (loss) to average net assets 0.32%++ (0.14%)+++ 0.92%**
Portfolio turnover rate 64% 53% 109%**
Average commission rate paid per exchange listed
transaction++++ $0.0266
Net assets, end of period (in thousands) $12,388 $ 8,397 $11,445
Ratios assuming no reduction of fees or expenses by PMC:
Net operating expenses 4.29% 4.21% 6.57%**
Net investment income (loss) (1.69)% (2.07%) (3.40%)**
Ratios assuming a reduction of fees and expenses by PMC and
a reduction for fees paid indirectly:
Net operating expenses 2.25% 2.25%
Net investment income (loss) 0.35% (0.11%)
</TABLE>
Selected Data for a Class B Share Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
For the Year Ended June 23, 1994
October 31, (Commencement
---------------------- of Operations) to
1996 1995 October 31, 1994+
---------- ---------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 8.39 $ 11.24 $11.50
Increase (decrease) from investment operations:
Net investment income (loss) $ (0.03) $ (0.07) --
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions*** (1.56) (2.77) (0.26)
---------- ---------- ------------------
Net increase (decrease) from investment operations $ (1.59) $ (2.84) $(0.26)
Distribution to shareholders from net investment income -- (0.01) --
Net increase (decrease) in net asset value (1.59) $ (2.85) $(0.26)
---------- ---------- ------------------
Net asset value, end of period $ 6.80 $ 8.39 $11.24
========== ========== ==================
Total return* (18.95)% (25.31%) (2.26%)
Ratio of net operating expenses to average net assets 3.15%++ 3.01%+++ 3.21%**
Ratio of net investment income (loss) to average net assets (0.45)%++ (0.86%)+++ (0.01%)**
Portfolio turnover rate 64% 53% 109%**
Average commission rate paid per exchange listed
transaction++++ $0.0266
Net assets, end of period (in thousands) $ 8,275 $ 5,991 $6,084
Ratios assuming no reduction of fees or expenses by PMC:
Net operating expenses 5.23% 4.91% 7.50%**
Net investment income (loss) (2.53)% (2.76%) (4.28%)**
Ratios assuming a reduction of fees and expenses by PMC and
a reduction for fees paid indirectly:
Net operating expenses 3.13% 2.97%
Net investment income (loss) (0.43)% (0.82%)
</TABLE>
+The per share data presented above is based upon average shares and average
net assets outstanding for the period presented.
+++Ratios include fees paid indirectly.
++++Amount may fluctuate from period to period as a result of portfolio
transactions executed in different markets where trading practices and
commission rate structures may vary.
*Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of the period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
**Annualized
3
<PAGE>
Selected Data for a Class C Share Outstanding Throughout the Period(1):
<TABLE>
<CAPTION>
For the period January 31, 1996
through October 31, 1996
<S> <C>
Net asset value, beginning of period $ 7.85
Increase (decrease) from investment operations:
Net investment income (loss) $ (0.02)
Net realized and unrealized gain (loss) on investments
and other forward foreign currency related transactions (1.06)
--------------------------------
Net increase (decrease) in net asset value $ (1.08)
--------------------------------
Net asset value, end of period $ 6.77
================================
Distributions to shareholders from:
Net investment income (loss) --
Net realized gain (loss) --
Total return* (13.76)%
Ratio of net operating expenses to average net assets 3.12%**+
Ratio of net investment income (loss) to average net assets (0.42)%**+
Portfolio turnover rate 64%
Average commission rate paid per exchange listed transaction+++ $0.0266
Net assets, end of period (in thousands) $ 557
Ratios assuming no reduction of fees or expenses by PMC:
Net operating expenses 4.63%**
Net investment income (loss) (1.93)%**
Ratios assuming a reduction of fees and expenses by PMC and a
reduction for fees paid indirectly:
Net operating expenses 3.06%**
Net investment income (loss) (0.36)%**
</TABLE>
(1)Class C shares were first offered on January 31, 1996.
+Ratios include fees paid indirectly.
+++Amount may fluctuate from period to period as a result of portfolio
transactions executed in different markets where trading practices and
commission rate structures may vary.
*Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of the period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
**Annualized.
III. INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is long-term growth of capital. The Fund
pursues this objective by investing, under normal circumstances, at least 65%
of its total assets in equity securities of Indian Companies (including
Depositary Receipts as defined below). For purposes of its investment
policies, the Fund considers a company to be an "Indian Company" if it (i) is
organized under the laws of India, (ii) derives at least 50% of its revenues
from goods produced or sold, investments made, or services performed, in
India, or has at least 50% of its assets in India, or (iii) has securities
that are traded principally on any Indian stock exchange (including India's
Over the Counter Exchange).
The Fund may invest up to 35% of its total assets in (i) equity securities
of issuers (other than Indian Companies) which, in the judgment of PMC or the
Indian Adviser, may benefit from the Indian economy, (ii) debt securities
issued by Indian Companies or by the Government of India or its agencies or
instrumentalities, and (iii) short-term investments (as described below).
Equity securities in which the Fund may invest consist of common and
preferred stock (including convertible preferred stock); American, Global or
other types of depositary receipts (collectively, "Depositary Receipts");
convertible bonds, notes and debentures; shares of closed-end investment
companies; equity interests in trusts, partnerships, joint ventures or
similar enterprises; and common stock purchase warrants and rights.
Substantially all of the equity securities purchased by the Fund are expected
to be traded on an Indian or other foreign stock exchange or over-the-counter
market. However, as described in "Risk Factors," the Fund may be subject to
significant delays or limitations on the timing and amount of its direct
investments in India.
Debt securities in which the Fund may invest consist of bonds, debentures,
notes and similar debt instruments which may be comparable in quality to debt
securities rated BB or lower by Standard & Poor's Ratings Group ("Standard &
Poor's") or Ba or lower by Moody's Investors Service, Inc. ("Moody's"). The
Fund may invest up to 25% of its total assets in debt securities. For a
description of the risks of investing in
4
<PAGE>
lower quality debt securities, see "Risk Factors" in this Prospectus. PMC
expects that most of the Fund's investments in debt securities will not be
rated by Standard & Poor's, Moody's, or any other U.S. rating organization.
The Fund may employ forward foreign currency exchange contracts in an
attempt to hedge foreign currency risks associated with the Fund's
investments. However, there currently is no market, or only a limited market
for these contracts with respect to the Indian rupee (hereinafter the
"rupee") and the currencies of certain other foreign countries in which the
Fund may invest. Consequently, there can be no assurance that these contracts
will be available for hedging currency risks at the times when the Fund
wishes to use them. See Appendix B and the Statement of Additional
Information for a description of forward foreign currency exchange contracts
and associated risks.
The Fund also may invest in restricted and illiquid securities and
repurchase agreements, may purchase securities on a when-issued, delayed
delivery or forward commitment basis and may borrow money for temporary
emergency purposes. See Appendix B and the Statement of Additional
Information for a description of these investment and management techniques,
associated risks and limitations on the Fund's use of these techniques.
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 India's economy or securities market to such an extent that PMC or the
Indian Adviser believes there to be extraordinary risks in being
substantially invested in the equity securities of Indian Companies.
In selecting securities for investment by the Fund, PMC and/or the Indian
Adviser perform a fundamental analysis of each company being considered for
inclusion in the Fund's portfolio. In performing this fundamental analysis,
PMC and the Indian Adviser consider a variety of factors, including financial
condition, growth prospects, asset valuation, management expertise, existing
or potential dividend payments, the liquidity of the security, the market
valuation of the company and the effect the investment would have on the
diversification of the Fund's portfolio. 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, and may be affected by
limitations imposed by U.S. or Indian law.
Investment in India
Because of economic and political developments and changes in India, PMC
and the Indian Adviser believe that India's economy has significant potential
to experience growth in the next several years. For these reasons, PMC and
the Indian Adviser also believe that the equity securities of many Indian
Companies offer significant potential for long-term capital growth. For a
summary description of India and its securities markets, see Appendix A.
Since mid-1991, the Government of India, led by India's former prime
minister and finance minister, has taken steps to liberalize India's trade
policies, reform India's financial sector, and place greater reliance on
market mechanisms to direct economic activity. A significant component of the
Government's reform program has been the creation and empowerment of the
Securities and Exchange Board of India (the "SEBI") as the governmental
regulator of India's securities market. Another important component of the
reform program has been the promotion of foreign investment in key areas of
India's economy and the further development of India's private sector. As a
result of this policy and more recent developments, foreign investment in
India's economy and securities market has increased significantly. See "Risk
Factors," "Restrictions on Investment in India" and Appendix A.
In 1992, the Government of India announced, under a new policy intended to
encourage foreign investment, that Foreign Institutional Investors ("FIIs")
who satisfied certain conditions would be permitted to make direct
investments in India's securities market. Previously, non-Indian nationals
generally were not permitted to make portfolio investments in India's
securities market. Under the new policy, FIIs are permitted to invest
directly or on behalf of their institutional clients in any equity or debt
instrument which is listed on any Indian stock exchange. FIIs are required to
register with the SEBI. PMC is registered with the SEBI as an FII to invest
in India on behalf of the Fund and other approved clients. At present, FII
authorizations are granted for five years and may be renewed with the
approval of the SEBI. PMC intends to renew its registration as an FII on
March 18, 1998 (the date on which PMC's current FII registration expires).
See "Risk Factors" and "Restrictions on Investment in India."
Risk Factors
Investing in the Fund entails a substantial degree of risk. Because of the
special risks associated with investing in India, 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 India, which are in addition to the
usual risks of investing in developed countries around the world.
Investment in India and Certain Other Foreign Countries. The concentration
of the Fund's investments in Indian Companies will cause the value of the
Fund's assets to be particularly susceptible to the effects of political and
economic developments in India. India has a longstanding border dispute with
Pakistan. In addition, religious and ethnic unrest persists in India and has
caused disruptions in the recent past. It remains possible that disruption
associated with these tensions could destabilize India's economy and
adversely affect the net asset value of the Fund. The leadership of the
Government of India, which initiated recent financial reforms, is now out of
power. The new government has not changed major policies to date nor halted
or reversed the progress of economic reforms of India. Moreover, it is
possible that changes in the current leadership of the Govern-
5
<PAGE>
ment of India could result in a halt in, or even reverse the progress of,
economic reforms in India. See Appendix A.
The Fund expects that, under normal circumstances, most of its investments
in Indian Companies will be in securities that are listed or traded on an
Indian stock exchange. The securities markets in India and in certain other
foreign countries in which the Fund may invest are smaller and less liquid,
and may be significantly more volatile, than the securities market in the
United States. The Bombay Stock Exchange (the "BSE"), established in 1875,
and the National Stock Exchange ("NSE"), established in 1994 (see Appendix
A), are the principal stock exchanges in India, and account for over
two-thirds of the secondary trading market in India. Although the BSE has
greater liquidity and a greater number of listed issues than many emerging
markets, the relatively small trading volume and market capitalization of
most securities listed on the BSE may cause the Fund's investments to be less
liquid and subject to greater volatility than comparable U.S. investments.
The limited liquidity of the BSE and other securities markets in which the
Fund may invest also may affect the Fund's ability to accurately value its
portfolio securities or to acquire or dispose of securities at the prices and
times that it desires or in order to meet redemption requests.
In managing the Fund's portfolio, PMC and the Indian Adviser will attempt
to prevent the Fund from being exposed to undue illiquidity risk that may be
associated with investing in the Indian securities market. For example, if
deemed appropriate by PMC or the Indian Adviser, the Fund may concentrate its
equity investments in Indian Companies in larger capitalization issuers
and/or issuers whose equity securities (including Depositary Receipts) are
traded in securities markets outside of India. At times, the market for such
securities may be more liquid than the market for equity securities of
smaller capitalization Indian Companies.
Disclosure and regulatory standards in India's securities markets and in
other foreign markets in which the Fund may invest are less stringent than
U.S. standards in certain respects. Although issuers in India are subject to
accounting, auditing and financial standards and requirements that are based
on U.K. standards and requirements, such standards and requirements, as well
as those applicable to other foreign issuers, may differ significantly from
those applicable to issuers located in developed countries. In addition,
there may be substantially less publicly available information about issuers
in India and many of the other foreign countries in which the Fund may invest
than there is about U.S. issuers.
There is generally less governmental supervision and regulation of
securities exchanges and securities professionals in India and other foreign
countries in which the Fund may invest than exists in the United States.
However, the Government of India, acting through the SEBI, has promulgated
several rules and regulations to reform India's securities market and
regulate the activities of securities professionals. For example, in 1992,
the SEBI promulgated regulations prohibiting insider trading in the Indian
securities markets. However, there can be no assurance that the SEBI will be
able to enforce such rules and regulations as effectively as similar rules
and regulations are enforced in U.S. securities markets. See Appendix A for a
further description of recent reforms in India's securities market.
The value of the Fund's investments in India could be adversely affected
by the circulation of improperly registered shares or the occurrence of other
fraudulent activities in India's securities markets. In 1992, irregularities
and frauds in the Indian securities transactions of several banks were
exposed. Subsequent to the discovery of the bank/securities scandal, major
Indian securities market indices fell more than 40% from their highest
levels. However, as a result of the scandal, India's Ministry of Finance
strengthened the SEBI's regulatory authority and made other significant
reforms in India's securities markets.
The BSE has had frequent closures before the NSE became operational. Due
in part to competition from the NSE, there have been no such occurrences in
the past. However, there can be no assurance that such closures will not
recur. Settlement procedures in India and other foreign countries in which
the Fund may invest are less developed and reliable than those in the U.S.,
and the Fund may experience settlement delays or other material differences.
In addition, significant delays are common in registering transfers of
securities in India, and the Fund may be unable to sell portfolio securities
until the registration process is completed. Recent inflows of funds into the
Indian securities market have placed added strains on the settlement system,
and several custodial institutions in India have announced that they do not
possess the physical capacity to undertake new business. Although a number of
custodial institutions have augmented their capacity, the Fund may be subject
to significant delays or limitations on the timing of its direct investments
in India and significant limitations on the volume of trading during any
particular period, imposed by its subcustodian in India or otherwise as a
result of such physical or other operational constraints. The foregoing
factors could impede the ability of the Fund to effect portfolio transactions
on a timely basis, have an adverse effect on the net asset value of the
Fund's shares and make it more difficult for the Fund to obtain cash
necessary to satisfy applicable federal income tax requirements for avoiding
federal income and/or excise taxation. See "Dividends, Distributions and U.S.
Taxation."
The value of the Fund's investments in the securities of Indian Companies
and other foreign issuers may be adversely affected by fluctuations in the
relative rates of exchange between the currencies of different countries. 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 quoted or denominated in a foreign currency will increase
or decrease in response to changes in the value of foreign currencies in
relation to the U.S. dollar. In addition, the value of the Fund's investments
in Indian Companies and other foreign issuers may be adversely affected by
exchange control regulations. Under the FII guidelines as currently in effect
in India, PMC has received approv-
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als required to establish bank and custodial accounts and to convert rupees
into U.S. dollars on behalf of the Fund. Although the Government of India has
announced its intention ultimately to make the rupee fully convertible, there
can be no assurance that it will not impose restrictions in the future that
may adversely affect the ability of the Fund to convert its income and
capital from certain investments from rupees to U.S. dollars. See Appendix A.
Brokerage commissions and other securities transaction costs, including
custody costs, in India and in certain other foreign countries in which the
Fund may invest are generally higher than in the United States. In addition,
brokers in India and certain other countries in which the Fund may invest
generally are not as well capitalized as brokers in the U.S., and are
therefore more susceptible to financial failure in times of market, political
or economic stress.
Additionally, in India and other foreign countries in which the Fund may
invest, there is the possibility of expropriation or confiscatory taxation,
limitations on the removal of securities, property or other assets of the
Fund, political or social instability, or diplomatic developments which could
adversely affect U.S. investments in these countries.
Investment in Lower-Quality Debt Securities. The Fund's investments in
debt securities may consist of debt securities issued by Indian Companies or
the Government of India or its agencies or instrumentalities. These debt
securities may be comparable in quality to debt securities rated BB or lower
by Standard & Poor's or Ba or lower by Moody's. Debt securities of such
quality are commonly referred to in the U.S. as "junk bonds" and 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. While generally providing greater income than investments in
higher-quality securities, lower-quality debt securities involve greater
risk of loss of principal and income, including the possibility of default or
bankruptcy of the issuers of such securities, and have greater price
volatility, especially during periods of economic uncertainty or change.
Lower-quality debt securities also tend to be affected by economic changes
and short-term corporate developments to a greater extent than higher-quality
securities, which react primarily to fluctuations in the general level of
interest rates. Lower-quality debt securities will also be affected by the
market's perception of their credit quality, especially during times of
adverse publicity, and the outlook for economic growth. The market for
lower-quality debt securities is generally less liquid than the market for
higher-quality debt securities. Therefore, PMC's and the Indian Adviser's
judgment may at times play a greater role in valuing these securities than in
the case of higher-quality debt securities.
The Fund's investments in debt securities issued by the Government of
India or its agencies or instrumentalities involve special risks in addition
to those described above. The willingness or ability of an Indian
governmental issuer to repay principal and pay interest when due may be
affected adversely by the size of the issuer's debt service burden relative
to India's economy as a whole, changes in India's economy, political
constraints to which the issuer is subject and various other factors. In
addition, there are no legal proceedings available in India by which the Fund
could seek recourse for the default of a debt security issued by the
Government of India or one of its agencies or instrumentalities.
The Fund's investments in debt securities may also include zero coupon and
payment-in-kind debt securities, which tend to be affected to a greater
extent by interest rate changes, and therefore tend to be more volatile, than
debt securities which pay interest periodically and in cash.
Restrictions on Investment in India
Under India's guidelines applicable to FIIs, the Fund's direct investments
in India may include only securities that are listed or to be listed on a
recognized stock exchange or traded on a recognized Indian stock exchange,
and the Fund may not hold more than 10% of the total issued capital of any
issuer of such securities. Further, at least 70% of the total investments
made by the Fund pursuant to PMC's FII authorization must be in equity
securities. In addition, all non-resident portfolio investments, including
the Fund's investments, may not exceed 24% of the issued share capital of any
Indian issuer. Accordingly, the Fund's ability to invest in certain Indian
Companies may be restricted. Although the Government of India recently has
implemented policies to encourage foreign investment, there can be no
assurance that additional restrictions will not be imposed in the future.
Indian Taxes
It is expected that most of the Fund's investments in Indian Companies
will be subject to the following taxes imposed by the Government of India.
India imposes a withholding tax at a rate of 20% on dividend and interest
income earned on Indian investments. India also imposes a tax on capital
gains realized on Indian investments at a rate of 10% on long-term capital
gains and 30% on short-term capital gains. Gains from all listed securities
(including debt) held for periods in excess of 12 months are treated as
long-term gains. Under the Income Tax Treaty in effect between India and the
U.S., the applicable Indian tax rate on interest income is generally reduced
to 15%, and the applicable Indian tax rate on dividend income may be reduced
to 15% in the event that the Fund owns at least 10% of the voting stock of
the Indian resident company that pays dividends to the Fund. This treaty does
not reduce or eliminate the Indian taxation of capital gains the Fund may
realize with respect to its Indian investments. If the Fund elects to
"pass-through" to shareholders amounts of qualified foreign taxes it pays,
Fund shareholders will be required to include such amounts in income (in
addition to the dividends they actually receive) and certain Fund
shareholders may be able to claim a foreign tax credit or deduction on their
U.S. federal income tax returns for their proportionate shares of Indian
taxes paid by the Fund, subject to applicable limitations under the U.S.
Internal Revenue Code of 1986, as amended (the "Code"). "See Dividends,
Distributions and U.S. Taxation."
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PMC may explore opportunities for the Fund to invest in India through a
structure that would reduce withholding and other taxes imposed by India.
Other Eligible Investments
Equity Securities of Companies That May Benefit From India's Economy. As
noted above, the Fund may invest in the equity securities of companies, other
than Indian Companies (defined above), that may benefit from India's economy.
The Fund's investments in the equity securities of such issuers may involve
some or all of the risks associated with investments in Indian issuers. See
"Risk Factors."
Short-Term Investments. As noted above, 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
or better by Moody's, or A-1, AA or better by Standard & Poor's; obligations
(including certificates of deposit, time deposits, demand deposits and
bankers' acceptances) of banks (located in the U.S. or foreign countries)
with securities outstanding that are rated Prime-1, Aa or better by Moody's,
or A-1, AA or better by Standard and Poor's; 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.
In addition, the Fund may invest up to 100% of its total assets in such
short-term investments for temporary defensive purposes. The Fund will assume
a temporary defensive posture only when political and economic factors cause
PMC or the Indian Adviser to believe that there are extraordinary risks in
being substantially invested in the equity securities of Indian Companies.
Debt Securities. Although the Fund invests primarily in equity securities
of Indian Companies, the Fund may invest up to 25% of its total assets in
debt securities (including short-term debt securities) issued by Indian
Companies or by the Government of India or its agencies or instrumentalities.
The Fund may invest in debt securities of any quality or maturity. See "Risk
Factors." The net asset value of the Fund attributable to its investments in
debt securities can generally be expected to change as general levels of
interest rates fluctuate. The value of debt securities generally varies
inversely with changes in interest rates, and prices of debt securities with
longer maturities are more sensitive to interest rate changes than those with
shorter maturities.
Other Investment Companies. The Fund may invest up to 10% of its total
assets, calculated at the time of purchase, in the securities of closed-end
investment companies. The Fund may not invest more than 5% of its total
assets in the securities of any one investment company or acquire more than
3% of the voting securities of any other investment company. The Fund will
indirectly bear its proportionate share of any management or other fees paid
by closed-end investment companies in which it invests, in addition to its
own fees.
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 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 securities for which they
may be exchanged. For purposes of the Fund's investment policies, investments
in ADRs, GDRs and similar instruments will be deemed to be investments in the
equity securities of the foreign issuers into which they may be converted.
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.
Investments in Initial Public Offerings. The Fund may invest in initial
public offerings of Indian issuers. At the initial stage of such an offering,
the issuer may reserve up to 24% of the offering for nonresident Indian
investors and certain foreign institutional investors such as the Fund. The
issuer also may reserve up to 20% of the offering for locally offered mutual
funds. The price available to the Fund in such an offering may be higher or
lower than the price available to other institutions. When the Fund commits
to purchase from the reserved portion of such an offering, it may be required
to place the purchase price in a bank deposit account (that does not pay
interest) before receiving securities. In addition, until the purchase is
settled, the Fund may not know if it will receive the amount of securities
for which it has subscribed.
Portfolio Turnover
The Fund will attempt to be substantially fully invested at all times,
except as described above. To the extent consistent with investment
considerations, PMC and the Indian Adviser intend to minimize the Fund's
realization of short-term capital gains with respect to securities subject
to Indian short-term capital gains taxes. See "Indian Taxes." However,
changes in the Fund's portfolio may be made promptly when determined by PMC
or the Indian Adviser to be advisable by
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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. It is anticipated
that the portfolio turnover rate of the Fund will not exceed 100% in the
coming year. A high rate of portfolio turnover (100% or more) involves
correspondingly greater transaction costs which must be borne by the Fund and
its shareholders and may, under certain circumstances, make it more difficult
for the Fund to qualify as a regulated investment company under the Code. See
"Dividends, Distributions and Taxation."
The Fund's investment objective and certain investment restrictions
designated as fundamental in the Statement of Additional Information may be
changed by the Board of Trustees only with shareholder approval. The Fund's
investment policies and nonfundamental investment restrictions may be changed
by the Board of Trustees without shareholder approval. See "Investment
Policies, Restrictions and Risk Factors" in the Statement of Additional
Information.
IV. MANAGEMENT OF THE FUND
The Fund's Board of Trustees has overall responsibility for management and
supervision of the Fund. There are currently eight Trustees, six of whom are
not "interested persons" of the Fund as defined in the Investment Company Act
of 1940, as amended (the "1940 Act"). The Board meets at least quarterly. By
virtue of the functions performed by Pioneering Management Corporation as
manager and by ITI Pioneer AMC Ltd. as Indian Adviser, the Fund requires no
employees other than its executive officers, all of whom receive their
compensation from PMC or other sources. The Statement of Additional
Information contains the names and general business and professional
background of each Trustee and executive officer of the Fund.
The Adviser
The Fund is managed under a contract with PMC. PMC is responsible for the
overall management of the Fund's business affairs and the day-to-day
management of Fund assets that are not under the Indian Adviser's management,
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.
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 global equity managers which reviews PMC's research and portfolio
operations, including those of the Fund. Mr. Tripple joined PMC in 1974.
Research and management for the Fund is the responsibility of a team of
portfolio managers and analysts focusing on non-U.S. companies. Members of
the team meet regularly to discuss holdings, prospective investments and
portfolio composition. Dr. Norman Kurland, a Senior Vice President of PMC and
a 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 since February 1997. Mr. Madden, a Vice President of PMC and the fund,
shared responsibility for the day-to-day management of the Fund with Mr.
Tripple from April 1995 to February 1997. Mr. Madden joined PMC in 1990 and
has 13 years of investment experience. Mr. Manish Modi is the senior analyst
focusing on India and Indian companies. Mr. Modi joined PMC in 1994 and has 7
years of investment experience.
PMC manages and serves as the investment adviser for several 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.
Under the terms of its contract with the Fund, PMC manages the Fund's
business affairs, supervises the Indian Adviser's performance of its
portfolio management responsibilities and allocates the management of Fund
assets between itself and the Indian Adviser. PMC's supervisory
responsibilities include consulting with the Indian Adviser on a regular
basis regarding the Indian Adviser's decisions to purchase, sell or hold
particular securities. PMC is authorized in its discretion to use Fund assets
that are under its management to buy and sell securities for the Fund's
account. PMC pays all advisory fees to the Indian Adviser and all 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 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 with respect to shares of 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 the SEC,
individual states or blue sky securities agencies, territories and foreign
countries, including the preparation of prospectuses and statements of
additional information for filing with regulatory agencies; (g) all expenses
of shareholders' and Trustees' meetings and of preparing, printing and
distributing prospectuses, notices, proxy statements and all reports to
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<PAGE>
shareholders and to governmental agencies; (h) charges and expenses of legal
counsel to the Fund and to Trustees; (i) distribution fees paid by the Fund
in accordance with Rule 12b-1 promulgated by the SEC pursuant to the 1940
Act; (j) compensation of those Trustees of the Fund who are not affiliated
with or interested 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. The Fund also pays all brokers' and
underwriting commissions chargeable to the Fund in connection with its
portfolio transactions.
Orders for the Fund's portfolio securities transactions in the Indian
securities markets are placed by the Indian Adviser. Orders for the Fund's
portfolio securities transactions in all other markets are placed by PMC.
Both PMC and the Indian Adviser strive 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 by the Indian Adviser or PMC to whether the broker-dealer provides
investment research or brokerage services or sells shares of the Fund or
other funds for which PMC or any affiliate or subsidiary serves as investment
adviser or manager. See the Statement of Additional Information for a further
description of PMC's and Indian Adviser's brokerage allocation practices.
As compensation for its management services and certain expenses which PMC
incurs, PMC is entitled to a management fee equal to 1.25% per annum of the
Fund's average daily net assets. While this fee, which is computed daily and
paid monthly, is higher than most management fees, the costs of managing the
Fund are significantly greater than the costs of managing a domestic fund.
PMC has agreed not to impose a portion of its management fee and to make
other arrangements, if necessary, to limit certain other expenses of the Fund
to the extent necessary to limit Class A expenses to 2.25% of the average
daily net assets attributable to Class A shares; the portion of the Fund-wide
expenses attributable to Class B and Class C shares will be reduced only to
the extent such expenses are reduced for Class A shares. This agreement is
voluntary and temporary and may be revised or terminated by PMC at any time.
John F. Cogan, Jr., Chairman and President of the Fund, Chairman of PFD
and PMC and President and a Director of PGI, beneficially owned 14% of the
outstanding capital stock of PGI as of the date of this Prospectus.
The Indian Adviser
ITI Pioneer AMC Ltd., the Indian investment adviser to the Fund, is
responsible for investing the Fund's assets in the Indian securities markets
and providing certain related services to PMC, subject to the supervision of
PMC, which, in turn, is subject to the supervision of the Fund's Board of
Trustees. The Indian Adviser is a joint venture of PMC, a Delaware
corporation, and Investment Trust of India Limited ("ITI"), a corporation
organized under the laws of India. ITI was established in 1946 and is one of
India's leading providers of financial services. The Indian Adviser was the
first institution in India to establish locally-registered private sector
mutual funds in India. PMC and ITI currently own approximately 46% and 49%,
respectively, of the Indian Adviser's total equity capital.
All investment decisions made by the Indian Adviser are made by an
investment committee comprised of certain of the Indian Adviser's directors
and officers, including Ravi Mehrotra, Chief Investment Officer, and R.
Sukumar, Fund Manager. Prior to joining ITI Pioneer in 1993, Mr. Mehrotra
worked in the financial services and banking industries in India. Mr. Sukumar
joined ITI Pioneer in 1994 after working in the financial services industry.
As compensation for its services under its Subadvisory Agreement with PMC,
the Indian Adviser receives a subadvisory fee at an annual rate from 0.10% to
0.60% of the Fund's average gross assets invested in India's securities
markets, including assets invested in Depositary Receipts for securities
traded in India's securities markets. The fee, which is paid by PMC, accrues
monthly and is paid quarterly.
V. FUND SHARE ALTERNATIVES
The Fund continuously offers three Classes of shares designated as Class
A, Class B and Class C shares, as described more fully in "How to Buy Fund
Shares." If you do not specify in your instructions to the Fund which Class
of shares you wish to purchase, exchange or redeem, the Fund will assume that
your instructions apply to Class A shares.
Class A Shares. If you invest less than $1 million in Class A shares, you
will pay an initial sales charge. Certain purchases may qualify for reduced
initial sales charges. If you invest $1 million or more in Class A shares, no
sales charge will be imposed at the time of purchase; however, shares
redeemed within 12 months of purchase may be subject to a CDSC. Class A
shares are subject to distribution and service fees at a combined annual rate
of up to 0.25% of the Fund's average daily net assets attributable to Class A
shares.
Class B Shares. If you plan to invest up to $250,000, Class B shares are
available to you. Class B shares are sold without an initial sales charge,
but are subject to a CDSC of up to 4% if redeemed within six years. Class B
shares are subject to distribution and service fees at a combined annual rate
of 1% of the Fund's average daily net assets attributable to Class B shares.
Your entire investment in Class B shares is available to work for you from
the time you make your investment, but the higher distribution fee paid by
Class B shares will cause your Class B shares (until conversion) to have a
higher expense ratio and to pay lower per share dividends, to the extent
dividends are paid, than Class A shares. Class B shares will automatically
convert to Class A shares, based on relative net asset value, eight years
after the initial purchase.
Class C Shares. Class C shares are sold without an initial sales charge,
but are subject to a 1% CDSC if they are redeemed within the first year after
purchase. Class C shares are subject to distribution and service fees at a
combined
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annual rate of up to 1% of the Fund's average daily net assets attributable
to Class C shares. Your entire investment in Class C shares is available to
work for you from the time you make your investment, but the higher
distribution fee paid by Class C shares will cause your Class C shares to
have a higher expense ratio and to pay lower dividends, to the extent
dividends are paid, than Class A shares. Class C shares have no conversion
feature.
Selecting a Class of Shares. The decision as to which Class to purchase
depends on the amount you invest, the intended length of the investment and
your personal situation. If you are making an investment that qualifies for
reduced sales charges, you might consider Class A shares. If you prefer not
to pay an initial sales charge on an investment of $250,000 or less and you
plan to hold the investment for at least six years, you might consider Class
B shares. If you prefer not to pay an initial sales charge and you plan to
hold your investment for one to eight years, you may prefer Class C shares.
Investment dealers or their representatives may receive different
compensation depending on which Class of shares they sell. Shares may be
exchanged only for shares of the same Class of another Pioneer mutual fund
and shares acquired in the exchange will continue to be subject to any CDSC
applicable to the shares of the Fund originally purchased. Shares sold
outside the U.S. to persons who are not U.S. citizens may be subject to
different sales charges, CDSCs and dealer compensation arrangements in
accordance with local laws and business practices.
VI. SHARE PRICE
Shares of the Fund are sold at the public offering price, which is the net
asset value per share, plus the applicable sales charge. The net asset value
per share of each Class of Fund shares is determined by dividing the fair
market value of its assets, less liabilities attributable to that Class, by
the number of shares of that Class outstanding. The net asset value is
computed once daily, on each day the New York Stock Exchange (the "Exchange")
is open as of the close of regular trading on the Exchange.
Securities are valued at the last sale price on the principal exchange or
market where they are traded. Securities which have not traded on the date of
valuation, or securities for which sales prices are not generally reported,
are valued at the mean between the current bid and asked prices. Securities
quoted in international currencies are converted to U.S. dollars utilizing
foreign exchange rates employed by the Fund's independent pricing services.
Generally, trading in international securities is substantially completed
each day at various times prior to the close of regular trading on the
Exchange. The values of such securities used in computing the net asset value
of the Fund's shares are determined as of such times. Foreign currency
exchange rates are also generally determined prior to the close of regular
trading on the Exchange. Occasionally, events which affect the values of such
securities and such exchange rates may occur between the times at which they
are determined and the close of regular trading on the Exchange and will
therefore not be reflected in the computation of the Fund's net asset value.
If events materially affecting the value of such securities occur during such
period, then these securities are valued at their fair value as determined in
good faith by the Trustees. All assets of the Fund for which there is no
other readily available valuation method are valued at their fair value as
determined in good faith by the Trustees.
VII. HOW TO BUY FUND SHARES
You may buy Fund shares from any securities broker-dealer which has a
sales agreement with PFD. If you do not have a securities broker-dealer,
please call 1-800-225-6292. Shares will be purchased at the public offering
price, that is, the net asset value per share plus any applicable sales
charge, next computed after receipt of a purchase order, except as set forth
below.
The minimum initial investment is $1,000 for Class A, Class B and Class C
shares except as specified below. The minimum initial investment is $50 for
Class A accounts being established to utilize monthly bank drafts, government
allotments, payroll deduction and other similar automatic investment plans.
Separate minimum investment requirements apply to retirement plans and to
telephone and wire orders placed by broker-dealers; no sales charges or
minimum requirements apply to the reinvestment of dividends or capital gains
distributions. The minimum subsequent investment is $50 for Class A shares
and $500 for Class B and Class C shares except that the subsequent minimum
investment amount for Class B and Class C share accounts may be as little as
$50 if an automatic investment plan (see "Automatic Investment Plans") is
established.
Telephone Purchases. Your account is automatically authorized to have the
telephone purchase privilege unless you indicate otherwise on your Account
Application or by writing to Pioneering Services Corporation ("PSC"). The
telephone purchase option may be used to purchase additional shares for an
existing Pioneer mutual fund account; it may not be used to establish a new
account. Proper account identification will be required for each telephone
purchase. A maximum of $25,000 per account may be purchased by telephone each
day. The telephone purchase privilege is available to Individual Retirement
Accounts ("IRAs") but may not be available to other types of retirement plan
accounts. Call PSC for more information.
You are strongly urged to consult with your financial representative prior
to requesting a telephone purchase. To purchase shares by telephone, you must
establish your bank account of record by completing the appropriate section
of your Account Application or an Account Options Form. PSC will
electronically debit the amount of each purchase from this predesignated bank
account. Telephone purchases may not be made for 30 days after the
establishment of your bank of record or any change to your bank information.
Telephone purchases will be priced at the net asset value plus any
applicable sales charge next determined after PSC's
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receipt of a telephone purchase instruction and receipt of good funds
(usually three days after the purchase instruction). You may always elect to
deliver purchases to PSC by mail. See "Telephone Transactions and Related
Liabilities" for additional information.
Class A Shares
You may buy Class A shares at the public offering price, including a sales
charge, as follows:
Sales Charge as a Dealer
Percentage of Allowance
-------------------- as a
Net Percentage of
Offering Amount Offering
Amount of Purchase Price Invested Price
----------------------- -------- --------- --------------
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than
$100,000 4.50 4.71 4.00
$100,000 but less than
$250,000 3.50 3.63 3.00
$250,000 but less than
$500,000 2.50 2.56 2.00
$500,000 but less than
$1,000,000 2.00 2.04 1.75
$1,000,000 or more -0- -0- See below
The schedule of sales charges above is applicable to purchases of Class A
shares of the Fund by (i) an individual, (ii) an individual and his or her
spouse and children under the age of 21 and (iii) a trustee or other
fiduciary of a trust estate or fiduciary account or related trusts or
accounts including pension, profit-sharing and other employee benefit trusts
qualified under Section 401 or 408 of the Code, although more than one
beneficiary is involved. The sales charges applicable to a current purchase
of Class A shares of the Fund by a person listed above is determined by
adding the value of shares to be purchased to the aggregate value (at the
then current offering price) of shares of any of the other Pioneer mutual
funds previously purchased and then owned, provided PFD is notified by such
person or his or her broker-dealer each time a purchase is made which would
qualify. Pioneer mutual funds include all mutual funds for which PFD serves
as principal underwriter. At the sole discretion of PFD, holdings of funds
domiciled outside the U.S., but which are managed by affiliates of PMC, may
be included for this purpose.
No sales charge is payable at the time of purchase on investments of $1
million or more or for purchases by participants in certain group plans
(described below) subject to a CDSC of 1% which may be imposed in the event
of a redemption of Class A shares within 12 months of purchase. See "How to
Sell Fund Shares." PFD may, in its discretion, pay a commission to
broker-dealers who initiate and are responsible for such purchases as
follows: 1% on the first $5 million invested; 0.50% on the next $45 million;
and 0.25% on the excess over $50 million. These commissions will not be paid
if the purchaser is affiliated with the broker-dealer or if the purchase
represents the reinvestment of a redemption made during the previous 12
calendar months. Broker-dealers who receive a commission in connection with
Class A share purchases at net asset value by 401(a) or 401(k) retirement
plans with 1,000 or more eligible participants or with at least $10 million
in plan assets will be required to return any commission paid or a pro rata
portion thereof if the retirement plan redeems its shares within 12 months of
purchase. See also "See How to Sell Fund Shares." In connection with PGI's
acquisition of Mutual of Omaha Fund Management Company and contingent upon
the achievement of certain sales objectives, PFD may pay to Mutual of Omaha
Investor Services, Inc. 50% of PFD's retention of any sales commission on
sales of the Fund's Class A shares through such dealer. From time to time,
PFD may elect to reallow the entire initial sales charge to participating
dealers for all Class A sales with respect to which orders are placed during
a particular period. Dealers to whom substantially the entire sales charge is
reallowed may be deemed to be underwriters under the federal securities laws.
Qualifying for a Reduced Sales Charge. Class A shares of the Fund may be
sold at a reduced or eliminated sales charge to certain group plans ("Group
Plans") under which a sponsoring organization makes recommendations to,
permits group solicitation of, or otherwise facilitates purchases by, its
employees, members or participants. Class A shares of the Fund may be sold at
net asset value without a sales charge to 401(k) retirement plans with 100 or
more participants or at least $500,000 in plan assets. Information about such
arrangements is available from PFD.
Class A shares of the Fund may be sold at net asset value per share
without a sales charge to: (a) current or former Trustees and officers of the
Fund and partners and employees of its legal counsel; (b) current or former
directors, officers, employees or sales representatives of PGI or its
subsidiaries; (c) current or former directors, officers, employees or sales
representatives of any subadviser or predecessor investment adviser to any
investment company for which PMC serves as investment adviser, and the
subsidiaries or affiliates of such persons; (d) current or former officers,
partners, employees or registered representatives of broker-dealers which
have entered into sales agreements with PFD; (e) members of the immediate
families of any of the persons above; (f) any trust, custodian, pension,
profit-sharing or other benefit plan of the foregoing persons; (g) insurance
company separate accounts; (h) certain "wrap accounts" for the benefit of
clients of financial planners adhering to standards established by PFD; (i)
other funds and accounts for which PMC or any of its affiliates serves as
investment adviser or manager; and (j) certain unit investment trusts. Shares
so purchased are purchased for investment purposes and may not be resold
except through redemption or repurchase by or on behalf of the Fund. The
availability of this privilege is conditioned upon the receipt by PFD of
written notification of eligibility. Class A shares of the Fund may be sold
at net asset value per share without a sales charge to Optional Retirement
Program (the "Program") participants if (i) the employer has authorized a
limited number of investment company providers for the Program, (ii) all
authorized investment company providers offer their shares to Program
participants at net asset value, (iii) the employer has agreed in writing to
actively promote the authorized investment company providers to Pro-
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<PAGE>
gram participants and (iv) the Program provides for a matching contribution
for each participant contribution. Class A shares may also be sold at net
asset value in connection with certain reorganization, liquidation, or
acquisition transactions involving other investment companies or personal
holding companies.
Reduced sales charges are available for purchases of $50,000 or more of
Class A shares (excluding any reinvestments of dividends and capital gains
distributions) made within a 13-month period pursuant to a Letter of Intent
("LOI") which may be established by completing the Letter of Intent section
of the Account Application. The reduced sales charge will be the charge that
would be applicable to the purchase of the specified amount of Class A shares
as if the shares had all been purchased at the same time. A purchase not made
pursuant to an LOI may be included if the LOI is submitted to PSC within 90
days of such purchase. You may also obtain the reduced sales charge by
including the value (at current offering price) of all your Class A shares in
the Fund and all other Pioneer mutual funds held of record as of the date of
your LOI in the amount used to determine the applicable sales charge for the
Class A shares to be purchased under the LOI. Five percent of your total
intended purchase amount will be held in escrow by PSC, registered in your
name, until the terms of the LOI are fulfilled.
You are not obligated to purchase the amount specified in your LOI. If,
however, the amount actually purchased during the 13-month period is more or
less than that indicated in your LOI, an adjustment in the sales charge will
be made. If a payment to cover actual sales charges is due, it must be paid
to PFD within 20 days after PFD or your dealer sends you a written request or
PFD will direct PSC to liquidate sufficient shares from your escrow account
to cover the amount due. See the Statement of Additional Information for more
information.
Investors who are clients of a broker-dealer with a current sales
agreement with PFD may purchase Class A shares of the Fund at net asset
value, without a sales charge, to the extent that the purchase price is paid
out of proceeds from one or more redemptions by the investor of shares of
certain other mutual funds. In order for a purchase to qualify for this
privilege, the investor must document to the broker-dealer that the
redemption occurred within the 60 days immediately preceding the purchase of
Class A shares; that the client paid a sales charge on the original purchase
of the shares redeemed; and that the mutual fund whose shares were redeemed
also offers net asset value purchases to redeeming shareholders of any of the
Pioneer mutual funds. Further details may be obtained from PFD.
Class B Shares
You may buy Class B shares at the net asset value next computed after
receipt of a purchase order without the imposition of an initial sales
charge. However, Class B shares redeemed within six years of purchase will be
subject to a CDSC at the rates shown in the table below. The charge will be
assessed on the amount equal to the lesser of the current market value or the
original purchase cost of the shares being redeemed. No CDSC will be imposed
on increases in account value above the initial purchase price, including
shares derived from the reinvestment of dividends or capital gains
distributions.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of purchase until the time of redemption of Class B shares. For
the purpose of determining the number of years from the time of any purchase,
all payments during a quarter will be aggregated and deemed to have been made
on the first day of that quarter. In processing redemptions of Class B
shares, the Fund will first redeem shares not subject to any CDSC, and then
shares held longest during the six-year-period. As a result, you will pay the
lowest possible CDSC.
The CDSC for Class B shares subject to a CDSC upon redemption will be
determined as follows:
Year Since CDSC as a Percentage of Dollar
Purchase Amount Subject to CDSC
--------------------------- -----------------------------------
First 4.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter none
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to
the Fund in connection with the sale of Class B shares, including the payment
of compensation to broker-dealers.
Class B shares will automatically convert into Class A shares at the end
of the calendar quarter that is eight years after the purchase date, except
as noted below. Class B shares acquired by exchange from Class B shares of
another Pioneer mutual fund will convert into Class A shares based on the
date of the initial purchase and the applicable CDSC. Class B shares acquired
through reinvestment of distributions will convert into Class A shares based
on the date of the initial purchase of the shares to which such shares
relate. For this purpose, Class B shares acquired through reinvestment of
distributions will be attributed to particular purchases of Class B shares in
accordance with such procedures as the Trustees may determine from time to
time. The conversion of Class B shares to Class A shares is subject to the
continuing availability of a ruling from the Internal Revenue Service
("IRS"), for which the Fund is applying, or an opinion of counsel that such
conversions will not constitute taxable events for federal tax purposes.
There can be no assurance that such ruling or opinion will be available. The
conversion of Class B shares to Class A shares will not occur if such ruling
or opinion is not available and, therefore, Class B shares would continue to
be subject to higher expenses than Class A shares for an indeterminate
period.
Class C Shares
You may buy Class C shares at the net asset value next computed after
receipt of a purchase order without the impo-
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<PAGE>
sition of an initial sales charge; however, Class C shares redeemed within
one year of purchase will be subject to a CDSC of 1%. The charge will be
assessed on the amount equal to the lesser of the current market value or the
original purchase cost of the shares being redeemed. No CDSC will be imposed
on increases in account value above the initial purchase price, including
shares derived from the reinvestment of dividends or capital gains
distributions. Class C shares do not convert to any other Class of Fund
shares.
For the purpose of determining the time of any purchase, all payments
during a quarter will be aggregated and deemed to have been made on the first
day of that quarter. In processing redemptions of Class C shares, the Fund
will first redeem shares not subject to any CDSC, and then shares held for
the shortest period of time during the one-year period. As a result, you will
pay the lowest possible CDSC.
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to
the Fund in connection with the sale of Class C shares, including the payment
of compensation to broker-dealers.
Waiver or Reduction of Contingent Deferred Sales Charge. The CDSC on Class
B shares may be waived or reduced for non-retirement accounts if: (a) the
redemption results from the death of all registered owners of an account (in
the case of UGMAs, UTMAs and trust accounts, waiver applies upon the death of
all beneficial owners) or a total and permanent disability (as defined in
Section 72 of the Code) of all registered owners occurring after the purchase
of the shares being redeemed or (b) the redemption is made in connection with
limited automatic redemptions as set forth in "Systematic Withdrawal Plans"
(limited in any year to 10% of the value of the account in the Fund at the
time the withdrawal plan is established).
The CDSC on Class B shares may be waived or reduced for retirement plan
accounts if: (a) the redemption results from the death or a total and
permanent disability (as defined in Section 72 of the Code) occurring after
the purchase of the shares being redeemed of a shareholder or participant in
an employer-sponsored retirement plan; (b) the distribution is to a
participant in an IRA, 403(b) or employer-sponsored retirement plan, is part
of a series of substantially equal payments made over the life expectancy of
the participant or the joint life expectancy of the participant and his or
her beneficiary or as scheduled periodic payments to a participant (limited
in any year to 10% of the value of the participant's account at the time the
distribution amount is established; a required minimum distribution due to
the participant's attainment of age 70-1/2 may exceed the 10% limit only if
the distribution amount is based on plan assets held by Pioneer); (c) the
distribution is from a 401(a) or 401(k) retirement plan and is a return of
excess employee deferrals or employee contributions or a qualifying hardship
distribution as defined by the Code or results from a termination of
employment (limited with respect to a termination to 10% per year of the
value of the plan's assets in the Fund as of the later of the prior December
31 or the date the account was established unless the plan's assets are being
rolled over to or reinvested in the same class of shares of a Pioneer mutual
fund subject to the CDSC of the shares originally held); (d) the distribution
is from an IRA, 403(b) or employer-sponsored retirement plan and is to be
rolled over to or reinvested in the same class of shares in a Pioneer mutual
fund and which will be subject to the applicable CDSC upon redemption; (e)
the distribution is in the form of a loan to a participant in a plan which
permits loans (each repayment of the loan will constitute a new sale which
will be subject to the applicable CDSC upon redemption); or (f) the
distribution is from a qualified defined contribution plan and represents a
participant's directed transfer (provided that this privilege has been
pre-authorized through a prior agreement with PFD regarding participant
directed transfers).
The CDSC on Class C shares and on any Class A shares subject to a CDSC may
be waived or reduced as follows: (a) for automatic redemptions as described
in "Systematic Withdrawal Plans" (limited to 10% of the value of the
account); (b) if the redemption results from the death or a total and
permanent disability (as defined in Section 72 of the Code) occurring after
the purchase of the shares being redeemed of a shareholder or participant in
an employer-sponsored retirement plan; (c) if the distribution is part of a
series of substantially equal payments made over the life expectancy of the
participant or the joint life expectancy of the participant and his or her
beneficiary; or (d) if the distribution is to a participant in an
employer-sponsored retirement plan and is (i) a return of excess employee
deferrals or contributions, (ii) a qualifying hardship as defined by the
Code, (iii) from a termination of employment, (iv) in the form of a loan to a
participant in a plan which permits loans, or (v) from a qualified defined
contribution plan and represents a participant's directed transfer (provided
that this privilege has been pre-authorized through a prior agreement with
PFD regarding participant directed transfers).
The CDSC on any shares subject to a CDSC may be waived or reduced for
either non-retirement or retirement plan accounts if: (a) the redemption is
made by any state, county, or city, or any instrumentality, department,
authority, or agency thereof, which is prohibited by applicable laws from
paying a CDSC in connection with the acquisition of shares of any registered
investment management company; or (b) the redemption is made pursuant to the
Fund's right to liquidate or involuntarily redeem shares in a shareholder's
account. The CDSC on any shares subject to a CDSC will not be applicable if
the selling broker-dealer elects, with PFD's approval, to waive receipt of
the commission normally paid at the time of the sale.
Broker-Dealers
An order for any Class of Fund shares received by PFD from a broker-dealer
prior to the close of regular trading on the Exchange is confirmed at the
price appropriate for that Class as determined at the close of regular
trading on the Exchange on the day the order is received, provided the order
is received by PFD prior to PFD's close of business (usually, 5:30 p.m.
Eastern Time). It is the responsibility of broker-
14
<PAGE>
dealers to transmit orders so that they will be received by PFD prior to its
close of business. PFD or its affiliates may provide additional compensation
to certain dealers or such dealers' affiliates based on certain objective
criteria established from time to time by PFD. All such payments are made out
of PFD's or the affiliate's own assets. These payments will not change the
price an investor will pay for shares or the amount that the Fund will
receive from such sale.
General
The Fund reserves the right in its sole discretion to withdraw all or any
part of the offering of shares when, in the judgment of the Fund's
management, such withdrawal is in the best interest of the Fund. An order to
purchase shares is not binding on, and may be rejected by, PFD until it has
been confirmed in writing by PFD and payment has been received.
VIII. HOW TO SELL FUND SHARES
You can arrange to sell (redeem) Fund shares on any day the Exchange is
open by selling either some or all of your shares to the Fund.
You may sell your shares either through your broker-dealer or directly to
the Fund. Please note the following:
(bullet) If you are selling shares from a retirement account, other than
an IRA, you must make your request in writing (except for
exchanges to other Pioneer mutual funds which can be requested by
phone or in writing). Call 1-800-622-0176 for more information.
(bullet) If you are selling shares from a non-retirement or IRA account,
you may use any of the methods described below.
Your shares will be sold at the share price next calculated after your
order is received in good order less any applicable CDSC. Sale proceeds
generally will be sent to you in cash, normally within seven days after your
order is received in good order. The Fund reserves the right to withhold
payment of the sale proceeds until checks received by the Fund in payment for
the shares being sold have cleared, which may take up to 15 calendar days
from the purchase date.
In Writing. You may sell your shares by delivering a written request,
signed by all registered owners, in good order to PSC, however, you must use
a written request, including a signature guarantee, to sell your shares if
any of the following applies:
(bullet) you wish to sell over $50,000 worth of shares,
(bullet) your account registration or address has changed within the last
30 days,
(bullet) the check is not being mailed to the address on your account
(address of record),
(bullet) the check is not being made out to the account owners, or
(bullet) the sale proceeds are being transferred to a Pioneer mutual fund
account with a different registration.
Your request should include your name, the Fund's name, your fund account
number, the Class of shares to be redeemed, the dollar amount or number of
shares to be redeemed, and any other applicable requirements as described
below. Unless instructed otherwise, PSC will send the proceeds of the sale to
the address of record. Fiduciaries and corporations are required to submit
additional documents. For more information, contact PSC at 1-800-225-6292.
Written requests will not be processed until they are received in good
order by PSC. Good order means that there are no outstanding claims or
requests to hold redemptions on the account, any certificates are endorsed by
the record owner(s) exactly as the shares are registered and the signature(s)
are guaranteed by an eligible guarantor. You should be able to obtain a
signature guarantee from a bank, broker, dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency or
savings association. A notary public cannot provide a signature guarantee.
Signature guarantees are not accepted by facsimile ("fax"). For additional
information about the necessary documentation for redemption by mail, please
contact PSC at 1-800-225-6292.
By Telephone or by Fax. Your account is automatically authorized to have
the telephone redemption privilege unless you indicate otherwise on your
Account Application or by writing to PSC. Proper account identification will
be required for each telephone redemption. The telephone redemption option is
not available to retirement plan accounts, except IRAs. A maximum of $50,000
per account per day may be redeemed by telephone or fax and the proceeds may
be received by check or bank wire or electronic funds transfer. To receive
the proceeds by check: the check must be made payable exactly as the account
is registered and the check must be sent to the address of record which must
not have changed in the last 30 days. To receive the proceeds by bank wire or
electronic funds transfer: the proceeds must be sent to your bank address of
record which must have been properly predesignated either on your Account
Application or on an Account Options Form and which must not have changed in
the last 30 days. To redeem by fax send your redemption request to
1-800-225-4240. You may always elect to deliver redemption instructions to
PSC by mail. See "Telephone Transactions and Related Liabilities" below.
Telephone and fax redemptions will be priced as described above. You are
strongly urged to consult with your financial representative prior to
requesting a telephone redemption.
Selling Shares Through Your Broker-Dealer. The Fund has authorized PFD to
act as its agent in the repurchase of shares of the Fund from qualified
broker-dealers and reserves the right to terminate this procedure at any
time. Your broker-dealer must receive your request before the close of
business on the Exchange and transmit it to PFD before PFD's close of
business to receive that day's redemption price. Your broker-dealer is
responsible for providing all necessary documentation to PFD and may charge
you for its services.
15
<PAGE>
Small Accounts. The minimum account value is $500. If you hold shares of
the Fund in an account with a net asset value of less than the minimum
required amount due to redemptions or exchanges, the Fund may redeem the
shares held in this account at net asset value if you have not increased the
net asset value of the account to at least the minimum required amount within
six months of notice by the Fund to you of the Fund's intention to redeem the
shares.
CDSC on Class A Shares. Purchases of Class A shares of $1 million or more,
or by participants in a Group Plan which were not subject to an initial sales
charge, may be subject to a CDSC upon redemption. A CDSC is payable to PFD on
these investments in the event of a share redemption within 12 months
following the share purchase, at the rate of 1% of the lesser of the value of
the shares redeemed (exclusive of reinvested dividend and capital gain
distributions) or the total cost of such shares. Shares subject to the CDSC
which are exchanged into another Pioneer mutual fund will continue to be
subject to the CDSC until the original 12-month period expires. However, no
CDSC is payable upon redemption with respect to Class A shares purchased by
401(a) or 401(k) retirement plans with 1,000 or more eligible participants or
with at least $10 million in plan assets.
General. Redemptions may be suspended or payment postponed during any
period in which any of the following conditions exist: the Exchange or BSE is
closed or trading on either exchange is restricted; an emergency exists as a
result of which disposal by the Fund of securities owned by it is not
reasonably practicable or it is not reasonably practicable for the Fund to
fairly determine the value of the net assets of its portfolio; or the SEC, by
order, so permits.
Redemptions and repurchases are taxable transactions to shareholders. The
net asset value per share received upon redemption or repurchase may be more
or less than the cost of shares to an investor, depending on the market value
of the portfolio at the time of redemption or repurchase.
IX. HOW TO EXCHANGE FUND SHARES
Written Exchanges. You may exchange your shares by sending a letter of
instruction to PSC. Your letter should include your name, the name of the
Pioneer mutual fund out of which you wish to exchange and the name of the
Pioneer mutual fund into which you wish to exchange, your fund account
number(s), the Class of shares to be exchanged and the dollar amount or
number of shares to be exchanged. Written exchange requests must be signed by
all record owner(s) exactly as the shares are registered.
Telephone Exchanges. Your account is automatically authorized to have the
telephone exchange privilege unless you indicate otherwise on your Account
Application or by writing to PSC. Proper account identification will be
required for each telephone exchange. Telephone exchanges may not exceed
$500,000 per account per day. Each telephone exchange request, whether by
voice or by FactFone(SM), will be recorded. You are strongly urged to consult
with your financial representative prior to requesting a telephone exchange.
See "Telephone Transactions and Related Liabilities" below.
Automatic Exchanges. You may automatically exchange shares from one
Pioneer mutual fund account for shares of the same Class in another Pioneer
mutual fund account on a monthly or quarterly basis. The accounts must have
identical registrations and the originating account must have a minimum
balance of $5,000. The exchange will be effective on the day of the month
designated on your Account Application or Account Options Form.
General. Exchanges must be at least $1,000. You may exchange your
investment from one Class of Fund shares at net asset value, without a sales
charge, for shares of the same Class of any other Pioneer mutual fund. Not
all Pioneer mutual funds offer more than one Class of shares. A new Pioneer
mutual fund account opened through an exchange must have a registration
identical to that on the original account.
Shares which would normally be subject to a CDSC upon redemption will not
be charged the applicable CDSC at the time of the exchange. Shares acquired
in an exchange will be subject to the CDSC of the shares originally held. For
purposes of determining the amount of any applicable CDSC, the length of time
you have owned shares acquired by exchange will be measured from the date you
acquired the original shares and will not be affected by any subsequent
exchange.
Exchange requests received by PSC before 4:00 p.m. Eastern Time will be
effective on that day if the requirements above have been met, otherwise,
they will be effective on the next business day. PSC will process exchanges
only after receiving an exchange request in good order. There are currently
no fees or sales charges imposed at the time of an exchange. An exchange of
shares may be made only in states where legally permitted. For federal and
(generally) state income tax purposes, an exchange is considered to be a sale
of the shares of the fund exchanged and a purchase of shares in another
Pioneer mutual fund. Therefore, an exchange could result in a gain or loss on
the shares sold, depending on the tax basis of these shares and the timing of
the transaction, and special tax rules may apply.
You should consider the differences in objectives and policies of the
Pioneer mutual funds, as described in each fund's current prospectus, before
making any exchange. For the protection of the Fund's performance and
shareholders, the Fund and PFD reserve the right to refuse any exchange
request or restrict, at any time without notice, the number and/or frequency
of exchanges to prevent abuses of the exchange privilege. Such abuses may
arise from frequent trading in response to short-term market fluctuations, a
pattern of trading by an individual or group that appears to be an attempt to
"time the market" or any other exchange request which, in the view of
management, will have a detrimental effect on the Fund's portfolio management
strategy or its operations. In addition, the Fund and PFD reserve the right
to charge a fee for exchanges or to modify, limit, suspend or
16
<PAGE>
discontinue the exchange privilege with notice to shareholders as required by
law.
X. DISTRIBUTION PLANS
The Fund has adopted a Plan of Distribution for each Class of shares (the
"Class A Plan," "Class B Plan," and "Class C Plan") in accordance with Rule
12b-1 under the 1940 Act pursuant to which certain distribution and service
fees are paid.
Pursuant to the Class A Plan, the Fund reimburses PFD for its actual
expenditures to finance any activity primarily intended to result in the sale
of Class A shares or to provide services to holders of Class A shares,
provided the categories of expenses for which reimbursement is made are
approved by the Fund's Board of Trustees. As of the date of this Prospectus,
the Board of Trustees has approved the following categories of expenses for
Class A shares of the Fund: (i) a service fee to be paid to qualified
broker-dealers in an amount not to exceed 0.25% per annum of the Fund's
average daily net assets attributable to Class A shares; (ii) reimbursement
to PFD for its expenditures for broker-dealer commissions and employee
compensation on certain sales of the Fund's Class A shares with no initial
sales charge (see "How to Buy Fund Shares"); and (iii) reimbursement to PFD
for expenses incurred in providing services to Class A shareholders and
supporting broker-dealers and other organizations (such as banks and trust
companies) in their efforts to provide such services. Banks are currently
prohibited under the Glass-Steagall Act from providing certain underwriting
or distribution services. If a bank was prohibited from acting in any
capacity or providing any of the described services, management would
consider what action, if any, would be appropriate.
Expenditures of the Fund pursuant to the Class A Plan are accrued daily
and may not exceed 0.25% of the Fund's average daily net assets attributable
to Class A shares. Distribution expenses of PFD are expected to substantially
exceed the distribution fees paid by the Fund in a given year. The Class A
Plan may not be amended to increase materially the annual percentage
limitation of average net assets which may be spent for the services
described therein without approval of the Fund's Class A shareholders. The
Class A Plan does not provide for the carryover of reimbursable expenses
beyond 12 months from the time the Fund is first invoiced for an expense. The
limited carryover provision in the Class A Plan may result in an expense
invoiced to the Fund in one fiscal year being paid in the subsequent fiscal
year and thus being treated for purposes of calculating the maximum
expenditures of the Fund as having been incurred in the subsequent fiscal
year. In the event of termination or non-continuance of the Class A Plan, the
Fund has 12 months to reimburse any expense which it incurs prior to such
termination or non-continuance, provided that payments by the Fund during
such twelve-month period shall not exceed 0.25% of the Fund's average daily
net assets attributable to the Class A shares during such period. For the
calendar year ended December 31, 1996, there was an allowable carryover of
distribution expenses reimbursable to PFD of $10,575 (less than .09% of the
average net assets attributable to the Class A shares of the Fund).
Both the Class B and the Class C Plan provide that the Fund will pay a
distribution fee at the annual rate of 0.75% of the Fund's average daily net
assets attributable to the applicable Class of shares and will pay PFD a
service fee at the annual rate of 0.25% of the Fund's average daily net
assets attributable to that Class of shares. The distribution fee is intended
to compensate PFD for its distribution services to the Fund. The service fee
is intended to be additional compensation for personal services and/or
account maintenance services with respect to Class B or Class C shares. PFD
also receives the proceeds of any CDSC imposed on the redemption of Class B
or Class C shares.
Commissions of 4%, equal to 3.75% of the amount invested and a first
year's service fee equal to 0.25% of the amount invested in Class B shares,
are paid to broker-dealers who have selling agreements with PFD. PFD may
advance to dealers the first year service fee at a rate up to 0.25% of the
purchase price of such shares and, as compensation therefor, PFD may retain
the service fee paid by the Fund with respect to such shares for the first
year after purchase. Dealers will become eligible for additional service fees
with respect to such shares commencing in the 13th month following the
purchase.
Commissions of up to 1% of the amount invested in Class C shares,
consisting of 0.75% of the amount invested and a first year's service fee of
0.25% of the amount invested, are paid to broker-dealers who have selling
agreements with PFD. PFD may advance to dealers the first year service fee at
a rate up to 0.25% of the purchase price of such shares and, as compensation
therefore, PFD may retain the service fee paid by the Fund with respect to
such shares for the first year after purchase. Commencing in the 13th month
following the purchase of Class C shares, dealers will become eligible for
additional annual distribution fees and service fees of up to 0.75% and
0.25%, respectively, of the net asset value of such shares.
When a broker-dealer sells Class B or Class C shares and elects, with
PFD's approval, to waive its right to receive the commission normally paid at
the time of the sale, PFD may cause all or a portion of the distribution fees
described above to be paid to the broker-dealer.
Dealers may from time to time be required to meet certain criteria in
order to receive service fees. PFD or its affiliates are entitled to retain
all service fees payable under the Class B Plan or the Class C Plan for which
there is no dealer of record or for which qualification standards have not
been met as partial consideration for personal services and/or account
maintenance services performed by PFD or its affiliates for shareholder
accounts.
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION
The Fund has elected to be treated, has qualified and intends to qualify
each year as a "regulated investment company" under Subchapter M of the Code,
so that it will not pay federal income tax on income and capital gains
distributed to shareholders at least annually as required under the Code.
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Under the Code, the Fund will be subject to a nondeductible 4% 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's policy is to pay to shareholders dividends from net investment
income, if any, and to make distributions from net long-term capital gains,
if any, annually, usually in December. Distributions from net short-term
capital gains, if any, may be paid with such dividends; 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.
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" and "Directed Dividends" below.
The Fund's dividends and distributions generally will not qualify for any
dividends-received deduction available to corporate shareholders.
The Fund will be subject to foreign withholding taxes or other foreign
taxes on income (including interest, dividend and capital gains taxes imposed
by India and possibly other countries) from 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 will
permit certain of its shareholders to take a credit or, a deduction for all
or a portion of foreign income or other qualified taxes, including Indian
income taxes on interest, dividends and capital gains, 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. Certain shareholders,
including shareholders not subject to U.S. federal income taxation, will not
be entitled to the benefit of a deduction or credit with respect to foreign
income taxes paid by the Fund. As a result of certain limitations under the
Code on foreign tax credits, which have different effects depending upon a
shareholder's particular tax situation, shareholders may be able to claim a
credit only for less than the full amount of their proportionate share of the
foreign taxes paid by the Fund. Further, the creditable portion may be
smaller to the extent the Fund's income consists of U.S.-source income,
generally including capital gains from the sale of both U.S. and foreign
stocks and securities and certain foreign currency gains, rather than
foreign-source income such as interest and dividends on foreign stocks and
securities.
Dividends and other distributions and the proceeds of redemptions,
exchanges or repurchases of Fund shares paid to individuals and other
non-exempt payees will be subject to 31% backup withholding of federal income
tax if the Fund is not provided with the shareholder's correct taxpayer
identification number and certification that the number is correct and that
the shareholder is not subject to backup withholding or the Fund receives
notice from the IRS or a broker that such withholding applies. Please refer
to the Account Application for additional information.
The description above relates only to U.S. federal income tax consequences
for shareholders who are U.S. persons, i.e., U.S. citizens or residents or
U.S. corporations, partnerships, trusts or estates, and who are subject to
U.S. federal income tax. Non-U.S. shareholders and tax-exempt shareholders
are subject to different tax treatment that is not described above.
Shareholders should consult their own tax advisors regarding state, local and
other applicable tax laws.
XII. SHAREHOLDER SERVICES
PSC is the shareholder services and transfer agent for shares of the Fund.
PSC, a Massachusetts corporation, is a wholly owned subsidiary of PGI. PSC's
offices are located at 60 State Street, Boston, Massachusetts 02109, and
inquiries to PSC should be mailed to Pioneering Services Corporation, P.O.
Box 9014, Boston, Massachusetts 02205-9014. Brown Brothers Harriman & Co.
(the "Custodian") serves as 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. The
Custodian oversees a network of subcustodians and depositories in the
countries in which the Fund may invest. The Custodian has appointed Standard
Chartered Bank as subcustodian to hold investments purchased by the Fund in
India.
Account and Confirmation Statements
PSC maintains an account for each shareholder and all transactions of the
shareholder are recorded in this account. Confirmation statements showing
details of transactions are sent to shareholders as transactions occur except
Automatic Investment Plan transactions which are confirmed quarterly. The
Pioneer Combined Account Statement, mailed quarterly, is available to all
shareholders who have more than one Pioneer mutual fund account.
Shareholders whose shares are held in the name of an investment
broker-dealer or other party will not normally have an account with the Fund
and might not be able to utilize some of the services available to
shareholders of record. Examples of services which might not be available are
pur-
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chases, exchanges or redemptions by mail or telephone, automatic reinvestment
of dividends and capital gains distributions, withdrawal plans, Letters of
Intention, Rights of Accumulation and newsletters.
Additional Investments
You may add to your account by sending a check (minimum of $50 for Class A
shares and $500 for Class B and Class C shares) to PSC (account number and
Class of shares should be clearly indicated). The bottom portion of a
confirmation statement may be used as a remittance slip to make additional
investments.
Additions to your account, whether by check or through a Pioneer
Investomatic Plan, are invested in full and fractional shares of the Fund at
the applicable offering price in effect as of the close of regular trading on
the Exchange on the day of receipt.
Automatic Investment Plans
You may arrange for regular automatic investments of $50 or more through
government/military allotments, payroll deduction or through a Pioneer
Investomatic Plan. A Pioneer Investomatic Plan provides for a monthly or
quarterly investment by means of a preauthorized electronic funds transfer or
draft drawn on a checking account. Pioneer Investomatic Plan investments are
voluntary, and you may discontinue the Plan at any time without penalty upon
30 days' written notice to PSC. PSC acts as agent for the purchaser, the
broker-dealer and PFD in maintaining these plans.
Financial Reports and Tax Information
As a shareholder, you will receive financial reports at least
semiannually. In January of each year, the Fund will mail to you information
about the tax status of dividends and distributions.
Distribution Options
Dividends and capital gains distributions, if any, will automatically be
invested in additional shares of the Fund, at the applicable net asset value
per share, unless you indicate another option on the Account Application. Two
other options available are (a) dividends in cash and capital gains
distributions in additional shares; and (b) all dividends and capital gains
distributions in cash. These two options are not available, however, for
retirement plans or for an account with a net asset value of less than $500.
Changes in your distribution options may be made by written request to PSC.
If you elect to receive either dividends or capital gains or both in cash
and a distribution check issued to you is returned by the U.S. Postal Service
as not deliverable or a distribution check remains uncashed for six months or
more, the amount of the check may be reinvested in your account. Such
additional shares will be purchased at the then current net asset value.
Furthermore, the distribution option on the account will automatically be
changed to the reinvestment option until such time as you request a different
option by writing to PSC.
Directed Dividends
You may elect (in writing) to have the dividends paid by one Pioneer
mutual fund account invested in a second Pioneer mutual fund account. The
value of this second account must be at least $1,000 ($500 for Pioneer Fund
or Pioneer II). Invested dividends may be in any amount, and there are no
fees or charges for this service. Retirement plan shareholders may only
direct dividends to accounts with identical registrations, i.e., PGA IRA Cust
for John Smith may only go into another account registered PGA IRA Cust for
John Smith.
Direct Deposit
If you have elected to take distributions, whether dividends or dividends
and capital gains, in cash, or have established a Systematic Withdrawal Plan,
you may choose to have those cash payments deposited directly into your
savings, checking, or NOW bank account. You may establish this service by
completing the appropriate section on the Account Application when opening a
new account or the Account Options Form for an existing account.
Voluntary Tax Withholding
You may request (in writing) that PSC withhold 28% of the dividends and
capital gains distributions paid from an account (before any reinvestment)
and forward the amount withheld to the IRS as a credit against your federal
income taxes. This option is not available for retirement plan accounts or
for accounts subject to backup withholding.
Telephone Transactions and Related Liabilities
Your account is automatically authorized to have telephone transaction
privileges unless you indicate otherwise on your Account Application or by
writing to PSC. You may purchase, sell or exchange Fund shares by telephone.
See "How to Buy Fund Shares," "How to Sell Fund Shares" and "How to Exchange
Fund Shares" for more information. For personal assistance, call
1-800-225-6292 between 8:00 a.m. and 9:00 p.m. Eastern Time on weekdays.
Computer-assisted transactions may be available to shareholders who have pre-
recorded certain bank information (see "FactFone(SM)"). You are strongly
urged to consult with your financial representative prior to requesting any
telephone transaction. To confirm that each transaction instruction received
by telephone is genuine, PSC will record each telephone transaction, require
the caller to provide the personal identification number ("PIN") for the
account and send you a written confirmation of each telephone transaction.
Different procedures may apply to accounts that are registered to non-U.S.
citizens or that are held in the name of an institution or in the name of an
investment broker-dealer or other third-party. If reasonable procedures, such
as those described above, are not followed, the Fund may be liable for any
loss due to unauthorized or fraudulent instructions. The Fund may implement
other procedures from time to time. In all other cases, neither the Fund nor
PSC nor PFD will be responsible for the authenticity of instructions received
by telephone; therefore, you bear the risk of loss for unauthorized or
fraudulent telephone transactions.
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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 mutual fund shareholders by dialing 1-800-225-4321.
FactFone(SM) allows you to obtain current information on your Pioneer mutual
fund accounts and to inquire about the prices and yields of all publicly
available Pioneer mutual funds. In addition, you may use FactFone(SM) to make
computer-assisted telephone purchases, exchanges and redemptions from your
Pioneer mutual fund accounts if you have activated your PIN. Telephone
purchases and redemptions require the establishment of a bank account of
record. You are strongly urged to consult with your financial representative
prior to requesting any telephone transaction. Shareholders whose accounts
are registered in the name of a broker-dealer or other third party may not be
able to use FactFone(SM). See "How to Buy Fund Shares," "How to Exchange Fund
Shares," "How to Sell Fund Shares" and "Telephone Transactions and Related
Liabilities." Call PSC for assistance.
Retirement Plans
You should contact the Retirement Plans Department of PSC at
1-800-622-0176 for information relating to retirement plans for business,
age-weighted profit sharing plans, Simplified Employee Pension Plans, IRAs
and Section 403(b) retirement plans for employees of certain non-profit
organizations and public school systems, all of which are available in
conjunction with investments in the Fund. The Account Application
accompanying this Prospectus should not be used to establish any of these
plans. Separate applications are required.
Telecommunications Device for the Deaf (TDD)
If you have a hearing disability and access to TDD keyboard equipment, you
can call our TDD number toll-free at 1-800-225-1997, weekdays from 8:30 a.m.
to 5:30 p.m. Eastern Time, to contact our telephone representatives with
questions about your account.
Systematic Withdrawal Plans
If your account has a total value of at least $10,000, you may establish a
Systematic Withdrawal Plan ("SWP") providing for fixed payments at regular
intervals. Withdrawals from Class B and Class C share accounts are limited to
10% of the value of the account at the time the SWP is implemented. See
"Waiver or Reduction of Contingent Deferred Sales Charge" for more
information. Periodic checks of $50 or more will be sent to you, or any
person designated by you, monthly or quarterly, and your periodic redemptions
of shares may be taxable to you. Payments can be made either by check or
electronic transfer to a bank account designated by you. If you direct that
withdrawal checks be paid to another person after you have opened your
account, a signature guarantee must accompany your instructions. Purchases of
Class A shares of the Fund at a time when you have a SWP in effect may result
in the payment of unnecessary sales charges and may therefore be
disadvantageous.
You may obtain additional information by calling PSC at 1-800-225-6292 or
by referring to the Statement of Additional Information.
Reinvestment Privilege (Class A Shares Only)
If you redeem all or part of your Class A shares of the Fund, you may
reinvest all or part of the redemption proceeds without a sales charge in
Class A shares of the Fund if you send a written request to PSC not more than
90 days after your shares were redeemed. Your redemption proceeds will be
reinvested at the next determined net asset value of the Class A shares of
the Fund immediately after receipt of the written request for reinstatement.
You may realize a gain or loss for federal income tax purposes as a result of
the redemption, and special tax rules may apply if a reinstatement occurs. In
addition, if a redemption resulted in a loss and an investment is made in
shares of the Fund within 30 days before or after the redemption, you may not
be able to recognize the loss for federal income tax purposes. Subject to the
provisions outlined under "How to Exchange Fund Shares" above, you may also
reinvest in Class A shares of other Pioneer mutual funds; in this case you
must meet the minimum investment requirement for each fund you enter.
The 90-day reinstatement period may be extended by PFD for periods of up
to one year for shareholders living in areas that have experienced a natural
disaster, such as a flood, hurricane, tornado, or earthquake.
The options and services available to shareholders, including the terms of
the Exchange Privilege and the Pioneer Investomatic Plan, may be revised,
suspended, or terminated at any time by PFD or by the Fund. You may establish
the services described in this section when you open your account. You may
also establish or revise many of them on an existing account by completing an
Account Options Form, which you may request by calling 1-800-225-6292.
XIII. THE FUND
Pioneer India Fund is an open-end, diversified management investment
company (commonly referred to as a mutual fund) organized as a Delaware
business trust on April 4, 1994. The Fund has authorized an unlimited number
of shares of beneficial interest. As an open-end management investment
company, the Fund continuously offers its shares to the public and under
normal conditions must redeem its shares upon the demand of any shareholder
at the then current net asset value per share, less any applicable CDSC. See
"How to Sell Fund Shares." The Fund is not required, and does not intend, to
hold annual shareholder meetings, although special meetings may be called for
the purpose of electing or removing Trustees, changing fundamental investment
restrictions or approving a management or subadvisory contract.
The Trustees have the authority, without further shareholder approval, to
classify and reclassify the shares of the
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Fund, or any additional series of the Fund, into one or more classes. As of
the date of this Prospectus, the Trustees have authorized the issuance of
three classes of shares, designated Class A, Class B and Class C. The shares
of each class represent an interest in the same portfolio of investments of
the Fund. Each class has equal rights as to voting, redemption, dividends and
liquidation, except that each class bears different distribution and transfer
agent fees and may bear other expenses properly attributable to the
particular class. Class A, Class B and Class C shareholders have exclusive
voting rights with respect to the Rule 12b-1 distribution plans adopted by
holders of those shares in connection with the distribution of shares. The
Fund reserves the right to create and issue additional series of shares.
In addition to the requirements under Delaware law, the Declaration of
Trust provides that a shareholder of the Fund may bring a derivative action
on behalf of the Fund only if the following conditions are met: (a)
shareholders eligible to bring such derivative action under Delaware law who
hold at least 10% of the outstanding shares of the Fund, or 10% of the
outstanding shares of the series or class to which such action relates, shall
join in the request for the Trustees to commence such action; and (b) the
Trustees must be afforded a reasonable amount of time to consider such
shareholder request and investigate the basis of such claim. The Trustees
shall be entitled to retain counsel or other advisers in considering the
merits of the request and shall require an undertaking by the shareholders
making such request to reimburse the Fund for the expense of any such
advisers in the event that the Trustees determine not to bring such action.
When issued and paid for in accordance with the terms of the Prospectus
and Statement of Additional Information, shares of the Fund are fully paid
and non-assessable by the Fund. Shares will remain on deposit with the Fund's
transfer agent and certificates will not normally be issued. The Fund
reserves the right to charge a fee for the issuance of certificates.
XIV. INVESTMENT RESULTS
The average annual total return (for a designated period of time) on an
investment in the Fund may be included in advertisements, and furnished to
existing or prospective shareholders. The average annual total return for
each Class is computed in accordance with the SEC's standardized formula. The
calculation for all Classes assumes the reinvestment of all dividends and
distributions at net asset value and does not reflect the impact of federal
or state income tax. In addition, for Class A shares the calculation assumes
the deduction of the maximum sales charge of 5.75%; for Class B and Class C
shares the calculation reflects the deduction of any applicable CDSC. The
periods illustrated would normally include one, five and ten years (or since
the commencement of the public offering of the shares of a Class, if shorter)
through the most recent calendar quarter.
One or more additional measures and assumptions, including but not limited
to historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share
values; or any graphic illustration of such data may also be used. These data
may cover any period of the Fund's existence and may or may not include the
impact of sales charges, taxes or other factors.
Other investments or savings vehicles and/or unmanaged market indices,
indicators of economic activity or averages of mutual fund performance may be
cited or compared with the investment results of the Fund. Rankings or
listings by magazines, newspapers or independent statistical or rating
services, such as Lipper Analytical Services, Inc., may also be referenced.
The Fund's investment results will vary from time to time depending on
market conditions, the composition of the Fund's portfolio and operating
expenses of the Fund. All quoted investment results are historical and should
not be considered representative of what an investment in the Fund may earn
in any future period. For further information about the calculation methods
and uses of the Fund's investment results, see the Statement of Additional
Information.
APPENDIX A
INDIA
The information set forth in this Appendix is based on various publicly
available sources. No representation is made that any correlation exists or
will exist between India or its economy in general and the performance of the
Fund.
I. THE COUNTRY OF INDIA
Geography and Population
India is the seventh largest country in the world, covering an area of
approximately 3,300,000 square kilometers. It is situated in South Asia and
is bordered by Nepal, Bhutan and China in the north, Myanmar and Bangladesh
in the east, Pakistan in the west and Sri Lanka in the south.
India is the world's second most populous country in the world. In 1995,
India's total population was estimated to be 911 million. Although migration
from rural to urban centers has been increasing steadily, India's population
remains predominantly rural; the 1991 census reported that 74.3% of the total
population still lives in the countryside. India's total population is
projected to exceed 1 billion by the year 2000.
Hindi is the official national language and is spoken by approximately 30%
of India's population. English is widely used in India as the language of
jurisprudence, commercial transactions and higher and technical education.
Government
India became independent from the United Kingdom in 1947. India is a
federal republic and is governed by a parliamentary democracy under the
Constitution of India. The executive, legislative and judicial functions of
India's Government are separated and certain powers are reserved to India's
25 States and 7 Union Territories.
In general, the federal Parliament has jurisdiction over banking, customs,
currency and communication laws, national defense and foreign affairs. The
States have jurisdiction over
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public health, education, local law and order and agricultural affairs. The
federal and state governments have concurrent legislative authority over a
variety of economic and social matters, although federal law is superior to
state law in these areas.
International Relations
With the exception of Pakistan, India's foreign relations are generally
stable. In 1993, India renegotiated its foreign debt to Russia and undertook
to rebuild its trade ties with the Central Asian states emerging from the
break-up of the former Soviet Union. In addition, in September 1993 India and
China agreed to pursue a negotiated settlement of the two countries'
longstanding border dispute. Although relations with the U.S. have generally
improved following the breakup of the former Soviet Union, important
differences persist between the U.S. and India regarding relations with
Pakistan, protection of intellectual property rights and India's refusal to
become a signatory to the Nuclear Non-Proliferation Treaty. More than one
million persons of Indian origin live in the United States.
India's relations with Pakistan remain tense. The principal dispute
between the two countries relates to Pakistan's claim to the Indian border
state of Jammu and Kashmir, which was created in connection with the
partition of India at the time of independence.
Ethnic and Cultural Diversity and Conflict
India has a diverse mix of ethnic and cultural groups. The major line of
distinction, however, tends to be religion, which in some areas closely
mirrors cultural or ethnic divisions as well. There are a large number of
religions practiced in India, with Hinduism being the major religion,
followed by an estimated 82% of the total population.
Religious and ethnic differences have been a recurring source of conflict
in India throughout the post-independence era and on several occasions have
erupted in violence. Terrorists bombings have occurred from time to time in a
number of Indian cities.
Overview of India's Economy and Recent Developments
Modern economic development in India began in the mid-1940s with the
publication of the Bombay Plan. The Planning Commission was established in
1950 to assess the country's available resources and to identify growth
areas. A centrally planned economic model was adopted, and in order to
control the direction of private investment, all investment and major
economic decisions required government approval. Foreign investment was
allowed only selectively. This protectionist regime held back development of
India's economy until the mid-1980s when there began to be some move towards
liberalization and market orientation of the economy. With the measures
introduced in the budget of 1985, the annual growth of the country's real
gross domestic product ("GDP") rose from an average 3-4 percent since the
1940s to an average 6.1 percent between 1986 and 1990.
In 1991, faced with a rising oil import bill, an adverse balance of
payments and a large foreign debt, India had reached a position where it was
unable to obtain further commercial borrowings. At this time, the government
of Prime Minister Narasimha Rao took office and has since moved to
significantly reform the structure of India's economic system. The
Government's reforms generally have been supported by consensus among India's
other main political parties, including the BJP.
In July 1991, the Government's Finance Minister, Dr. Manmohan Singh,
presented the Government's first budget and announced a new industrial
policy. Consequently, for many industrial sectors, it became no longer
necessary to obtain government approval for new investments. Foreign
companies can now hold up to 51 percent of an Indian company as opposed to 40
percent previously. As a result of these policies and other factors, foreign
investment in India has greatly increased in recent years. For example, U.S.
private sector investment in India during 1992 and 1993 exceeded the total
amount of money invested in India by U.S. companies during the previous 40
years.
The process of liberalization was taken further with the budget of
February 1992 when the rupee was made partially convertible and import
tariffs were reduced. Personal tax rates were brought down and it was
announced that foreign institutional investors would be able to invest
directly in the Indian capital markets. In September 1992, the guidelines for
foreign institutional investors were published and a number of foreign
institutional investors have been registered by the Securities and Exchange
Board of India ("SEBI").
While political instability and communal violence have led to a slowdown
in India's economic growth and the implementation of reforms, PMC and the
Indian Adviser believe that the prospects for economic growth and
liberalization remain sound.
The budgets of February 1993 and 1994 continued to demonstrate the
Government of India's commitment to economic reform. In particular, the rupee
was allowed to float freely, interest rates were reduced and major reductions
were made in customs and excise duties. Tax holidays were given to encourage
new investment in industrially backward areas and in new power projects. In
order to stimulate capital investment a system for computing long-term
capital gains tax was introduced, which favors those whose gains accrue over
a longer period. Further, the proposed Finance Bill 1994 proposes to reduce
tax rates for certain corporations and withdraw a surcharge applicable to
individual tax rates.
The Government of India continued to focus on its efforts on financial
reform in its 1995 and 1996 budgets. The Government's fiscal deficit had been
reduced progressively from 8.4% of GDP in 1992 to 6.7% in 1996 due to
decreases in tax reforms, greater control in government expenditure,
reduction in subsidies and the sale of certain equity stakes in companies or
undertakings owned by the Government. In its effort to simplify tax systems,
the Government of India reduced corporate tax rates from 50% to 40% for 1995
and 1996.
II. INDIA'S SECURITIES MARKET
There currently are 25 recognized stock exchanges in India (including the
Over The Counter Exchange of India). Activity
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and broad interest in the market have increased in recent years compared to
historical norms. This increase reflects the growth of the private sector's
role in the Indian economy and greater participation in the market by
individual investors and foreign institutional investors. In addition, the
Government of India has actively promoted expanded capital market activity by
both foreign and domestic investors and has adopted policies designed to
increase domestic companies' reliance on the capital markets as a source of
financing.
In 1991, the Government of India introduced a program of economic
structural reforms, including certain measures to stimulate growth and
activity in India's capital markets. These reforms included the grant of
statutory authority to the SEBI as an independent agency to promulgate and
enforce rules governing India's capital markets. The SEBI has undertaken a
number of initiatives to reform the Indian securities market and regulate the
activities of securities professionals. The SEBI has occasionally encountered
resistance to its reforms from portions of India's community of securities
brokers.
A and B Shares
Equity securities that are traded in the Indian securities markets are
divided into two groups, A shares (also known as "specified shares") and B
shares (also known as "non-specified shares"). A shares are actively traded,
listed equity shares of companies which have a large equity base, and which
meet certain other requirements. All other listed equity shares traded in
India's securities markets are B shares.
The distinction between A shares and B shares is important because the
trade settlement practices for these two classes of securities are different.
While B shares trade only on a cash basis, trades in A shares may be effected
on either a cash basis or a "squared-up" basis. Squaring up a position
involves effecting a trade which is the opposite of an earlier trade. On the
settlement date for such a trade, only the net cash from the offsetting or
squared-up trades is transferred. Transactions in A shares are settled once
every 14 days through the Bombay Stock Exchange's clearing house.
Transactions involving B shares are settled once every 7 days among exchange
members.
The Bombay Stock Exchange
Shares listed on the Bombay Stock Exchange ("BSE") account for over 90% of
the market capitalization of securities listed on India's 25 stock exchanges.
The BSE was established in 1875 and is a self-regulatory organization owned
by its members and governed by a Board of Governors. The BSE at present
consists of over 560 member brokers. The BSE has a high daily trading volume,
both in terms of the number of transactions and their value. Active trading
on the BSE and other Indian stock exchanges is concentrated in shares of
relatively few issuers and only a limited portion of many companies' shares
are part of the public float. However, compared to the securities markets of
many other emerging countries, India's securities market is broad-based and
unconcentrated in that the ten largest issuers represent a relatively small
portion of total market capitalization.
The BSE is officially open Monday through Friday. Trading is normally
conducted from 10:00 a.m. to 3:30 p.m. each day using a screen-based trading
system. The BSE is closed on bank holidays and certain religious holidays.
Special trading sessions are held outside normal trading hours simultaneously
with the annual Government budget announcements and on the commencement of
the BSE's financial year. A special trading session for odd lots is held for
an hour on Saturdays.
Orders executed on the BSE are transmitted from the offices of brokers to
the trading floor for execution by an open outcry auction. There are separate
trading posts for different groups of securities. Spreads may vary
considerably. A computerized system is used for settling daily transactions.
The BSE clearing house is managed by the State Bank of India and receives
payments and deliveries on behalf of members of the BSE in respect of A
shares. For B shares, delivery and payment is made outside the clearing house
directly among members. There is usually a lag of a few days between delivery
of securities by sellers and receipt of payment.
The following table shows performance information for the periods
indicated for the Bombay Stock Exchange, as represented by the BSE Sensitive
Index, which is comprised of securities of large capitalization issuers.
BSE SENSITIVE INDEX
[Base Year = 1979-80 = 100]
Period-End Index Level
------------ -------------
1982 235.83
1983 252.92
1984 271.87
1985 527.36
1986 524.45
1987 442.17
1988 666.26
1989 778.64
1990 1048.29
1991 1908.85
1992 2615.37
1993 3362.60
1994 3929.90
1995 3110.49
1996 3085.20
The Over the Counter Exchange of India
The Over the Counter Exchange of India ("OTCEI") was built along the lines
of the U.S. Nasdaq National Market and began operations in mid-1992. Trading
on this exchange is fully automated. The OTCEI is a "quote driven market"
with a network of market makers and dealers. The OTCEI is operated only in
Bombay at present, and it intends to commence trading in Delhi and Madras.
The OTCEI mainly provides an avenue for raising funds for small companies
having a capital float between 300,000 rupees and 250 million rupees.
Creation of the National Stock Exchange
The NSE was created by the Government of India in part to increase the
interconnectivity among India's several stock exchanges and thereby to reduce
interexchange arbitrage opportunities (i.e., to increase the transparency of
India's
23
<PAGE>
securities exchanges). NSE commenced trading in late 1994 with fully
computerized trading, settlement and information dissemination systems.
Financial institutions own the NSE but they must apply and qualify for
trading on the same basis as others wishing to trade. Qualifications for
membership include capital adequacy standards and educational training.
Equity trading is open to both institutional and individual investors.
Trading volumes on the NSE have been increasing steadily, at time exceeding
the BSE's volume. Debt and equity trading will eventually be book-entry with
a central depositary. Futures and option trading began in 1995.
APPENDIX B
CERTAIN INVESTMENT PRACTICES
Forward Foreign Currency Exchange Contracts
The Fund has the ability to hold a portion of its assets in foreign
currencies and to enter into forward foreign currency exchange contracts to
facilitate settlement of foreign securities transactions or to protect
against changes in foreign currency exchange rates. The Fund might sell a
foreign currency on either a spot or forward basis to hedge against an
anticipated decline in the U.S. dollar value of securities in its portfolio
or securities it intends or has contracted to sell or to preserve the U.S.
dollar value of dividends, interest or other amounts it expects to receive.
Although this strategy could minimize the risk of loss due to a decline in
the value of the hedged foreign currency, it could also limit any potential
gain which might result from an increase in the value of the currency.
Alternatively, the Fund might purchase a foreign currency or enter into a
forward purchase contract for the currency to preserve the U.S. dollar price
of securities it is authorized to purchase or has contracted to purchase.
If the Fund enters into a forward contract to buy foreign currency for any
purpose, the Fund will be required to place cash or liquid, high grade debt
securities in a segregated account of the Fund maintained by the Fund's
custodian in an amount equal to the value of the Fund's total assets
committed to the consummation of the forward contract.
The use of forward foreign currency exchange contracts is a highly
specialized activity which involves investment techniques and risks that are
different from those associated with ordinary portfolio transactions. The use
of forward foreign currency exchange contracts 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 a hedging position may not
match the foreign currency fluctuations intended to be hedged, and (3) market
risk that an incorrect prediction of exchange rates by PMC or the Indian
Adviser may cause the Fund to perform less favorably than if such position
had not been entered. The loss that may be incurred by the Fund in entering
into forward foreign currency exchange contracts is potentially unlimited.
There is no limit on the percentage of the Fund's assets that may be invested
in forward foreign currency exchange contracts.
There currently is no market, or only a limited market, for forward
foreign currency exchange contracts with respect to the rupee and the
currencies of certain other foreign countries in which the Fund may invest.
Consequently, there can be no assurance that such contracts will be available
for hedging currency risks at the times when the Fund wishes to use them. In
addition, the Fund's transactions in forward foreign currency exchange
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.
Borrowing
The Fund may borrow money only from banks and only for temporary emergency
purposes such as in connection with the redemption of Fund shares or in
connection with the clearance of portfolio transactions. The aggregate amount
of the Fund's borrowings may not exceed 33-1/3% of the Fund's total assets
(including the amount borrowed) taken at market value. In addition, the Fund
will not purchase securities for its portfolio while the Fund's outstanding
borrowings exceed 5% of its total assets. The Fund will incur interest and
other expenses in connection with its borrowings.
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 illiquid securities, including
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 may adopt guidelines and delegate to PMC
the daily function of determining and monitoring the liquidity of restricted
securities. The Board,
24
<PAGE>
however, will retain sufficient oversight and be 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 will carefully monitor the Fund's investments in
these securities, focusing on such important factors, among others, as
valuation, liquidity and availability of information. This investment
practice could have the effect of increasing the level of illiquidity in the
Fund to the extent that qualified institutional buyers become for a time
uninterested in purchasing these restricted securities. 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.
When-Issued Securities and Forward Commitments
The Fund may purchase securities on a when-issued, delayed delivery or
forward commitment basis. When these transactions are negotiated, the price
of the securities is fixed at the time of the commitment, but delivery and
payment take place after the date of the commitment. When-issued securities
and forward commitments involve a risk of loss if the value of the security
to be purchased declines prior to the settlement date. When the Fund
purchases securities on a when-issued, delayed delivery or forward commitment
basis, the Fund's custodian will maintain in a segregated account cash or
liquid, high grade debt securities having a value (determined daily) at least
equal to the amount of the Fund's purchase commitment.
25
<PAGE>
THE PIONEER FAMILY OF MUTUAL FUNDS
Growth Funds
Global/International
Pioneer Emerging Markets Fund
Pioneer Europe Fund
Pioneer Gold Shares
Pioneer India Fund
Pioneer International Growth Fund
Pioneer World Equity Fund
United States
Pioneer Capital Growth Fund
Pioneer Growth Shares
Pioneer Mid-Cap Fund
Pioneer Small Company Fund
Pioneer Micro-Cap Fund*
Growth and Income Funds
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer Real Estate Shares
Pioneer II
Income Funds
Taxable
Pioneer America Income Trust
Pioneer Bond Fund
Pioneer Short-Term Income Trust*
Tax-Exempt
Pioneer Intermediate Tax-Free Fund**
Pioneer Tax-Free Income Fund**
Money Market Fund
Pioneer Cash Reserves Fund
*Offers Class A and B Shares only
**Not suitable for retirement accounts
26
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Notes
<PAGE>
[Pioneer logo]
Pioneer India Fund
60 State Street
Boston, Massachusetts 02109
OFFICERS
JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
JASKARAN S. TEJA, Vice President
NORMAN KURLAND, Ph.D., Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
INVESTMENT MANAGER
PIONEERING MANAGEMENT CORPORATION
INDIAN INVESTMENT ADVISER
ITI PIONEER AMC LTD.
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANT
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR LLP
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: 1-800-225-6292
SERVICE INFORMATION
If you would like information on the following, please call:
Existing and new accounts, prospectuses,
applications and service forms
and telephone transactions 1-800-225-6292
FactFone(SM)
Automated fund yields, automated prices and
account information 1-800-225-4321
Retirement plans 1-800-622-0176
Toll-free fax 1-800-225-4240
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
0297-4020
(c)Pioneer Funds Distributor, Inc.
<PAGE>
PIONEER INDIA FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
CLASS A, CLASS B AND CLASS C SHARES
February 28, 1997
This Statement of Additional Information is not a Prospectus, but should be
read in conjunction with the Prospectus dated February 28, 1997 (the
"Prospectus") of Pioneer India Fund (the "Fund"). A copy of the Prospectus can
be obtained free of charge by calling Shareholder Services at 1-800-225-6292 or
by written request to the Fund at 60 State Street, Boston, Massachusetts 02109.
The most recent Annual Report to Shareholders is attached to, and is hereby
incorporated into, this Statement of Additional Information.
TABLE OF CONTENTS
Page
1. Investment Policies, Restrictions and Risk Factors..................2
2. Management of the Fund..............................................10
3. Investment Advisers.................................................14
4. Principal Underwriter...............................................15
5. Distribution Plans..................................................16
6. Shareholder Servicing/Transfer Agent................................19
7. Custodian...........................................................20
8. Independent Public Accountant.......................................20
9. Portfolio Transactions..............................................20
10. Tax Status..........................................................22
11. Description of Shares...............................................26
12. Certain Liabilities.................................................27
13. Determination of Net Asset Value....................................28
14. Systematic Withdrawal Plan..........................................28
15. Letter of Intention.................................................29
16. Investment Results..................................................30
17. Financial Statements................................................32
APPENDIX A--........................................................34
APPENDIX B--........................................................57
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED
OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
<PAGE>
1. INVESTMENT POLICIES, RESTRICTIONS AND RISK FACTORS
The Fund's Prospectus identifies the investment objective and the principal
investment policies of the Fund and the risk factors associated with the Fund's
investments. Additional investment policies of the Fund and a supplemental
discussion of applicable risk factors are set forth below. This Statement of
Additional Information should be read in conjunction with the Prospectus.
Capitalized terms not otherwise defined herein have the meaning given to them in
the Prospectus.
RISK FACTORS ASSOCIATED WITH INVESTMENTS IN INDIA AND OTHER FOREIGN COUNTRIES
The Fund is intended for long-term investors who can accept the risks
associated with investing primarily in equity securities of Indian Companies (as
defined in the Prospectus) and other foreign issuers, as well as the risks
associated with investments quoted or denominated in foreign currencies. In
addition, certain of the Fund's potential investment and management techniques
entail special risks. There can be no assurance that the Fund will achieve its
investment objective. See "Investment Objective and Policies--Risk Factors" in
the Prospectus.
The securities markets of India and most other countries with emerging
markets are each less liquid and subject to greater price volatility and have a
smaller market capitalization than the United States ("U.S.") securities market.
Issuers and securities markets in India and these other countries are not
subject to as extensive and frequent accounting, financial and other reporting
requirements or as comprehensive government regulations as are issuers and
securities markets in the U.S.. Certain of the securities markets in which the
Fund may invest are marked by a relatively high concentration of market
capitalization and trading volume in a small number of issuers representing a
limited number of industries, as well as a high concentration of ownership of
such securities by a limited number of investors. See "Risk Factors" and
"Restrictions on Investment in India" in the Prospectus. The limited liquidity
of these securities markets may also affect the Fund's ability to accurately
value its portfolio securities or to acquire or dispose of securities at the
price and time it wishes to do so or in order to meet redemption requests.
Foreign investment in the securities market of India and in certain other
emerging markets is restricted or controlled to varying degrees. These
restrictions may limit the Fund's ability to invest in these countries and may
increase the expenses of the Fund. For a description of the restrictions on
foreign investment in India, see "Restrictions on Investment in India" in the
Prospectus and Appendix A to the Prospectus.
India and other emerging countries are subject to a greater degree of
economic, political and social instability than is the case in the U.S. and most
of the Western European countries. Such instability may result from, among other
things, the following: (i) authoritarian governments or military involvement in
political and economic decision making, including changes or attempted changes
in governments through extra-constitutional means; (ii) popular unrest
associated with demands for improved political, economic or social conditions;
(iii) internal insurgencies; (iv) hostile relations with neighboring countries;
and (v) ethnic, religious and racial disaffection or conflict. Such economic,
political and social instability could disrupt the principal financial markets
in which the Fund invests and adversely affect the value of the Fund's assets.
For a description of possible sources of economic, political and social
instability in India, see "Risk Factors" and "Restrictions on Investment in
India" in the Prospectus and Appendix A to the Prospectus.
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<PAGE>
The Fund's income and, in some cases, capital gains from foreign securities
will be subject to applicable taxation in certain of the countries in which it
invests, and in some cases treaties may not be available to reduce the otherwise
applicable tax rates. For a description of the Indian taxes that will apply to
the Fund's investments in India, see "Indian Taxes" in the Prospectus. The Fund
may elect, when eligible, to "pass-through" to the Fund's shareholders those
taxes that are treated as income or certain other qualified taxes for U.S.
federal income tax purposes. If the Fund is eligible for and makes such
election, U.S. shareholders will be required to include in income their
proportionate shares of the amount of qualifying non-U.S. taxes paid by the Fund
and may be entitled to claim either a credit or deduction for all or a portion
of such taxes. Certain shareholders, including shareholders not subject to U.S.
taxation, will not be entitled to the benefit of a deduction or credit with
respect to non-U.S. income taxes paid by the Fund. See "Tax Status." If the Fund
does not make the election, it may deduct foreign taxes that it has paid in
computing its income available for distribution to shareholders to satisfy
applicable tax distribution requirements.
Foreign securities markets also have different clearance and settlement
procedures than securities markets in the U.S., and in certain foreign markets
there have been times when settlements have been unable to keep pace with the
volume of securities transactions for a variety of reasons (including, in India,
custodial infrastructure limitations), making it difficult to conduct such
transactions. For a discussion of such problems in India's securities market,
see "Risk Factors" and "Restrictions on Investment in India" in the Prospectus.
Such delays in settlement could result in temporary periods when a portion of
the Fund's assets are uninvested and no return is earned on such assets. The
inability of the Fund to make intended security purchases due to settlement
problems could result in lost opportunities to the Fund due to subsequent
increases in value of the securities. Conversely, the Fund's inability to sell
portfolio securities promptly because of settlement problems may result in
losses to the Fund due to subsequent declines in value of the portfolio
securities. In addition, because payments in connection with securities
transactions in certain foreign countries (including India) generally are made
to and received from brokers (and not clearinghouses) the Fund will be exposed
to broker-counterparty risk in connection with such transactions.
EFFECTS OF FLUCTUATIONS IN FOREIGN CURRENCY EXCHANGE RATES
Because the Fund, under normal circumstances, will invest a substantial
portion of its assets in securities which are denominated or quoted in Indian
rupees (hereinafter "rupees") and other foreign currencies, the strength or
weakness of the U.S. dollar against such currencies will affect the Fund's
investment performance. A decline in the value of any particular foreign
currency against the U.S. dollar will cause a decline in the U.S. dollar value
of the Fund's holdings of securities denominated or quoted in such currency and,
therefore, may 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. Even if the Fund attempts to hedge against the effects
of adverse changes in foreign currency exchange rates, there will be significant
limitations on the Fund's ability to hedge effectively against the currency
risks associated with its portfolio investments. See Appendix B to the
Prospectus.
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.
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<PAGE>
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, however, 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 buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at
one rate, while offering a lesser rate of exchange should the Fund desire to
sell that currency to the dealer.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may conduct foreign currency transactions 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 may enter into forward foreign currency
exchange contracts ("forward contracts") involving rupees or currencies of other
foreign countries in which the Fund may invest. Forward contracts are
contractual agreements to purchase or sell a specified currency at a specified
future date and price set at the time the parties enter into the contract.
Forward contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers.
Currently, there is no market, or only a limited market, for these
contracts with respect to the rupee and the currencies of certain other foreign
countries in which the Fund may invest. Consequently, there can be no assurance
that such contracts will be available for hedging currency risks at the time
when the Fund wishes to use them.
The Fund may enter into forward contracts to hedge against foreign currency
risk in the following circumstances. First, when the Fund intends to purchase or
sell a security denominated or quoted in a foreign currency, or when the Fund
anticipates the receipt in a foreign currency of dividend or interest payments
on such a security that it holds, the Fund may wish to "lock in" the U.S. dollar
price of the security or the U.S. dollar equivalent of such dividend or interest
payment, as the case may be. By entering into a forward contract for the
purchase or sale, for a fixed amount of U.S. dollars, of the amount of foreign
currency involved, the Fund will attempt to protect itself against an adverse
change in the relationship between the U.S. dollar and the subject foreign
currency during the period between the date on which the Fund enters into the
forward contract and the date on which the contract matures or is closed out.
Second, when Pioneering Management Corporation ("PMC"), the Fund's manager
and investment adviser, believes that the currency of a particular foreign
country may suffer a significant decline against the U.S. dollar, it may attempt
to hedge the Fund's exposure to such currency by entering into a forward
contract to sell, for a fixed amount of U.S. dollars, the amount of foreign
currency approximating the value of some or all of the Fund's portfolio
securities denominated or quoted in the subject foreign currency. The precise
matching of the forward contract amounts and the value of the portfolio
securities involved generally will not be possible because the future value (in
foreign currencies) of such securities will change as a consequence of
securities market movements between the date on which the contract is entered
into and the date it matures or is closed out.
The Fund's custodian will place cash or liquid, high grade debt securities
(i.e., securities rated in one of the top three rating categories by Standard &
Poor's Ratings Group ("Standard & Poors") or by
-4-
<PAGE>
Moody's Investors Service, Inc. ("Moody's") or, if unrated by such rating
organizations, determined by PMC to be of comparable credit quality) into a
segregated account with the Fund's custodian in an amount equal to the value of
the Fund's total assets committed to the consummation of forward contracts
requiring the Fund to purchase foreign currencies. If the value of the
securities placed in the segregated account declines, the Fund will place
additional cash or securities in the account so that the value of the account
will equal the amount of the Fund's commitments with respect to such contracts.
The segregated account will be marked-to-market on a daily basis.
Forward contracts entered into by the Fund for hedging purposes will limit
the opportunity for gain in the event that the value of the hedged currency
rises. In addition, the use of forward contracts to protect against a decline in
the value of a foreign currency to which the Fund has exposure will not
eliminate fluctuations in the prices of securities denominated or quoted in such
currency. It simply will establish a rate of exchange which the Fund will be
able to achieve at a specified future point in time. Moreover, it may not be
possible for the Fund to hedge against a currency devaluation that is so
generally anticipated that the Fund is not able to contract to sell the currency
at a price above the anticipated devaluation level.
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 deposits, fees or commissions generally are involved. At
the maturity of a forward contract, the Fund may either accept or make delivery
of the currency specified in the contract or, at or prior to maturity, enter
into a closing purchase transaction involving the purchase or sale of an
offsetting contract. Closing purchase transactions with respect to forward
contracts are usually effected with the currency trader who is a party to the
original forward contract.
ILLIQUID SECURITIES
The Fund may invest up to 15% of its net assets in illiquid securities. See
"Restricted and Illiquid Securities" in Appendix B to the Prospectus. Generally,
a security will 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 restrictions 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 U.S. 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 or
Regulation S under the Securities Act of 1933, as amended (collectively, "144A
securities"), which may be illiquid for purposes of this limitation, often sell
at a price lower than similar securities that are not subject to restrictions on
resale.
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 to PMC, pursuant to guidelines reviewed and approved by the
Trustees. PMC takes into account a number of factors in making liquidity
determinations. 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
-5-
<PAGE>
market in the security; (iv) the number of 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,
with the Indian Adviser's assistance, will monitor the liquidity of the Fund's
portfolio securities on an ongoing basis and will report periodically to the
Trustees on this subject.
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 Appendix B to the Prospectus.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS
The Fund will purchase securities on a when-issued, delayed delivery or
forward commitment basis only with the intention of completing the transaction
and actually purchasing the securities. If deemed appropriate by PMC or the
Indian Adviser, however, the Fund may dispose of or renegotiate a commitment
after it is entered into, and may sell securities it has committed to purchase
before those securities are delivered to the Fund on the settlement date. In
these cases, the Fund may realize a taxable gain or loss.
When the Fund agrees to purchase securities on a when-issued, delayed
delivery or forward commitment basis, the Fund's custodian will set aside cash
or liquid, high grade debt securities equal to the amount of the commitment in a
segregated account. The market value of the Fund's net assets may fluctuate to a
greater degree when it sets aside portfolio securities than when it sets aside
cash. Because the Fund's liquidity and ability to manage its portfolio might be
affected when it sets aside cash or portfolio securities to cover purchase
commitments, the Fund expects that its commitments to purchase when-issued
securities and forward commitments will not exceed 33% of the value of its total
assets absent unusual market conditions. When the Fund engages in when-issued
and forward commitment transactions, it relies on the other party to the
transaction to consummate the trade. Failure of such party to do so may result
in the Fund incurring a loss or missing an opportunity to obtain a price
considered to be advantageous.
The market value of securities underlying a when-issued purchase or a
forward commitment to purchase securities, and any subsequent fluctuations in
their market value, are taken into account when determining the market value of
the Fund, starting on the day the Fund agrees to purchase the securities.
-6-
<PAGE>
INVESTMENT RESTRICTIONS
The Fund has adopted certain additional investment restrictions which may
not be changed without the affirmative vote of the holders of a "majority" (as
defined in the Investment Company Act of 1940, as amended (the "1940 Act")) of
the Fund's outstanding voting securities. The Fund may not:
(1) Issue senior securities, except as permitted by paragraphs (2), (6) and
(7) below. For purposes of this restriction, the issuance of shares of
beneficial interest in multiple classes or series, the purchase or sale of
options, futures contracts and options on futures contracts, forward
commitments, forward foreign exchange contracts, repurchase agreements and
reverse repurchase agreements entered into in accordance with the Fund's
policies, and the pledge, mortgage or hypothecation of the Fund's assets within
the meaning of paragraph (3) below are not deemed to be senior securities.
(2) Borrow money, except from banks as a temporary measure for
extraordinary emergency purposes and except pursuant to reverse repurchase
agreements and then only in amounts not to exceed 33 1/3% of the Fund's total
assets (including the amount borrowed) taken at market value. The Fund will not
use leverage to attempt to increase income. The Fund will not purchase
securities while outstanding borrowings (including reverse repurchase
agreements) exceed 5% of the Fund's total assets.
(3) Pledge, mortgage, or hypothecate its assets, except to secure
indebtedness permitted by paragraph (2) above and then only if such pledging,
mortgaging or hypothecating does not exceed 33 1/3% of the Fund's total assets
taken at market value.
(4) Act as an underwriter, except to the extent that, in connection with
the disposition of portfolio securities, the Fund may be deemed to be an
underwriter for purposes of the Securities Act of 1933, as amended (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.
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<PAGE>
(8) With respect to 75% of its total assets, purchase securities of an
issuer (other than the U.S. Government, its agencies or instrumentalities), if
(a) such purchase would cause more than 5% of the Fund's total
assets, taken at market value, to be invested in the securities of such
issuer, or
(b) such purchase would at the time result in more than 10% of the
outstanding voting securities of such issuer being held by the Fund.
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. This policy
does not apply to the Fund's 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 nonfundamental investment policy and in
connection with the offering of its shares in various states and foreign
countries, the Fund has agreed not to:
-8-
<PAGE>
(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 or the
Indian Adviser to save commissions or to average prices among them is not deemed
to result in a securities trading account.
(b) Purchase securities on margin or make short sales unless by virtue of
its ownership of other securities, the Fund has the right to obtain, without
payment of additional consideration, securities equivalent in kind and amount to
the securities sold and, if the right is conditional, the sale is made upon the
same conditions, except that 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 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 10% of its total assets in the aggregate of (1)
securities of any issuer which, together with its predecessors, has been in
operation for less than three years and (2) restricted securities, excluding
securities eligible for resale pursuant to Rule 144A under the 1933 Act or
foreign securities which are offered or sold outside the U.S. in accordance with
Regulation S under the 1933 Act; provided, however, that the Fund may not invest
more than 15% of its net assets in restricted securities including those
eligible for resale under Rule 144A. 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.
(e) Invest for the purpose of exercising control over or management of any
company.
(f) Purchase warrants of any issuer, if, as a result of such purchases,
more than 2% of the value of the Fund's net assets would be invested in
warrants, which are not listed on the New York Stock Exchange (the "Exchange"),
the American Stock Exchange or comparable international exchanges or more than
5% of the value of the net assets of the Fund would be invested in warrants
generally, whether or not listed. For these purposes, warrants are to be valued
at the lesser of cost or market, but warrants acquired by the Fund in units with
or attached to debt securities shall be deemed to be without value.
(g) Knowingly purchase or retain securities of an issuer if one or more of
the Trustees or officers of the Fund or directors or officers of PMC, the Indian
Adviser or any investment management subsidiary of PMC or the Indian Adviser
individually owns beneficially more than 0.5% and together own beneficially more
than 5% of the securities of such issuer.
-9-
<PAGE>
(h) Purchase interests in oil, gas or other mineral leases or exploration
programs; however, this policy will not prohibit the acquisition of securities
of companies engaged in the production or transmission of oil, gas or other
minerals.
(i) 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.
(j) Invest more than 5% of its total assets in restricted securities,
excluding Rule 144A securities; provided, however, the Fund may not invest more
than 15% of its total assets in restricted securities, including such Rule 144A
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.
(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 PMC and Pioneer Funds Distributor, Inc.
("PFD"); Director of Pioneering Services Corporation ("PSC"), Pioneer Capital
Corporation ("PCC") and Forest-Starma (a Russian timber joint venture);
President and Director of Pioneer Plans Corporation ("PPC"), Pioneer Investment
Corp. ("PIC"), Pioneer Metals and Technology, Inc. ("PMT"), Pioneer
International Corp. ("PIntl"), Luscina, Inc., Pioneer First Russia, Inc. ("First
Russia") and Pioneer Omega, Inc. ("Omega") and Theta Enterprises, Inc.; Chairman
of the Board and Director of Pioneer Goldfields Limited ("PGL") and Teberebie
Goldfields Limited; Chairman of the Supervisory Board of Pioneer Fonds
Marketing, GmbH ("Pioneer GmbH"); Member of the Supervisory Board of Pioneer
First Polish Trust Fund Joint Stock Company ("PFPT"); Chairman, President and
Trustee of all of the Pioneer mutual funds and Partner, Hale and Dorr LLP
(counsel to the Fund).
RICHARD H. EGDAHL, M.D., TRUSTEE, DOB: DECEMBER 1926
Boston University Health Policy Institute, 53 Bay State Rd., Boston, MA 02115
Professor of Management, Boston University School of Management, since
1988; Professor of Public Health, Boston University School of Public Health;
Professor of Surgery, Boston University School of Medicine; Director, Boston
University Health Policy Institute and Boston University Medical Center;
Executive Vice President and Vice Chairman of the Board, University Hospital;
-10-
<PAGE>
Academic Vice President for Health Affairs, Boston University; Director, Essex
Investment Management Company, Inc. (investment adviser), Health Payment Review,
Inc. (health care containment software firm), Mediplex Group, Inc. (nursing care
facilities firm), Peer Review Analysis, Inc. (health care facilities firm) and
Springer-Verlag New York, Inc. (publisher); Honorary Trustee, Franciscan
Children's Hospital and Trustee of all of the Pioneer mutual funds.
MARGARET B.W. GRAHAM, TRUSTEE, DOB: MAY 1947
The Keep, P.O. Box 110. Little Deer Isle, ME 04650
Founding Director, Winthrop Group, Inc., consulting firm since 1982;
Manager of Research Operations, Xerox Palo Alto Research Center, from 1991 to
1994; Professor of Operations Management and Management of Technology, Boston
University School of Management ("BUSM"), from 1989 to 1993 and Trustee of all
of the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
JOHN W. KENDRICK, TRUSTEE, DOB: JULY 1917
6363 Waterway Drive, Falls Church, VA 22044
Professor Emeritus and Adjunct Scholar, George Washington University;
Economic Consultant and Director, American Productivity and Quality Center;
American Enterprise Institute and Trustee of all of the Pioneer mutual funds,
except Pioneer Variable Contracts Trust.
MARGUERITE A. PIRET, TRUSTEE, DOB: MAY 1948
One Boston Place, Suite 2635, Boston, MA 02108
President, Newbury, Piret & Company, Inc. (merchant banking firm) and
Trustee of all of the Pioneer mutual funds.
DAVID D. TRIPPLE*, TRUSTEE AND EXECUTIVE VICE PRESIDENT, DOB: FEBRUARY 1944
Executive Vice President and a Director of PGI; President, Chief Investment
Officer and a Director of PMC; Director of PFD, PCC, PIC, PIntl , First Russia,
Omega and Pioneer SBIC Corporation, Executive Vice President and Trustee of all
of the Pioneer mutual funds.
STEPHEN K. WEST, TRUSTEE, DOB: SEPTEMBER 1928
125 Broad Street, New York, NY 10004
Partner, Sullivan & Cromwell (law firm); Trustee, The Winthrop Focus Funds
(mutual funds) and Trustee of all of the Pioneer mutual funds.
JOHN WINTHROP, TRUSTEE, DOB: JUNE 1936
One North Adgers Wharf, Charleston, SC 29401
President, John Winthrop & Co., Inc. (private investment firm); Director of
NUI Corp.; Trustee of Alliance Capital Reserves, Alliance Government Reserves
and Alliance Tax Exempt Reserves and Trustee of all of the Pioneer mutual funds,
except Pioneer Variable Contracts Trust.
WILLIAM H. KEOUGH, TREASURER, DOB: APRIL 1937
Senior Vice President, Chief Financial Officer and Treasurer of PGI;
Treasurer of PFD, PMC, PSC, PCC, PIC, PIntl, PMT, PGL, First Russia, Omega and
Pioneer SBIC Corporation; Treasurer and Director of PPC and Treasurer of all of
the Pioneer mutual funds.
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<PAGE>
JOSEPH P. BARRI, SECRETARY, DOB: AUGUST 1946
Secretary of PGI, PMC, PPC, PIC, PIntl, PMT, First Russia, Omega and PCC;
Clerk of PFD and PSC; Partner, Hale and Dorr LLP (counsel to the Fund) and
Secretary of all of the Pioneer mutual funds.
ERIC W. RECKARD, ASSISTANT TREASURER, DOB: JUNE 1956
Manager of Fund Accounting and Compliance of PMC since May 1994; Manager of
Auditing, Compliance and Business Analysis for PGI prior to May 1994 and
Assistant Treasurer of all of the Pioneer mutual funds.
ROBERT P. NAULT, ASSISTANT SECRETARY, DOB: MARCH 1964
General Counsel and Assistant Secretary of PGI since 1995; Assistant
Secretary of PMC, PIntl, PGL, First Russia, Omega and all of the Pioneer mutual
funds; Assistant Clerk of PFD and PSC: and formerly of Hale and Dorr (counsel to
the Fund) where he most recently served as junior partner.
JASKARAN S. TEJA, VICE PRESIDENT, DOB: MARCH 1930
Senior Vice President, PIntl since 1992; Director, PGI since 1994, the
Indian Adviser since 1993, Forest-Starma, Komsomols-on-Amur, Russia since 1993,
Pioneer Investments, Russia since 1993; Independent International Consultant
from 1988 to 1992; Permanent Representative/Ambassador of India to the United
Nations and other international organizations before 1988.
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 Europe Fund, Pioneer Emerging Markets Fund and
Pioneer International Growth Fund.
The Fund's Declaration of Trust (the "Declaration of Trust") provides that
the holders of two-thirds of its outstanding shares may vote to remove a Trustee
of the Fund at any meeting of shareholders. See "Description of Shares" below.
The business address of all officers is 60 State Street, Boston, Massachusetts
02109.
All of the outstanding capital stock of PFD, PMC and PSC is owned, directly
or indirectly, by PGI, a publicly-owned Delaware corporation. PMC, the Fund's
investment adviser, serves as the investment adviser for the Pioneer mutual
funds listed below and manages the investments of certain institutional
accounts.
The table below lists all the Pioneer mutual funds currently offered to the
public and the investment adviser and principal underwriter for each fund.
Investment Principal
Fund Name Adviser Underwriter
- --------- ------- -----------
Pioneer World Equity Fund PMC PFD
Pioneer International Growth Fund PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer India Fund PMC PFD
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<PAGE>
Pioneer Capital Growth Fund PMC PFD
Pioneer Mid-Cap Fund PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Balanced Fund PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer Income Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer Interest Shares, Inc. PMC Note 1
Pioneer Variable Contracts Trust PMC Note 2
Note 1 This fund is a closed-end fund.
Note 2 This is a series of eight separate portfolios designed to
provide investment vehicles for the variable annuity and variable
life insurance contracts of various insurance companies and for
certain qualified pension plans.
To the knowledge of the Fund, no officer or Trustee of the Fund
owned 5% or more of the issued and outstanding shares of PGI as of the date of
this Statement of Additional Information, except Mr. Cogan who then owned
approximately 14% of such shares.
On January 31, 1996, Merrill Lynch, Pierce, Fenner & Smith, Inc., 250 Vesey
Street, World Financial Center, North Tower, New York, New York 10281 owned of
record approximately 8% (135,203 shares) of the Fund's Class A shares,
approximately 34% (460,581 shares) of the Fund's Class B shares and
approximately 6.00% (9,643 shares) of the Fund's Class C shares On the same
date, BHC Securities, Inc., One Commerce Square, 2005 Market Street, Suite 1200,
Philadelphia, PA 19103 owned approximately 8% (12,899.476 shares) of the Fund's
Class C shares , and PFD owned approximately 8% (12,886.598 shares) of the
Fund's Class C shares.
COMPENSATION OF OFFICERS AND TRUSTEES
The Fund pays no salaries or compensation to any of its officers,
however,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 the average net
assets of the Fund. In addition, the Fund will pay a per meeting fee of $100 to
each Trustee who is not affiliated with PGI, PMC, PFD or PSC. The Fund also will
pay an annual committee participation fee to each Trustee who serves as a member
of any committees established to act on behalf of one or more of the 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
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<PAGE>
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 Board of Trustees for the Pioneer
mutual funds, will receive an annual fee equal to 5% of the annual trustees'
fee, except the Committee Chair who will receive an annual trustees' fee equal
to 10% of the annual trustees' fee. Any such fees paid to affiliates or
interested persons of PGI, PMC, PFD or PSC are reimbursed to the Fund under its
management contract.
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
Benefits Accrued as from Pioneer Family
Aggregate Part of the Trust's of Funds**
Compensation Expenses
Name of Trustee from the Fund**
<S> <C> <C> <C>
John F. Cogan, Jr. $ 500* $0 $ 11,083*
Richard H. Egdahl, M.D. 1,931 0 59,858
Margaret B.W. Graham 1,971 0 59,858
John W. Kendrick 1,971 0 59,858
Marguerite A. Piret 2,193 0 79,842
David D. Tripple 500* 0 11, 083*
Stephen K. West 2,076 0 67,850
John Winthop 2,136 0 66,442
Total 13,277 0 417,052
</TABLE>
* As of fiscal period ended October 31, 1996.
** As of the calendar year ended December 31, 1996.
3. INVESTMENT ADVISERS
The Adviser. As described in the Prospectus, PMC, 60 State Street, Boston,
Massachusetts, serves as the Fund's investment adviser. The Fund's management
contract with PMC expires on June 22, 1997, but it is renewable annually after
such date by the vote of a majority of the Board of Trustees of the Fund
(including a majority of the Board of Trustees who are not parties to the
contract or interested persons of any such parties) cast in person at a meeting
called for the purpose of voting on such renewal. This contract terminates if
assigned and may be terminated without penalty by either party by vote of its
Board of Directors orTrustees, as the case may be, or a majority of the Fund's
outstanding voting securities and the giving of sixty days' written notice.
As compensation for its management services and expenses incurred, PMC is
entitled to a management fee at the rate of 1.25% per annum of the Fund's
average daily net assets. This fee is normally computed daily and paid monthly.
PMC has agreed not to impose all or a portion of its
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<PAGE>
management fee and to make other arrangements, if necessary, to limit certain
other expenses of the Fund to the extent necessary to limit Class A expenses to
2.25% of the average daily net assets attributable to the Fund's Class A shares;
the portion of the Fund-wide expenses attributable to Class B and Class C shares
will be reduced only to the extent such expenses are reduced for Class A shares.
This agreement is voluntary and temporary and may be revised or terminated by
PMC at any time.
The Fund paid no management fees for the period from June 23, 1994 through
October 31, 1994 and for the fiscal years ended October 31, 1995 and 1996. If
PMC's fee reduction and expense limiation had not been in effect, th Fund would
have paid management fees of $40,723, $201,379 and $350,384, respectively for
such periods.
The Indian Adviser. As described in the Prospectus, ITI Pioneer AMC Ltd.
(the "Indian Adviser") serves as investment adviser with respect to the Fund's
investments in India. The Indian Adviser is a joint venture between PMC and
Investment Trust of India, Ltd., a leading provider of financial services in
India. The Indian Adviser has entered into an advisory contract with PMC and the
Fund. The advisory contract expires on June 22, 1997, but it is renewable
annually after such date by the vote of a majority of the Board of Trustees of
the Fund (including a majority of the Board of Trustees who are not parties to
the contract or interested persons of any such parties) cast in person at a
meeting called for the purpose of voting on such renewal. The advisory contract
terminates if assigned and may be terminated without penalty by any party by
vote of its Board of Directors orTrustees, as the case may be, or a majority of
the Fund's outstanding voting securities and the giving of sixty days' written
notice.
In accordance with the following schedule, the Indian Adviser is entitled
to a subadvisory fee (payable by PMC and not by the Fund) as compensation for
its subadvisory services and expenses incurred:
o 0.10% of the Fund's average gross assets invested in India's securities
markets, including assets invested in American, Global or other types of
depositary receipts for securities traded in India's securities markets
if such gross assets are no greater than $15,000,000;
o 0.20% of such gross assets if such gross assets are greater than
$15,000,000 but no greater than $45,000,000;
o 0.40% of such gross assets if such gross assets are greater than
$45,000,000 but no greater than $60,000,000; and
o 0.60% of such gross assets if such gross assets are greater than
$60,000,000.
The above subadvisory fee is normally computed monthly and paid quarterly. In
addition, the applicable fee rate applies to all assets that are the basis for
the Indian Adviser's fee. For example, if such assets were $50,000,000 for any
one year, the Indian Adviser's fee pursuant to the above fee schedule would be
$200,000 ($50,000,000 X 0.40%). For the period June 23, 1994 (commencement of
operations) through October 31, 1994, PMC paid subadvisory fees to the Indian
Adviser of approximately $1,178. For the fiscal years ended October 31, 1995 and
1996, PMC paid or owed subadvisory fees to the Indian Adviser of approximately
$16,151 and $34,152, respectively.
-15-
<PAGE>
4. PRINCIPAL UNDERWRITER
PFD serves as the principal underwriter in connection with the continuous
offering of the shares of the Fund pursuant to an Underwriting Agreement, dated
June 22, 1994. The Trustees who were not "interested persons" (as defined in the
1940 Act) of the Fund approved the Underwriting Agreement, which will continue
in effect from year to year, if annually approved by the Trustees, in
conjunction with the continuance of the Plans of Distribution. See "Distribution
Plans" below. The Underwriting Agreement provides that PFD will bear certain
distribution expenses not borne by the Fund.
For the fiscal years ending October 31, 1994 (commencement of operations
June 23,1994), 1995 and 1996, net underwriting commissions retained by PFD were
approximately $6, 439, $21,354 and $28,000, respectively. Commissions reallowed
to dealers during such periods were approximately $608,257, $140,268 and
$191,000, respectively.
PFD bears all expenses it incurs in providing services under the
Underwriting Agreement. Such expenses include compensation to its employees and
representatives and to securities dealers for distribution related services. PFD
also pays certain expenses in connection with the distribution of the Fund's
shares, including the cost of preparing, printing and distributing advertising
or promotional materials, and the cost of printing and distributing prospectuses
and supplements to prospective shareholders. The Fund bears the cost of
registering its shares under federal, state and foreign securities law. See
"Distribution Plans" below.
The Fund and PFD have agreed to indemnify each other against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
Under the Underwriting Agreement, PFD will use its best efforts in rendering
services to the Fund.
The Fund will not generally issue Fund shares for consideration other than
cash. At the Fund's sole discretion, however, it may issue Fund shares for
consideration other than cash in connection with an acquisition of portfolio
securities or a merger or other reorganization.
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.
5. DISTRIBUTION PLANS
The Fund has adopted plans of distribution pursuant to Rule 12b-1
promulgated by the SEC under the 1940 Act with respect to its Class A, Class B
and Class C shares (the "Class A Plan", "Class B Plan" and the "Class C Plan")
(collectively, the "Plans").
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<PAGE>
CLASS A PLAN
Pursuant to the Class A Plan, the Fund may reimburse PFD for its
expenditures in financing any activity primarily intended to result in the sale
of 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 on an annual basis 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 other criteria in
order to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class B Plan is to
compensate PFD for its distribution services to the Fund. PFD pays commissions
to dealers as well as expenses of printing prospectuses and reports used for
sales purposes, expenses with respect to the preparation and printing of sales
literature and other distribution related expenses, including, without
limitation, the cost necessary to provide distribution-related services or
personnel, travel, office expenses and equipment. The Class B Plan also provides
that PFD will receive all CDSCs attributable to Class B shares. (See
"Distribution Plans" in the Prospectus.) When the broker-dealer effecting the
sale of Class B shares waives its right to receive commissions on such sales,
PFD may cause the distribution fees described above to be paid to that
broker-dealer.
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
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<PAGE>
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
current value of the amount invested and additional compensation at a rate of up
to 0.75% of the amount invested with respect to such shares. Dealers may from
time to time be required to meet certain other criteria in order to receive
service fees. PFD or its affiliates are entitled to retain all service fees
payable under the Class C Plan for which there is no dealer of record or for
which qualification standards have not been met as partial consideration for
personal services and/or account maintenance services performed by PFD or its
affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class C Plan is to
compensate PFD for its distribution services with respect to the Class C shares
of the Fund. PFD pays commissions to dealers as well as expenses of printing
prospectuses and reports used for sales purposes, expenses with respect to the
preparation and printing of sales literature and other distribution-related
expenses, including, without limitation, the cost necessary to provide
distribution-related services, or personnel, travel office expenses and
equipment. The Class C Plan also provides that PFD will receive all CDSCs
attributable to Class C shares. (See "Distributions Plans" in the Prospectus.)
When the broker-dealer effecting the sale of Class C shares waives its right to
receive commissions on such sales, PFD may cause the distribution fees described
above to be paid to that broker-dealer.
GENERAL
In accordance with the terms of the Plans, PFD provides to the Fund for
review by the Trustees a quarterly written report of the amounts expended under
the respective 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)
(the "Qualified Trustees"), cast in person at a meeting called for the purpose
of voting on the Plans. In approving the Plans, the Trustees identified and
considered a number of potential benefits which the Plans may provide. The Board
of Trustees believes that there is a reasonable likelihood that the Plans will
benefit the Fund and its current and future shareholders. Under their terms, the
Plans remain in effect from year to year provided such continuance is approved
annually by vote of the Trustees in the manner described above. The Plans may
not be amended to increase materially the annual percentage limitation of
average net assets which may be spent for the services described therein without
approval of the shareholders of the Class or Classes affected thereby, and
material amendments of the Plans must also be approved by the Trustees in the
manner described above. A Plan may be terminated at any time, without payment of
any penalty, by vote of the majority of the Trustees who are not interested
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<PAGE>
persons of the Fund and have no direct or indirect financial interest in the
operations of the Plan, or by a vote of a majority of the outstanding voting
securities of the respective Class of the Fund (as defined in the 1940 Act). A
Plan will automatically terminate in the event of its assignment (as defined in
the 1940 Act). In the Trustees' quarterly review of the Plans, they will
consider the Plans' continued appropriateness and the level of compensation they
provide.
During the fiscal year ended October 31, 1995, the Fund incurred total
distribution fees of $21,507 and $65,619 pursuant to the Class A Planand the
Class B Plan, respectively. During the fiscal year ended October 31, 1996, the
Fund incurred total distribution fees of $39,970, $ 77,860 and $4,698 pursuant
to the Class A Plan, Class B Plan and Class C Plan, respectively. Distribution
fees were paid by the Fund to PFD in reimbursement of expenses related to
servicing of shareholders accounts and compensate dealers and sales personnel.
Class C shares were first offered on January 31, 1996.
A contingent deferred sales charge ("CDSC") of 1.00% may be imposed on
redemptions of certain net asset value purchases of Class A shares within one
year of purchase. Class B shares that are redeemed within six years of purchase
are subject to a CDSC, from a maximum of 4.0% of the lower of the cost or market
value of the shares being redeemed. Redemptions of Class C shares within one
year of purchase are subject to a CDSC of 1.00%. For the fiscal year ended
October 31, 1996, CDSCs in the amount of $128,275 were paid to PFD. Such CDSCs
are paid to PFD in reimbursement of expenses related to servicing of
shareholders accounts and compensation paid to dealers and sales personnel (as
described in "How to Buy Fund Shares" in the Prospectus).
6. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with PSC, 60 State Street, Boston, Massachusetts,
to act as shareholder servicing agent and transfer agent for the Fund. This
contract terminates if assigned and may be terminated without penalty by either
party by vote of its Board of Directors orTrustees, as the case may be, or a
majority of the Fund's outstanding voting securities and the giving of ninety
days' written notice.
Under the terms of its contract with the Fund, PSC will service shareholder
accounts, and its duties will include: (i) processing sales, redemptions and
exchanges of shares of the Fund; (ii) distributing dividends and capital gains
associated with Fund portfolio accounts; and (iii) maintaining account records
and responding to routine shareholder inquiries.
PSC receives an annual fee of $22.75 per Class A, Class B and Class C
shareholder account from the Fund as compensation for the services described
above. PSC is also reimbursed by the Fund for its out-of-pocket expenditures.
The annual fee is set at an amount determined by vote of a majority of the
Trustees (including a majority of the Trustees who are not parties to the
contract with PSC or interested persons of any such parties) to be comparable to
fees for such services being paid by other investment companies. The Fund may
compensate entities which have agreed to provide certain sub-accounting services
such as specific transaction processing and recordkeeping services. 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.
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7. CUSTODIAN
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts 02109
(the "Custodian"), is the custodian of the Fund's assets. The Custodian's
responsibilities include safekeeping and controlling the Fund's cash and
securities in the 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 Subcustodian of Fund assets held in India is Standard
Chartered Bank. The Custodian also provides bookkeeping and pricing assistance
to the Fund and assistance in arranging for forward 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 . In selecting Brown Brothers Harriman & Co.
and its network of foreign subcustodians as the custodians for foreign
securities, the Board of Trustees made certain determinations required by Rule
17f-5 promulgated under the 1940 Act. The Trustees annually review and approve
the continuation of the Fund's international subcustodian arrangements.
8. INDEPENDENT PUBLIC ACCOUNTANT
Arthur Andersen LLP, 225 Franklin Street , Boston, Massachusetts 02110, is
the Fund's independent public accountant, providing audit services, tax return
review, and assistance and consultation with respect to the preparation of
filings with the SEC.
9. PORTFOLIO TRANSACTIONS
Orders for the Fund's portfolio securities transactions in the Indian
securities market are placed by the Indian Adviser. Orders for the Fund's
portfolio securities transactions in all other markets are placed by PMC. In
selecting brokers or dealers, PMC and the Indian Adviser consider factors
relating to best execution, including, but not limited to, the size and type of
the transaction; the nature and character of the markets for 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. Many
transactions in foreign equity securities are executed by broker-dealers in
foreign countries in which commission rates are fixed and non-negotiable (unlike
commission rates in the U.S.) and are generally higher than in the United
States.
PMC and the Indian Adviser may select broker-dealers which provide
brokerage and/or research services to the Fund and/or other investment companies
or accounts managed by PMC or the Indian Adviser. Such services may include
advice concerning the value of securities; the advisability of investing in,
purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement). PMC
and the Indian Adviser maintain a listing of broker-dealers who provide such
services on a regular basis. However,
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<PAGE>
because many transactions on behalf of the Fund and other investment companies
or accounts managed by PMC are placed with broker-dealers (including
broker-dealers on the listing) without regard to the furnishing of such
services, it is not possible to estimate the proportion of such transactions
directed to such dealers solely because such services were provided. Management
of the Fund believes that no exact dollar value can be calculated for such
services.
The research received from broker-dealers may be useful to PMC and the
Indian Adviser in rendering investment management services to the Fund as well
as to other investment companies or accounts managed by PMC or the Indian
Adviser, although not all of such research may be useful to the Fund.
Conversely, such information provided by brokers or dealers who have executed
transaction orders on behalf of such other accounts may be useful to PMC or the
Indian Adviser in carrying out its obligations to the Fund. The receipt of such
research has not reduced PMC's normal independent research activities; however,
it has enabled PMC and the Indian Adviser to avoid the additional expenses which
might otherwise be incurred if it was to attempt to develop comparable
information through its own staff.
In circumstances where two or more broker-dealers offer comparable prices
and executions, preference may be given to a broker-dealer which has sold shares
of the Fund as well as shares of other investment companies or accounts managed
by PMC or the Indian Adviser. This policy does not imply a commitment to execute
all portfolio transactions through all broker-dealers that sell shares of the
Fund. In addition, if PMC or the Indian Adviser determines in good faith that
the amount of commissions charged by a broker is reasonable in relation to the
value of the brokerage and research services provided by such broker, the Fund
may pay commissions to such broker in an amount greater than the amount another
firm may charge.
The Trustees periodically review PMC's and the Indian Adviser's performance
of their respective responsibilities in connection with the placement of
portfolio transactions on behalf of the Fund.
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. Similarly, the Indian Adviser acts as investment
adviser to certain investment funds registered in India. These funds have
investment objectives similar to the Fund's investment objective. Accordingly,
securities may meet investment objectives of the Fund, such other funds and such
private accounts. In such cases, the decision to purchase for one fund or
account rather than another is based on a number of factors. The determining
factors in most cases are the amount of securities of the issuer then
outstanding, the value of those securities and the market for them. Other
factors considered include other investments which each fund or account
presently has in a particular industry or country and the availability of funds
in each fund or account.
It is possible that, at times, identical securities will be held by more
than one fund and/or account. However, the position of any fund or account in
the same issue may vary and the length of time that any fund or account may
choose to hold its investment in the same issue may likewise vary. To the extent
that the Fund, another fund in the Pioneer complex or a private account managed
by PMC or the Indian Adviser seeks to acquire the same security at about the
same time, the Fund may not be able to acquire as large a position in the
security as it desires or it may have to pay a higher price for the security.
Similarly, the Fund may not be able to obtain as large an execution of an order
to sell or as high a price for any particular portfolio security if PMC or the
Indian Adviser decides to sell on behalf
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of another account the same portfolio security at the same time. On the other
hand, if the same securities are bought or sold at the same time by more than
one account, the resulting participation in volume transactions could produce
better executions for the Fund or other account. In the event that more than one
account purchases or sells the same security on a given date, the purchases and
sales will normally be made as nearly as practicable on a pro rata basis in
proportion to the amounts desired to be purchased or sold by each.
For the fiscal years ended October 31, 1994 (commencement of operations
June 23, 1994), 1995 and 1996, the Fund paid or accrued aggregate brokerage
commissions of $41,282, $34,936 and $245,000, respectively.
10. TAX STATUS
It is the Fund's policy to meet the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), for qualification as a
regulated investment company. These requirements relate to the sources of the
Fund's income, the diversification of its assets and the distribution of its
income to shareholders. If the Fund meets all such requirements and distributes
to its shareholders, in accordance with the Code's timing requirements, all
investment company taxable income and net capital gain, if any, which it earns,
the Fund will be relieved of the necessity of paying federal income tax.
In order to qualify as a regulated investment company under Subchapter M,
the Fund must, among other things, derive at least 90% of its annual gross
income from dividends, interest, gains from the sale or other disposition of
stock, securities or foreign currencies, or other income (including gains from
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "90% income test"), limit its gains from
the sale of stock, securities and certain other positions held for less than
three months to less than 30% of its annual gross income (the "30% test") and
satisfy certain annual distribution and quarterly diversification requirements.
For purposes of the 90% income test, income the Fund earns from equity interests
in certain entities that are not treated as corporations (e.g., are treated as
partnerships or trusts) for U.S. tax purposes will generally have the same
character for the Fund as in the hands of such entities; consequently, the Fund
may be required to limit its equity investments in such entities that earn fee
income, rental income, or other nonqualifying income.
Dividends from investment company taxable income, which includes net
investment income, net short-term capital gain in excess of net long-term
capital loss, and certain net foreign exchange gains, are taxable as ordinary
income, whether received in cash or reinvested in additional shares. Dividends
from net long-term capital gain in excess of net short-term capital loss, if
any, whether received in cash or reinvested in additional shares, are taxable to
the Fund's shareholders as long-term capital gains for federal income tax
purposes without regard to the length of time shares of the Fund have been held.
The federal income tax status of all distributions will be reported to
shareholders annually.
Any dividend declared by the Fund in October, November or December as of a
record date in such a month and paid during the following January will be
treated for federal income tax purposes as received by shareholders on December
31 of the calendar year in which it is declared.
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Foreign exchange gains and losses realized by the Fund in connection with
certain transactions involving foreign currency-denominated debt securities,
foreign currency forward contracts, foreign currencies, or payables or
receivables denominated in a foreign currency are subject to Section 988 of the
Code, which generally causes such gains and losses to be treated as ordinary
income and losses and may affect the amount, timing and character of
distributions to shareholders. Any such transactions that are not directly
related to the Fund's investments in stock or securities may need to be limited
in order to enable the Fund to satisfy the limitations described in the second
paragraph above that are applicable to the income or gains recognized by a
regulated investment company. If the net foreign exchange loss for a year were
to exceed the Fund's investment company taxable income (computed without regard
to such loss), the resulting ordinary loss for such year would not be deductible
by the Fund or its shareholders in future years.
If the Fund acquires any equity interest (under proposed regulations,
generally including not only stock but also an option to acquire stock) in
certain foreign corporations that receive at least 75% of their annual gross
income from passive sources (such as interest, dividends, rents, royalties or
capital gain) or hold at least 50% of their assets in investments producing such
passive income ("passive foreign investment companies"), the Fund could be
subject to federal income tax and additional interest charges on "excess
distributions" received from such companies or gain from the sale of stock in
such companies, even if all income or gain actually received by the Fund is
timely distributed to its shareholders. The Fund would not be able to pass
through to its shareholders any credit or deduction for such a tax. Certain
elections may, if available, ameliorate these adverse tax consequences, but any
such election would require the Fund to recognize taxable income or gain without
the concurrent receipt of cash. The Fund may limit and/or manage its holdings in
passive foreign investment companies to minimize its tax liability or maximize
its return from these investments.
The Fund may invest in debt obligations that are in the lowest rating
categories or are unrated, including debt obligations of issuers not currently
paying interest or who are in default. Investments in debt obligations that are
at risk of or in default present special tax issues for the Fund. Tax rules are
not entirely clear about issues such as when the Fund may cease to accrue
interest, original issue discount, or market discount, when and to what extent
deductions may be taken for bad debts or worthless securities, how payments
received on obligations in default should be allocated between principal and
income, and whether exchanges of debt obligations in a workout context are
taxable. These and other issues will be addressed by the Fund, in the event it
invests in such securities, in order to seek to ensure that it distributes
sufficient income to preserve its status as a regulated investment company and
does not become subject to federal income or excise tax.
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.
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<PAGE>
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.
Only a small portion, if any, of the Fund's dividends paid to U.S.
corporate shareholders may qualify for the 70% dividends-received deduction
available to corporations, because the Fund does not expect that it will
generally receive any significant amount of qualifying dividends, i.e.,
dividends from U.S domestic corporations. The Code contains holding period
requirements, debt-financing restrictions and other limitations relating to any
otherwise qualifying dividends.
At the time of an investor's purchase of Fund shares, a portion of the
purchase price may be attributable to realized or unrealized appreciation in the
Fund's portfolio or undistributed taxable income of the Fund. Consequently,
subsequent distributions on these shares from such appreciation or income may be
taxable to such investor even if the net asset value of the investor's shares
is, as a result of the distributions, reduced below the investor's cost for such
shares and the distributions economically represent a return of a portion of the
investment.
Redemptions and exchanges are taxable events. Any loss realized by a
shareholder upon the redemption, exchange or other disposition of shares with a
tax holding period of six months or less will be treated as a long-term capital
loss to the extent of any amounts treated as distributions of long-term capital
gain with respect to such shares.
In addition, if Class A shares redeemed or exchanged have been held for
less than 91 days, (1) in the case of a reinvestment at net asset value pursuant
to the reinvestment privilege, the sales charge paid on such shares is not
included in their tax basis under the Code, and (2) in the case of an exchange,
all or a portion of the sales charge paid on such shares is not included in
their tax basis under the Code, to the extent a sales charge that would
otherwise apply to the shares received is reduced pursuant to the exchange
privilege. In either case, the portion of the sales charge not included in the
tax basis of the shares redeemed or surrendered in an exchange is included in
the tax basis of the shares acquired in the reinvestment or exchange. Losses on
redemptions or other dispositions of shares may be disallowed under "wash sale"
rules in the event of other investments in the Fund (including those made
pursuant to reinvestment of dividends and/or capital gain distributions) within
a period of 61 days beginning 30 days before and ending 30 days after a
redemption or other disposition of shares. In such a case, the disallowed
portion of any loss would be included in the federal tax basis of the shares
acquired in the other investments.
Certain foreign currency forward contracts may cause the Fund to recognize
gains or losses from marking-to-market at the end of its taxable year even
though such contracts may not have been performed or closed out. Forward
contracts relating to foreign currency are subject to Section 988, as described
above, and may accordingly produce ordinary income or loss. Losses on certain
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 forward contracts) may also be deferred under the tax
straddle rules of the Code, which may also affect the characterization of
capital gains or losses from straddle positions and certain successor positions
as long-term or short-term. Certain tax elections may be available that would
enable the Fund to ameliorate some adverse
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effects of the tax rules described in this paragraph. The tax rules applicable
to forward contracts and straddles may affect the amount, timing and character
of the Fund's income and losses and hence of its distributions to shareholders.
The Fund's dividends and distributions will generally not qualify to any
material extent for any dividends-received deduction that might otherwise be
available for certain dividends received by shareholders that are corporations.
The Fund will be subject to withholding and other taxes imposed by foreign
countries, including, in the case of India and possibly other countries, taxes
on interest, dividends and capital gains, with respect to its investments in
those countries. Tax conventions between certain countries and the U.S. may
reduce or eliminate such taxes in some cases. If more than 50% of the Fund's
total assets at the close of any taxable year consists of stock or securities of
foreign corporations, the Fund may elect to pass through to its shareholders
their pro rata shares of qualified foreign taxes paid by the Fund, with the
result that shareholders would be required to include such taxes in their gross
incomes (in addition to dividends and distributions they actually received),
would treat such taxes as foreign taxes paid by them, and may be entitled to a
tax deduction or credit for such taxes, subject to certain limitations under the
Code.
Qualified foreign taxes generally include taxes that would be treated as
income taxes under U.S. tax regulations but do not include most other taxes,
such as stamp taxes, securities transaction taxes, and similar taxes. If the
Fund makes the election described above, shareholders may deduct their pro rata
portion of qualified foreign taxes paid by the Fund in computing their income
subject to U.S. federal income taxation or, alternatively, use them as foreign
tax credits, subject to applicable limitations under the Code, against their
U.S. federal income taxes. Shareholders who do not itemize deductions for
federal income tax purposes will not, however, be able to deduct their pro rata
portion of qualified foreign taxes paid by the Fund, although such shareholders
will be required to include their shares of such taxes in gross income if the
Fund makes the election described above.
If the Fund makes this election and a shareholder chooses to take a credit
for the foreign taxes deemed paid by such shareholder, the amount of the credit
that may be claimed in any year may not exceed the same proportion of the U.S.
tax against which such credit is taken which the shareholder's taxable income
from foreign sources (but not in excess of the shareholder's entire taxable
income) bears to his entire taxable income. For this purpose, long-term and
short-term capital gains the Fund realizes and distributes to shareholders will
generally not be treated as income from foreign sources in their hands, nor will
distributions of certain foreign currency gains subject to Section 988 of the
Code and of any other income realized by the Fund that is deemed, under the
Code, to be U.S.-source income in the hands of the Fund. This foreign tax credit
limitation may also be applied separately to certain specific categories of
foreign-source income and the related foreign taxes. As a result of these rules,
which have different effects depending upon each shareholder's particular tax
situation, certain shareholders may not be able to claim a credit for the full
amount of their proportionate share of the foreign taxes paid by the Fund.
Shareholders who are not liable for U.S. federal income taxes, including
tax-exempt shareholders, will ordinarily not benefit from this election. If the
Fund does make the election, it will provide required tax information to
shareholders. If the Fund does not make the election, it may deduct such taxes
in computing its income available for distribution to shareholders to satisfy
applicable tax distribution requirements.
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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 Internal Revenue Service ("IRS") regulations. In
order to avoid this withholding requirement, shareholders must certify on their
Account Applications, or on separate IRS Forms W-9, that the Social Security
Number or other Taxpayer Identification Number they provide is their correct
number and that they are not currently subject to backup withholding, or that
they are exempt from backup withholding. The Fund may nevertheless be required
to withhold if it receives notice from the IRS or a broker that the number
provided is incorrect or backup withholding is applicable as a result of
previous underreporting of interest or dividend income.
If, as anticipated, the Fund qualifies as a regulated investment company
under the Code, it will not be required to pay any Massachusetts income,
corporate excise or franchise taxes or any Delaware corporation income tax.
The description of certain federal tax provisions above relates only to
U.S. federal income tax consequences for shareholders who are U.S. persons, i.e.
U.S. citizens or residents or U.S. corporations, partnerships, trusts or
estates, and who are subject to U.S. federal income tax. This description does
not address the special tax rules that may be applicable to particular types of
investors, such as financial institutions, insurance companies, securities
dealers, or tax-exempt or tax-deferred plans, accounts or entities. Investors
other than U.S. persons may be subject to different U.S. tax treatment,
including a possible 30% non-resident alien U.S. withholding tax (or
non-resident alien withholding tax at a lower treaty rate) on amounts treated as
ordinary dividends from the Fund and, unless an effective IRS Form W-8 or
authorized substitute for Form W-8 is on file, to 31% backup withholding on
certain other payments from the Fund. Shareholders should consult their own tax
advisers on these matters and on state, local and other applicable tax laws.
11. DESCRIPTION OF SHARES
The Fund's Agreement and Declaration of Trust permits the Board of Trustees
to authorize the issuance of an unlimited number of full and fractional shares
of beneficial interest (without par value) which may be divided into such
separate series as the Trustees may establish. Currently, the Fund consists of
only one series. The Trustees may, however, establish additional series of
shares in the future, and may divide or combine the shares into a greater or
lesser number of shares without thereby changing the proportionate beneficial
interests in the Fund. The Agreement and Declaration of Trust further authorizes
the Trustees to classify or reclassify any series of the shares into one or more
classes. Pursuant thereto, the Trustees have authorized the issuance of three
classes of shares of the Fund, Class A shares, Class B shares and Class C
shares. Each share of a class of the Fund represents an equal proportionate
interest in the assets of the Fund allocable to that class. Upon liquidation of
the Fund, shareholders of each class of the Fund are entitled to share pro rata
in the Fund's net assets allocable to such class available for distribution to
shareholders. The Fund reserves the right to create and issue
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<PAGE>
additional series or classes of shares, in which case the shares of each class
of a series would participate equally in the earnings, dividends and assets
allocable to that class of the particular series.
Shareholders are entitled to one vote for each share held and may vote in
the election of Trustees and on other matters submitted to meetings of
shareholders. Although Trustees are not elected annually by the shareholders,
shareholders have, under certain circumstances, the right to remove one or more
Trustees.
The shares of each series of the Fund are entitled to vote separately to
approve investment advisory agreements or changes in investment restrictions,
but shareholders of all series vote together in the election and selection of
Trustees and accountants. Shares of all series of the Fund vote together as a
class on matters that affect all series of the Fund in substantially the same
manner. As to matters affecting a single series or class, shares of such series
or class will vote separately. No amendment adversely affecting the rights of
shareholders may be made to the Fund's Agreement and Declaration of Trust
without the affirmative vote of a majority of its shares. Shares have no
preemptive or conversion rights. Shares are fully paid and non-assessable by the
Fund, except as stated below. See "Certain Liabilities."
12. CERTAIN LIABILITIES
As a Delaware business trust, the Fund's operations are governed by its
Agreement and Declaration of Trust dated April 4, 1994. A copy of the Fund's
Certificate of Trust, also dated April 4, 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 Fund's Agreement and Declaration of Trust
expressly provides that the Fund has been organized under the Delaware Act and
that the Agreement and Declaration of Trust is to be governed by Delaware law.
It is nevertheless possible that a Delaware business trust, such as the Fund,
might become a party to an action in another state whose courts refused to apply
Delaware law, in which case the trust's shareholders could be subject to
personal liability.
To guard against this risk, the Agreement and Declaration of Trust (i)
contains an express disclaimer of shareholder liability for acts or obligations
of the Fund and provides that notice of such disclaimer may be given in each
agreement, obligation and instrument entered into or executed by the Fund or its
Trustees, (ii) provides for the indemnification out of Fund property of any
shareholders held personally liable for any obligations of the Fund or any
series of the Fund and (iii) provides that the Fund shall, upon request, assume
the defense of any claim made against any shareholder for any act or obligation
of the Fund and satisfy any judgment thereon. Thus, the risk of a Fund
shareholder incurring financial loss beyond his or her investment because of
shareholder liability is limited to circumstances in which all of the following
factors are present: (1) a court refused to apply Delaware law; (2) the
liability arose under tort law or, if not, no contractual limitation of
liability was in effect; and (3) the Fund itself would be unable to meet its
obligations. In 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.
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<PAGE>
The Agreement and Declaration of Trust further provides that the Fund shall
indemnify each of its Trustees and officers against liabilities and expenses
reasonably incurred by them, in connection with, or arising out of, any action,
suit or proceeding, threatened against or otherwise involving such Trustee or
officer, directly or indirectly, by reason of being or having been a Trustee or
officer of the Fund. The Agreement and Declaration of Trust does not authorize
the Fund to indemnify any Trustee or officer against any liability to which he
or she would otherwise be subject by reason of or for willful misfeasance, bad
faith, gross negligence or reckless disregard of such person's duties.
13. DETERMINATION OF NET ASSET VALUE
The net asset value per share of each class of the Fund is determined as of
the close of regular trading (currently 4:00 p.m., Eastern Time) on each day on
which the Exchangeis open for trading. As of the date of this Statement of
Additional Information, the Exchange is open for trading every weekday except
for the following holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The net asset value per share of each class of the Fund is also determined on
any other day in which the level of trading in its portfolio securities is
sufficiently high so that the current net asset value per share might be
materially affected by changes in the value of its portfolio securities. The
Fund is not required to determine its net asset value per share on any day in
which no purchase orders for the shares of the Fund become effective and no
shares are tendered for redemption.
The net asset value per share of each class of the Fund is computed by
taking the value of all of the Fund's assets attributable to that class, less
the Fund's liabilities attributable to that class, and dividing it by the number
of outstanding shares of that class. For purposes of determining net asset
value, expenses of the classes of the Fund are accrued daily.
Securities which have not traded on the date of valuation or securities for
which sales prices are not generally reported are valued at the mean between the
last bid and asked prices. Securities for which no market quotations are readily
available (including those the trading of which has been suspended) will be
valued at fair value as determined in good faith by the Board of Trustees,
although the actual computations may be made by persons acting pursuant to the
direction of the Board of Trustees. As stated in the Prospectus, when the Fund
invests in initial public offerings of Indian issuers it may not know if it will
receive the total amount of securities for which it has subscribed. Such
investments will also 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 sales charge. Class B and Class C shares are
offered at net asset value without the imposition of an initial sales charge.
14. SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan ("SWP") is designed to provide a convenient
method of receiving fixed payments at regular intervals from shares of the Fund
deposited by the applicant under this SWP. The applicant must deposit or
purchase for deposit with PSC shares of the Fund having a total value of not
less than $10,000. Periodic checks of $50 or more will be deposited monthly or
quarterly directly into a bank account designated by the applicant, or will be
sent by check to the applicant or any person
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<PAGE>
designated by the applicant. Class B share 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 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 checks
subsequent to opening an account must be accompanied by a signature guarantee.
Any income dividends or capital gains distributions on shares under the SWP
will be credited to the SWP account on the payment date in full and fractional
shares at the net asset value per share in effect on the record date.
SWP payments are made from the proceeds of the redemption of shares
deposited under the SWP in a SWP account. To the extent that such redemptions
for periodic withdrawals exceed dividend income reinvested in the SWP account,
such redemptions will reduce and may ultimately exhaust the number of shares
deposited in the SWP account. Redemptions are taxable transactions to
shareholders. In addition, the amounts received by a shareholder cannot be
considered as an actual yield or income on his or her investment because part of
such payments may be a return of his or her investment.
The SWP may be terminated at any time (1) by written notice to PSC or from
PSC to the shareholder; (2) upon receipt by PSC of appropriate evidence of the
shareholder's death; or (3) when all shares under the SWP have been redeemed.
15. LETTER OF INTENTION
A Letter of Intent (a "Letter") may be established by completing the
Letter of Intent section of the Account Application. When you sign the Account
Application, you agree to irrevocably appoint PSC your attorney-in-fact to
surrender for redemption any or all shares held in escrow with full power of
substitution. A Letter of Intent is not a binding obligation upon the investor
to purchase, or the Fund to sell, the full amount indicated.
If the total purchases, less redemptions, exceed the amount specified
under the Letter of Intent and are in an amount which would qualify for a
further quantity discount, all transactions will be recomputed on the expiration
date of the Letter of Intent to effect the lower sales charge. Any difference in
the sales charge resulting from such recomputation will be either delivered to
you in cash or invested in additional shares at the lower sales charge. The
dealer, by signing the Account Application, agrees to return to PFD, as part of
such retroactive adjustment, the excess of the commission previously reallowed
or paid to the dealer over that which is applicable to the actual amount of the
total purchases under the Letter of Intent.
If the total purchases, less redemptions, are less than the amount
specified under the Letter of Intent, you must remit to PFD any difference
between the sales charge on the amount actually purchased and the amount
originally specified in the Letter of Intent 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 Buy Fund Shares" in the Prospectus for more information.
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<PAGE>
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.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS
Average annual total return quotations for Class A, Class B and Class C
shares are computed by finding the average annual compounded rates of return
that would cause a hypothetical investment in that class made on the first day
of a designated period (assuming all dividends and distributions are reinvested)
to equal the ending redeemable value of such hypothetical investment on the last
day of the designated period in accordance with the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000, less the maximum
sales load of $57.50 for Class A shares or the deduction of
the CDSC for Class B or Class C shares at the end of the
period.
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1000 initial
payment made at the beginning of the designated period (or
fractional portion thereof)
For purposes of the above computation, it is assumed that the maximum sales
charge of 5.75% was deducted from the initial investment and that all dividends
and distributions made by the Fund are reinvested at net asset value during the
designated period. The average annual total return quotation is determined to
the nearest 1/100 of 1%.
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<PAGE>
In determining the average annual total return (calculated as provided
above), recurring fees, if any, that are charged to all shareholder accounts of
a particular class are taken into consideration. For any account fees that vary
with the size of the account, the account fee used for purposes of the above
computation is assumed to be the fee that would be charged to the class' mean
account size.
The average annual total returns for each Class of shares of the Fund for
the specified periods ended October 31, 1996 were as follows:
1 Year Life of Fund
------ ------------
Class A Shares (21.16) (22.69)*
Class B Shares (20.92) (22.17)*
Class C Shares N/A (14.49)**
* Commencement of operations, June 23, 1994.
**Commencement of operations, January 31, 1996.
Class A share results reflect the maximum sales charge of 5.75%. Class B
share results reflect the effect of the CDSC that would have been charged if
shares were redeemed at the end of each period. If PMC's voluntary fee and
expense reduction agreement had not been in place, total return would have been
lower.
OTHER QUOTATIONS, COMPARISONS, AND GENERAL INFORMATION
From time to time, in advertisements, in sales literature, or in reports to
shareholders, the past performance of the Fund may be illustrated and/or
compared with that of other mutual funds with similar investment objectives, and
to stock or other relevant indices. For example, total return of the Fund's
classes may be compared to averages or rankings prepared by Lipper Analytical
Services, Inc., a widely recognized independent service which monitors mutual
fund performance; the Europe Australia Far East Index ("EAFE"), an unmanaged
index of international stock markets, Morgan Stanley Capital International USA
Index, an unmanaged index of U.S. domestic stock markets, or other appropriate
indices of Morgan Stanley Capital International ("MSCI"); International Finance
Corporation Composite, an unmanaged index of foreign stock markets including
Latin America, East Asia, South Africa, Europe/Mid East and; the Standard &
Poor's 500 Stock Index ("S&P 500"), an unmanaged index of common stocks; or the
Dow Jones Industrial Average, a recognized unmanaged index of common stocks of
30 industrial companies listed on the Exchange.
In addition, the performance of the classes of the Fund may be compared to
alternative investment or savings vehicles and/or to indexes or indicators of
economic activity, e.g., inflation or interest rates. Performance rankings and
listings reported in newspapers or national business and financial publications,
such as Barron's, Business Week, Consumer's Digest, Consumer Reports, Financial
World, Forbes, Fortune, Investors Business Daily, Kiplinger's Personal Finance
Magazine, Money Magazine, the New York Times, Smart Money, USA Today, U.S. News
and World Report, The Wall Street Journal and Worth may also be cited (if the
Fund is listed in any such publication) or used for comparison, as well as
performance listings and rankings from various other sources including Bloomberg
Financial Systems, CDA/Wiesenberger Investment Companies Service, Donoghue's
Mutual Fund Almanac, Investment
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<PAGE>
Company Data, Inc., Johnson's Charts, Kanon Bloch Carre & Co., Micropal, Inc.,
Morningstar, Inc., Schabacker Investment Management and Towers Data Systems.
In addition, from time to time, quotations from articles from financial
publications, such as those listed above, may be used in advertisements, in
sales literature or in reports to shareholders of the Fund.
The Fund may also present, from time to time, historical information
depicting the value of a hypothetical account in one or more classes of the Fund
since the Fund's inception.
In presenting investment results, the Fund may also include references to
certain financial planning concepts, including (a) an investor's need to
evaluate his financial assets and obligations to determine how much to invest;
(b) his need to analyze the objectives of various investments to determine where
to invest; and (c) his need to analyze his time frame for future capital needs
to determine how long to invest. The investor controls these three factors, all
of which affect the use of investments in building assets.
AUTOMATED INFORMATION LINE
FactFoneSM, Pioneer's 24-hour automated information line, allows
shareholders to dial toll-free 1-800-225-4321 and hear recorded fund
information, including:
o net asset value prices for all Pioneer mutual funds;
o annualized 30-day yields on Pioneer's fixed income funds;
o annualized 7-day yields and 7-day effective (compound) yields for
Pioneer's money market fund; and
o dividends and capital gains distributions on all funds.
Yields are calculated in accordance with standard formulas mandated by the SEC.
In addition, by using a personal identification number ("PIN"),
shareholders may enter purchases, exchanges and redemptions, access their
account balance and last three transactions and may order a duplicate statement.
See "FactFoneSM" in the Prospectus for more information.
All performance numbers communicated through FactFone represent past
performance; figures for all quoted bond funds include the maximum applicable
sales charge. A shareholder's actual yield and total return will vary with
changing market conditions. The value of Class A, Class B and Class C shares
(except for Pioneer's money market fund, which seeks a stable $1.00 share price)
will also vary and may be worth more or less at redemption than their original
cost.
17. FINANCIAL STATEMENTS
The audited financial statements are included in the Fund's 1996 Annual
Report to Shareholders, which is hereby incorporated by reference into this
Statement of Additional Information and attached hereto in reliance upon the
report of Arthur Andersen LLP, independent public accountants, as experts in
accounting and auditing.. A copy of the Fund's annual report may be obtained
without charge by calling Shareholder Services at 1-800-225-6292 or by written
request to the Fund at 60 State Street, Boston, Massachusetts 02109.
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<PAGE>
APPENDIX A
PIONEER INDIA FUND
CLASS A SHARES
<TABLE>
<CAPTION>
NET ASSET INITIAL NET
INITIAL OFFERING SALES CHARGE SHARES VALUE ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
<S> <C> <C> <C> <C> <C> <C>
6/23/94 $10,000 $12.20 5.75% 819.672 $11.50 $9,425
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
FROM INVESTMENT FROM CAPITAL FROM DIVIDENDS TOTAL
DATE GAINS REINVESTED REINVESTED VALUE
<S> <C> <C> <C> <C>
12/31/94 $8,344 $0 $15 $8,359
12/31/95 $6,680 $0 $12 $6,692
12/31/96 $5,582 $0 $10 $5,592
</TABLE>
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<PAGE>
PIONEER INDIA FUND
CLASS B SHARES
<TABLE>
<CAPTION>
NET ASSET INITIAL NET
INITIAL OFFERING SALES CHARGE SHARES VALUE ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
<S> <C> <C> <C> <C> <C> <C>
6/23/94 $10,000 $11.50 0.00% 869.565 $11.50 $10,000
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
CONTINGENT
DEFERRED SALES
DATE FROM INVESTMENT FROM CAPITAL FROM DIVIDENDS CHARGE IF TOTAL CDSC
---- --------------- ------------- --------------- ---------- -----
GAINS REINVESTED REINVESTED REDEEMED VALUE PERCENTAGE
---------------- ----------- -------- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
12/31/94 $8,826 $0 $5 $353 $8,478 4.00%
12/31/95 $7,018 $0 $4 $281 $6,741 4.00%
---- -----
12/31/96 $5,818 $0 $3 $175 $5,646 3.00%
-------- ------ -- -- ---- ------ -----
</TABLE>
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<PAGE>
PIONEER INDIA FUND
CLASS C SHARES
<TABLE>
<CAPTION>
NET ASSET INITIAL NET
INITIAL OFFERING SALES CHARGE SHARES VALUE ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
<S> <C> <C> <C> <C> <C> <C>
1/31/96 $10,000 $7.85 0.00% 1,273.885 $7.85 $10,000
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
CONTINGENT
DEFERRED SALES
DATE FROM INVESTMENT FROM CAPITAL FROM DIVIDENDS CHARGE IF TOTAL CDSC
---- --------------- ------------- --------------- ---------- -----
GAINS REINVESTED REINVESTED REDEEMED VALUE PERCENTAGE
---------------- ----------- -------- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
12/31/96 $8,471 $0 $0 $85 $8,386 1.00%
-------- ------ -- -- --- ------ -----
</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 be used, if appropriate. The indices
are not available for direct investment. The data presented is not meant to be
indicative of the performance of the Fund, reflects past performance and does
not guarantee future results.
S&P 500
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P Composite Index
includes 500 of the largest stocks (in terms of stock market value) in the
United States; prior to March 1957 it consisted of 90 of the largest stocks.
DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of 30 blue chip stocks.
U.S. SMALL STOCK INDEX
This index is a market value weighted index of the ninth and tenth deciles of
the New York Stock Exchange (NYSE), plus stocks listed on the American Stock
Exchange (AMEX) and over-the-counter (OTC) with the same or less capitalization
as the upper bound of the NYSE ninth decile.
U.S. INFLATION
The Consumer Price Index for All Urban Consumers (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S. Department of Labor, Bureau of Labor Statistics, Washington, DC.
S&P/BARRA INDEXES
The S&P/BARRA Growth and Value Indexes are constructed by dividing the stocks in
the S&P 500 Index according to price-to-book ratios. The Growth Index contains
stocks with higher price-to-book ratios, and the Value Index contains stocks
with lower price-to-book ratios. Both indexes are market capitalization
weighted.
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<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
LONG-TERM U.S. GOVERNMENT BONDS
The total returns on long-term government bonds from 1977 to 1991 are
constructed with data from The Wall Street Journal. Over 1926-1976, data are
obtained from the Government bond file at the Center for Research in Security
Prices (CRSP), Graduate School of Business, University of Chicago. Each year, a
one-bond portfolio with a term of approximately 20 years and a reasonably
current coupon was used, and whose returns did not reflect potential tax
benefits, impaired negotiability, or special redemption or call privileges.
Where callable bonds had to be used, the term of the bond was assumed to be a
simple average of the maturity and first call dates minus the current date. The
bond was "held" for the calendar year and returns were computed. Total returns
for 1977-1991 are calculated as the change in the flat price or and-interest
price.
INTERMEDIATE-TERM U.S. GOVERNMENT BONDS
Total returns of the intermediate-term government bonds for 1977-1991 are
calculated from The Wall Street Journal prices, using the change in flat price.
Returns from 1934-1986 are obtained from the CRSP Government Bond File.
Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than 5 years, and this bond is "held"
for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934-1942, almost all bonds
with maturities near 5 years were partially or full tax-exempt and were selected
using the rules described above. Personal tax rates were generally low in that
period, so that yields on tax-exempt bonds were similar to yields on taxable
bonds. From 1926-1933, there are few bonds suitable for construction of a series
with a 5-year maturity. For this period, five year bond yield estimates are
used.
MSCI
Morgan Stanley Capital International Indices, developed by the Capital
International S.A., are based on share prices of some 1470 companies listed on
the stock exchanges around the world.
Countries in the MSCI EAFE Portfolio are:
Australia; Austria; Belgium; Denmark; Finland; France; Germany; Hong Kong;
Italy; Japan; Netherlands; N. Zealand; Norway; Singapore/Malaysia; Spain;
Sweden; Switzerland; United Kingdom.
Countries in the MSCI EMERGING MARKET FREE INDEX are: Argentina, Brazil, Chile,
China, Czech Republic, Colombia, Greece, Hungary, India, Indonesia, Israel,
Jordan, Korea Free (at 50%), Malaysia, Mexico Free, Pakistan, Peru, Philippines
Free, Poland, Portugal, South Africa, Sri Lanka, Taiwan, Thailand, Turkey,
Venezuela Free
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<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
6 MONTH CDs
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
LONG-TERM U.S. CORPORATE BONDS
For 1969-1991, corporate bond total returns are represented by the Salomon
Brothers Long-Term High-Grade Corporate Bond Index. Since most large corporate
bond transactions take place over the counter, a major dealer is the natural
source of these data. The index includes nearly all Aaa- and Aa-rated bonds. If
a bond is downgraded during a particular month, its return for the month is
included in the index before removing the bond from future portfolios.
Over 1926-1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946-1968, Ibbotson
and Sinquefield backdated the Salomon Brothers' index, using Salomon Brothers'
monthly yield data with a methodology similar to that used by Salomon for
1969-1991. Capital appreciation returns were calculated from yields assuming (at
the beginning of each monthly holding period) a 20-year maturity, a bond price
equal to par, and a coupon equal to the beginning-of-period yield. For the
period 1926-1945, the Standard and Poor's monthly High-Grade Corporate Composite
yield data were used, assuming a 4 percent coupon and a 20-year maturity. The
conventional present-value formula for bond price for the beginning and
end-of-month prices was used. (This formula is presented in Ross, Stephen A.,
and Randolph W. Westerfield, Corporate Finance, Times Mirror/Mosby, St. Louis,
1990, p. 97 ["Level-Coupon Bonds"].) The monthly income return was assumed to be
one-twelfth the coupon.
U.S. (30 DAY) TREASURY BILLS
For the U.S. Treasury bill index, data from The Wall Street Journal are used for
1977-1991; the CRSP U.S. Government Bond File is the source until 1976. Each
month a one-bill portfolio containing the shortest-term bill having not less
than one month to maturity is constructed. (The bill's original term to maturity
is not relevant.) To measure holding period returns for the one-bill portfolio,
the bill is priced as of the last trading day of the previous month-end and as
of the last trading day of the current month.
NAREIT-EQUITY INDEX
All of the data is based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMSE and the NASDAQ. The data is
market-value-weighted. Prior to 1987 REITs were added to the index the January
following their listing. Since 1987 Newly formed or listed REITs are added to
the total shares outstanding figure in the month that the shares are issued.
Only common shares issued by the REIT are included in the index. The total
return calculation is based upon the weighing at the beginning of the period.
Only those REITs listed for the entire period are
-38-
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
used in the total return calculation. Dividends are included in the month based
upon their payment date. There is no smoothing of income. Liquidating dividends,
whether full or partial, are treated as income.
RUSSELL 2000 SMALL STOCK INDEX
Index of the 2,000 smallest stocks in the Russell 3000 Index (TM); the smallest
company has a market capitalization of approximately $13 million. The Russell
3000 is comprised of the 3,000 largest US companies as determined by market
capitalization representing approximately 98% of the US equity market. The
largest company in the index has a market capitalization of $67 billion. The
Russell Indexes (TM) are reconstituted annually as of June 1st, based on May 31
market capitalization rankings.
WILSHIRE REAL ESTATE SECURITIES INDEX
The Wilshire Real Estate Securities Index is a market capitalization-weighted
index which measures the performance of more than 85 securities.
The index contains performance data on five major categories of property;
office, retail, industrial, apartment and miscellaneous. Additionally, the Index
has real estate portfolio encumbered by 16% third party mortgages. The companies
in the WRESEC are 79% equity and hybrid REIT's and 21% real estate operating
companies. The capitalization is 47% NYSE, 33% AMEX and 20% OTC."
STANDARD & POOR'S MIDCAP 400 INDEX
The Standard and Poor's MidCap 400 Index is a market-value-weighted index. The
performance data for the MidCap 400 Index were calculated by taking the stocks
presently in the MidCap 400 Index and tracking them backwards in time as long as
there were prices reported. No attempt was made to determine what stocks "might
have been" in the MidCap 400 Index five or ten years ago had it existed.
Dividends are reinvested on a monthly basis prior to June 30, 1991, and are
reinvested daily thereafter.
The S&P MidCap 400 Index and the S&P 500 together represent approximately 85% of
the total market capitalization of stocks traded in the United States.
LIPPER BALANCED FUNDS INDEX
Equally-weighted performance indices, adjusted for capital gains distributions
and income dividends of approximately 30 of the largest funds with a primary
objective of conserving principal by maintaining at all times a balanced
portfolio of stocks and bonds. Typically, the stock/bond ratio ranges around
60%/40%.
-39-
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
BANK SAVINGS ACCOUNT
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963-1987 and The Wall Street Journal for the years 1988-1994.
Source: Ibbotson Associates
-40-
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S&P 500 Dow U.S. Small S&P/ S&P/
Jones Stock U.S. BARRA BARRA
Industrials Index Inflation Growth Value
- --------------------------------------------------------------------------------
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A
Dec 1931 -43.34 -49.03 -49.75 -9.52 N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A
Dec 1933 53.99 73.71 142.87 0.51 N/A N/A
Dec 1934 -1.44 8.07 24.22 2.03 N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A
Dec 1942 20.34 14.12 44.51 9.29 N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A
-41-
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S&P 500 Dow U.S. Small S&P/ S&P/
Jones Stock U.S. BARRA BARRA
Industrials Index Inflation Growth Value
- --------------------------------------------------------------------------------
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60
Dec 1994 1.31 5.06 3.11 2.78 3.13 -0.64
Dec 1995 37.43 36.84 34.46 2.74 38.13 36.99
Dec 1996 23.07 28.84 17.62 3.58 23.96 21.99
-42-
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Intermediate MSCI Long-
Long-Term -Term U.S. EAFE 6 Term U.S. U.S.
U.S. Gov't Government - Net of MONTH Corporate (30 Day)
Bonds Bonds Taxes CDs Bonds T- Bill
- --------------------------------------------------------------------------------
Dec 1925 N/A N/A N/A N/A N/A N/A
Dec 1926 7.77 5.38 N/A N/A 7.37 3.27
Dec 1927 8.93 4.52 N/A N/A 7.44 3.12
Dec 1928 0.1 0.92 N/A N/A 2.84 3.56
Dec 1929 3.42 6.01 N/A N/A 3.27 4.75
Dec 1930 4.66 6.72 N/A N/A 7.98 2.41
Dec 1931 -5.31 -2.32 N/A N/A -1.85 1.07
Dec 1932 16.84 8.81 N/A N/A 10.82 0.96
Dec 1933 -0.07 1.83 N/A N/A 10.38 0.30
Dec 1934 10.03 9.00 N/A N/A 13.84 0.16
Dec 1935 4.98 7.01 N/A N/A 9.61 0.17
Dec 1936 7.52 3.06 N/A N/A 6.74 0.18
Dec 1937 0.23 1.56 N/A N/A 2.75 0.31
Dec 1938 5.53 6.23 N/A N/A 6.13 -0.02
Dec 1939 5.94 4.52 N/A N/A 3.97 0.02
Dec 1940 6.09 2.96 N/A N/A 3.39 0.00
Dec 1941 0.93 0.50 N/A N/A 2.73 0.06
Dec 1942 3.22 1.94 N/A N/A 2.60 0.27
Dec 1943 2.08 2.81 N/A N/A 2.83 0.35
Dec 1944 2.81 1.80 N/A N/A 4.73 0.33
Dec 1945 10.73 2.22 N/A N/A 4.08 0.33
Dec 1946 -0.10 1.00 N/A N/A 1.72 0.35
Dec 1947 -2.62 0.91 N/A N/A -2.34 0.50
Dec 1948 3.40 1.85 N/A N/A 4.14 0.81
Dec 1949 6.45 2.32 N/A N/A 3.31 1.10
Dec 1950 0.06 0.70 N/A N/A 2.12 1.20
Dec 1951 -3.93 0.36 N/A N/A -2.69 1.49
Dec 1952 1.16 1.63 N/A N/A 3.52 1.66
Dec 1953 3.64 3.23 N/A N/A 3.41 1.82
Dec 1954 7.19 2.68 N/A N/A 5.39 0.86
Dec 1955 -1.29 -0.65 N/A N/A 0.48 1.57
Dec 1956 -5.59 -0.42 N/A N/A -6.81 2.46
Dec 1957 7.46 7.84 N/A N/A 8.71 3.14
Dec 1958 -6.09 -1.29 N/A N/A -2.22 1.54
Dec 1959 -2.26 -0.39 N/A N/A -0.97 2.95
Dec 1960 13.78 11.76 N/A N/A 9.07 2.66
Dec 1961 0.97 1.85 N/A N/A 4.82 2.13
Dec 1962 6.89 5.56 N/A N/A 7.95 2.73
Dec 1963 1.21 1.64 N/A N/A 2.19 3.12
Dec 1964 3.51 4.04 N/A 4.18 4.77 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 3.93
-43-
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Intermediate MSCI Long-
Long-Term -Term U.S. EAFE 6 Term U.S. U.S.
U.S. Gov't Government - Net of MONTH Corporate (30 Day)
Bonds Bonds Taxes CDs Bonds T- Bill
- --------------------------------------------------------------------------------
Dec 1966 3.65 4.69 N/A 5.75 0.20 4.76
Dec 1967 -9.18 1.01 N/A 5.48 -4.95 4.21
Dec 1968 -0.26 4.54 N/A 6.44 2.57 5.21
Dec 1969 -5.07 -0.74 N/A 8.71 -8.09 6.58
Dec 1970 12.11 16.86 -11.66 7.06 18.37 6.52
Dec 1971 13.23 8.72 29.59 5.36 11.01 4.39
Dec 1972 5.69 5.16 36.35 5.38 7.26 3.84
Dec 1973 -1.11 4.61 -14.92 8.60 1.14 6.93
Dec 1974 4.35 5.69 -23.16 10.20 -3.06 8.00
Dec 1975 9.20 7.83 35.39 6.51 14.64 5.80
Dec 1976 16.75 12.87 2.54 5.22 18.65 5.08
Dec 1977 -0.69 1.41 18.06 6.12 1.71 5.12
Dec 1978 -1.18 3.49 32.62 10.21 -0.07 7.18
Dec 1979 -1.23 4.09 4.75 11.90 -4.18 10.38
Dec 1980 -3.95 3.91 22.58 12.33 -2.76 11.24
Dec 1981 1.86 9.45 -2.28 15.50 -1.24 14.71
Dec 1982 40.36 29.1 -1.86 12.18 42.56 10.54
Dec 1983 0.65 7.41 23.69 9.65 6.26 8.80
Dec 1984 15.48 14.02 7.38 10.65 16.86 9.85
Dec 1985 30.97 20.33 56.16 7.82 30.09 7.72
Dec 1986 24.53 15.14 69.44 6.30 19.85 6.16
Dec 1987 -2.71 2.90 24.63 6.58 -0.27 5.47
Dec 1988 9.67 6.10 28.27 8.15 10.70 6.35
Dec 1989 18.11 13.29 10.54 8.27 16.23 8.37
Dec 1990 6.18 9.73 -23.45 7.85 6.78 7.81
Dec 1991 19.3 15.46 12.13 4.95 19.89 5.60
Dec 1992 8.05 7.19 -12.17 3.27 9.39 3.51
Dec 1993 18.24 11.24 32.56 2.88 13.19 2.90
Dec 1994 -7.77 -5.14 7.78 5.40 -5.76 3.90
Dec 1995 31.67 16.8 11.21 5.21 26.39 5.60
Dec 1996 -0.93 2.10 6.05 5.21 1.40 5.21
-44-
<PAGE>
<TABLE>
<CAPTION>
RUSSELL LIPPER MSCI EMERGING
2000 WILSHIRE REAL S&P MIDCAP BALANCED MARKETS FREE BANK
NAREIT-EQUITY INDEX ESTATE 400 FUND INDEX SAVINGS ACCOUNT
SECURITIES INDEX INDEX
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 N/A N/A N/A N/A N/A N/A N/A
Dec 1927 N/A N/A N/A N/A N/A N/A N/A
Dec 1928 N/A N/A N/A N/A N/A N/A N/A
Dec 1929 N/A N/A N/A N/A N/A N/A N/A
Dec 1930 N/A N/A N/A N/A N/A N/A 5.30
Dec 1931 N/A N/A N/A N/A N/A N/A 5.10
Dec 1932 N/A N/A N/A N/A N/A N/A 4.10
Dec 1933 N/A N/A N/A N/A N/A N/A 3.40
Dec 1934 N/A N/A N/A N/A N/A N/A 3.50
Dec 1935 N/A N/A N/A N/A N/A N/A 3.10
Dec 1936 N/A N/A N/A N/A N/A N/A 3.20
Dec 1937 N/A N/A N/A N/A N/A N/A 3.50
Dec 1938 N/A N/A N/A N/A N/A N/A 3.50
Dec 1939 N/A N/A N/A N/A N/A N/A 3.40
Dec 1940 N/A N/A N/A N/A N/A N/A 3.30
Dec 1941 N/A N/A N/A N/A N/A N/A 3.10
Dec 1942 N/A N/A N/A N/A N/A N/A 3.00
Dec 1943 N/A N/A N/A N/A N/A N/A 2.90
Dec 1944 N/A N/A N/A N/A N/A N/A 2.80
Dec 1945 N/A N/A N/A N/A N/A N/A 2.50
Dec 1946 N/A N/A N/A N/A N/A N/A 2.20
Dec 1947 N/A N/A N/A N/A N/A N/A 2.30
Dec 1948 N/A N/A N/A N/A N/A N/A 2.30
Dec 1949 N/A N/A N/A N/A N/A N/A 2.40
Dec 1950 N/A N/A N/A N/A N/A N/A 2.50
Dec 1951 N/A N/A N/A N/A N/A N/A 2.60
Dec 1952 N/A N/A N/A N/A N/A N/A 2.70
Dec 1953 N/A N/A N/A N/A N/A N/A 2.80
Dec 1954 N/A N/A N/A N/A N/A N/A 2.90
Dec 1955 N/A N/A N/A N/A N/A N/A 2.90
Dec 1956 N/A N/A N/A N/A N/A N/A 3.00
Dec 1957 N/A N/A N/A N/A N/A N/A 3.30
Dec 1958 N/A N/A N/A N/A N/A N/A 3.38
Dec 1959 N/A N/A N/A N/A N/A N/A 3.53
Dec 1960 N/A N/A N/A N/A 5.77 N/A 3.86
Dec 1961 N/A N/A N/A N/A 20.59 N/A 3.90
Dec 1962 N/A N/A N/A N/A -6.80 N/A 4.08
Dec 1963 N/A N/A N/A N/A 13.10 N/A 4.17
Dec 1964 N/A N/A N/A N/A 12.36 N/A 4.19
Dec 1965 N/A N/A N/A N/A 9.80 N/A 4.23
Dec 1966 N/A N/A N/A N/A -5.86 N/A 4.45
Dec 1967 N/A N/A N/A N/A 15.09 N/A 4.67
Dec 1968 N/A N/A N/A N/A 13.97 N/A 4.68
Dec 1969 N/A N/A N/A N/A -9.01 N/A 4.80
Dec 1970 N/A N/A N/A N/A 5.62 N/A 5.14
Dec 1971 N/A N/A N/A N/A 13.90 N/A 5.30
-45-
<PAGE>
RUSSELL LIPPER MSCI EMERGING
2000 WILSHIRE REAL S&P MIDCAP BALANCED MARKETS FREE BANK
NAREIT-EQUITY INDEX ESTATE 400 FUND INDEX SAVINGS ACCOUNT
SECURITIES INDEX INDEX
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1972 8.01 N/A N/A N/A 11.13 N/A 5.37
Dec 1973 -15.52 N/A N/A N/A -12.24 N/A 5.51
Dec 1974 -21.40 N/A N/A N/A -18.71 N/A 5.96
Dec 1975 19.30 N/A N/A N/A 27.10 N/A 6.21
Dec 1976 47.59 N/A N/A N/A 26.03 N/A 6.23
Dec 1977 22.42 N/A N/A N/A -0.72 N/A 6.39
Dec 1978 10.34 N/A 13.04 N/A 4.80 N/A 6.56
Dec 1979 35.86 43.09 70.81 N/A 14.67 N/A 7.29
Dec 1980 24.37 38.58 22.08 N/A 19.70 N/A 8.78
Dec 1981 6.00 2.03 7.18 N/A 1.86 N/A 10.71
Dec 1982 21.60 24.95 24.47 22.68 30.63 N/A 11.19
Dec 1983 30.64 29.13 27.61 26.10 17.44 N/A 9.71
Dec 1984 20.93 -7.30 20.64 1.18 7.46 N/A 9.92
Dec 1985 19.10 31.05 22.20 35.58 29.83 N/A 9.02
Dec 1986 19.16 5.68 20.30 16.21 18.43 N/A 7.84
Dec 1987 -3.64 -8.77 -7.86 -2.03 4.13 N/A 6.92
Dec 1988 13.49 24.89 24.18 20.87 11.18 40.43 7.20
Dec 1989 8.84 16.24 2.37 35.54 19.70 64.96 7.91
Dec 1990 -15.35 -19.51 -33.46 -5.12 0.66 10.55 7.80
Dec 1991 35.70 46.05 20.03 50.10 25.83 59.91 4.61
Dec 1992 14.59 18.41 7.36 11.91 7.46 11.40 2.89
Dec 1993 19.65 18.91 15.24 13.96 11.95 74.83 2.73
Dec 1994 3.17 -1.82 1.64 -3.57 -2.05 7.32 4.96
Dec 1995 15.27 28.44 13.65 30.94 24.89 5.21 5.24
Dec 1996 35.26 16.53 36.87 19.20 13.01 6.03 4.95
</TABLE>
Source: Lipper
-46-
<PAGE>
APPENDIX B
ADDITIONAL PIONEER INFORMATION
The Pioneer group of mutual funds was established in 1928 with the
creation of Pioneer Fund. Pioneer is one of the oldest and most experienced
money managers in the United States.
As of December 31, 1996, PMC employed a professional investment staff
of 53, with a combined average of twelve years' experience in the financial
services industry.
Total assets of all Pioneer mutual funds at December 31, 1996, were
approximately $15.8 billion representing 1,086,554 shareholder accounts, 722,661
non-retirement accounts and 363,893 retirement accounts.
-47-
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements:
The financial highlights of the Registrant are included in
Part A of the Registration Statement and the financial
statements of the Registrant are incorporated by reference
into Part B of the Registration Statement from the 1996 Annual
Report to Shareholders for the year ended October 31, 1996
(filed electronically on December 26, 1996; file no. 811-8468;
accession number 0000921447-96-000016).
(b) Exhibits:
1.1 Agreement and Declaration of Trust of the Registrant.**
1.2 Certificate of Trust of the Registrant.**
1.3 Establishment and Designation of Class A and Class B
shares of Beneficial Interest.**
1.4 Establishment and Designation of Class C shares of
Beneficial Interest.**
2. By-Laws of the Registrant.**
3. None.
4. None.
5.1 Management Contract between the Registrant and
Pioneering Management Corporation.**
5.2 Subadvisory Contract between Pioneering Management
Corporation and ITI Pioneer AMC Ltd.**
6.1. Underwriting Agreement between the Registrant and
Pioneer Funds Distributor, Inc.**
6.2. Form of Dealer Sales Agreement.**
7. None.
C-1
<PAGE>
8. Custodian Agreement between the Registrant and Brown
Brothers Harriman & Co.**
9. Investment Company Service Agreement between the
Registrant and Pioneering Services Corporation.**
10. Not Applicable.
11. Consent of Independent Public Accountants.*
12. Not Applicable.
13. Share Purchase Agreement.**
14. None.
15.1 Class A Distribution Plan.**
15.2 Class B Distribution Plan.**
15.3 Class C Distribution Plan.**
16. None.
17. Financial Data Schedule*
18.1 Rule 18f-3 Plan Covering Two Classes of Shares.**
18.2 Rule 18f-3 Plan Covering Three Classes of Shares.**
19. Powers of Attorney.**
-------------
* Filed herewith.
** Previously filed electronically on February 28, 1996 with Post-Effective
Amendment No. 3 to the Registrant's Registration Statement on Form N-1A.
C-2
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER
COMMON CONTROL WITH REGISTRANT.
PERCENT STATE/COUNTRY
OF OF
COMPANY OWNED BY SHARES INCORPORATION
- ------- -------- ------ -------------
Pioneering Management Corp. (PMC) PGI 100% DE
Pioneering Services Corp. (PSC) PGI 100% MA
Pioneer Capital Corp. (PCC) PGI 100% MA
Pioneer Fonds Marketing GmbH (GmbH) PGI 100% MA
Pioneer SBIC Corp. (SBIC) PGI 100% MA
Pioneer Associates, Inc. (PAI) PGI 100% MA
Pioneer International Corp. (PInt) PGI 100% MA
Pioneer Plans Corp. (PPC) PGI 100% MA
Pioneer Goldfields Ltd (PGL) PGI 100% MA
Pioneer Investments Corp. (PIC) PGI 100% MA
Pioneer Metals and Technology,
Inc. (PMT) PGI 100% DE
Pioneer First Polish Trust Fund
Joint Stock Co. (First Polish) PGI 100% Poland
Teberebie Goldfields Ltd. (TGL) PGI 90% Ghana
Pioneer Funds Distributor, Inc.
(PFD) PMC 100% MA
SBIC's outstanding capital stock PCC 100% MA
THE FUNDS: All are parties to management contracts with PMC.
BUSINESS
FUND TRUST
---- -----
Pioneer World Equity Fund MA
Pioneer International Growth Fund MA
Pioneer Europe Fund MA
Pioneer Emerging Markets Fund DE
Pioneer India Fund DE
Pioneer Growth Trust MA
Pioneer Mid-Cap Fund DE
Pioneer Micro-Cap Fund DE
Pioneer Growth Shares DE
Pioneer Small Company Fund DE
Pioneer Fund MA
Pioneer II MA
Pioneer Real Estate Shares DE
Pioneer Short-Term Income Fund 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
OTHER:
. SBIC is the sole general partner of Pioneer Ventures Limited Partnership,
a Massachusetts limited partnership.
C-3
<PAGE>
. ITI Pioneer AMC Ltd. (ITI Pioneer) (Indian Corp.), is a joint venture
between PMC and Investment Trust of India Ltd. (ITI) (Indian Corp.)
. ITI and PMC own approximately 46% and 49%, respectively, of the total
equity capital of ITI Pioneer.
JOHN F. COGAN, JR.
OWNS APPROXIMATELY 14% OF THE OUTSTANDING SHARES OF PGI.
TRUSTEE/
ENTITY CHAIRMAN PRESIDENT DIRECTOR OTHER
Pioneer Family of
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
PCC X
PSC X
PMC X X
PFD X X
TGL X X
First Polish X Member of
Supervisory Board
Hale and Dorr LLP Partner
GmbH Chairman of
Supervisory Board
C-4
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
The following table sets forth the approximate number of record holders
of each class of securities of the Registrant as of January 31, 1997:
Class A Class B Class C
------- ------- -------
Number of Record Holders: 2,260 1,338 137
ITEM 27. INDEMNIFICATION.
Except for the Agreement and Declaration of Trust dated April 4, 1994
(the "Declaration"), establishing the Registrant as a business trust under
Delaware law, there is no contract, arrangement or statute under which any
director, officer, underwriter or affiliated person of the Registrant is insured
or indemnified. The 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 "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 Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment 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 Act and will
be governed by the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The business and other connections of the officers and directors of the
Registrant's investment manager, Pioneering Management Corporation, are listed
on the Form ADV of Pioneering Management Corporation as currently on file with
the Commission (File No. 801-8255). The following sections of such Form ADV are
incorporated herein by reference:
(a) Items 1 and 2 of Part 2;
(b) Section 6, Business Background, of Schedule D.
The business and other connections of the officers and directors of the
Registrant's investment adviser in India, ITI Pioneer AMC Ltd., are listed on
the Form ADV of ITI Pioneer AMC Ltd. as currently on file with the Commission
(File No. 801-46648). The following sections of such Form ADV are incorporated
herein by reference:
C-5
<PAGE>
(a) Items 1 and 2 of Part 2;
(b) Section 6, Business Background, of Schedule D.
ITEM 29. PRINCIPAL UNDERWRITER
(a) See Item 25 above.
(b) Directors and Officers of PFD:
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with 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
John C. Drachman Vice President None
Barry G. Knight Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Elizabeth B. Rice Vice President None
Mary Kleeman Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy L. Supovitz Vice President None
Steven R. Berke Assistant None
Vice President
Mary Sue Hoban Assistant None
Vice President
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
* The principal business address of each person listed is 60 State Street,
Boston, Massachusetts 02109.
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts and records are maintained at the Registrant's office at
60 State Street, Boston, Massachusetts; contact the Treasurer.
ITEM 31. MANAGEMENT SERVICES
The Registrant is not a party to any management-related service
contract, except as described in the Prospectus and the Statement of Additional
Information.
ITEM 32. UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to deliver, or cause to be
delivered with the Registrant's prospectus, to each person to whom such
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 its prospectus that it will furnish, without
charge, a copy of such report on request, and the name, address and telephone
number of the person to whom such a request should be directed.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment No. 4 to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment No. 4 to such Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston and The Commonwealth of Massachusetts, on the
25th day of February, 1997.
PIONEER INDIA FUND
By:/s/ John F. Cogan, Jr.
John F. Cogan, Jr.
Chairman and President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 4 to the Registrant's Registration Statement has
been signed below by the following persons in the capacities and on the date
indicated:
Signature Title
--------- -----
/s/ John F. Cogan, Jr. Chairman of the Board )
John F. Cogan, Jr. and President )
(Principal Executive )
Officer) )
)
William H. Keough* Chief Financial Officer )
William H. Keough and Treasurer (Principal )
Financial and Accounting )
Officer) )
Trustees:
/s/ John F. Cogan, Jr. )
John F. Cogan, Jr. )
)
)
)
Richard H. Egdahl, M.D.* )
Richard H. Egdahl, M.D. )
)
)
Margaret B. W. Graham* )
Margaret B. W. Graham )
)
)
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/ John F. Cogan, Jr. Dated: February 25, 1997
-------------------------
John F. Cogan, Jr.
Attorney-in-fact
C-7
<PAGE>
EXHIBIT INDEX
Exhibit
Number Document Title
11. Consent of Independent Public Accountants.
17. Financial Data Schedule.
C-8
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report on Pioneer India Fund dated December 4, 1996 (and to all references to
our firm) included in or made a part of Post-Effective Amendment No. 4 and
Amendment No. 6 to Registration Statement File Nos. 33-77472 and 811-8468,
respectively.
/s/ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 24, 1997
[ARTICLE] 6
[CIK] 0000921447
[NAME] PIONEER INDIA FUND
[SERIES]
[NUMBER] 001
[NAME] PIONEER INDIA FUND CLASS A
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] OCT-31-1996
[PERIOD-END] OCT-31-1996
[INVESTMENTS-AT-COST] 28702425
[INVESTMENTS-AT-VALUE] 19559545
[RECEIVABLES] 514351
[ASSETS-OTHER] 3315
[OTHER-ITEMS-ASSETS] 1573399
[TOTAL-ASSETS] 21650610
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 430342
[TOTAL-LIABILITIES] 430342
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 33272594
[SHARES-COMMON-STOCK] 1786561
[SHARES-COMMON-PRIOR] 991672
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (2906393)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (9145933)
[NET-ASSETS] 21220268
[DIVIDEND-INCOME] 556282
[INTEREST-INCOME] 70240
[OTHER-INCOME] 17254
[EXPENSES-NET] (621308)
[NET-INVESTMENT-INCOME] 22468
[REALIZED-GAINS-CURRENT] (2472495)
[APPREC-INCREASE-CURRENT] (4252776)
[NET-CHANGE-FROM-OPS] (6702803)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 3057493
[NUMBER-OF-SHARES-REDEEMED] 2262604
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 6831972
[ACCUMULATED-NII-PRIOR] (737343)
[ACCUMULATED-GAINS-PRIOR] (4898325)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 305384
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1123122
[AVERAGE-NET-ASSETS] 16174368
[PER-SHARE-NAV-BEGIN] 8.47
[PER-SHARE-NII] 0.03
[PER-SHARE-GAIN-APPREC] (1.57)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 6.93
[EXPENSE-RATIO] 2.28
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<PAGE>
[ARTICLE] 6
[CIK] 0000921447
[NAME] PIONEER INDIA FUND
[SERIES]
[NUMBER] 002
[NAME] PIONEER INDIA FUND CLASS B
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] OCT-31-1996
[PERIOD-END] OCT-31-1996
[INVESTMENTS-AT-COST] 28702425
[INVESTMENTS-AT-VALUE] 19559545
[RECEIVABLES] 514351
[ASSETS-OTHER] 3315
[OTHER-ITEMS-ASSETS] 1573399
[TOTAL-ASSETS] 21650610
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 430342
[TOTAL-LIABILITIES] 430342
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 33272594
[SHARES-COMMON-STOCK] 1216378
[SHARES-COMMON-PRIOR] 713880
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (2906393)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (9145933)
[NET-ASSETS] 21220268
[DIVIDEND-INCOME] 556282
[INTEREST-INCOME] 70240
[OTHER-INCOME] 17254
[EXPENSES-NET] (621308)
[NET-INVESTMENT-INCOME] 22468
[REALIZED-GAINS-CURRENT] (2472495)
[APPREC-INCREASE-CURRENT] (4252776)
[NET-CHANGE-FROM-OPS] (6702803)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 994158
[NUMBER-OF-SHARES-REDEEMED] 491660
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 6831972
[ACCUMULATED-NII-PRIOR] (737343)
[ACCUMULATED-GAINS-PRIOR] (4898325)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 305384
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1123122
[AVERAGE-NET-ASSETS] 7789248
[PER-SHARE-NAV-BEGIN] 8.39
[PER-SHARE-NII] (0.03)
[PER-SHARE-GAIN-APPREC] (1.56)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 6.80
[EXPENSE-RATIO] 3.15
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<PAGE>
[ARTICLE] 6
[CIK] 0000921447
[NAME] PIONEER INDIA FUND
[SERIES]
[NUMBER] 003
[NAME] PIONEER INDIA FUND CLASS C
[PERIOD-TYPE] OTHER
[FISCAL-YEAR-END] OCT-31-1996
[PERIOD-END] OCT-31-1996
[INVESTMENTS-AT-COST] 28702425
[INVESTMENTS-AT-VALUE] 19559545
[RECEIVABLES] 514351
[ASSETS-OTHER] 3315
[OTHER-ITEMS-ASSETS] 1573399
[TOTAL-ASSETS] 21650610
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 430342
[TOTAL-LIABILITIES] 430342
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 33272594
[SHARES-COMMON-STOCK] 82178
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (2096393)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (9145933)
[NET-ASSETS] 21220268
[DIVIDEND-INCOME] 556282
[INTEREST-INCOME] 70240
[OTHER-INCOME] 17254
[EXPENSES-NET] (621308)
[NET-INVESTMENT-INCOME] 22468
[REALIZED-GAINS-CURRENT] (2472495)
[APPREC-INCREASE-CURRENT] (4252776)
[NET-CHANGE-FROM-OPS] (6702803)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 127681
[NUMBER-OF-SHARES-REDEEMED] 45503
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 6831972
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 305384
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1123122
[AVERAGE-NET-ASSETS] 627269
[PER-SHARE-NAV-BEGIN] 7.85
[PER-SHARE-NII] 0.07
[PER-SHARE-GAIN-APPREC] (1.15)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 6.77
[EXPENSE-RATIO] 3.12
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
