[Pioneer Logo]
Pioneer Indo-Asia Fund
Class A, Class B and Class C Shares
Prospectus
October 1, 1998
Pioneer Indo-Asia Fund (the "Fund") seeks long-term growth of capital by
investing in a portfolio consisting primarily of securities of companies in
Asia and the Indian Subcontinent ("Indo-Asian Issuers"). 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.
Investments in non-U.S. securities entail significant risks in addition
to those 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" for a discussion of these risks.
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 October 1, 1998, as supplemented or revised from time to
time, which is incorporated into this Prospectus by reference. A copy of the
Statement of Additional Information may be obtained free of charge by calling
Shareholder Services at 1-800-225-6292 or by written request to the Fund at 60
State Street, Boston, Massachusetts 02109. Other information about the Fund has
been filed with the Securities and Exchange Commission (the "SEC") and is
available upon request and without charge by calling 1-800-225-6292 or through
the SEC's Internet web site (http://www.sec.gov).
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
------------------------------------------------------ -----
<S> <C> <C>
I. EXPENSE INFORMATION .................................. 2
II. FINANCIAL HIGHLIGHTS ................................. 3
III. INVESTMENT OBJECTIVE AND POLICIES .................... 4
IV. MANAGEMENT OF THE FUND ............................... 7
V. FUND SHARE ALTERNATIVES .............................. 9
VI. SHARE PRICE .......................................... 9
VII. HOW TO BUY FUND SHARES ............................... 10
VIII. HOW TO SELL FUND SHARES .............................. 13
IX. HOW TO EXCHANGE FUND SHARES .......................... 14
X. DISTRIBUTION PLANS ................................... 15
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION ................ 16
XII. SHAREHOLDER SERVICES ................................. 17
Account and Confirmation Statements ................. 17
Additional Investments .............................. 17
Automatic Investment Plans .......................... 17
Financial Reports and Tax Information ............... 17
Distribution Options ................................ 17
Directed Dividends .................................. 17
Direct Deposit ...................................... 17
Voluntary Tax Withholding ........................... 18
Telephone Transactions .............................. 18
FactFoneSM .......................................... 18
Retirement Plans .................................... 18
Telecommunications Device for the Deaf (TDD) ........ 18
Systematic Withdrawal Plans ......................... 18
Reinvestment Privilege (Class A Shares Only) ........ 18
XIII. THE FUND ............................................. 19
XIV. INVESTMENT RESULTS ................................... 19
APPENDIX ............................................. 20
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
I. EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses
that you, as a shareholder, will bear directly or indirectly when you invest in
the Fund. The table reflects annual operating expenses based on actual expenses
incurred for the fiscal year ended October 31, 1997. Expenses have been restated
to reflect current fees.
<TABLE>
<CAPTION>
Class A Class B Class C
------------ --------- ----------
<S> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Initial Sales Charge on Purchases (as a
percentage of offering price) .................. 5.75%(1) None None
Maximum Sales Charge on Reinvestment of
Dividends ...................................... None None None
Maximum Deferred Sales Charge (as a percentage
of purchase price or redemption proceeds, as
applicable) .................................... None(1) 4.00% 1.00%
Redemption fee(2)................................. None None None
Exchange fee ..................................... None None None
Annual Operating Expenses
(as a percentage of average net assets):
Management fee (after fee reduction)(3)........... 0.00% 0.00% 0.00%
12b-1 fees ....................................... 0.24% 1.00% 1.00%
Other Expenses (including transfer agent fee,
custodian fees and accounting and printing
expenses) (after expense reduction)(3,4)........ 1.90% 1.75% 1.69%
----- ----- -----
Total Operating Expenses
(after fee and expense reductions)(3,4)........... 2.14% 2.75% 2.69%
===== ===== ====
</TABLE>
- --------------------
(1) Purchases of $1 million or more and purchases by participants in certain
group plans are not subject to an initial sales charge but may be subject
to a contingent deferred sales charge ("CDSC") as further described in "How
to Sell Fund Shares."
(2) Separate fees (currently $10 and $20, respectively) apply to United States
("U.S.") and international wire transfers of redemption proceeds.
(3) Pioneering Management Corporation ("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 2.10% 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.
<TABLE>
<CAPTION>
Class A Class B Class C
--------- --------- ----------
<S> <C> <C> <C>
Expenses Absent Fee and Expense Reductions
Management Fee .......................... 1.10% 1.10% 1.10%
Other Expenses .......................... 3.05% 2.89% 2.79%
Total Operating Expenses ................ 4.39% 4.99% 4.89%
</TABLE>
- --------------------
(4) Expenses do not reflect reductions due to certain expense offset
arrangements. Because of those arrangements other expenses would be 1.86%,
1.71% and 1.63% and total operating expenses would be 2.10%, 2.71% and
2.63% for Class A, Class B and Class C shares, respectively. See "Financial
Highlights."
Example:
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return, reinvestment of all dividends and distributions and that the
percentage amounts listed under "Annual Operating Expenses" remain the same
each year.
<TABLE>
<CAPTION>
One Year Three Years Five Years Ten Years
---------- ------------- ------------ ----------
<S> <C> <C> <C> <C>
Class A Shares $78 $121 $166 $291
Class B Shares
--Assuming complete
redemption at end of
period $68 $115 $165 $293
--Assuming no
redemption $28 $ 85 $145 $293
Class C shares**
--Assuming complete
redemption at end
of period $37 $ 84 $142 $302
--Assuming no
redemption $27 $ 84 $142 $302
- --------------------
*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.
</TABLE>
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 paying more than the economic equivalent of the maximum sales
charge permitted under the Conduct Rules of the National Association of
Securities Dealers, Inc.
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 reports on the Fund's
audited financial statements as of October 31, 1997 and April 30, 1998, appear
in the Fund's Annual Report and Semi-Annual Report, respectively, which are
incorporated by reference into 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 and Semi-Annual Report. The Annual
and Semi-Annual Reports include more information about the Fund's performance
and are available free of charge by calling Shareholder Services at
1-800-225-6292.
Pioneer Indo-Asia Fund
Selected Data for a Class A Share Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
Six
Months
Ended
April 30,
--------------------
1998
--------------------
<S> <C>
Net asset value, beginning of period .................................................. $ 7.14
Increase (decrease) from investment operations:
Net investment income (loss) ........................................................ $ (0.04)
Net realized and unrealized gain (loss) on investments and foreign currency related
transactions ....................................................................... (0.04)
----------
Net increase (decrease) from investment operations ................................. $ (0.08)
Distributions to shareholders from net investment income .............................. --
----------
Net increase (decrease) in net asset value ............................................ $ (0.08)
----------
Net asset value, end of period ........................................................ $ 7.06
==========
Total return* ......................................................................... (1.12)%
Ratios/Supplemental Data
Ratio of net expenses to average net assets ........................................... 2.31%**++
Ratio of net investment income (loss) to average net assets ........................... (1.27)%**++
Portfolio turnover rate ............................................................... 65%**
Average brokerage commission per share ................................................ $ 0.0260
Net assets, end of period (in thousands) .............................................. $ 7,455
Ratios assuming no waiver of management fees and assumption of expenses by PMC
and no reduction for fees paid indirectly:
Net expenses ........................................................................ 5.47%**
Net investment income (loss) ........................................................ (4.43)%**
Ratios assuming waiver of management fees and assumption of expenses by PMC and
a reduction for fees paid indirectly:
Net expenses ........................................................................ 2.25%**
Net investment income (loss) ........................................................ (1.21)%**
<CAPTION>
For the Year Ended October 31,
-----------------------------------
1997 1996
----------------- -----------------
<S> <C> <C>
Net asset value, beginning of period .................................................. $ 6.93 $ 8.47
Increase (decrease) from investment operations:
Net investment income (loss) ........................................................ $ (0.01) $ 0.03
Net realized and unrealized gain (loss) on investments and foreign currency related
transactions ....................................................................... 0.22 (1.57)
--------- --------
Net increase (decrease) from investment operations ................................. $ 0.21 $ (1.54)
Distributions to shareholders from net investment income .............................. -- --
--------- --------
Net increase (decrease) in net asset value ............................................ $ 0.21 (1.54)
--------- --------
Net asset value, end of period ........................................................ $ 7.14 $ 6.93
========= ========
Total return* ......................................................................... 3.03% (18.18)%
Ratios/Supplemental Data
Ratio of net expenses to average net assets ........................................... 2.29%++ 2.28%++
Ratio of net investment income (loss) to average net assets ........................... (0.09%)++ 0.32%++
Portfolio turnover rate ............................................................... 71% 64%
Average brokerage commission per share ................................................ $ 0.0288 $ 0.0266
Net assets, end of period (in thousands) .............................................. $ 9,846 $ 12,388
Ratios assuming no waiver of management fees and assumption of expenses by PMC
and no reduction for fees paid indirectly:
Net expenses ........................................................................ 4.39% 4.29%
Net investment income (loss) ........................................................ (2.19)% ( 1.69)%
Ratios assuming waiver of management fees and assumption of expenses by PMC and
a reduction for fees paid indirectly:
Net expenses ........................................................................ 2.25% 2.25%
Net investment income (loss) ........................................................ (0.05)% 0.35%
<CAPTION>
June 23, 1994
(Commencement
of Operations) to
1995 October 31, 1994+
---------------- -----------------
<S> <C> <C>
Net asset value, beginning of period .................................................. $ 11.28 $ 11.50
Increase (decrease) from investment operations:
Net investment income (loss) ........................................................ $ (0.01) $ 0.04
Net realized and unrealized gain (loss) on investments and foreign currency related
transactions ....................................................................... ( 2.78) ( 0.26)
---------- ---------
Net increase (decrease) from investment operations ................................. $ (2.79) $ (0.22)
Distributions to shareholders from net investment income .............................. ( 0.02) --
---------- ---------
Net increase (decrease) in net asset value ............................................ $ (2.81) $ (0.22)
---------- ---------
Net asset value, end of period ........................................................ $ 8.47 $ 11.28
========== =========
Total return* ......................................................................... (24.78)% ( 1.91)%
Ratios/Supplemental Data
Ratio of net expenses to average net assets ........................................... 2.28%++ 2.25%**
Ratio of net investment income (loss) to average net assets ........................... ( 0.14)%++ 0.92%**
Portfolio turnover rate ............................................................... 53% 109%**
Average brokerage commission per share ................................................
Net assets, end of period (in thousands) .............................................. $ 8,397 $ 11,445
Ratios assuming no waiver of management fees and assumption of expenses by PMC
and no reduction for fees paid indirectly:
Net expenses ........................................................................ 4.21% 6.57%**
Net investment income (loss) ........................................................ ( 2.07)% ( 3.40)%**
Ratios assuming waiver of management fees and assumption of expenses by PMC and
a reduction for fees paid indirectly:
Net expenses ........................................................................ 2.25% --
Net investment income (loss) ........................................................ ( 0.11)% --
</TABLE>
Selected Data for a Class B Share Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
Six
Months
Ended
April 30,
--------------------
1998
--------------------
<S> <C>
Net asset value, beginning of period .................................................. $ 6.96
Increase (decrease) from investment operations:
Net investment income (loss) ........................................................ $ (0.06)
Net realized and unrealized gain (loss) on investments and foreign currency related
transactions ....................................................................... (0.03)
----------
Net increase (decrease) from investment operations ................................ $ (0.09)
Distributions to shareholders from net investment income .............................. --
----------
Net increase (decrease) in net asset value ............................................ $ (0.09)
----------
Net asset value, end of period ........................................................ $ 6.87
==========
Total return* ......................................................................... (1.29)%
Ratios/Supplemental Data
Ratio of net expenses to average net assets ........................................... 2.85%**++
Ratio of net investment income (loss) to average net assets ........................... (1.82)%**++
Portfolio turnover rate ............................................................... 65%**
Average brokerage commission paid per share ........................................... $ 0.0260
Net assets, end of period (in thousands) .............................................. $ 7,912
Ratios assuming no waiver of management fees and assumption of expenses by PMC
and no reduction for fees paid indirectly:
Net expenses ........................................................................ 6.09%**
Net investment income (loss) ........................................................ (5.06)%**
Ratios assuming waiver of management fees and assumption of expenses by PMC and
a reduction for fees paid indirectly:
Net expenses ........................................................................ 2.79%**
Net investment income (loss) ........................................................ (1.76)%**
<CAPTION>
For the Year Ended October 31,
------------------------------------
1997 1996
----------------- ------------------
<S> <C> <C>
Net asset value, beginning of period .................................................. $ 6.80 $ 8.39
Increase (decrease) from investment operations:
Net investment income (loss) ........................................................ $ (0.04) $ (0.03)
Net realized and unrealized gain (loss) on investments and foreign currency related
transactions ....................................................................... 0.20 ( 1.56)
------- ----------
Net increase (decrease) from investment operations ................................ $ 0.16 $ (1.59)
Distributions to shareholders from net investment income .............................. -- --
------- ----------
Net increase (decrease) in net asset value ............................................ $ 0.16 (1.59)
------- ----------
Net asset value, end of period ........................................................ $ 6.96 $ 6.80
======= ========
Total return* ......................................................................... 2.35% (18.95)%
Ratios/Supplemental Data
Ratio of net expenses to average net assets ........................................... 2.90%++ 3.15%++
Ratio of net investment income (loss) to average net assets ........................... (0.62)%++ ( 0.45)%++
Portfolio turnover rate ............................................................... 71% 64%
Average brokerage commission paid per share ........................................... $0.0288 $ 0.0266
Net assets, end of period (in thousands) .............................................. $ 9,392 $ 8,275
Ratios assuming no waiver of management fees and assumption of expenses by PMC
and no reduction for fees paid indirectly:
Net expenses ........................................................................ 4.99% 5.23%
Net investment income (loss) ........................................................ (2.71)% (2.53)%
Ratios assuming waiver of management fees and assumption of expenses by PMC and
a reduction for fees paid indirectly:
Net expenses ........................................................................ 2.86% 3.13%
Net investment income (loss) ........................................................ (0.58)% ( 0.43)%
<CAPTION>
June 23, 1994
(Commencement
of Operations) to
1995 October 31, 1994+
---------------- ------------------
<S> <C> <C>
Net asset value, beginning of period .................................................. $ 11.24 $ 11.50
Increase (decrease) from investment operations:
Net investment income (loss) ........................................................ $ (0.07) --
Net realized and unrealized gain (loss) on investments and foreign currency related
transactions ....................................................................... ( 2.77) ( 0.26)
---------- ---------
Net increase (decrease) from investment operations ................................ $ (2.84) $ (0.26)
Distributions to shareholders from net investment income .............................. ( 0.01) --
---------- ---------
Net increase (decrease) in net asset value ............................................ $ (2.85) $ (0.26)
---------- ---------
Net asset value, end of period ........................................................ $ 8.39 $ 11.24
========== =========
Total return* ......................................................................... (25.31)% ( 2.26)%
Ratios/Supplemental Data
Ratio of net expenses to average net assets ........................................... 3.01%++ 3.21%**
Ratio of net investment income (loss) to average net assets ........................... ( 0.86)%++ ( 0.01)%**
Portfolio turnover rate ............................................................... 53% 109%**
Average brokerage commission paid per share ...........................................
Net assets, end of period (in thousands) .............................................. $ 5,991 $ 6,084
Ratios assuming no waiver of management fees and assumption of expenses by PMC
and no reduction for fees paid indirectly:
Net expenses ........................................................................ 4.91% 7.50%**
Net investment income (loss) ........................................................ ( 2.76)% ( 4.28)%**
Ratios assuming waiver of management fees and assumption of expenses by PMC and
a reduction for fees paid indirectly:
Net expenses ........................................................................ 2.97% --
Net investment income (loss) ........................................................ ( 0.82)% --
</TABLE>
- -----------
+ The per share data presented above is based upon average shares and average
net assets outstanding for the period presented.
++ Ratios assuming no reduction for fees paid indirectly.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of the period, and no sales
charges.
Total return would be reduced if sales charges were taken into account.
** Annualized.
3
<PAGE>
II. FINANCIAL HIGHLIGHTS (continued)
Selected Data for a Class C Share Outstanding Throughout the Period:
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1998
--------------------
<S> <C>
Net asset value, beginning of period ................................ $ 6.93
Increase (decrease) from investment operations:
Net investment income (loss) ...................................... $ (0.07)
Net realized and unrealized gain (loss) on investments
and other forward foreign currency related transactions ......... (0.02)
----------
Net increase (decrease) in net asset value .......................... $ (0.09)
----------
Net asset value, end of period ...................................... $ 6.84
==========
Total return* ....................................................... (1.30) %
Ratios/Supplemental Data
Ratio of net expenses to average net assets ......................... 2.81%**++
Ratio of net investment income (loss) to average net assets ......... (1.76)%**++
Portfolio turnover rate ............................................. 65%**
Average brokerage commission per share .............................. $ 0.0260
Net assets, end of period (in thousands) ............................ $ 630
Ratios assuming no waiver of management fees and assumption of
expenses by PMC and no reduction for fees paid indirectly:
Net operating expenses ............................................ 6.05%**
Net investment income (loss) ...................................... (5.00)%**
Ratios assuming waiver of management fees and assumption of expenses
by PMC and a reduction for fees paid indirectly:
Net expenses ...................................................... 2.70%**
Net investment income (loss) ...................................... (1.65)%**
<CAPTION>
For the Year Ended For the period January 31, 1996
October 31, 1997 through October 31, 1996
-------------------- -------------------------------
<S> <C> <C>
Net asset value, beginning of period ................................ $ 6.77 $ 7.85
Increase (decrease) from investment operations:
Net investment income (loss) ...................................... $ (0.04) $ (0.02)
Net realized and unrealized gain (loss) on investments
and other forward foreign currency related transactions ......... 0.20 ( 1.06)
--------- -----------
Net increase (decrease) in net asset value .......................... $ 0.16 $ (1.08)
--------- -----------
Net asset value, end of period ...................................... $ 6.93 $ 6.77
========= ===========
Total return* ....................................................... 2.36% (13.76)%
Ratios/Supplemental Data
Ratio of net expenses to average net assets ......................... 2.84%+ 3.12%**+
Ratio of net investment income (loss) to average net assets ......... (0.56)%+ ( 0.42)%**+
Portfolio turnover rate ............................................. 71% 64%
Average brokerage commission per share .............................. $0.0288 $ 0.0266
Net assets, end of period (in thousands) ............................ $ 803 $ 557
Ratios assuming no waiver of management fees and assumption of
expenses by PMC and no reduction for fees paid indirectly:
Net operating expenses ............................................ 4.89% 4.63%**
Net investment income (loss) ...................................... (2.61)% ( 1.93)%**
Ratios assuming waiver of management fees and assumption of
expenses by PMC and a reduction for fees paid indirectly:
Net expenses ...................................................... 2.78% 3.06%**
Net investment income (loss) ...................................... (0.50)% ( 0.36)%**
</TABLE>
- ------------------------
+ Ratios assuming no reduction for fees paid indirectly.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of 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 Indo-Asian Issuers. Other
investments include (i) equity securities of other companies which may benefit
from the economies of countries in Asia and the Indian Subcontinent; (ii) debt
securities issued by companies in or the governments of countries in Asia and
the Indian Subcontinent, or their respective agencies or instrumentalities; or
(iii) certain short-term investments. The specific allocation among countries
is determined from time to time by Pioneering Management Corporation ("PMC"),
the Fund's investment manager.
For purposes of the Fund's investment policies, Indo-Asian countries
include Australia, Bangladesh, China, Hong Kong, India, Indonesia, Korea,
Malaysia, Mongolia, New Zealand, Pakistan, the Philippines, Singapore, Sri
Lanka, Taiwan and Thailand, as well as any other country in Asia (other than
Japan) to the extent that foreign investors are now or in the future permitted
by applicable law to make such investments. For purposes of its investment
policies, the Fund considers a company to be an Indo-Asian Issuer if it (i) is
organized under the laws of a country in Asia or the Indian Subcontinent, (ii)
derives at least 50% of its revenues from goods produced or sold, investments
made, or services performed in a country in Asia or the Indian Subcontinent, or
has at least 50% of its assets in a country in Asia or the Indian Subcontinent,
or (iii) has securities that are traded principally on any stock exchange
(including an over-the-counter exchange) located in a country in Asia or the
Indian Subcontinent. Allocation of the Fund's investments among these countries
will depend upon PMC's views of the relative attractiveness of the Indo-Asian
markets and particular issuers.
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 com-
4
<PAGE>
panies; equity interests in trusts, partnerships, joint ventures or similar
enterprises; and common stock purchase warrants and rights.
Debt securities in which the Fund may invest consist of bonds, debentures,
notes and similar debt instruments which may, in PMC's view, 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 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.
See the Appendix 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 the Appendix 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
securities markets to such an extent that PMC believes there to be
extraordinary risks in being substantially invested in the equity securities of
Indo-Asian Issuers.
In selecting securities for investment by the Fund, PMC performs a
fundamental analysis of each company being considered for inclusion in the
Fund's portfolio. In performing this fundamental analysis, PMC considers a
variety of factors, including financial condition, growth prospects, asset
valuation, management expertise, existing or potential dividend payments, 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 issuer is determined by the
relationship of the relative return and risk among individual investments.
Risk Factors
Investing in the Fund entails a substantial degree of risk. Because of the
special risks associated with investing in Indo-Asian countries, an investment
in the Fund may not be suitable for all investors and should not be considered
an overall investment program. Investors are strongly advised to consider
carefully the special risks involved in investing in Indo-Asian countries,
which are in addition to the usual risks of investing in developed countries
around the world.
Investments in Indo-Asian Countries
Investing in the securities of Indo-Asian Issuers involves considerations
and potential risks not typically associated with investing in the securities
of issuers in the U.S. and other developed countries. The risks of investments
in Indo-Asian Issuers may be related to (i) differences in size, liquidity and
volatility of, and the degree and manner of regulation of, securities markets
compared to the securities markets in the United States and other developed
countries; (ii) economic, political and social factors; and (iii) foreign
exchange matters, such as restrictions on the repatriation of capital,
fluctuations in exchange rates between the U.S. dollar and the currencies in
which the Fund's portfolio securities are denominated or quoted, exchange
control regulations and costs associated with currency exchange. Unanticipated
political or social developments may affect the values of the Fund's
investments and the availability to the Fund of additional investments in such
countries. During 1997 and 1998, the political stability, economies and
securities and currency markets of many markets in the Indo-Asian region
experienced significant disruption and declines. There can be no assurances
that these economic and market disruptions will not continue or spread to other
countries in the region.
Economic, political and social instability in the region could
significantly disrupt the principal financial markets in which the Fund
invests. Investing in these countries involves the risk of loss of the Fund's
investments resulting from expropriation, nationalization, confiscation of
assets and property or the imposition of restrictions on foreign investments
and on repatriation of capital invested. Economies in the region may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross domestic product, rates of inflation, currency valuation, capital
reinvestment, resource self-sufficiency and balance of payments positions.
Certain Indo-Asian countries have experienced substantial rates of inflation
which have had, and may continue to have, very negative effects on their
economies and securities markets. In addition, the economies in emerging
countries generally depend heavily upon international trade and, accordingly,
have been and may continue to be affected adversely by trade barriers, exchange
controls, managed adjustments in relative currency values and other
protectionist measures imposed or negotiated by the countries with which they
trade.
Equity securities of most Indo-Asian Issuers are less liquid and are
generally subject to greater price volatility than securities of issuers in the
United States and other developed countries. Even the markets for relatively
widely traded securities in Indo-Asian countries may not be able to absorb,
without price disruptions, a significant increase in trading volume or trades
of a size customarily undertaken by institutional investors in the securities
markets of developed countries. Accordingly, each of these markets may be more
susceptible to the adverse effects of events generally affecting the mar-
5
<PAGE>
ket, and of trades of significant blocks of securities, than are usual for
similar securities in the securities markets of developed countries. The less
liquid the market, the more difficult it may be for the Fund to accurately
price its portfolio securities or to dispose of such securities at the times
PMC determines to be appropriate. There may be less publicly available
information about securities and issuers in the Indo-Asian region than is
available with respect to U.S. securities and issuers. Indo-Asian Issuers
generally are not subject to uniform accounting, auditing and financial
reporting standards, practices and requirements comparable to those applicable
to U.S. companies.
Custodial services and other costs relating to investment in international
securities markets generally are more expensive than in the United States. Such
markets have settlement and clearance procedures that differ from those of more
developed markets. There may be times when settlement procedures are unable to
keep pace with the volume of securities transactions and may not fully protect
the Fund against loss or theft of its assets. The inability of the Fund to make
intended securities purchases due to settlement problems could cause the Fund
to miss attractive investment opportunities. Inability to dispose of a
portfolio security caused by settlement problems could result in losses to the
Fund due to a subsequent decline in value of the portfolio security.
Certain Indo-Asian countries restrict or control foreign investment in
their securities markets to varying degrees. These restrictions may limit the
Fund's investment in those markets and may increase the expenses of the Fund.
In addition, the repatriation of both investment income and capital from
certain markets in the region is subject to restrictions such as the need for
certain governmental consents. Even where there is no outright restriction on
repatriation of capital, the mechanics of repatriation may affect certain
aspects of the Fund's operation.
The Fund is subject to taxes, including withholding taxes, on income
(possibly including, in some cases, capital gains) that are or may be imposed
by certain Indo-Asian countries with respect to the Fund's investments in those
countries. These taxes will reduce the Fund's return. Treaties between the
United States and such countries may not be available to reduce the otherwise
applicable tax rates.
The value of securities denominated or quoted in international currencies
may also be adversely affected by fluctuations in the relative rates of
exchange between the currencies of different nations and by exchange control
regulations. The Fund's investment performance may be negatively affected by a
devaluation of a currency in which the Fund's investments are denominated or
quoted. The Fund may enter into forward contracts and other transactions to
seek to hedge the currency risk, if any, in the Fund's portfolio. However,
there may be no or only a limited market for currency transactions with respect
to many of the Indo-Asian currencies. In addition, the precise matching of such
hedging transactions and the value of the securities involved generally will
not be possible.
The Fund may invest more than 25% of its total assets in the securities of
issuers located in a single country. Investment of a substantial portion of the
Fund's assets in a single country will subject the Fund to the risks of adverse
securities markets, exchange rates and social, political or economic events
which may occur in that country.
Investment in Lower-Quality Debt Securities. The Fund's investments in
debt securities may consist of debt securities issued by Indo-Asian companies,
the governments of each Indo-Asian country or their 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 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 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.
Other Eligible Investments
Equity Securities of Companies That May Benefit From the Economies of Asia
and the Indian Subcontinent. As noted above, the Fund may invest in the equity
securities of issuers, other than Indo-Asian Issuers (defined above), that may
benefit from the economies of Asia and the Indian Subcontinent. The Fund's
investments in the equity securities of such issuers may involve some or all of
the risks associated with investments in Indo-Asian 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
6
<PAGE>
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.
Other Investment Companies. The Fund may invest in the securities of other
investment companies to the extent that such investments are consistent with the
Fund's investment objective and policies and permissible under the Investment
Company Act of 1940, as amended (the "1940 Act"). The Fund, as a shareholder of
the securities of other investment companies, will bear its pro rata portion of
the other investment company's expenses, including advisory fees. These expenses
are in addition to the direct expenses of the Fund's own operations.
Investments in Depositary Receipts. The Fund may hold securities of
foreign issuers in the form of American Depository Receipts ("ADRs"), Global
Depository 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.
Portfolio Turnover
The Fund will attempt to be substantially fully invested at all times,
except as described above. Changes in the Fund's portfolio may be made promptly
when determined by PMC to be advisable by reason of developments not foreseen
at the time of the initial investment decision, and usually without reference
to the length of time a security has been held. Accordingly, portfolio turnover
rates are not considered a limiting factor in the execution of investment
decisions. See "Financial Highlights" for the Fund's actual turnover rate.
Effective October 1, 1998, the Fund changed its investment focus. Portfolio
turnover is not expected to exceed 300% for the year following the change. A
high rate of portfolio turnover (100% or more) involves correspondingly greater
transaction costs which must be borne by the Fund and its shareholders.
The Fund's investment objective and certain investment restrictions
designated as fundamental in the Statement of Additional Information may be
changed by the Board of Trustees only with shareholder approval. 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. The Board meets at least quarterly. By virtue of the
functions performed by PMC as investment adviser, the Fund requires no
employees other than its executive officers, all of whom receive their
compensation from PMC or other sources. The Statement of Additional Information
contains the name and general business and professional background of each
Trustee and executive officer of the Fund.
The Investment Adviser
The Fund is managed under a contract with PMC. PMC is responsible for the
overall management of the Fund's business affairs, subject only to the
authority of the Board of Trustees. PMC is a wholly owned subsidiary of The
Pioneer Group, Inc. ("PGI"), a publicly traded Delaware corporation. Pioneer
Funds Distributor, Inc. ("PFD"), an indirect wholly owned subsidiary of PGI, is
the principal underwriter of the Fund.
Ms. Theresa Hamacher, Senior Vice President and Chief Investment Officer of
PMC, has general responsibility for PMC's investment operations. Ms. Hamacher
joined PMC in 1997. She has been an investment professional since 1982.
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.
Day-to-day management of the Fund has been the responsibility of Mr.
Christopher D. Lively, a Vice President of PMC and of the Fund, since March 1,
1998. Mr. Lively joined PMC in 1993 and has 5 years of investment experience.
From February 1997 to February 27, 1998, Mr. Mark H.
7
<PAGE>
Madden was responsible for the day-to day management of the Fund. 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 14 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 and 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 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 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, state or blue sky securities agencies and foreign
countries, including the preparation of prospectuses and statements of
additional information for filing with regulatory agencies; (g) all expenses of
shareholders' and Trustees' meetings and of preparing, printing and distributing
prospectuses, notices, proxy statements and all reports to shareholders and to
governmental agencies; (h) charges and expenses of legal counsel to the Fund and
the Trustees; (i) distribution fees paid by the Fund in accordance with Rule
12b-1 promulgated by the SEC pursuant to the 1940 Act; (j) compensation of those
Trustees of the Fund who are not affiliated with or interested 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 are placed by PMC
which strives to obtain the best price and execution for each transaction. In
circumstances in which two or more broker-dealers are in a position to offer
comparable prices and execution, consideration may be given by PMC to whether
the broker-dealer provides investment research or brokerage services or sells
shares of any Pioneer mutual fund or other funds for which PMC or any affiliate
serves as investment adviser or manager. See the Statement of Additional
Information for a further description of PMC's brokerage allocation practices.
As compensation for its management services and certain expenses which PMC
incurs, PMC is entitled to a management fee equal to 1.10% per annum of the
Fund's average daily net assets. 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
2.10% 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 and a
Director of PFD and PMC and President and a Director of PGI, beneficially owned
approximately 14% of the outstanding capital stock of PGI as of the date of
this Prospectus.
The Indian Adviser
Kothari Pioneer AMC Ltd., the Indian investment adviser to the Fund (the
"Indian Adviser"), 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 45% and 55%,
respectively, of the Indian Adviser's total equity capital. As compensation for
its services under its Subadvisory agreement with PMC, the Indian Adviser
receives a subadvisory fee which is paid by PMC, accrues monthly and is paid
quarterly.
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 the Indian Adviser in 1993, Mr. Mehrotra worked
in the financial services and banking industries in India. Mr. Sukumar joined
the Indian Adviser 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 of 0.10% 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
8
<PAGE>
securities markets subject to a minimum fee of . The fee, which is paid by
PMC, accrues monthly and is paid quarterly.
Certain information technology experts currently predict the possibility
of a widespread failure of computer systems and certain other equipment which
will be triggered on or after certain dates--primarily January 1, 2000--due to
a systemic inability to process date-related information. This scenario,
commonly known as the "Year 2000 Problem," could have an adverse impact on
individuals and businesses, including the Fund and other mutual funds and
financial organizations. PMC and its affiliates are taking steps believed to be
adequate to address the Year 2000 Problem with respect to the systems and
equipment controlled by the Fund's investment adviser, broker-dealer and
transfer agent. In addition, other entities providing services to the Fund and
its shareholders are being asked to provide assurances that they have
undertaken similar measures with respect to their systems and equipment. There
can be no assurance that these steps will be sufficient to avoid any adverse
impact on the Fund.
V. FUND SHARE ALTERNATIVES
The Fund continuously offers three classes of shares designated as Class
A, Class B and Class C shares, as described more fully in "How to Buy Fund
Shares." If you do not specify in your instructions to the Fund which class of
shares you wish to purchase, exchange or redeem, the Fund will assume that your
instructions apply to Class A shares.
Class A Shares. If you invest less than $1 million in Class A shares, you
will pay an initial sales charge. Certain purchases may qualify for reduced
initial sales charges. If you invest $1 million or more in Class A shares, no
sales charge will be imposed at the time of purchase; however, shares redeemed
within 12 months of purchase may be subject to a contingent deferred sales
charge ("CDSC"). Class A shares are subject to distribution and service fees at
a combined annual rate of up to 0.25% of the Fund's average daily net assets
attributable to Class A shares.
Class B Shares. If you plan to invest up to $250,000, Class B shares are
available to you. Class B shares are sold without an initial sales charge, but
are subject to a CDSC of up to 4% if redeemed within six years. Class B shares
are subject to distribution and service fees at a combined annual rate of 1% of
the Fund's average daily net assets attributable to Class B shares. Your entire
investment in Class B shares is available to work for you from the time you
make your investment, but the higher distribution fee paid by Class B shares
will cause your Class B shares (until conversion) to have a higher expense
ratio and to pay lower per share dividends, to the extent dividends are paid,
than Class A shares. Class B shares will automatically convert to Class A
shares, based on relative net asset value, eight years after the initial
purchase.
Class C Shares. Class C shares are sold without an initial sales charge,
but are subject to a 1% CDSC if they are redeemed within the first year after
purchase. Class C shares are subject to distribution and service fees at a
combined annual rate of up to 1% of the Fund's average daily net assets
attributable to Class C shares. Your entire investment in Class C shares is
available to work for you from the time you make your investment, but the
higher distribution fee paid by Class C shares will cause your Class C shares
to have a higher expense ratio and to pay lower dividends, to the extent
dividends are paid, than Class A shares. Class C shares have no conversion
feature.
Selecting a Class of Shares. The decision as to which class to purchase
depends on the amount you invest, the intended length of the investment and
your personal situation. If you are making an investment that qualifies for
reduced sales charges, you might consider Class A shares. If you prefer not to
pay an initial sales charge on an investment of $250,000 or less and you plan
to hold the investment for at least six years, you might consider Class B
shares. If you prefer not to pay an initial sales charge and you plan to hold
your investment for one to eight years, you may prefer Class C shares.
Investment dealers or their representatives may receive different
compensation depending on which class of shares they sell. Shares may be
exchanged only for shares of the same class of another Pioneer mutual fund and
shares acquired in the exchange will continue to be subject to any CDSC
applicable to the shares of the Fund originally purchased. Shares sold outside
the U.S. to persons who are not U.S. citizens may be subject to different sales
charges, CDSCs and dealer compensation arrangements in accordance with local
laws and business practices.
VI. SHARE PRICE
Shares of the Fund are sold at the public offering price, which is the net
asset value per share, plus any applicable sales charge. The net asset value
per share of a class of Fund shares is determined by dividing the value of its
assets, less liabilities attributable to that class, by the number of shares of
that class outstanding. The net asset value is computed once daily, on each day
the New York Stock Exchange (the "Exchange") is open as of the close of regular
trading on the Exchange.
Securities are valued at the last sale price on the principal exchange or
market where they are traded. Securities which have not traded on the date of
valuation, or securities for which sales prices are not generally reported, are
valued at the mean between the current bid and asked prices. Securities quoted
in 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
9
<PAGE>
such securities and such exchange rates may occur between the times at which
they are determined and the close of regular trading on the Exchange and will
therefore not be reflected in the computation of the Fund's net asset value. If
events materially affecting the value of such securities occur during such
period, then these securities may be valued at their fair value as determined
in good faith by the Trustees. All assets of the Fund for which there is no
other readily available valuation method are valued at their fair value as
determined in good faith by the Trustees.
VII. 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, next computed after receipt of a
purchase order, plus any applicable sales charge, 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 is established (see "Automatic Investment
Plans").
Telephone Purchases. Your account is automatically authorized to have the
telephone purchase privilege unless you indicate otherwise on your Account
Application or by writing to Pioneering Services Corporation ("PSC"). The
telephone purchase option may be used to purchase additional shares for an
existing Pioneer mutual fund account; it may not be used to establish a new
account. Proper account identification will be required for each telephone
purchase. A maximum of $25,000 per account may be purchased by telephone each
day. The telephone purchase privilege is available to Individual Retirement
Accounts ("IRAs") but may not be available to other types of retirement plan
accounts. Call PSC for more information.
You are strongly urged to consult with your financial representative prior
to requesting a telephone purchase. To purchase shares by telephone, you must
establish your bank account of record by completing the appropriate section of
your Account Application or an Account Options Form. PSC will electronically
debit the amount of each purchase from this predesignated bank account.
Telephone purchases may not be made for 30 days after the establishment of your
bank of record or any change to your bank information.
Telephone purchases will be priced at the net asset value plus any
applicable sales charge next determined after PSC's receipt of a telephone
purchase instruction and receipt of good funds (usually three days after the
purchase instruction). You may always elect to deliver purchases to PSC by
mail. See "Telephone Transactions" for additional information.
Class A Shares
You may buy Class A shares at the public offering price, including a sales
charge, as follows:
<TABLE>
<CAPTION>
Sales Charge as a Dealer
Percentage of Allowance
----------------------- as a
Net Percentage of
Offering Amount Offering
Amount of Purchase Price Invested Price
- ------------------------ ---------- ---------- --------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than
$100,000 4.50 4.71 4.00
$100,000 but less than
$250,000 3.50 3.63 3.00
$250,000 but less than
$500,000 2.50 2.56 2.00
$500,000 but less than
$1,000,000 2.00 2.04 1.75
$1,000,000
or more -0- -0- see below
</TABLE>
The schedule of sales charges above is applicable to purchases of Class A
shares of the Fund by (i) an individual, (ii) an individual and his or her
spouse and children under the age of 21 and (iii) a trustee or other fiduciary
of a trust estate or fiduciary account or related trusts or accounts including
pension, profit-sharing and other employee benefit trusts qualified under
Section 401 or 408 of the Internal Revenue Code of 1986, as amended (the
"Code"), although more than one beneficiary is involved. The sales charges
applicable to a current purchase of Class A shares of the Fund by a person
listed above is determined by adding the value of shares to be purchased to the
aggregate value (at the then current offering price) of shares of any of the
other Pioneer mutual funds previously purchased and then owned, provided PFD is
notified by such person or his or her broker-dealer each time a purchase is
made which would qualify. Pioneer mutual funds include all mutual funds for
which PFD serves as principal underwriter. 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
10
<PAGE>
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 Program participants and (iv) the Program
provides for a matching contribution for each participant contribution. Class A
shares may also be sold at net asset value in connection with certain
reorganization, liquidation, or acquisition transactions involving other
investment companies or personal holding companies.
Reduced sales charges are available for purchases of $50,000 or more of
Class A shares (excluding any reinvestments of dividends and capital gains
distributions) made within a 13-month period pursuant to a Letter of Intent
("LOI") which may be established by completing the Letter of Intent section of
the Account Application. The reduced sales charge will be the charge that would
be applicable to the purchase of the specified amount of Class A shares as if
the shares had all been purchased at the same time. A purchase not made
pursuant to an LOI may be included if the LOI is submitted to PSC within 90
days of such purchase. You may also obtain the reduced sales charge by
including the value (at current offering price) of all your Class A shares in
the Fund and all other Pioneer mutual funds held of record as of the date of
your LOI in the amount used to determine the applicable sales charge for the
Class A shares to be purchased under the LOI. Five percent of your total
intended purchase amount will be held in escrow by PSC, registered in your
name, until the terms of the LOI are fulfilled.
You are not obligated to purchase the amount specified in your LOI. If,
however, the amount actually purchased during the 13-month period is more or
less than that indicated in your LOI, an adjustment in the sales charge will be
made. If a payment to cover actual sales charges is due, it must be paid to PFD
within 20 days after PFD or your dealer sends you a written request otherwise
PFD will direct PSC to liquidate sufficient shares from your escrow account to
cover the amount due. See the Statement of Additional Information for more
information.
Investors who are clients of a broker-dealer with a current sales
agreement with PFD may purchase Class A shares of the Fund at net asset value,
without a sales charge, to the extent that the purchase price is paid out of
proceeds from one or more redemptions by the investor of shares of certain
other mutual funds. In order for a purchase to qualify for this privilege, the
investor must document to the broker-dealer that the redemption occurred within
the 60 days immediately preceding the purchase of Class A shares; that the
client paid a sales charge on the original purchase of the shares redeemed; and
that the mutual fund whose shares were redeemed also offers net asset value
purchases to redeeming shareholders of any of the Pioneer mutual funds. Further
details may be obtained from PFD.
Class B Shares
You may buy Class B shares at the net asset value next computed after
receipt of a purchase order without the impo-
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<PAGE>
sition 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:
<TABLE>
<CAPTION>
Year Since CDSC as a Percentage of Dollar
Purchase Amount Subject to CDSC
- ------------------------ -------------------------------
<S> <C>
First 4.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter none
</TABLE>
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class B shares, including the payment of
compensation to broker-dealers.
Class B shares will automatically convert into Class A shares at the
beginning 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 (the "IRS") or an opinion of
counsel that such conversions will not constitute taxable events for federal
tax purposes. The conversion of Class B shares to Class A shares will not occur
if such ruling 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 imposition of an initial sales charge;
however, Class C shares redeemed within one year of purchase will be subject to
a CDSC of 1%. The charge will be assessed on the amount equal to the lesser of
the current market value or the original purchase cost of the shares being
redeemed. No CDSC will be imposed on increases in account value above the
initial purchase price, including shares derived from the reinvestment of
dividends or capital gains distributions. Class C shares do not convert to any
other class of Fund shares.
For the purpose of determining the time of any purchase, all payments
during a quarter will be aggregated and deemed to have been made on the first
day of that quarter. In processing redemptions of Class C shares, the Fund will
first redeem shares not subject to any CDSC, and then shares held for the
shortest period of time during the one-year period. As a result, you will pay
the lowest possible CDSC.
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class C shares, including the payment of
compensation to broker-dealers.
Waiver or Reduction of Contingent Deferred Sales Charge. The CDSC on Class
B shares may be waived or reduced for non-retirement accounts if: (a) the
redemption results from the death of all registered owners of an account (in the
case of UGMAs, UTMAs and 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 in Pioneer mutual funds); (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
dis-
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<PAGE>
tribution 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: 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 a broker-dealer prior to the
close of regular trading on the Exchange is confirmed at the price appropriate
for that class as determined at the close of regular trading on the Exchange on
the day the order is received, provided the order is received by PFD prior to
PFD's close of business (usually, 5:30 p.m. Eastern time). It is the
responsibility of broker-dealers to transmit orders so that they will be
received by PFD prior to its close of business. PFD or its affiliates may
provide additional compensation to certain dealers or such dealers' affiliates
based on certain objective criteria established from time to time by PFD. All
such payments are made out of PFD's or the affiliate's own assets. These
payments will not change the price an investor will pay for shares or the
amount that the Fund will receive from such sale.
General
The Fund reserves the right in its sole discretion to withdraw all or any
part of the offering of shares when, in the judgment of the Fund's management,
such withdrawal is in the best interest of the Fund. An order to purchase
shares is not binding on, and may be rejected by, PFD until it has been
confirmed in writing by PFD and payment has been received.
VIII. HOW TO SELL FUND SHARES
You can arrange to sell (redeem) Fund shares on any day the Exchange is
open by selling either some or all of your shares to the Fund.
You may sell your shares either through your broker-dealer or directly to
the Fund. Please note the following:
[bullet] If you are selling shares from a retirement account, other than an
IRA, you must make your request in writing (except for exchanges to
other Pioneer mutual funds which can be requested by phone or in
writing). Call 1-800-622-0176 for more information.
[bullet] If you are selling shares from a non-retirement 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 by check, bank wire, or electronic funds transfer
normally within seven days after your order is received in good order. The Fund
reserves the right to withhold payment of the sale proceeds until checks
received by the Fund in payment for the shares being sold have cleared, which
may take up to 15 calendar days from the purchase date.
In Writing. You may sell your shares by delivering a written request,
signed by all registered owners, in good order to PSC; however, you must use a
written request, including a signature guarantee, to sell your shares if any of
the following applies:
[bullet] you wish to sell over $100,000 worth of shares,
[bullet] your account registration or address has changed within the last
30 days,
[bullet] the check is not being mailed to the address on your account
(address of record),
[bullet] the check is not being made out to the account owners, or
[bullet] the sale proceeds are being transferred to a Pioneer mutual fund
account with a different registration.
13
<PAGE>
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 $100,000 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" below. Telephone and fax redemptions will
be priced as described above. You are strongly urged to consult with your
financial representative prior to requesting a telephone redemption.
Selling Shares Through Your Broker-Dealer. The Fund has authorized PFD to
act as its agent in the repurchase of shares of the Fund from qualified
broker-dealers and reserves the right to terminate this procedure at any time.
Your broker-dealer must receive your request before the close of business on
the Exchange and transmit it to PFD before PFD's close of business to receive
that day's redemption price. Your broker-dealer is responsible for providing
all necessary documentation to PFD and may charge you for its services.
Small Accounts. The minimum account value is $500. If you hold shares of
the Fund in an account with a net asset value of less than the minimum required
amount due to redemptions or exchanges, the Fund may redeem the shares held in
this account at net asset value if you have not increased the net asset value
of the account to at least the minimum required amount within six months of
notice by the Fund to you of the Fund's intention to redeem the shares.
CDSC on Class A Shares. Purchases of Class A shares of $1 million or more,
or by participants in a Group Plan which were not subject to an initial sales
charge, may be subject to a CDSC upon redemption. A CDSC is payable to PFD on
these investments in the event of a share redemption within 12 months following
the share purchase, at the rate of 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividend and capital gain distributions) or
the total cost of such shares. Shares subject to the CDSC which are exchanged
into another Pioneer mutual fund will continue to be subject to the CDSC 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
14
<PAGE>
financial representative prior to requesting a telephone exchange. See
"Telephone Transactions" 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 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 to PFD.
Pursuant to the Class A Plan, the Fund reimburses PFD for its actual
expenditures to finance any activity primarily intended to result in the sale
of Class A shares or to provide services to holders of Class A shares, provided
the categories of expenses for which reimbursement is made are approved by the
Fund's Board of Trustees. As of the date of this Prospectus, the Board of
Trustees has approved the following categories of expenses for Class A shares
of the Fund: (i) a service fee to be paid to qualified broker-dealers in an
amount not to exceed 0.25% per annum of the Fund's 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.
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-
15
<PAGE>
dealers who have sales 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 sales
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. 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.
Under the Code, the Fund will be subject to a nondeductible 4% federal
excise tax on a portion of its undistributed ordinary income and capital gains
if it fails to meet certain distribution requirements with respect to each
calendar year. The Fund intends to make distributions in a timely manner and,
accordingly, does not expect to be subject to the excise tax.
The Fund'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 foreign countries) on certain 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 their share of qualified foreign taxes
paid by the Fund. Each shareholder would then include in gross income (in
addition to dividends actually received) his or her share of the amount of
qualified foreign taxes paid by the Fund. If this election is made, the Fund
will notify its shareholders annually as to their share of the amount of
qualified foreign taxes paid by 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,
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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, including the effect of recent
federal tax legislation, in their particular circumstances.
XII. SHAREHOLDER SERVICES
PSC is the shareholder services and transfer agent for shares of the Fund.
PSC, a Massachusetts corporation, is a wholly owned subsidiary of PGI. PSC's
offices are located at 60 State Street, Boston, Massachusetts 02109, and
inquiries to PSC should be mailed to Shareholder Services, Pioneering Services
Corporation, P.O. Box 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.
Account and Confirmation Statements
PSC maintains an account for each shareholder and all transactions of the
shareholder are recorded in this account. Confirmation statements showing the
details of transactions are sent to shareholders as transactions occur 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 purchases,
exchanges or redemptions by mail or telephone, automatic reinvestment of
dividends and capital gains distributions, withdrawal plans, Letters of Intent,
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 from
your bank account. Pioneer Investomatic Plan investments are voluntary, and you
may discontinue your plan at any time or change your plan elections for the
dollar amount, frequency or investment date by calling PSC at 1-800-225-6292,
or by sending a written request to Shareholder Services, Pioneering Services
Corporation, P.O. Box 9014, Boston, Massachusetts 02205-9014. A change to your
bank account information must be made in writing on an Account Options Form.
You should allow up to five business days for PSC to make changes to an
established plan. 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 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 dividends and capital gains in
cash and a distribution check issued to you is returned by the U.S. Postal
Service as not deliverable or a distribution check remains uncashed for six
months or more, the amount of the check may be reinvested in your account. Such
additional shares will be purchased at the then current net asset value.
Furthermore, the distribution option on the account will automatically be
changed to the reinvestment option until such time as you request a different
option by writing to PSC.
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.
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
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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
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.
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." Call PSC for assistance.
Retirement Plans
You should contact the Retirement Plans Department of PSC at
1-800-622-0176 for information relating to tax-deferred retirement plans for
individuals, business, and tax-exempt organizations. 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 payments 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 payments 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
18
<PAGE>
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
The 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 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. 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
19
<PAGE>
the calculation methods and uses of the Fund's investment results, see the
Statement of Additional Information.
APPENDIX
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 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.
Repurchase Agreements
The Fund may enter into repurchase agreements not exceeding seven days in
duration. In a repurchase agreement, an investor (e.g., the Fund) purchases a
debt security from a seller which undertakes to repurchase the security at a
specified resale price on an agreed future date (ordinarily a week or less).
The resale price generally exceeds the purchase price by an amount which
reflects an agreed-upon market interest rate for the term of the repurchase
agreement. Repurchase agreements entered into by the Fund will be fully
collateralized with U.S. Treasury and/or U.S. Government agency obligations
with a market value of not less than 100% of the obligation, valued daily.
Collateral will be held in a segregated, safekeeping account for the benefit of
the Fund. In the event that a repurchase agreement is not fulfilled, the Fund
could suffer a loss to the extent that the value of the collateral falls below
the repurchase price or if the Fund is prevented from realizing the value of
the collateral by reason of an order of a court with jurisdiction over an
insolvency proceeding with respect to the other party to the repurchase
agreement.
Restricted and Illiquid Securities
The Fund may invest in restricted securities (i.e., securities that would
be required to be registered prior to distribution to the public), including
restricted securities eligible for resale to certain institutional investors
pursuant to Rule 144A under the Securities Act of 1933. In addition, the Fund
may invest up to 15% of its net assets in 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, 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.
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[Pioneer Logo]
Pioneer Indo-Asia 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
CHRISTOPHER D. LIVELY, Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
INVESTMENT MANAGER
PIONEERING MANAGEMENT CORPORATION
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
Visit our website....................................... www.pioneerfunds.com
0998-5515
(C)Pioneer Funds Distributor, Inc.
PIONEER INDO-ASIA FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
CLASS A, CLASS B AND CLASS C SHARES
October 1, 1998
This Statement of Additional Information is not a Prospectus, but should be
read in conjunction with the Prospectus dated October 1, 1998, as supplemented
from time to time (the "Prospectus") of Pioneer Indo-Asia 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 and Semi-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............................................ 7
3. Investment Advisers............................................... 12
4. Principal Underwriter............................................. 14
5. Distribution Plans................................................ 15
6. Shareholder Servicing/Transfer Agent.............................. 17
7. Custodian......................................................... 18
8. Independent Public Accountant..................................... 18
9. Portfolio Transactions............................................ 18
10. Tax Status........................................................ 20
11. Description of Shares............................................. 25
12. Certain Liabilities............................................... 26
13. Determination of Net Asset Value.................................. 27
14. Systematic Withdrawal Plan........................................ 27
15. Letter of Intent.................................................. 28
16. Investment Results................................................ 28
17. Financial Statements.............................................. 32
Appendix A--Description of Short-Term Debt
and Corporate Bond Ratings................................. 33
Appendix B--Performance Statistics................................ 38
Appendix C--Other Pioneer Information............................. 54
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 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. Capitalized terms not
otherwise defined herein have the meaning given to them in the Prospectus.
The following policies and restrictions supplement those discussed in the
Prospectus. Whenever an investment policy or restriction states a maximum
percentage of the Fund's assets that may be invested in any security or presents
a policy regarding quality standards, that standard or other restrictions (other
than the restrictions on illiquid securities and borrowing) shall be determined
immediately after and as a result of the Fund's investment. Accordingly, any
later increase or decrease resulting from a change in values, net assets or
other circumstances will not be considered in determining whether the investment
complies with the Fund's investment objective and policies.
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 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 the
Appendix 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.
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 currencies of 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.
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 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 or by Moody's or, if unrated by such rating organizations, determined by
PMC to be of comparable credit quality) into a segregated account 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 the Appendix to the Prospectus.
Generally, a security may be considered illiquid if the Fund is unable to
dispose of such security within seven days at approximately the price at which
it values such security. Securities may also be considered illiquid as a result
of certain legal or contractual 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
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
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 the Appendix 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, 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.
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), (5) and
(6) 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 to facilitate
the meeting of redemption requests or for extraordinary or emergency purposes
and except pursuant to reverse repurchase agreements, in all cases in amounts
not to exceed 33 1/3% of the Fund's total assets (including the amount borrowed)
taken at market value.
(3) 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").
(4) 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.
(5) Make loans, except by purchase of debt obligations, by entering into
repurchase agreements or through the lending of portfolio securities.
(6) Invest in commodities or commodity contracts, except that the Fund may
invest in financial futures contracts and related options and in any other
financial instruments which may be deemed to be commodities or commodity
contracts in which the Fund is not prohibited from investing by the Commodity
Exchange Act and the rules and regulations thereunder.
(7) 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.
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 Securities and Exchange Commission ("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 or
lend portfolio securities as described in fundamental investment restrictions
(1),(2) and () 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:
(a) 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.
(b) 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.
(c) Invest for the purpose of exercising control over or management of any
company.
(d) 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.
(e) 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.
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"), Pioneer Real Estate Advisors, Inc., Pioneer Forest, Inc.,
Pioneer Explorer, Inc., Pioneer Management (Ireland) Ltd. ("PMIL") and Closed
Joint Stock Company "Forest-Starma"; President and Director of Pioneer Metals
and Technology, Inc. ("PMT"), Pioneer International Corp. ("PIntl"), Pioneer
First Russia, Inc. ("First Russia") and Pioneer Omega, Inc. ("Omega"); Chairman
of the Board and Director of Pioneer Goldfields Limited ("PGL") and Teberebie
Goldfields Limited; Chairman of the Supervisory Board of Pioneer Fonds
Marketing, GmbH, Pioneer First Polish Investment Fund Joint Stock Company, S.A.
and Pioneer Czech Investment Company, A.S.; Chairman, President and Trustee of
all of the Pioneer mutual funds; Director of Pioneer Global Equity Fund Plc,
Pioneer Global Bond Fund Plc, Pioneer DM Cashfonds Plc, Pioneer European Equity
Fund Plc, Pioneer Central & Eastern Europe Fund Plc and Pioneer US Real Estate
Fund Plc; and Partner, Hale and Dorr LLP (counsel to PGI and the Fund).
MARY K. BUSH, TRUSTEE, DOB: APRIL 1948
4201 CATHEDRAL AVENUE, NW, WASHINGTON, DC 20016
President, Bush & Co., (international financial advisory firm) since 1991 ;
Director and/or Trustee of Mortgage Guaranty Insurance Corporation, Novecon
Management Company, Hoover Institution, Folger Shakespeare Library, March of
Dimes, Project 2000, Inc. (not-for-profit educational organization), Small
Enterprise Assistance Fund, Wilberforce University and Texaco, Inc.; Advisory
Board Member, Washington Mutual Investors Fund, (registered investment company);
and Trustee of all the Pioneer mutual funds, except Pioneer Variable Contracts
Trust.
RICHARD H. EGDAHL, M.D., TRUSTEE, DOB: DECEMBER 1926
BOSTON UNIVERSITY HEALTH POLICY INSTITUTE, 53 BAY STATE ROAD, BOSTON, MA 02215
Alexander Graham Bell Professor of Health Care Entrepreneurship, Boston
University; Professor of Management, Boston University School of Management;
Professor of Public Health, Boston University School of Public Health; Professor
of Surgery, Boston University School of Medicine; University Professor, Boston
University; Director, Boston University Health Policy Institute and Boston
University Program for Health Care Entrepreneurship; Director, CORE (management
of workers' compensation and disability costs - Nasdaq National Market);
Director, WellSpace (provider of complementary health care); Trustee, Boston
Medical Center; Honorary Trustee, Franciscan Children's Hospital; and Trustee of
all of the Pioneer mutual funds.
MARGARET B.W. GRAHAM, TRUSTEE, DOB: MAY 1947
THE KEEP, P.O. BOX 110, LITTLE DEER ISLE, ME 04650
Founding Director, The Winthrop Group, Inc. (consulting firm); Manager of
Research Operations, Xerox Palo Alto Research Center, from 1991 to 1994;
Professor of Operations Management and Management of Technology and Associate
Dean, Boston University School of Management, from 1989 to 1993; and Trustee of
all the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
JOHN W. KENDRICK, TRUSTEE, DOB: JULY 1917
6363 WATERWAY DRIVE, FALLS CHURCH, VA 22044
Professor Emeritus, George Washington University; Director, American
Productivity and Quality Center; Adjunct Scholar, American Enterprise Institute;
Economic Consultant; and Trustee of all of the Pioneer mutual funds, except
Pioneer Variable Contracts Trust.
MARGUERITE A. PIRET, TRUSTEE, DOB: MAY 1948
ONE BOSTON PLACE, SUITE 2635, BOSTON, MA 02108
President, Newbury, Piret & Company, Inc. (merchant banking firm); Trustee
of Boston Medical Center; Member of the Board of Governors of the Investment
Company Institute; and Trustee of all of the Pioneer mutual funds.
DAVID D. TRIPPLE*, TRUSTEE AND EXECUTIVE VICE PRESIDENT, DOB: FEBRUARY 1944
Executive Vice President and a Director of PGI; President and a Director of
PMC; Director of PFD, PCC, PIntl, First Russia, Omega, Pioneer SBIC Corporation
("Pioneer SBIC"), PMIL, Pioneer Global Equity Fund Plc, Pioneer Global Bond Fund
Plc, Pioneer DM Cashfonds Plc, Pioneer European Equity Fund Plc, Pioneer Central
& Eastern Europe Fund Plc and Pioneer US Real Estate Fund Plc; and Executive
Vice President and Trustee of all of the Pioneer mutual funds.
STEPHEN K. WEST, TRUSTEE, DOB: SEPTEMBER 1928
125 BROAD STREET, NEW YORK, NY 10004
Of Counsel to Sullivan & Cromwell (law firm); Director, Kleinwort Benson
Australian Income Fund, Inc. since May 1997 and The Swiss Helvtia Fund, Inc.
since 1995 (mutual funds). AMVESCAP PLC (investment managers) since 1997 and
AMerican Insurance Holdings, Inc.; Trustee, The Winthrop Focus Funds (mutual
funds); and Trustee of all of the Pioneer mutual funds.
JOHN WINTHROP, TRUSTEE, DOB: JUNE 1936
ONE NORTH ADGERS WHARF, CHARLESTON, SC 29401
President, John Winthrop & Co., Inc. (private investment firm); Director of
NUI Corp. (energy sales, services and distribution); and Trustee of all of the
Pioneer mutual funds, except Pioneer Variable Contracts Trust.
WILLIAM H. KEOUGH, TREASURER, DOB: APRIL 1937
Senior Vice President, Chief Financial Officer and Treasurer of PGI;
Treasurer of PFD, PMC, PSC, PCC, PIntl, PMT, PGL, First Russia, Omega and
Pioneer SBIC; and Treasurer of all of the Pioneer mutual funds.
JOSEPH P. BARRI, SECRETARY, DOB: AUGUST 1946
Corporate Secretary of PGI and most of its subsidiaries; Secretary of all
of the Pioneer mutual funds; and Partner, Hale and Dorr LLP.
ERIC W. RECKARD, ASSISTANT TREASURER, DOB: JUNE 1956
Manager of Business Planning and Internal Audit of PGI since September
1996; Manager of Fund Accounting of PMC since May 1994; Manager of Auditing,
Compliance and Business Analysis for PGI prior to May 1994; and Assistant
Treasurer of all of the Pioneer mutual funds.
ROBERT P. NAULT, ASSISTANT SECRETARY, DOB: MARCH 1964
General Counsel and Assistant Secretary of PGI since 1995; Assistant
Secretary of PMC, certain other PGI subsidiaries and all of the Pioneer mutual
funds; Assistant Clerk of PFD and PSC; and junior partner of Hale and Dorr LLP
prior to 1995.
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 and PGL since 1995; 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,
Pioneer India Fund, Pioneer International Growth Fund and Pioneer World Equity
Fund.
CHRISTOPHER D. LIVELY, VICE PRESIDENT, DOB: JULY 1962
Vice President of PMC and of the 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 Indo-Asia Fund PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Mid-Cap Fund PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Independence Fund PMC Note 1
Pioneer Micro-Cap Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Balanced Fund PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer Interest Shares PMC Note 2
Pioneer Variable Contracts Trust PMC Note 3
Note 1 This fund is available to the general public only through
Pioneer Independence Plans, a systematic investment plan,
sponsored by PFD.
Note 2 This fund is a closed-end fund.
Note 3 This is a series of 12 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 June 30, 1998, MLPF&S For the Sole Benefit of its Customers, Mutual Fund
Administration, 4800 Deer Lake Drive East 3rd FL, Jacksonville, FL 32246-6484
owned of record approximately 5.46% (50,803 shares) of the Fund's Class A
shares, approximately 35.52% (327,549 shares) of the Fund's Class B shares and
approximately 8.07% (6,496) of the Fund's Class C shares. On the same date, Star
Bank NA Cust FBO Opti-Flex Dynamic Fund U/TR/A DTD 05/03/96, PO Box 640229 owned
approximately 6.11% (56,808 shares) of the Fund's Class A shares; Smith Barney
Inc., 388 Greenwich Street, New York, NY 10013-2375 owned approximately 12.55%
(10,100 shares) of the Fund's Class C shares, Rahbir S. Sodhi & Santosh Sodi JT
TEN, Box 36, St. Johnsville, NY 13452-0036 owned approximately 6.29% (5,061
shares) of the Fund's Class C shares, BHC Securities, Inc. FAO 74016225 owned
approximately 5.74% (4,622 shares) of the Fund's Class C shares and PFD owned
approximately 16.02% (12,887 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. The Fund
pays an annual trustee's fee to each Trustee who is not affiliated with PGI,
PMC, PFD or PSC consisting of two components: (a) a base fee of $750 and (b) a
variable fee, calculated on the basis of the average net assets of the Fund. In
addition, the Fund pays a per meeting fee of $150 to each Trustee who is not
affiliated with PGI, PMC, PFD or PSC and pays an annual trustee's fee of $750
plus expenses to each Trustee affiliated with PGI, PMC, PFD or PSC. The Fund
also pays an annual committee participation fee to each Trustee who serves as a
member of any committee established to act on behalf of one or more of the
Pioneer mutual funds. Committee fees are allocated to the Fund on the basis of
the Fund's average net assets. Each Trustee who is a member of the Audit
Committee for the Pioneer mutual funds receives an annual fee equal to 10% of
the aggregate annual trustee's fee, except the Committee Chairperson who
receives an annual fee equal to 20% of the aggregate annual trustee's fee.
Members of the Pricing Committee for the Pioneer mutual funds, as well as any
other committee which renders material functional services to the Boards of
Trustees for the Pioneer mutual funds (such as the Year 2000 committee,
International Transfer Agent Issues Committee and Disinterested Trustees
Committee), receives an annual fee equal to 5% of the aggregate annual trustee's
fee, except the Committee Chairperson who receives an annual fee equal to 10% of
the aggregate annual trustee's fee. Any such fees paid to Trustees affiliated
with 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>
<S> <C> <C> <C>
Pension or Retirement Total Compensation
Aggregate Benefits Accrued as from the Fund and
Compensation Part of the Fund's Other Pioneer Mutual
Name of Trustee From the Fund* Expenses Funds**
John F. Cogan, Jr. $ 500 $0 $12,000
Mary K. Bush 576 30,000
Richard H. Egdahl, M.D. 1,730 0 62,000
Margaret B.W. Graham 1,730 0 60,000
John W. Kendrick 1,730 0 55,800
Marguerite A. Piret 1,948 0 80,000
David D. Tripple 500 0 12,000
Stephen K. West 1,835 0 63,800
John Winthop 1,936 0 69,000
----- - ------
Total 12,485 0 444,600
</TABLE>
* As of fiscal period ended October 31, 1997.
** As of the calendar year ended December 31, 1997.
3. INVESTMENT ADVISERS
THE ADVISER. As described in the Prospectus, PMC, 60 State Street, Boston,
Massachusetts 02109, serves as the Fund's investment adviser. The Fund's
management contract is renewable annually by the vote of a majority of the Board
of Trustees of the Fund (including a majority of the Board of Trustees who are
not parties to the contract or interested persons of any such parties) cast in
person at a meeting called for the purpose of voting on such renewal. This
contract terminates if assigned and may be terminated without penalty by either
party by vote of its Board of Directors or Trustees, as the case may be, or a
majority of the Fund's outstanding voting securities and the giving of 60days'
written notice.
As compensation for its management services and expenses incurred, PMC is
entitled to a management fee at the rate of 1.10% 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 management fee and to make
other arrangements, if necessary, to limit certain other expenses of the Fund to
the extent necessary to reduce Class A expenses to 2.10% 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 fiscal years ended October 31,
1995, 1996 and 1997. If PMC's fee reduction and expense limitation had not been
in effect, the Fund would have paid management fees of $201,379, $350,384 and
$272,512, respectively, for such periods.
THE INDIAN ADVISER. As described in the Prospectus, Kothari 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 is renewable annually by the vote of a majority of
the Board of Trustees of the Fund (including a majority of the Board of Trustees
who are not parties to the contract or interested persons of any such parties)
cast in person at a meeting called for the purpose of voting on such renewal.
The advisory contract terminates if assigned and may be terminated without
penalty by any party by vote of its Board of Directors or Trustees, as the case
may be, or a majority of the Fund's outstanding voting securities and the giving
of sixty days' written notice.
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
of .10% of the Fund's average gross assets in India's securities markets,
including assets invested in American, Global or other types of depository
receipts for securities traded in India's securities markets if such gross
assets are no greater than $15,000,000; 0.20% of such gross assets if such gross
assets are greater than $15,000,000 but no greater than $45,000,000; 0.40% of
such gross assets if such gross assets are greater than $45,000,000 but no
greater than $60,000,000; and 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 fiscal years ended October 31, 1995,
1996 and 1997, PMC paid or owed subadvisory fees to the Indian Adviser of
approximately $16,151, $34,152 and $28,405, respectively.
4. PRINCIPAL UNDERWRITER
PFD, 60 State Street, Boston, Massachusetts 02109, 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 ended October 31, 1995, 1996 and 1997, net
underwriting commissions retained by PFD were approximately $21,354, $28,000 and
$9,131, respectively. Commissions reallowed to dealers during such periods were
approximately $140,268, $191,000 and $107,730, 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").
<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 the Fund's Class A shares. Certain categories of such expenditures have been
approved by the Board of Trustees and are set forth in the Prospectus. See
"Distribution Plans" in the Prospectus. The expenses of the Fund pursuant to the
Class A Plan are accrued daily at a rate which may not exceed the annual rate of
0.25% of the Fund's average daily net assets attributable to Class A shares.
CLASS B PLAN
The Class B Plan provides that the Fund shall pay PFD, as the Fund's
distributor for its Class B shares, a distribution fee equal on an annual basis
to 0.75% of the Fund's average daily net assets attributable to Class B shares
and will pay PFD a service fee equal 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 with respect to Class B shares of
the Fund. PFD pays commissions to dealers as well as expenses of printing
prospectuses and reports used for sales purposes, expenses with respect to the
preparation and printing of sales literature and other distribution related
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 contingent
deferred sales charges ("CDSCs") attributable to Class B shares. (See
"Distribution Plans" in the Prospectus.) When a broker-dealer sells Class B
shares and elects, with PFD's approval, to waive its right to receive the
commission normally paid at the time of the sale, PFD may cause all or a portion
of the distribution fees described above to be paid to the broker-dealer.
CLASS C PLAN
The Class C Plan provides that the Fund will pay PFD, as the Fund's
distributor for its Class C shares, a distribution fee accrued daily and paid
quarterly, equal on an annual basis to 0.75% of the Fund's average daily net
assets attributable to Class C shares and will pay PFD a service fee equal to
0.25% of the Fund's average daily net assets attributable to Class C shares. PFD
will in turn pay to securities dealers which enter into a sales agreement with
PFD a distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the Fund's average daily net assets attributable to Class C
shares owned by investors for whom that securities dealer is the holder or
dealer of record. The service fee is intended to be in consideration of personal
services and/or account maintenance services rendered by the dealer with respect
to Class C shares. PFD will advance to dealers the first-year service fee at a
rate equal to 0.25% of the amount invested. As compensation therefor, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Commencing in the thirteenth month following a
purchase of Class C shares, dealers will become eligible for additional service
fees at a rate of up to 0.25% of the 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 "DistributionPlans" in the Prospectus.)
When a broker-dealer sells Class C shares and elects, with PFD's approval, to
waive its right to receive the commission normally paid at the time of the sale,
PFD may cause all or a portion of the distribution fees described above to be
paid to the broker-dealer.
GENERAL
In accordance with the terms of the Plans, PFD provides to the Fund for
review by the Trustees a quarterly written report of the amounts expended under
the respective Plans and the purpose for which such expenditures were made. In
the Trustees' quarterly review of the Plans, they will consider the continued
appropriateness and the level of reimbursement or compensation the Plans
provide. No interested person of the Fund, nor any Trustee of the Fund who is
not an interested person of the Fund, has any direct or indirect financial
interest in the operation of the Plans except to the extent that PFD and certain
of its employees may be deemed to have such an interest as a result of receiving
a portion of the amounts expended under the Plans by the Fund and except to the
extent certain officers may have an interest in PFD's ultimate parent, PGI.
The Plans were adopted by a majority vote of the Board of Trustees,
including all of the Trustees who are not, and were not at the time they voted,
interested persons of the Fund, as defined in the 1940 Act (none of whom has or
have any direct or indirect financial interest in the operation of the Plans),
cast in person at a meeting called for the purpose of voting on the Plans. In
approving the Plans, the Trustees identified and considered a number of
potential benefits which the Plans may provide. The Board of Trustees believes
that there is a reasonable likelihood that the Plans will benefit the Fund and
its current and future shareholders. Under their terms, the Plans remain in
effect from year to year provided such continuance is approved annually by vote
of the Trustees in the manner described above. The Plans may not be amended to
increase materially the annual percentage limitation of average net assets which
may be spent for the services described therein without approval of the
shareholders of the Class or Classes affected thereby, and material amendments
of the Plans must also be approved by the Trustees in the manner described
above. A Plan may be terminated at any time, without payment of any penalty, by
vote of the majority of the Trustees who are not interested persons of the Fund
and have no direct or indirect financial interest in the operations of the Plan,
or by a vote of a majority of the outstanding voting securities of the
respective Class of the Fund (as defined in the 1940 Act). A Plan will
automatically terminate in the event of its assignment (as defined in the 1940
Act).
During the fiscal year ended October 31, 1997, the Fund incurred total
distribution fees pursuant to the Fund's Class A Plan, Class B Plan and Class C
Plan respectively, as follows: $57,151, $39,820 and $3,794. Distribution fees
were paid by the Fund to PFD in reimbursement of or compensation for expenses
related to servicing of shareholder accounts and to compensating dealers and
sales personnel.
Upon redemption, certain Class A shares may be subject to a 1% CDSC, Class
B shares are subject to a CDSC at a rate declining from a maximum 4% of the
lower of the cost or market value of the shares and the Class C shares maybe
subject to a 1% CDSC. During the fiscal year ended October 31, 1997, CDSCs in
the amount of approximately $73,544 were paid to PFD in reimbursement of or
compensation for expenses related to servicing of shareholders' accounts and
compensation paid to dealers and sales personnel.
6. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with PSC, 60 State Street, Boston, Massachusetts
02109, 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 upon 90 days' written notice.
Under the terms of its contract with the Fund, PSC will service shareholder
accounts, and its duties will include: (i) processing sales, redemptions and
exchanges of Fund shares; (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.
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 Custodian does not determine the investment policies of the Fund or
decide which securities it will buy or sell. The Fund may invest in securities
issued by the Custodian or any of the Subcustodians, deposit cash in the
Custodian or any Subcustodian and deal with the Custodian or any of the
Subcustodians as a principal in securities transactions. Portfolio securities
may be deposited into the Federal Reserve-Treasury Department Book Entry System
or the Depository Trust Company in the U.S. or in recognized central
depositories in foreign countries . The Trustees periodically review the Fund's
foreign custodian 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 are placed on
behalf of the Fund by PMC. In selecting brokers or dealers, PMC considers
various 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. Most 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 may select broker-dealers which provide brokerage and/or research
services to the Fund and/or other investment companies or accounts managed by
PMC. In addition, consistent with Section 28(e) of the Securities Exchange Act
of 1934, as amended, the Fund may pay commissions to such broker in an amount
greater than the amount another firm may charge. Such services may include
advice concerning the value of securities; the advisability of investing in,
purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; providing stock quotation services;
furnishing analyses, electrtonic information services, manuals and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts and comparative fund statistics
and credit rating information; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement). PMC
maintains a listing of broker-dealers who provide such services on a regular
basis. However, because many transactions on behalf of the Fund and other
investment companies or accounts managed by PMC are placed with broker-dealers
(including broker-dealers on the listing) without regard to the furnishing of
such services, it is not possible to estimate 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 in rendering
investment management services to the Fund as well as to other investment
companies or accounts managed by PMC, although not all of such research may be
useful to the Fund. Conversely, such information provided by brokers or dealers
who have executed transaction orders on behalf of such other accounts may be
useful to PMC in carrying out its obligations to the Fund. The receipt of such
research has not reduced PMC's normal independent research activities; however,
it has enabled PMC to avoid the additional expenses which might otherwise be
incurred if it were to attempt to develop comparable information through its own
staff.
In circumstances where two or more broker-dealers offer comparable prices
and executions, preference may be given to a broker-dealer which has sold shares
of the Fund as well as shares of other investment companies or accounts managed
by PMC. This policy does not imply a commitment to execute all portfolio
transactions through all broker-dealers that sell shares of the Fund.
The Trustees periodically review PMC's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
Fund.
In addition to the Fund, PMC acts as investment adviser to the other
Pioneer mutual funds and certain private accounts with investment objectives
similar to the Fund's. As such, securities may frequently meet the investment
objectives of the Fund, such other mutual 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 positions 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 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 decides to sell on behalf of another
account the same portfolio security at the same time. On the other hand, if the
same securities are bought or sold at the same time by more than one account,
the resulting participation in volume transactions could produce better
executions for the Fund or other account. In the event that more than one
account purchases or sells the same security on a given date, the purchases and
sales will normally be made as nearly as practicable on a pro rata basis in
proportion to the amounts desired to be purchased or sold by each.
For the fiscal years ended October 31, 1995, 1996 and 1997, the Fund paid
or accrued aggregate brokerage commissions of $34,936, $245,000 and $171,236,
respectively. Differences in brokerage commissions reflected above were due to
increased or decreased portfolio activity and changes in net assets as a result
of shareholder transactions.
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, payments with respect to loans, 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") and satisfy certain annual distribution and quarterly diversification
requirements. For purposes of the 90% income test, income the Fund earns from
equity interests in certain entities that are not treated as corporations (E.G.,
are treated as partnerships or trusts) for U.S. tax purposes will generally have
the same character for the Fund as in the hands of such entities; consequently,
the Fund may be required to limit its equity investments in such entities that
earn fee income, rental income, or other nonqualifying income.
Dividends from investment company taxable income, which includes net
investment income, net short-term capital gain in excess of net long-term
capital loss, and certain net foreign exchange gains, are taxable as ordinary
income, whether received in cash or reinvested in additional shares. Dividends
from net long-term capital gain in excess of net short-term capital loss ("net
capital gain"), if any, whether received in cash or reinvested in additional
shares, are taxable to the Fund's shareholders as long-term capital gains for
federal income tax purposes without regard to the length of time shares of the
Fund have been held.
Any dividend declared by the Fund in October, November or December as of a
record date in such a month and paid during the following January will be
treated for federal income tax purposes as received by shareholders on December
31 of the calendar year in which it is declared.
Foreign exchange gains and losses realized by the Fund in connection with
certain transactions involving foreign currency-denominated debt securities,
foreign currency forward contracts, foreign currencies, or payables or
receivables denominated in a foreign currency are subject to Section 988 of the
Code, which generally causes such gains and losses to be treated as ordinary
income and losses and may affect the amount, timing and character of
distributions to shareholders. Under future regulations, 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 90% income
test. If the net foreign exchange loss for a year were to exceed the Fund's
investment company taxable income (computed without regard to such loss), the
resulting ordinary loss for such year would not be deductible by the Fund or its
shareholders in future years.
If the Fund acquires any equity interest (under proposed regulations,
generally including not only stock but also an option to acquire stock such as
inherent in a convertible bond) in certain foreign corporations that receive at
least 75% of their annual gross income from passive sources (such as interest,
dividends, certain rents and royalties or capital gains) or hold at least 50% of
their assets in investments producing such passive income ("passive foreign
investment companies"), the Fund could be subject to federal income tax and
additional interest charges on "excess distributions" received from such
companies or gain from the sale of stock in such companies, even if all income
or gain actually received by the Fund is timely distributed to its shareholders.
The Fund would not be able to pass through to its shareholders any credit or
deduction for such a tax. An election may generally be available that would
ameliorate these adverse tax consequences, but any such election would require
the Fund to recognize taxable income or gain (subject to tax distribution
requirements) without the concurrent receipt of cash. These investments could
also result in the treatment of associated capital gains as ordinary income. The
Fund may limit and/or manage its holdings in passive foreign investment
companies to minimize its tax liability or maximize its return from these
investments.
The Fund may invest in debt obligations that are in the lowest rating
categories or are unrated, including debt obligations of issuers not currently
paying interest or who are in default. Investments in debt obligations that are
at risk of or in default present special tax issues for the Fund. Tax rules are
not entirely clear about issues such as when the Fund may cease to accrue
interest, original issue discount, or market discount, when and to what extent
deductions may be taken for bad debts or worthless securities, how payments
received on obligations in default should be allocated between principal and
income, and whether exchanges of debt obligations in a workout context are
taxable. These and other issues will be addressed by the Fund, in the event it
invests in such securities, in order to seek to ensure that it distributes
sufficient income to preserve its status as a regulated investment company and
does not become subject to federal income or excise tax.
If the Fund invests in certain pay-in-kind securities ("PIKs"), zero coupon
securities, deferred interest securities or, in general, any other securities
with original issue discount (or with market discount if the Fund elects to
include market discount in income currently), the Fund must accrue income on
such investments for each taxable year, which generally will be prior to the
receipt of the corresponding cash payments. However, the Fund must distribute,
at least annually, all or substantially all of its net income, including such
accrued income, to shareholders to qualify as a regulated investment company
under the Code and avoid federal income and excise taxes. Therefore, the Fund
may have to dispose of its portfolio securities under disadvantageous
circumstances to generate cash, or may have to leverage itself by borrowing the
cash, to satisfy distribution requirements.
For federal income tax purposes, the Fund is permitted to carry forward a
net capital loss for any year to offset its capital gains, if any, during the
eight years following the year of the loss. To the extent subsequent capital
gains are offset by such losses, they would not result in federal income tax
liability to the Fund and therefore are not expected to be distributed as such
to shareholders. As of the end of its most recent taxable year, the Fund had a
capital loss carryforward of $7,457,718 which will expire between 2002 and 2005
if not used.
At the time of an investor's purchase of Fund shares, a portion of the
purchase price may be attributed to realized or unrealized appreciation in the
Fund's portfolio or undistributed taxable income of the Fund. Consequently,
subsequent distributions by the Fund on these shares from such appreciation or
income may be taxable to such investor even if the net asset value of the
investor's shares is, as a result of the distributions, reduced below the
investor's cost for such shares and the distributions economically represent a
return of a portion of the investment.
Redemptions and exchanges are taxable events for shareholders that are
subject to tax. Shareholders should consult their own tax advisers with
reference to their individual circumstances to determine whether any particular
transaction in Fund shares is properly treated as a sale for tax purposes, as
the following discussion assumes, and the tax treatment of any gains or losses
recognized in such transactions. Any loss realized by a shareholder upon the
redemption, exchange or other disposition of shares with a tax holding period of
six months or less will be treated as a long-term capital loss to the extent of
any amounts treated as distributions of long-term capital gain with respect to
such shares.
In addition, if Class A shares redeemed or exchanged have been held for
less than 91 days, (1) in the case of a reinvestment in the Fund or another
mutual fund at net asset value pursuant to the reinvestment privilege, the sales
charge paid on such shares is not included in their tax basis under the Code,
and (2) in the case of an exchange, all or a portion of the sales charge paid on
such shares is not included in their tax basis under the Code, to the extent a
sales charge that would otherwise apply to the shares received is reduced
pursuant to the exchange privilege. In either case, the portion of the sales
charge not included in the tax basis of the shares redeemed or surrendered in an
exchange is included in the tax basis of the shares acquired in the reinvestment
or exchange. Losses on redemptions or other dispositions of shares may be
disallowed under "wash sale" rules in the event of other investments in the Fund
(including those made pursuant to reinvestment of dividends and/or capital gain
distributions) within a period of 61 days beginning 30 days before and ending 30
days after a redemption or other disposition of shares. In such a case, the
disallowed portion of any loss would be included in the federal tax basis of the
shares acquired in the other investments.
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. Additionally, the
Fund may be required to recognize gain if a forward contract or other
transaction that is not subject to the mark to market rules is treated as a
"constructive sale" of an "appreciated financial position" held by the Fund
under Section 1259 of the Code. Any net mark to market gains and/or gains from
constructive sales may also have to be distributed to satisfy the distribution
requirements referred to above even though no corresponding cash amounts may
concurrently be received, possibly requiring the disposition of portfolio
securities or borrowing to obtain the necessary cash. Losses on certain 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 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 taxes on certain investment income and capital gains, with
respect to its investments in those countries. Tax conventions between certain
countries and the U.S. may reduce or eliminate such taxes in some cases. If more
than 50% of the Fund's total assets at the close of any taxable year consists of
stock or securities of foreign corporations, the Fund may elect to pass through
to its shareholders their pro rata shares of qualified foreign taxes paid by the
Fund, with the result that shareholders would be required to include such taxes
in their gross incomes (in addition to dividends and distributions they actually
received), would treat such taxes as foreign taxes paid by them, and may be
entitled to a tax deduction or credit for such taxes, subject to a holding
period requirement and other limitations under the Code.
Qualified foreign taxes generally include taxes that would be treated as
income taxes under U.S. tax regulations but do not include most other taxes,
such as stamp taxes, securities transaction taxes, and similar taxes. If the
Fund makes the election described above, shareholders may deduct their pro rata
portion of qualified foreign taxes paid by the Fund (not in excess of the tax
actually owed by the Fund) in computing their income subject to U.S. federal
income taxation or, alternatively, use them as foreign tax credits, subject to
applicable limitations under the Code, against their U.S. federal income taxes.
Shareholders who do not itemize deductions for federal income tax purposes will
not, however, be able to deduct their pro rata portion of qualified foreign
taxes paid by the Fund, although such shareholders will be required to include
their shares of such taxes in gross income if the Fund makes the election
described above.
If the Fund makes this election and a shareholder chooses to take a credit
for the foreign taxes deemed paid by such shareholder, the amount of the credit
that may be claimed in any year may not exceed the same proportion of the U.S.
tax against which such credit is taken which the shareholder's taxable income
from foreign sources (but not in excess of the shareholder's entire taxable
income) bears to his entire taxable income. For this purpose, long-term and
short-term capital gains the Fund realizes and distributes to shareholders will
generally not be treated as income from foreign sources in their hands, nor will
distributions of certain foreign currency gains subject to Section 988 of the
Code and of any other income realized by the Fund that is deemed, under the
Code, to be U.S.-source income in the hands of the Fund. This foreign tax credit
limitation may also be applied separately to certain specific categories of
foreign-source income and the related foreign taxes. As a result of these rules,
which may have different effects depending upon each shareholder's particular
tax situation, certain shareholders may not be able to claim a credit for the
full amount of their proportionate share of the qualified 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 either does not make the election or
pays foreign taxes relating to investments for which it does not satisfy an
applicable holding period requirement, it may deduct foreign taxes that are not
passed through to shareholders in computing its income available for
distribution to shareholders to satisfy applicable tax distribution
requirements.
Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions, and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their tax
advisers for more information.
Federal law requires that the Fund withhold (as "backup withholding") 31%
of reportable payments, including dividends, capital gain dividends and the
proceeds of redemptions (including exchanges) and repurchases to shareholders
who have not complied with Internal Revenue Service ("IRS") regulations. In
order to avoid this withholding requirement, shareholders must certify on their
Account Applications, or on separate IRS Forms W-9, that the Social Security
Number or other Taxpayer Identification Number they provide is their correct
number and that they are not currently subject to backup withholding, or that
they are exempt from backup withholding. The Fund may nevertheless be required
to withhold if it receives notice from the IRS or a broker that the number
provided is incorrect or backup withholding is applicable as a result of
previous underreporting of interest or dividend income.
If, as anticipated, the Fund continues to qualify as a regulated investment
company under the Code, it will not be required to pay any Massachusetts income,
corporate excise or franchise taxes or any Delaware corporation income tax.
The description of certain federal tax provisions above relates only to
U.S. federal income tax consequences for shareholders who are U.S. persons, I.E.
U.S. citizens or residents or U.S. corporations, partnerships, trusts or
estates, and who are subject to U.S. federal income tax. This description does
not address the special tax rules that may be applicable to particular types of
investors, such as financial institutions, insurance companies, securities
dealers, or tax-exempt or tax-deferred plans, accounts or entities. Investors
other than U.S. persons may be subject to different U.S. tax treatment,
including a possible 30% non-resident alien U.S. withholding tax (or
non-resident alien withholding tax at a lower treaty rate) on amounts treated as
ordinary dividends from the Fund and, unless an effective IRS Form W-8 or
authorized substitute for Form W-8 is on file, to 31% backup withholding on
certain other payments from the Fund. Shareholders should consult their own tax
advisers on these matters and on state, local and other applicable tax laws.
11. DESCRIPTION OF SHARES
The Fund's Declaration of Trust permits the Board of Trustees to authorize
the issuance of an unlimited number of full and fractional shares of beneficial
interest (without par value) which may be divided into such separate series as
the Trustees may establish. Currently, the Fund consists of only one series. The
Trustees may, however, establish additional series of shares , and may divide or
combine the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interests in the Fund. The Declaration of
Trust further authorizes the Trustees to classify or reclassify any series of
the shares into one or more classes. Pursuant thereto, the Trustees have
authorized the issuance of three classes of shares of the Fund, 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 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 Declaration of Trust without the
affirmative vote of a majority of it's the Fund's 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
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 Declaration of Trust expressly provides that the Fund
has been organized under the Delaware Act and that the Declaration of Trust is
to be governed by Delaware law. It is nevertheless possible that a Delaware
business trust, such as the Fund, might become a party to an action in another
state whose courts refused to apply Delaware law, in which case the trust's
shareholders could be subject to personal liability.
To guard against this risk, the Declaration of Trust (i) contains an
express disclaimer of shareholder liability for acts or obligations of the Fund
and provides that notice of such disclaimer may be given in each agreement,
obligation and instrument entered into or executed by the Fund or its Trustees,
(ii) provides for the indemnification out of Fund property of any shareholders
held personally liable for any obligations of the Fund or any series of the Fund
and (iii) provides that the Fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the Fund and
satisfy any judgment thereon. Thus, the risk of a Fund shareholder incurring
financial loss beyond his or her investment because of shareholder liability is
limited to circumstances in which all of the following factors are present: (1)
a court refused to apply Delaware law; (2) the liability arose under tort law
or, if not, no contractual limitation of liability was in effect; and (3) the
Fund itself would be unable to meet its obligations. In the light of Delaware
law, the nature of the Fund's business and the nature of its assets, the risk of
personal liability to a Fund shareholder is remote.
The Declaration of Trust further provides that the Fund shall indemnify
each of its Trustees and officers against liabilities and expenses reasonably
incurred by them, in connection with, or arising out of, any action, suit or
proceeding, threatened against or otherwise involving such Trustee or officer,
directly or indirectly, by reason of being or having been a Trustee or officer
of the Fund. The Declaration of Trust does not authorize the Fund to indemnify
any Trustee or officer against any liability to which he or she would otherwise
be subject by reason of or for willful misfeasance, bad faith, gross negligence
or reckless disregard of such person's duties.
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 Exchange is open for trading. As of the date of this Statement of
Additional Information, the Exchange is open for trading every weekday except
for the following holidays: New Year's Day, Martin Luther King Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The net asset value per share of each class
of the Fund is also determined on any other day in which the level of trading in
its portfolio securities is sufficiently high so that the current net asset
value per share might be materially affected by changes in the value of its
portfolio securities. The net asset value per share of the Fund is not
determined on any day in which no purchase orders in good order for the shares
of the Fund become effective and no shares are tendered for redemption.
The net asset value per share of each class of the Fund is computed by
taking the value of all of the Fund's assets attributable to a class, less the
Fund's liabilities attributable to that class, and dividing the result by the
number of outstanding shares of that class. For purposes of determining net
asset value, expenses of the classes of the Fund are accrued daily.
Securities that have not traded on the date of valuation or securities for
which sales prices are not generally reported are valued at the mean between the
last bid and asked prices. Securities for which no market quotations are readily
available (including those the trading of which has been suspended) will be
valued at fair value as determined in good faith by the Board of Trustees,
although the actual computations may be made by persons acting pursuant to the
direction of the Board of Trustees.
The Fund's 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 payments 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 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
a third party to receive payments subsequent to opening an account must be
accompanied by a signature guarantee.
Any income dividends or capital gains distributions on shares under the SWP
will be credited to the SWP account on the payment date in full and fractional
shares at the net asset value per share in effect on the record date.
SWP payments are made from the proceeds of the redemption of shares
deposited under the SWP in a SWP account. To the extent that such redemptions
for periodic withdrawals exceed dividend income reinvested in the SWP account,
such redemptions will reduce and may ultimately exhaust the number of shares
deposited in the SWP account. Redemptions are 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 INTENT
A Letter of Intent (an "LOI") may be established by completing the LOI
section of the Account Application. When you sign the Account Application, you
agree to irrevocably appoint PSC your attorney-in-fact to surrender for
redemption any or all shares held in escrow with full power of substitution. An
LOI is not a binding obligation upon the investor to purchase, or the Fund to
sell, the full amount indicated.
If the total purchases, less redemptions, exceed the amount specified
under the LOI and are in an amount which would qualify for a further quantity
discount, all transactions will be recomputed on the expiration date of the LOI
to effect the lower sales charge. Any difference in the sales charge resulting
from such recomputation will be either delivered to you in cash or invested in
additional shares at the lower sales charge. The dealer, by signing the Account
Application, agrees to return to PFD, as part of such retroactive adjustment,
the excess of the commission previously reallowed or paid to the dealer over
that which is applicable to the actual amount of the total purchases under the
LOI.
If the total purchases, less redemptions, are less than the amount
specified under the LOI, you must remit to PFD any difference between the sales
charge on the amount actually purchased and the amount originally specified in
the LOI section of the Account Application. When the difference is paid, the
shares held in escrow will be deposited to your account. If you do not pay the
difference in sales charge within 20 days after written request from PFD or your
dealer, PSC, after receiving instructions from PFD, will redeem the appropriate
number of shares held in escrow to realize the difference and release any
excess. See "How to Buy Fund Shares - Letter of Intent" in the Prospectus for
more information.
16. INVESTMENT RESULTS
One of the primary methods used to measure the performance of a class of
the Fund is "total return." Total return will normally represent the percentage
change in value of an account, or of a hypothetical investment in a class of the
Fund, over any period up to the lifetime of that class of the Fund. Total return
calculations will usually assume the reinvestment of all dividends and capital
gains distributions and will be expressed as a percentage increase or decrease
from an initial value, for the entire period or for one or more specified
periods within the entire period. Total return percentages for periods of less
than one year will not 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 each class of Fund 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:
n
P(1+T) = 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%.
In determining the average annual total return (calculated as provided
above), recurring fees, if any, that are charged to all shareholder accounts of
a particular class of shares are taken into consideration. For any account fees
that vary with the size of the account, the account fee used for purposes of the
above computation is assumed to be the fee that would be charged to the class'
mean account size.
The average annual total returns for each Class of shares of the Fund for
the specified periods ended April 30, 1998 were as follows:
1 YEAR LIFE OF FUND
Class A Shares (10.29)% (13.20)%*
Class B Shares (9.03)% (13.20)*
Class C Shares (5.26)% (5.94)%**
* 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 indices or indicators of
economic activity, e.g., inflation or interest rates. Performance rankings and
listings reported in newspapers or national business and financial publications,
such as BARRON'S, BUSINESS WEEK, CONSUMER'S DIGEST, CONSUMER REPORTS, FINANCIAL
WORLD, FORBES, FORTUNE, INVESTORS BUSINESS DAILY, KIPLINGER'S PERSONAL FINANCE
MAGAZINE, MONEY MAGAZINE, THE NEW YORK TIMES, SMART MONEY, USA TODAY, U.S. NEWS
AND WORLD REPORT, THE WALL STREET JOURNAL and WORTH may also be cited (if the
Fund is listed in any such publication) or used for comparison, as well as
performance listings and rankings from various other sources including BLOOMBERG
FINANCIAL SYSTEMS, CDA/WIESENBERGER INVESTMENT COMPANIES SERVICE, DONOGHUE'S
MUTUAL FUND ALMANAC, INVESTMENT COMPANY DATA, INC., JOHNSON'S CHARTS, KANON
BLOCH CARRE & CO., MICROPAL, INC., MORNINGSTAR, INC., SCHABACKER INVESTMENT
MANAGEMENT and TOWERS DATA SYSTEMS.
In addition, from time to time, quotations from articles from financial
publications, such as those listed above, may be used in advertisements, in
sales literature or in reports to shareholders of the Fund.
The Fund may also present, from time to time, historical information
depicting the value of a hypothetical account in one or more classes of the Fund
since the Fund's inception.
In presenting investment results, the Fund may also include references to
certain financial planning concepts, including (a) an investor's need to
evaluate his financial assets and obligations to determine how much to invest;
(b) his need to analyze the objectives of various investments to determine where
to invest; and (c) his need to analyze his time frame for future capital needs
to determine how long to invest. The investor controls these three factors, all
of which affect the use of investments in building assets.
AUTOMATED INFORMATION LINE
FactFoneSM, Pioneer's 24-hour automated information line, allows
shareholders to dial toll-free 1-800-225-4321 and hear recorded fund
information, including:
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 Pioneer
mutual funds.
Yields are calculated in accordance with standard formulas mandated by the SEC.
In addition, by using a personal identification number ("PIN"),
shareholders may enter purchases, exchanges and redemptions, access their
account balances 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
performanceand include the maximum applicable sales charge. A shareholder's
actual yield and total return will vary with changing market conditions. The
value of Class A, Class B and Class C shares (except for Pioneer Cash Reserves
Fund, which seeks to maintain a stable $1.00 share price) will also vary and
such shares may be worth more or less at redemption than their original cost.
17. FINANCIAL STATEMENTS
The Fund's Annual Report, filed with the SEC on December 24, 1997
(Accession No. 0000921447-97-000009) and in the Fund's April 30, 1998 Semiannual
Report to Shareholders (Accession No. 0000921447-98-000007) , are incorporated
by reference into this Statement of Additional Information. The financial
statements in the Fund's Annual and Semiannual Reports, including the financial
highlights, for the periods ended October 31, 1997 and April 30, 1998,
respectively, included or incorporated by reference into the Prospectus for the
Fund's Class A, Class B and Class C shares and this Statement of Additional
Information, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect to the financial
statements, and are included in reliance upon the authority of Arthur Andersen
LLP as experts in accounting and auditing in giving their reports.
<PAGE>
APPENDIX A
DESCRIPTION OF SHORT-TERM DEBT AND CORPORATE BOND RATINGS1 [superscript]
MOODY'S INVESTORS SERVICE, INC. SHORT-TERM PRIME RATING SYSTEM - TAXABLE
DEBT AND DEPOSITS GLOBALLY
Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually senior debt obligations. These obligations have an original maturity
not exceeding one year, unless explicitly noted.
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:
PRIME-1: Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
Leading market positions in well-established industries.
High rates of return on funds employed.
Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
Well-established access to a range of financial markets and assured
sources of alternate liquidity.
PRIME-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the Characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
PRIME-3: Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating
categories.
Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating on
a bank's ability to repay senior obligations extends only to branches located in
countries which carry a Moody's Sovereign Rating for Bank Deposits.
_______________________________
1 [superscript] The ratings indicated herein are believed to be the most
recent ratings available at the date of this Statement of Additional Information
for the securities listed. Ratings are generally given to securities at the time
of issuance. While the rating agencies may from time to time revise such
ratings, they undertake no obligation to do so, and the ratings indicated do not
necessarily represent ratings which will be given to these securities on the
date of the Fund's fiscal year-end.
<PAGE>
Such branch obligations are rated at the lower of the bank's rating or
Moody's Sovereign Rating for Bank Deposits for the country in which the branch
is located.
When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings do
not incorporate an opinion as to whether payment of the obligation will be
affected by actions of the government controlling the currency of denomination.
In addition, risks associated with bilateral conflicts between an investor's
home country and either the issuer's home country or the country where an
issuer's branch is located are not incorporated into Moody's short-term debt
ratings.
If an issuer represents to Moody's that its short-term debt obligations are
supported by the credit of another entity or entities, then the name or names of
such supporting entity or entities are listed within the parenthesis beneath the
name of the issuer, or there is a footnote referring the reader to another page
for the name or names of the supporting entity or entities. In assigning ratings
to such issuers, Moody's evaluates the financial strength of the affiliated
corporations, commercial banks, insurance companies, foreign governments or
other entities, but only as one factor in the total rating assessment.
MOODY'S CORPORATE BOND RATINGS
AAA: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A posses many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA: Bonds which are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
<PAGE>
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.
CA: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
NOTE: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicated that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicated
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.
STANDARD & POOR'S SHORT-TERM ISSUE CREDIT RATINGS
A-1: A short-term obligation rated A-1 is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity to
meet its financial commitment on these obligations is extremely strong.
A-2: A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.
A-3: A short-term obligation rated A-3 exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
B: A short-term obligation rated B is regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
C: A short-term obligation rated C is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.
D: A short-term obligation rated D is in payment default. The D rating category
is used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
<PAGE>
STANDARD & POOR'S CORPORATE BOND RATINGS
AAA: An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA: An obligation rated AA differs from the highest-rated obligations only in
a small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A: An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB: An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
Obligations rated BB, B, CCC, CC, and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and C
the highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.
BB: An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to the
obligor's capacity to meet its financial commitment on the obligation.
B: An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.
CCC: An obligation rated CCC is currently vulnerable to nonpayment and is
dependent upon favorable business, financial and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial or economic conditions, the obligor is not likely to
have the capacity to meet its financial commitment on the obligation.
CC: An obligation rated CC is currently highly vulnerable to nonpayment.
C: The C rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.
D: An obligation rated D is in payment default. The D rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments are jeopardized.
<PAGE>
PLUS (+) OR MINUS (-): The rating from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within the major categories.
R: This symbol is attached to the ratings of instruments with significant
noncredit risks. It highlights risks to principal or volatility of expected
returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk, such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.
<PAGE>
APPENDIX B
PIONEER IND0-ASIA 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
</TABLE>
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
<TABLE>
<CAPTION>
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
12/31/97 $5,164 $0 $9 $5,173
</TABLE>
<PAGE>
PIONEER INDO-ASIA 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
</TABLE>
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE IF REDEEMED
DATE FROM FROM CAPITAL FROM TOTAL CDSC
INVESTMENT GAINS REINVESTED DIVIDENDS VALUE PERCENTAGE
REINVESTED
<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%
12/31/97 $5,339 $0 $3 $160 $5,182 3.00%
</TABLE>
<PAGE>
PIONEER INDO-ASIA 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
</TABLE>
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
<TABLE>
<CAPTION>
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%
12/31/97 $7,796 $0 $0 $0 $0 0.00%
</TABLE>
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
The following securities indices are well known, unmanaged measures of market
performance. Advertisements and sales literature for the Fund may refer to these
indices or may present comparisons between the performance of the Fund and one
or more of the indices. Other indices may also be used, if appropriate. The
indices are not available for direct investment. The data presented are not
meant to be indicative of the performance of the Fund, do not reflect past
performance and do not guarantee future results.
S&P 500
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P 500 includes 500 of
the largest stocks (in terms of stock market value) in the U.S.
DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of stocks of 30 blue chip
companies widely held by individuals and institutional investors. The 30 stocks
represent about a fifth of the $8 trillion-plus market value of all U.S. stocks
and about a fourth of the value of stocks listed on the New York Stock Exchange
(NYSE).
U.S. SMALL STOCK INDEX
This index is a market value weighted index of the ninth and tenth deciles of
the NYSE, plus stocks listed on the American Stock Exchange and over the counter
with the same or less capitalization as the upper bound of the NYSE ninth
decile.
U.S. INFLATION
THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S. Department of Labor, Bureau of Labor Statistics, Washington, DC.
S&P/BARRA INDEXES
The S&P/BARRA GROWTH AND VALUE INDEXES are constructed by dividing the stocks in
the S&P 500 according to price-to-book ratios. The GROWTH INDEX contains stocks
with higher price-to-book ratios, and the VALUE INDEX contains stocks with lower
price-to-book ratios. Both indexes are market capitalization weighted.
MERRILL LYNCH MICRO-CAP INDEX
The MERRILL LYNCH MICRO-CAP INDEX represents the performance of 2,036 stocks
ranging in market capitalization from $50 million to $220 million. Index returns
are calculated monthly.
<PAGE>
LONG-TERM U.S. GOVERNMENT BONDS
The total returns on long-term government bonds after 1977 are constructed with
data from The Wall Street Journal and are calculated as the change in the flat
price or and-interest price. From 1926 to 1976, data are obtained from the
government bond file at the Center for Research in Security Prices (CRSP),
Graduate School of Business, University of Chicago. Each year, a one-bond
portfolio with a term of approximately 20 years and a reasonably current coupon
was used and whose returns did not reflect potential tax benefits, impaired
negotiability or special redemption or call privileges. Where callable bonds had
to be used, the term of the bond was assumed to be a simple average of the
maturity and first call dates minus the current date. The bond was "held" for
the calendar year and returns were computed.
INTERMEDIATE-TERM U.S. GOVERNMENT BONDS
Total returns of intermediate-term government bonds after 1987 are calculated
from The Wall Street Journal prices, using the change in flat price. Returns
from 1934 to 1986 are obtained from the CRSP government bond file.
Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than five years, and this bond is
"held" for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934 to 1942, almost all bonds
with maturities near five years were partially or fully tax-exempt and were
selected using the rules described above. Personal tax rates were generally low
in that period, so that yields on tax-exempt bonds were similar to yields on
taxable bonds. From 1926 to 1933, there are few bonds suitable for construction
of a series with a five-year maturity. For this period, five-year bond yield
estimates are used.
MORGAN STANLEY CAPITAL INTERNATIONAL ("MSCI")
These indices are in US dollar terms with gross dividends reinvested. MSCI All
Country indices represent both the developed and the emerging markets for a
particular region. These indices are unmanaged. The free indices exclude shares
which are not readily purchased by non-local investors. MSCI's international
indices are based on the share prices of approximately 1,700 companies listed on
stock exchanges in the 22 countries that make up the MSCI World Index. MSCI's
emerging market indices are comprised of approximately 1000 stocks from 26
countries.
Countries in the MSCI EAFE INDEX are: Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia,
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland and
United Kingdom.
Countries in the MSCI EMERGING MARKETS FREE INDEX are: Argentina, Brazil, Chile,
China Free, Czech Republic, Colombia, Greece, Hungary, India, Indonesia Free,
Israel, Jordan, Korea (at 50%), Malaysia Free, Mexico Free, Pakistan, Peru,
Philippines Free, Poland, Portugal, South Africa, Sri Lanka, Taiwan (at 50%),
Thailand Free, Turkey and Venezuela.
MSCI ALL COUNTRY (AC) ASIA FREE EX JAPAN: This index is made up of the following
12 countries: China Free, Hong Kong, India, Indonesia Free, Korea @50%, Malaysia
Free, Pakistan, Philippines Free, Singapore Free, Sri Lanka, Taiwan @50% and
Thailand Free.
MSCI ALL COUNTRY (AC) ASIA PACIFIC FREE EX JAPAN: This index is made up of the
following 14 countries: Australia, China Free, Hong Kong, India, Indonesia Free,
Korea @50%, Malaysia Free, New Zealand, Pakistan, Philippines Free, Singapore
Free, Sri Lanka, Taiwan @50% and Thailand Free.
6-MONTH CDS
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
<PAGE>
LONG-TERM U.S. CORPORATE BONDS
Since 1969, corporate bond total returns are represented by the Salomon Brothers
Long-Term High-Grade Corporate Bond Index. As most large corporate bond
transactions take place over the counter, a major dealer is the natural source
of these data. The index includes nearly all Aaa- and Aa-rated bonds with at
least 10 years to maturity. If a bond is downgraded during a particular month,
its return for the month is included in the index before removing the bond from
future portfolios.
From 1926 to 1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946 to 1968,
Ibbotson and Sinquefield backdated the Salomon Brothers' index, using Salomon
Brothers' monthly yield data with a methodology similar to that used by Salomon
Brothers for 1969 to 1995. Capital appreciation returns were calculated from
yields assuming (at the beginning of each monthly holding period) a 20-year
maturity, a bond price equal to par, and a coupon equal to the
beginning-of-period yield. For the period 1926 to 1945, Standard & Poor's
monthly high-grade corporate composite yield data were used, assuming a 4%
coupon and a 20-year maturity. The conventional present-value formula for bond
price for the beginning and end-of-month prices was used. (This formula is
presented in Ross, Stephen A., and Westerfield, Randolph W., Corporate Finance,
Times Mirror/Mosby, St. Louis, 1990, p. 97 ["Level-Coupon Bonds"].) The monthly
income return was assumed to be one-twelfth the coupon.
U.S. (30-DAY) TREASURY BILLS
For the U.S. TREASURY BILL INDEX, data from The Wall Street Journal are used
after 1977; the CRSP government bond file is the source until 1976. Each month a
one-bill portfolio containing the shortest-term bill having not less than one
month to maturity is constructed. (The bill's original term to maturity is not
relevant.) To measure holding period returns for the one-bill portfolio, the
bill is priced as of the last trading day of the previous month-end and as of
the last trading day of the current month.
NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT TRUSTS ("NAREIT")EQUITY REIT
INDEX All of the data are based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMEX and NASDAQ. The data are
market-value-weighted. Prior to 1987 REITs were added to the index the January
following their listing. Since 1987 newly formed or listed REITs are added to
the total shares outstanding figure in the month that the shares are issued.
Only common shares issued by the REIT are included in the index. The total
return calculation is based upon the weighting at the beginning of the period.
Only those REITs listed for the entire period are used in the total return
calculation. Dividends are included in the month based upon their payment date.
There is no smoothing of income. Liquidating dividends, whether full or partial,
are treated as income.
<PAGE>
RUSSELL U.S. EQUITY INDEXES
The RUSSELL 3000AE INDEX (the "Russell 3000") is comprised of the 3,000 largest
U.S. companies as determined by market capitalization representing approximately
98% of the U.S. equity market. The average market capitalization is
approximately $2.8 billion. The RUSSELL 2500TM INDEX measures performance of the
2,500 smallest companies in the Russell 3000. The average market capitalization
is approximately $733.4 million, and the largest company in the index has an
approximate market capitalization of $2.9 billion. The RUSSELL 2000AE INDEX
measures performance of the 2,000 smallest stocks in the Russell 3000; the
largest company in the index has a market capitalization of approximately $1.1
billion. The RUSSELL 1000AE INDEX (the "Russell 1000") measures the performance
of the 1,000 largest companies in the Russell 3000. The average market
capitalization is approximately $7.6 billion. The smallest company in the index
has an approximate market capitalization of $1.1 billion. The RUSSELL MIDCAPTM
INDEX measures performance of the 800 smallest companies in the Russell 1000.
The largest company in the index has an approximate market capitalization of
$8.0 billion.
The Russell indexes are reconstituted annually as of July 1, based on May 31
market capitalization rankings.
WILSHIRE REAL ESTATE SECURITIES INDEX
The WILSHIRE REAL ESTATE SECURITIES INDEX is a market capitalization weighted
index of 120 publicly traded real estate securities, such as REITs, real estate
operating companies ("REOCs") and partnerships.
The index contains performance data on five major categories of property:
office, retail, industrial, apartment and miscellaneous. The companies in the
index are 91.66% equity and hybrid REITs and 8.33% REOCs.
STANDARD & POOR'S MIDCAP 400 INDEX
The S&P 400 is a market-capitalization-weighted index. The performance data for
the index were calculated by taking the stocks presently in the index and
tracking them backwards in time as long as there were prices reported. No
attempt was made to determine what stocks "might have been" in the S&P 400 five
or ten years ago had it existed. Dividends are reinvested on a monthly basis
prior to June 30, 1991, and are reinvested daily thereafter.
LIPPER BALANCED FUNDS INDEX
This index represents equally weighted performance, adjusted for capital gains
distributions and income dividends, of approximately 30 of the largest funds
with a primary objective of conserving principal by maintaining at all times a
balanced portfolio of stocks and bonds. Typically, the stock/bond ratio ranges
around 60%/40%.
BANK SAVINGS ACCOUNT
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963 to 1987; and The Wall Street Journal thereafter.
Sources: Ibbotson Associates, Towers Data Systems, Lipper Analytical
Services, Inc. and PGI
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
DOW S&P/ S&P/
S&P JONES U.S. SMALL BARRA BARRA MERRILL LYNCH
500 INDUSTRIAL STOCK U.S. 500 500 MICRO-CAP
AVERAGE INDEX INFLATION GROWTH VALUE INDEX
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 11.62 N/A 0.28 -1.49 N/A N/A N/A
Dec 1927 37.49 N/A 22.10 -2.08 N/A N/A N/A
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A N/A
Dec 1931 -43.34 -49.03 -49.75 -9.52 N/A N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A N/A
Dec 1933 53.99 73.71 142.87 0.51 N/A N/A N/A
Dec 1934 -1.44 8.07 24.22 2.03 N/A N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A N/A
Dec 1942 20.34 14.13 44.51 9.29 N/A N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A N/A
</TABLE>
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
DOW S&P/ S&P/
S&P JONES U.S. SMALL BARRA 500 BARRA MERRILL LYNCH
500 INDUSTRIAL STOCK U.S. GROWTH 500 MICRO-CAP
AVERAGE INDEX INFLATION VALUE INDEX
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A N/A
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38 N/A
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93 N/A
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57 N/A
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16 27.76
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16 43.18
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59 32.32
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02 9.18
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04 33.62
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89 42.44
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52 -14.97
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68 22.89
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67 3.45
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68 -13.84
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67 22.76
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13 8.06
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85 -29.55
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56 57.44
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53 36.62
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60 31.32
Dec 1994 1.31 5.06 3.11 2.67 3.13 -0.64 1.81
Dec 1995 37.43 36.84 34.46 2.54 38.13 36.99 30.70
Dec 1996 23.07 28.84 17.62 3.32 23.96 21.99 13.88
Dec 1997 33.36 24.88 22.78 1.92 36.52 29.98 24.61
</TABLE>
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
LONG- INTERMEDIATE- MSCI LONG-
TERM TERM U.S. EAFE 6- TERM U.S. U.S.
U.S. GOV'T GOVERNMENT (Net of MONTH CORPORATE T-BILL
BONDS BONDS Taxes) CDS BONDS (30-Day)
<S> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A
Dec 1926 7.77 5.38 N/A N/A 7.37 3.27
Dec 1927 8.93 4.52 N/A N/A 7.44 3.12
Dec 1928 0.10 0.92 N/A N/A 2.84 3.56
Dec 1929 3.42 6.01 N/A N/A 3.27 4.75
Dec 1930 4.66 6.72 N/A N/A 7.98 2.41
Dec 1931 -5.31 -2.32 N/A N/A -1.85 1.07
Dec 1932 16.84 8.81 N/A N/A 10.82 0.96
Dec 1933 -0.07 1.83 N/A N/A 10.38 0.30
Dec 1934 10.03 9.00 N/A N/A 13.84 0.16
Dec 1935 4.98 7.01 N/A N/A 9.61 0.17
Dec 1936 7.52 3.06 N/A N/A 6.74 0.18
Dec 1937 0.23 1.56 N/A N/A 2.75 0.31
Dec 1938 5.53 6.23 N/A N/A 6.13 -0.02
Dec 1939 5.94 4.52 N/A N/A 3.97 0.02
Dec 1940 6.09 2.96 N/A N/A 3.39 0.00
Dec 1941 0.93 0.50 N/A N/A 2.73 0.06
Dec 1942 3.22 1.94 N/A N/A 2.60 0.27
Dec 1943 2.08 2.81 N/A N/A 2.83 0.35
Dec 1944 2.81 1.80 N/A N/A 4.73 0.33
Dec 1945 10.73 2.22 N/A N/A 4.08 0.33
Dec 1946 -0.10 1.00 N/A N/A 1.72 0.35
Dec 1947 -2.62 0.91 N/A N/A -2.34 0.50
Dec 1948 3.40 1.85 N/A N/A 4.14 0.81
Dec 1949 6.45 2.32 N/A N/A 3.31 1.10
Dec 1950 0.06 0.70 N/A N/A 2.12 1.20
Dec 1951 -3.93 0.36 N/A N/A -2.69 1.49
Dec 1952 1.16 1.63 N/A N/A 3.52 1.66
Dec 1953 3.64 3.23 N/A N/A 3.41 1.82
Dec 1954 7.19 2.68 N/A N/A 5.39 0.86
Dec 1955 -1.29 -0.65 N/A N/A 0.48 1.57
Dec 1956 -5.59 -0.42 N/A N/A -6.81 2.46
Dec 1957 7.46 7.84 N/A N/A 8.71 3.14
Dec 1958 -6.09 -1.29 N/A N/A -2.22 1.54
Dec 1959 -2.26 -0.39 N/A N/A -0.97 2.95
Dec 1960 13.78 11.76 N/A N/A 9.07 2.66
</TABLE>
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
LONG- INTERMEDIATE- MSCI LONG-
TERM TERM U.S. EAFE 6- TERM U.S. U.S.
U.S. GOV'T GOVERNMENT (Net of MONTH CORPORATE T-BILL
BONDS BONDS Taxes) CDS BONDS (30-Day)
<S> <C> <C> <C> <C> <C> <C>
Dec 1961 0.97 1.85 N/A N/A 4.82 2.13
Dec 1962 6.89 5.56 N/A N/A 7.95 2.73
Dec 1963 1.21 1.64 N/A N/A 2.19 3.12
Dec 1964 3.51 4.04 N/A 4.18 4.77 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 3.93
Dec 1966 3.65 4.69 N/A 5.76 0.20 4.76
Dec 1967 -9.18 1.01 N/A 5.48 -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 29.10 -1.86 12.18 42.56 10.54
Dec 1983 0.65 7.41 23.69 9.65 6.26 8.80
Dec 1984 15.48 14.02 7.38 10.65 16.86 9.85
Dec 1985 30.97 20.33 56.16 7.82 30.09 7.72
Dec 1986 24.53 15.14 69.44 6.30 19.85 6.16
Dec 1987 -2.71 2.90 24.63 6.58 -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 19.30 15.46 12.13 4.95 19.89 5.60
Dec 1992 8.05 7.19 -12.17 3.27 9.39 3.51
Dec 1993 18.24 11.24 32.56 2.88 13.19 2.90
Dec 1994 -7.77 -5.14 7.78 5.40 -5.76 3.90
Dec 1995 31.67 16.80 11.21 5.21 27.20 5.60
Dec 1996 -0.93 2.10 6.05 5.21 1.40 5.21
Dec 1997 15.85 8.38 1.78 5.71 12.95 5.26
</TABLE>
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
NAREIT LIPPER MSCI
EQUITY RUSSELL WILSHIRE BALANCED EMERGING BANK
REIT 2000 REAL ESTATE S&P FUND MARKETS SAVINGS
INDEX INDEX SECURITIES 400 INDEX FREE INDEX ACCOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 N/A N/A N/A N/A N/A N/A N/A
Dec 1927 N/A N/A N/A N/A N/A N/A N/A
Dec 1928 N/A N/A N/A N/A N/A N/A N/A
Dec 1929 N/A N/A N/A N/A N/A N/A N/A
Dec 1930 N/A N/A N/A N/A N/A N/A 5.30
Dec 1931 N/A N/A N/A N/A N/A N/A 5.10
Dec 1932 N/A N/A N/A N/A N/A N/A 4.10
Dec 1933 N/A N/A N/A N/A N/A N/A 3.40
Dec 1934 N/A N/A N/A N/A N/A N/A 3.50
Dec 1935 N/A N/A N/A N/A N/A N/A 3.10
Dec 1936 N/A N/A N/A N/A N/A N/A 3.20
Dec 1937 N/A N/A N/A N/A N/A N/A 3.50
Dec 1938 N/A N/A N/A N/A N/A N/A 3.50
Dec 1939 N/A N/A N/A N/A N/A N/A 3.40
Dec 1940 N/A N/A N/A N/A N/A N/A 3.30
Dec 1941 N/A N/A N/A N/A N/A N/A 3.10
Dec 1942 N/A N/A N/A N/A N/A N/A 3.00
Dec 1943 N/A N/A N/A N/A N/A N/A 2.90
Dec 1944 N/A N/A N/A N/A N/A N/A 2.80
Dec 1945 N/A N/A N/A N/A N/A N/A 2.50
Dec 1946 N/A N/A N/A N/A N/A N/A 2.20
Dec 1947 N/A N/A N/A N/A N/A N/A 2.30
Dec 1948 N/A N/A N/A N/A N/A N/A 2.30
Dec 1949 N/A N/A N/A N/A N/A N/A 2.40
Dec 1950 N/A N/A N/A N/A N/A N/A 2.50
Dec 1951 N/A N/A N/A N/A N/A N/A 2.60
Dec 1952 N/A N/A N/A N/A N/A N/A 2.70
Dec 1953 N/A N/A N/A N/A N/A N/A 2.80
Dec 1954 N/A N/A N/A N/A N/A N/A 2.90
Dec 1955 N/A N/A N/A N/A N/A N/A 2.90
Dec 1956 N/A N/A N/A N/A N/A N/A 3.00
Dec 1957 N/A N/A N/A N/A N/A N/A 3.30
Dec 1958 N/A N/A N/A N/A N/A N/A 3.38
Dec 1959 N/A N/A N/A N/A N/A N/A 3.53
Dec 1960 N/A N/A N/A N/A 5.77 N/A 3.86
Dec 1961 N/A N/A N/A N/A 20.59 N/A 3.90
</TABLE>
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<CAPTION>
NAREIT LIPPER MSCI
EQUITY RUSSELL WILSHIRE BALANCED EMERGING BANK
REIT 2000 REAL ESTATE S&P FUND MARKETS SAVINGS
INDEX INDEX SECURITIES 400 INDEX FREE INDEX ACCOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1962 N/A N/A N/A N/A -6.80 N/A 4.08
Dec 1963 N/A N/A N/A N/A 13.10 N/A 4.17
Dec 1964 N/A N/A N/A N/A 12.36 N/A 4.19
Dec 1965 N/A N/A N/A N/A 9.80 N/A 4.23
Dec 1966 N/A N/A N/A N/A -5.86 N/A 4.45
Dec 1967 N/A N/A N/A N/A 15.09 N/A 4.67
Dec 1968 N/A N/A N/A N/A 13.97 N/A 4.68
Dec 1969 N/A N/A N/A N/A -9.01 N/A 4.80
Dec 1970 N/A N/A N/A N/A 5.62 N/A 5.14
Dec 1971 N/A N/A N/A N/A 13.90 N/A 5.30
Dec 1972 8.01 N/A N/A N/A 11.13 N/A 5.37
Dec 1973 -15.52 N/A N/A N/A -12.24 N/A 5.51
Dec 1974 -21.40 N/A N/A N/A -18.71 N/A 5.96
Dec 1975 19.30 N/A N/A N/A 27.10 N/A 6.21
Dec 1976 47.59 N/A N/A N/A 26.03 N/A 6.23
Dec 1977 22.42 N/A N/A N/A -0.72 N/A 6.39
Dec 1978 10.34 N/A 13.04 N/A 4.80 N/A 6.56
Dec 1979 35.86 43.09 70.81 N/A 14.67 N/A 7.29
Dec 1980 24.37 38.58 22.08 N/A 19.70 N/A 8.78
Dec 1981 6.00 2.03 7.18 N/A 1.86 N/A 10.71
Dec 1982 21.60 24.95 24.47 22.68 30.63 N/A 11.19
Dec 1983 30.64 29.13 27.61 26.10 17.44 N/A 9.71
Dec 1984 20.93 -7.30 20.64 1.18 7.46 N/A 9.92
Dec 1985 19.10 31.05 22.20 35.58 29.83 N/A 9.02
Dec 1986 19.16 5.68 20.30 16.21 18.43 N/A 7.84
Dec 1987 -3.64 -8.77 -7.86 -2.03 4.13 N/A 6.92
Dec 1988 13.49 24.89 24.18 20.87 11.18 40.43 7.20
Dec 1989 8.84 16.24 2.37 35.54 19.70 64.96 7.91
Dec 1990 -15.35 -19.51 -33.46 -5.12 0.66 -10.55 7.80
Dec 1991 35.70 46.05 20.03 50.10 25.83 59.91 4.61
Dec 1992 14.59 18.41 7.36 11.91 7.46 11.40 2.89
Dec 1993 19.65 18.91 15.24 13.96 11.95 74.83 2.73
Dec 1994 3.17 -1.82 1.64 -3.57 -2.05 -7.32 4.96
Dec 1995 15.27 28.44 13.65 30.94 24.89 -5.21 5.24
Dec 1996 35.26 16.49 36.87 19.20 13.01 6.03 4.95
Dec 1997 20.29 22.36 19.80 32.26 20.05 -11.59 5.17
</TABLE>
Source: Lipper Analytical Services. Inc.
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
MSCI All Country (AC) MSCI All Country
Asia Free ex Japan (AC) Asia Pacific
Free ex Japan
- ------------------------------------------------------------
Dec 1925 N/A N/A
Dec 1926 N/A N/A
Dec 1927 N/A N/A
Dec 1928 N/A N/A
Dec 1929 N/A N/A
Dec 1930 N/A N/A
Dec 1931 N/A N/A
Dec 1932 N/A N/A
Dec 1933 N/A N/A
Dec 1934 N/A N/A
Dec 1935 N/A N/A
Dec 1936 N/A N/A
Dec 1937 N/A N/A
Dec 1938 N/A N/A
Dec 1939 N/A N/A
Dec 1940 N/A N/A
Dec 1941 N/A N/A
Dec 1942 N/A N/A
Dec 1943 N/A N/A
Dec 1944 N/A N/A
Dec 1945 N/A N/A
Dec 1946 N/A N/A
Dec 1947 N/A N/A
Dec 1948 N/A N/A
Dec 1949 N/A N/A
Dec 1950 N/A N/A
Dec 1951 N/A N/A
Dec 1952 N/A N/A
Dec 1953 N/A N/A
Dec 1954 N/A N/A
Dec 1955 N/A N/A
Dec 1956 N/A N/A
Dec 1957 N/A N/A
Dec 1958 N/A N/A
Dec 1959 N/A N/A
Dec 1960 N/A N/A
Dec 1961 N/A N/A
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
MSCI All Country (AC) MSCI All Country
Asia Free ex Japan (AC) Asia Pacific
Free ex Japan
- ------------------------------------------------------------
Dec 1962 N/A N/A
Dec 1963 N/A N/A
Dec 1964 N/A N/A
Dec 1965 N/A N/A
Dec 1966 N/A N/A
Dec 1967 N/A N/A
Dec 1968 N/A N/A
Dec 1969 N/A N/A
Dec 1970 N/A N/A
Dec 1971 N/A N/A
Dec 1972 N/A N/A
Dec 1973 N/A N/A
Dec 1974 N/A N/A
Dec 1975 N/A N/A
Dec 1976 N/A N/A
Dec 1977 N/A N/A
Dec 1978 N/A N/A
Dec 1979 N/A N/A
Dec 1980 N/A N/A
Dec 1981 N/A N/A
Dec 1982 N/A N/A
Dec 1983 N/A N/A
Dec 1984 N/A N/A
Dec 1985 N/A N/A
Dec 1986 N/A N/A
Dec 1987 N/A N/A
Dec 1988 30.00 30.45
Dec 1989 32.13 21.43
Dec 1990 -6.54 -11.86
Dec 1991 30.98 32.40
Dec 1992 21.81 9.88
Dec 1993 103.39 84.94
Dec 1994 -16.94 -12.59
Dec 1995 4.00 10.00
Dec 1996 10.05 8.08
Dec 1997 -40.31 -34.20
Source: Lipper Analytical Services. Inc
<PAGE>
APPENDIX C
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, 1997, PMC employed a professional investment staff of
58, with a combined average of 12 years experience in the financial services
industry.
Total assets of all Pioneer mutual funds at December 31, 1997, were
approximately $19.8 billion representing 1,177,148 shareholder accounts -
791,468 non-retirement accounts and 385,680 retirement accounts.
