As filed with the Securities and Exchange Commission on February 27, 1998
File Nos. 33-77472
811-08468
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
---
Pre-Effective Amendment No. __ / /
Post-Effective Amendment No. 5 / X /
---
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 7 / X /
(Check appropriate box or boxes)
PIONEER INDIA FUND
(Exact Name of Registrant as Specified in Charter)
60 State Street, Boston, Massachusetts 02109
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 742-7825
Joseph P. Barri, Hale and Dorr LLP, 60 State Street,
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
___ immediately upon filing pursuant to paragraph (b)
X on February 27, 1998 pursuant to paragraph (b)
---
___ 60 days after filing pursuant to paragraph (a)(1)
___ 75 days after filing pursuant to paragraph (a)(2)
___ on [date] pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest
(without par value)
<PAGE>
PIONEER INDIA FUND
Cross-Reference Sheet Showing Location in Prospectus and Statement of
Additional Information of Information
Required by Items of the Registration Form
FORM N-1A ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS OR STATEMENT
OF ADDITIONAL INFORMATION
1. Cover Page Prospectus - Cover Page
2. Synopsis Prospectus - Expense Information
3. Condensed Financial Information Prospectus - Financial Highlights
4. General Description of Registrant Prospectus - Cover Page; Investment
Objective and Policies; Management of
the Fund; Fund Share Alternatives;
Share Price; How to Buy Fund Shares;
How to Sell Fund Shares; How to
Exchange Fund Shares; The Fund;
Appendix A; Exhibit B
5. Management of the Fund Prospectus - Management of the Fund;
Shareholder Services
5A. Management's Discussion of Fund
Performance Not Applicable
6. Capital Stock and Other Securities Prospectus - Investment Objective and
Policies; Management of the Fund; Fund
Share Alternatives; Share Price; How to
Buy Fund Shares; How to Sell Fund
Shares; How to Exchange Fund Shares;
Dividends, Distributions and Taxation;
The Fund
7. Purchase of Securities Being
Offered Prospectus - Management of the Fund;
Distribution Plans; Fund Share
Alternatives; Share Price; How to Buy
Fund Shares; How to Sell Fund Shares;
How to Exchange Fund Shares;
Shareholder Services
8. Redemption or Repurchase Prospectus - Fund Share Alternatives;
How to Buy Fund Shares; How to Sell
Fund Shares; How to Exchange Fund
Shares; Shareholder Services
9. Pending Legal Proceedings Not Applicable
<PAGE>
10. Cover Page Statement of Additional Information -
Cover Page
11. Table of Contents Statement of Additional Information -
Cover Page
12. General Information and History Statement of Additional Information -
Description of Shares
13. Investment Objectives and Policies Statement of Additional Information -
Investment Policies, Restrictions and
Risk Factors; Appendix A
14. Management of the Fund Statement of Additional Information -
Management of the Fund
15. Control Persons and Principal
Holders of Securities Statement of Additional Information -
Management of the Fund
16. Investment Advisory and Other
Services Statement of Additional Information -
Management of the Fund; Investment
Advisers; Underwriting Agreement and
Distribution Plans; Shareholder
Servicing/Transfer Agent; Custodian;
Principal Underwriter; Independent
Public Accountant; Appendix C
17. Brokerage Allocation and Other
Practices Statement of Additional Information -
Portfolio Transactions
18. Capital Stock and Other Securities Statement of Additional Information -
Description of Shares
19. Purchase, Redemption and Pricing
of Securities Being Offered Statement of Additional Information -
Letter of Intent; Systematic Withdrawal
Plan; Determination of Net Asset Value
20. Tax Status Statement of Additional Information -
Tax Status
21. Underwriters Statement of Additional Information -
Distribution Plans; Principal
Underwriter
22. Calculation of Performance Data Statement of Additional Information -
Investment Results; Appendix B
23. Financial Statements Statement of Additional Information -
Financial Statements
<PAGE>
[PIONEER LOGO]
Pioneer India Fund
Class A, Class B and Class C Shares
Prospectus
February 27, 1998
Pioneer India Fund (the "Fund") seeks long-term growth of capital by
investing in a portfolio consisting primarily of equity securities of companies
in India. Any current income generated from these securities is incidental to
the investment objective of the Fund. The Fund is a diversified open-end
investment company designed for investors seeking to achieve long-term capital
growth. There is no assurance that the Fund will achieve its investment
objective.
Pioneering Management Corporation ("PMC") is the Fund's investment
manager. Kothari Pioneer AMC Ltd. (the "Indian Adviser") is the Fund's
investment adviser in India and, subject to PMC's supervision, is responsible
for managing the Fund's investments in the Indian securities markets. The Indian
Adviser is a joint venture between PMC and Investment Trust of India Limited
("ITI"), a corporation organized under the laws of India. ITI was established in
1946 and is one of India's leading providers of financial services. The Indian
Adviser was the first institution to establish locally-registered private sector
mutual funds in India.
Because of economic and political developments in India, both PMC and the
Indian Adviser believe that India's economy has significant potential to
experience growth in the next several years. For these reasons, PMC and the
Indian Adviser also believe that the equity securities of many companies in
India offer significant potential for long-term capital growth.
Investments in India's securities markets entail significant risks in
addition to the risks customarily associated with investing in United States
("U.S.") securities. The Fund is intended for investors who can accept the risks
associated with its investments and may not be suitable for all investors. See
"Investment Objective and Policies--Risk Factors" for a discussion of these
risks. Because the Fund invests primarily in securities of companies in India,
the Fund is not intended to be a complete investment program.
Fund returns and share prices fluctuate and the value of your account upon
redemption may be more or less than your purchase price. Shares in the Fund are
not deposits or obligations of, or guaranteed or endorsed by, any bank or other
depository institution, and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other government agency.
Shares of the Fund involve investment risks, including the possible loss of some
or all of the principal investment.
This Prospectus provides information about the Fund that you should know
before investing. Please read and retain it for your future reference. More
information about the Fund is included in the Statement of Additional
Information also dated February 27, 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. Additional information about the Fund
has been filed with the Securities and Exchange Commission (the "SEC") and is
available upon request and without charge by calling 1-800-225-6292 or through
the SEC's Internet web site (http://www.sec.gov).
TABLE OF CONTENTS PAGE
-------------------------------------------------------- -----
I. EXPENSE INFORMATION .................................... 2
II. FINANCIAL HIGHLIGHTS ................................... 3
III. INVESTMENT OBJECTIVE AND POLICIES ...................... 4
IV. MANAGEMENT OF THE FUND ................................. 9
V. FUND SHARE ALTERNATIVES ................................ 10
VI. SHARE PRICE ............................................ 11
VII. HOW TO BUY FUND SHARES ................................. 11
VIII. HOW TO SELL FUND SHARES ................................ 15
IX. HOW TO EXCHANGE FUND SHARES ............................ 16
X. DISTRIBUTION PLANS ..................................... 16
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION .................. 17
XII. SHAREHOLDER SERVICES ................................... 18
Account and Confirmation Statements ................... 18
Additional Investments ................................ 19
Automatic Investment Plans ............................ 19
Financial Reports and Tax Information ................. 19
Distribution Options .................................. 19
Directed Dividends .................................... 19
Direct Deposit ........................................ 19
Voluntary Tax Withholding ............................. 19
Telephone Transactions and Related Liabilities ........ 19
FactFoneSM ............................................ 20
Retirement Plans ...................................... 20
Telecommunications Device for the Deaf (TDD) .......... 20
Systematic Withdrawal Plans ........................... 20
Reinstatement Privilege (Class A Shares Only) ......... 20
XIII. THE FUND ............................................... 20
XIV. INVESTMENT RESULTS ..................................... 21
APPENDIX A: India ...................................... 21
APPENDIX B: Certain Investment Practices ............... 24
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
I. EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses that
you, as a shareholder, will bear directly or indirectly when you invest in the
Fund. The table reflects annual operating expenses based on actual expenses
incurred for the fiscal period ended October 31, 1997.
<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) ....... 2.01% 1.86% 1.78%
====== ===== =====
Total Operating Expenses
(after fee and expense reductions)(3) .......... 2.25% 2.86% 2.78%
====== ===== =====
</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) PMC has agreed not to impose all or a portion of its management fee and to
make other arrangements, if necessary, to limit the Class A share operating
expenses of the Fund to 2.25% of the Fund's average daily net assets
attributable to Class A shares. The portion of Fund-wide expenses
attributable to Class B and Class C shares will be reduced only to the
extent such expenses were reduced for the Class A shares of the Fund. This
agreement is voluntary and temporary and may be revised or terminated by
PMC at any time.
Class A Class B Class C
--------- --------- ----------
Expenses Absent Fee and Expense Reductions
Management Fee .......................... 1.25% 1.25% 1.25%
Other Expenses .......................... 2.90% 2.74% 2.64%
Total Operating Expenses ................ 4.39% 4.99% 4.89%
Example:
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return, reinvestment of all dividends and distributions and that the
percentage amounts listed under "Annual Operating Expenses" remain the same each
year.
One Year Three Years Five Years Ten Years
---------- ------------- ------------ ----------
Class A Shares $79 $124 $171 $301
Class B Shares
--Assuming complete
redemption at end of
period $69 $119 $171 $304
--Assuming no
redemption $29 $ 89 $151 $304
Class C shares**
--Assuming complete
redemption at end
of period $38 $ 86 $147 $311
--Assuming no
redemption $28 $ 86 $147 $311
- --------------------
*Class B shares convert to Class A shares eight years after purchase;
therefore, Class A share expenses are used after year eight.
**Class C shares redeemed during the first year after purchase are subject to a
1% CDSC.
The example is designed for information purposes only, and should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and return vary from year to year and may be higher or lower than those
shown.
For further information regarding management fees, 12b-1 fees and other
expenses of the Fund, see "Management of the Fund," "Distribution Plans" and
"How to Buy Fund Shares" in this Prospectus and "Management of the Fund,"
"Principal Underwriter" and "Distribution Plans" in the Statement of Additional
Information. The Fund's payment of a 12b-1 fee may result in long-term
shareholders paying more than the economic equivalent of the maximum initial
sales charge permitted under the Conduct Rules of the National Association of
Securities Dealers, Inc.
The maximum initial sales charge is reduced on purchases of specified
larger amounts of Class A shares and the value of shares owned in other Pioneer
mutual funds is taken into account in determining the applicable initial sales
charge. See "How to Buy Fund Shares." No sales charge is applied to exchanges of
shares of the Fund for shares of other publicly available Pioneer mutual funds.
See "How to Exchange Fund Shares."
2
<PAGE>
II. FINANCIAL HIGHLIGHTS
The following information has been audited by Arthur Andersen LLP,
independent public accountants. Arthur Andersen LLP's report on the Fund's
audited financial statements as of October 31, 1997 appears in the Fund's Annual
Report which is 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. The
Annual Report includes more information about the Fund's performance and is
available free of charge by calling Shareholder Services at 1-800-225-6292.
Pioneer India Fund
Selected Data for a Class A Share Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
June 23, 1994
For the Year Ended October 31, (Commencement
------------------------------------- of Operations) to
1997 1996 1995 October 31, 1994+
--------- --------- ------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ......................... $6.93 $8.47 $11.28 $11.50
Increase (decrease) from investment operations:
Net investment income (loss) ............................... $(0.01) $0.03 $(0.01) $0.04
Net realized and unrealized gain (loss) on
investments and foreign currency related transactions ..... 0.22 (1.57) (2.78) (0.26)
------- -------- ------ -------
Net increase (decrease) from investment operations ........ $0.21 $(1.54) $(2.79) $(0.22)
Distributions to shareholders from net investment income ..... -- -- (0.02) --
Net increase (decrease) in net asset value ................... $0.21 (1.54) $(2.81) $(0.22)
------- -------- ------ -------
Net asset value, end of period ............................... $7.14 $6.93 $8.47 $11.28
======= ======== ====== =======
Total return* ................................................ 3.03% (18.18)% (24.78%) (1.91%)
Ratio of net expenses to average net assets .................. 2.29%++ 2.28%++ 2.28%++ 2.25%**
Ratio of net investment income (loss) to average net assets .. (0.09%)++ 0.32%++ (0.14%)++ 0.92%**
Portfolio turnover rate ...................................... 71% 64% 53% 109%**
Average brokerage commission rate paid per share ............. $0.0288 $0.0266
Net assets, end of period (in thousands) ..................... $9,846 $12,388 $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 ............................................... 4.39% 4.29% 4.21% 6.57%**
Net investment income (loss) ............................... (2.19)% (1.69)% (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% 2.25% 2.25%
Net investment income (loss) ............................... (0.05)% 0.35% (0.11%)
</TABLE>
Selected Data for a Class B Share Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
For the Year Ended October 31,
------------------------------------
1997 1996 1995
------- ------- ------
<S> <C> <C> <C>
Net asset value, beginning of period ........................ $6.80 $8.39 $11.24
Increase (decrease) from investment operations:
Net investment income (loss) .............................. $(0.04) $(0.03) $(0.07)
Net realized and unrealized gain (loss) on
investments and foreign currency related transactions .... 0.20 (1.56) 2.77)
------- ------- ------
Net increase (decrease) from investment operations ...... $0.16 $(1.59) $(2.84)
Distributions to shareholders from net investment income .... -- -- (0.01)
Net increase (decrease) in net asset value .................. $0.16 (1.59) $(2.85)
------- ------- ------
Net asset value, end of period .............................. $6.96 $6.80 $8.39
======= ======= ======
Total return* ............................................... 2.35% (18.95)% (25.31%)
Ratio of net expenses to average net assets ................. 2.90%++ 3.15%++ 3.01%++
Ratio of net investment income (loss) to average net assets . (0.62%)++ (0.45)%++ (0.86%)++
Portfolio turnover rate ..................................... 71% 64% 53%
Average brokerage commission rate paid per share ............ $0.0288 $0.0266
Net assets, end of period (in thousands) .................... $9,392 $8,275 $5,991
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% 4.91%
Net investment income (loss) .............................. (2.71)% (2.53)% (2.76%)
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% 2.97%
Net investment income (loss) .............................. (0.58)% (0.43)% (0.82%)
<CAPTION>
June 23, 1994
(Commencement
of Operations) to
October 31, 1994+
------------------
<S> <C>
Net asset value, beginning of period ...................... $11.50
Increase (decrease) from investment operations:
Net investment income (loss) ............................ --
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions .............. (0.26)
------
Net increase (decrease) from investment operations .... $(0.26)
Distributions to shareholders from net investment income .. --
Net increase (decrease) in net asset value ................ $(0.26)
------
Net asset value, end of period ............................ $11.24
======
Total return* ............................................. (2.26%)
Ratio of net expenses to average net assets ............... 3.21%**
Ratio of net investment income (loss) to average net assets (0.01%)**
Portfolio turnover rate ................................... 109%**
Average brokerage commission rate paid per share ..........
Net assets, end of period (in thousands) .................. $6,084
Ratios assuming no waiver of management fees and
assumption of expenses by PMC and no reduction
for fees paid indirectly:
Net expenses ............................................ 7.50%**
Net investment income (loss) ............................ (4.28%)**
Ratios assuming waiver of management fees and
assumption of expenses by PMC and a reduction
for fees paid indirectly:
Net expenses ............................................
Net investment income (loss) ............................
</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>
Selected Data for a Class C Share Outstanding Throughout the Period:
<TABLE>
<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
======= =======
Distributions to shareholders from:
Net investment income ................................... -- --
Net realized gain ....................................... -- --
Total return* ............................................. 2.36% (13.76)%
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 rate paid 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 Indian Companies (including Depositary
Receipts as defined below). For purposes of its investment policies, the Fund
considers a company to be an "Indian Company" if it (i) is organized under the
laws of India, (ii) derives at least 50% of its revenues from goods produced or
sold, investments made, or services performed, in India, or has at least 50% of
its assets in India, or (iii) has securities that are traded principally on any
Indian stock exchange (including India's Over the Counter Exchange).
The Fund may invest up to 35% of its total assets in (i) equity securities
of issuers (other than Indian Companies) which, in the judgment of PMC or the
Indian Adviser, may benefit from the Indian economy, (ii) debt securities issued
by Indian Companies or by the Government of India or its agencies or
instrumentalities, and (iii) short-term investments (as described below).
Equity securities in which the Fund may invest consist of common and
preferred stock (including convertible preferred stock); American, Global or
other types of depositary receipts (collectively, "Depositary Receipts");
convertible bonds, notes and debentures; shares of closed-end investment
companies; equity interests in trusts, partnerships, joint ventures or similar
enterprises; and common stock purchase warrants and rights. Substantially all of
the equity securities purchased by the Fund are expected to be traded on an
Indian or other foreign stock exchange or over-the-counter market. However, as
described in "Risk Factors," the Fund may be subject to significant delays or
limitations on the timing and amount of its direct investments in India.
Debt securities in which the Fund may invest consist of bonds, debentures,
notes and similar debt instruments which may be comparable in quality to debt
securities rated BB or lower by Standard & Poor's Ratings Group ("Standard &
Poor's") or Ba or lower by Moody's Investors Service, Inc. ("Moody's"). The Fund
may invest up to 25% of its total assets in debt securities. For a description
of the risks of investing in 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 asso-
4
<PAGE>
ciated with the Fund's investments. However, there currently is no market, or
only a limited market for these contracts with respect to the Indian rupee
(hereinafter the "rupee") and the currencies of certain other foreign countries
in which the Fund may invest. Consequently, there can be no assurance that these
contracts will be available for hedging currency risks at the times when the
Fund wishes to use them. See Appendix B and the Statement of Additional
Information for a description of forward foreign currency exchange contracts and
associated risks.
The Fund also may invest in restricted and illiquid securities and
repurchase agreements, may purchase securities on a when-issued, delayed
delivery or forward commitment basis and may borrow money for temporary
emergency purposes. See Appendix B and the Statement of Additional Information
for a description of these investment and management techniques, associated
risks and limitations on the Fund's use of these techniques.
For temporary defensive purposes, the Fund may invest up to 100% of its
total assets in short-term investments (as described below). The Fund will
assume a temporary defensive posture when political and economic factors affect
India's economy or securities market to such an extent that PMC or the Indian
Adviser believes there to be extraordinary risks in being substantially invested
in the equity securities of Indian Companies.
In selecting securities for investment by the Fund, PMC and/or the Indian
Adviser perform a fundamental analysis of each company being considered for
inclusion in the Fund's portfolio. In performing this fundamental analysis, PMC
and the Indian Adviser consider a variety of factors, including financial
condition, growth prospects, asset valuation, management expertise, existing or
potential dividend payments, the liquidity of the security, the market valuation
of the company and the effect the investment would have on the diversification
of the Fund's portfolio. The specific size of the Fund's investment in any one
company is determined by the relationship of the relative return and risk among
individual investments, and may be affected by limitations imposed by U.S. or
Indian law.
Investment in India
Because of economic and political developments and changes in India, PMC
and the Indian Adviser believe that India's economy has significant potential to
experience growth in the next several years. For these reasons, PMC and the
Indian Adviser also believe that the equity securities of many Indian Companies
offer significant potential for long-term capital growth. For a summary
description of India and its securities markets, see Appendix A.
Since mid-1991, the Government of India has taken steps to liberalize
India's trade policies, reform India's financial sector, and place greater
reliance on market mechanisms to direct economic activity. A significant
component of the Government's reform program has been the creation and
empowerment of the Securities and Exchange Board of India (the "SEBI") as the
governmental regulator of India's securities market. Another important component
of the reform program has been the promotion of foreign investment in key areas
of India's economy, especially infrastructure, and the further development of
India's private sector. As a result of this policy and more recent developments,
foreign investment in India's economy and securities market has increased
significantly. See "Risk Factors," "Restrictions on Investment in India" and
Appendix A.
Foreign Institutional Investors ("FIIs") are permitted to invest directly
or on behalf of their institutional clients in any equity or debt instrument
which is listed on any Indian stock exchange. FIIs are required to register with
the SEBI. PMC is registered with the SEBI as an FII to invest in India on behalf
of the Fund and other approved clients. At present, FII authorizations are
granted for five years and may be renewed with the approval of the SEBI. PMC
has renewed its registration as an FII on December 19, 1995. See "Risk Factors"
and "Restrictions on Investment in India."
Risk Factors
Investing in the Fund entails a substantial degree of risk. Because of the
special risks associated with investing in India, an investment in the Fund may
not be suitable for all investors and should not be considered an overall
investment program. Investors are strongly advised to consider carefully the
special risks involved in investing in India, which are in addition to the usual
risks of investing in developed countries around the world.
Investment in India and Certain Other Foreign Countries. The concentration
of the Fund's investments in Indian Companies will cause the value of the Fund's
assets to be particularly susceptible to the effects of political and economic
developments in India. India has a longstanding border dispute with Pakistan. It
remains possible that disruption associated with religious and ethnic tensions
could destabilize India's economy and adversely affect the net asset value of
the Fund. The leadership of the Government of India, which initiated recent
financial reforms, is now out of power. Government leadership of India is
subject to periodic change. There is no assurance that liberalization policies
will be continued.
The Fund expects that, under normal circumstances, most of its investments
in Indian Companies will be in securities that are listed or traded on an Indian
stock exchange. The securities markets in India and in certain other foreign
countries in which the Fund may invest are smaller and less liquid, and may be
significantly more volatile, than the securities market in the United States.
The Bombay Stock Exchange (the "BSE"), established in 1875, and the National
Stock Exchange ("NSE"), established in 1994 (see Appendix A), are the principal
stock exchanges in India, and account for over two-thirds of the secondary
trading market in India. Although the BSE has greater liquidity and a greater
number of listed issues than many emerging markets, the relatively small trad-
5
<PAGE>
ing volume and market capitalization of most securities listed on the BSE may
cause the Fund's investments to be less liquid and subject to greater volatility
than comparable U.S. investments. The limited liquidity of the BSE and other
securities markets in which the Fund may invest also may affect the Fund's
ability to accurately value its portfolio securities or to acquire or dispose of
securities at the prices and times that it desires or in order to meet
redemption requests.
In managing the Fund's portfolio, PMC and the Indian Adviser will attempt
to prevent the Fund from being exposed to undue illiquidity risk that may be
associated with investing in the Indian securities market. For example, if
deemed appropriate by PMC or the Indian Adviser, the Fund may concentrate its
equity investments in Indian Companies in larger capitalization issuers and/or
issuers whose equity securities (including Depositary Receipts) are traded in
securities markets outside of India. At times, the market for such securities
may be more liquid than the market for equity securities of smaller
capitalization Indian Companies.
Disclosure and regulatory standards in India's securities markets and in
other foreign markets in which the Fund may invest are less stringent than U.S.
standards in certain respects. Although issuers in India are subject to
accounting, auditing and financial standards and requirements that are based on
U.K. standards and requirements, such standards and requirements, as well as
those applicable to other foreign issuers, may differ significantly from those
applicable to issuers located in developed countries. In addition, there may be
substantially less publicly available information about issuers in India and
many of the other foreign countries in which the Fund may invest than there is
about U.S. issuers.
There is generally less governmental supervision and regulation of
securities exchanges and securities professionals in India and other foreign
countries in which the Fund may invest than exists in the United States.
However, the Government of India, acting through the SEBI, has promulgated
several rules and regulations to reform India's securities market and regulate
the activities of securities professionals. However, there can be no assurance
that such rules and regulations can be enforced as effectively as similar rules
and regulations are enforced in U.S. securities markets. See Appendix A for a
further description of recent reforms in India's securities market.
The value of the Fund's investments in India could be adversely affected by
the circulation of improperly registered shares or the occurrence of other
fraudulent activities in India's securities markets. In 1992, irregularities and
frauds in the Indian securities transactions of several banks were exposed.
Subsequent to the discovery of the bank/securities scandal, major Indian
securities market indices fell more than 40% from their highest levels. However,
as a result of the scandal, India's Ministry of Finance strengthened the SEBI's
regulatory authority and made other significant reforms in India's securities
markets.
Settlement procedures in India and other foreign countries in which the
Fund may invest are less developed and reliable than those in the U.S., and the
Fund may experience settlement delays or other material differences. In
addition, significant delays are common in registering transfers of securities
in India, and the Fund may be unable to sell portfolio securities until the
registration process is completed. Inflows of funds into the Indian securities
market have, at times, placed added strains on the settlement system, and
several custodial institutions in India have announced that they do not possess
the physical capacity to undertake new business. Although a number of custodial
institutions have augmented their capacity, the Fund may be subject to
significant delays or limitations on the timing of its direct investments in
India and significant limitations on the volume of trading during any particular
period, imposed by its subcustodian in India or otherwise as a result of such
physical or other operational constraints. The foregoing factors could impede
the ability of the Fund to effect portfolio transactions on a timely basis, have
an adverse effect on the net asset value of the Fund's shares and make it more
difficult for the Fund to obtain cash necessary to satisfy applicable federal
income tax requirements for avoiding federal income and/or excise taxation. Such
factors are not expected to affect the ability of the Fund to invest in
Depository Receipts, convertible bonds and other equity securities of Indian
companies issued and traded outside of India. See "Dividends, Distributions and
U.S. Taxation."
The value of the Fund's investments in the securities of Indian Companies
and other foreign issuers may be adversely affected by fluctuations in the
relative rates of exchange between the currencies of different countries. The
Fund's investment performance may be significantly affected, either positively
or negatively, by currency exchange rates because the U.S. dollar value of
securities quoted or denominated in a foreign currency will increase or decrease
in response to changes in the value of foreign currencies in relation to the
U.S. dollar. In addition, the value of the Fund's investments in Indian
Companies and other foreign issuers may be adversely affected by exchange
control regulations. Under the FII guidelines as currently in effect in India,
PMC has received approvals required to establish bank and custodial accounts and
to convert rupees into U.S. dollars on behalf of the Fund. Although the
Government of India has announced its intention ultimately to make the rupee
fully convertible, there can be no assurance that it will not impose
restrictions in the future that may adversely affect the ability of the Fund to
convert its income and capital from certain investments from rupees to U.S.
dollars. See Appendix A.
Brokerage commissions and other securities transaction costs, including
custody costs, in India and in certain other foreign countries in which the Fund
may invest are generally higher than in the United States. In addition, brokers
in India and certain other countries in which the Fund may invest generally are
not as well capitalized as brokers in the U.S., and are therefore more
susceptible to financial failure in times of market, political or economic
stress.
Additionally, in India and other foreign countries in which the Fund may
invest, there is the possibility of expropriation
6
<PAGE>
or confiscatory taxation, limitations on the removal of securities, property or
other assets of the Fund, political or social instability, or diplomatic
developments which could adversely affect U.S. investments in these countries.
Investment in Lower-Quality Debt Securities. The Fund's investments in debt
securities may consist of debt securities issued by Indian Companies or the
Government of India or its agencies or instrumentalities. These debt securities
may be comparable in quality to debt securities rated BB or lower by Standard &
Poor's or Ba or lower by Moody's. Debt securities of such quality are commonly
referred to in the U.S. as "junk bonds" and are considered speculative, and
payments of interest thereon and repayment of principal may be questionable. In
some cases, such securities may be highly speculative, have poor prospects for
reaching investment grade standing and be in default. While generally providing
greater income than investments in higher-quality securities, lower-quality debt
securities involve greater risk of loss of principal and income, including the
possibility of default or bankruptcy of the issuers of such securities, and have
greater price volatility, especially during periods of economic uncertainty or
change. Lower-quality debt securities also tend to be affected by economic
changes and short-term corporate developments to a greater extent than
higher-quality securities, which react primarily to fluctuations in the general
level of interest rates. Lower-quality debt securities will also be affected by
the market's perception of their credit quality, especially during times of
adverse publicity, and the outlook for economic growth. The market for
lower-quality debt securities is generally less liquid than the market for
higher-quality debt securities. Therefore, PMC's and the Indian Adviser's
judgment may at times play a greater role in valuing these securities than in
the case of higher-quality debt securities.
The Fund's investments in debt securities issued by the Government of India
or its agencies or instrumentalities involve special risks in addition to those
described above. The willingness or ability of an Indian governmental issuer to
repay principal and pay interest when due may be affected adversely by the size
of the issuer's debt service burden relative to India's economy as a whole,
changes in India's economy, political constraints to which the issuer is subject
and various other factors. In addition, there are no legal proceedings available
in India by which the Fund could seek recourse for the default of a debt
security issued by the Government of India or one of its agencies or
instrumentalities.
The Fund's investments in debt securities may also include zero coupon and
payment-in-kind debt securities, which tend to be affected to a greater extent
by interest rate changes, and therefore tend to be more volatile, than debt
securities which pay interest periodically and in cash.
Restrictions on Investment in India
Under India's guidelines applicable to FIIs, the Fund's direct investments
in India may include securities that are unlisted, listed or to be listed on a
recognized stock exchange or traded on a recognized Indian stock exchange, and
the Fund may not hold more than 10% of the total issued capital of any issuer of
such securities. Further, at least 70% of the total investments made by the Fund
pursuant to PMC's FII authorization must be in equity securities. In addition,
all non-resident portfolio investments, including the Fund's investments, may
not exceed 24% of the issued share capital of any Indian issuer. Accordingly,
the Fund's ability to invest in certain Indian Companies may be restricted.
Although the Government of India recently has implemented policies to encourage
foreign investment, there can be no assurance that additional restrictions will
not be imposed in the future.
Indian Taxes
It is expected that most of the Fund's investments in Indian Companies will
be subject to the following taxes imposed by the Government of India. As per the
special scheme for taxation of income earned by FIIs from investment in listed
securities, India imposes a withholding tax at a rate of 20% on interest income
earned on Indian investments. India also imposes a tax on capital gains realized
on Indian investments at a rate of 10% on long-term capital gains and 30% on
short-term capital gains. Income earned by the Fund from investment in unlisted
securities (including debt), if any, would not be covered by the above scheme
and would be taxed as follows: interest income--48%; short-term capital
gains--48% and; long-term capital gains--20%. Gains arising on transfer of
shares of Indian companies and any other security (including debt) listed on a
recognized stock exchange in India, held for a period of not more than 12
months, are classified as short-term capital gains. However, gains arising on
transfer of unlisted securities, other than shares of Indian companies held for
not more than 36 months prior to its transfer, are classified as short- term
capital gains. Dividends declared, distributed or paid by a domestic company on
or after June 1, 1997, are exempt from tax in India in the hands of the
shareholder. However, the company paying the dividend is required to pay a
dividend tax of 10% of the dividend.
Under the regime for computing taxes on income from American Depository
Receipts ("ADRs") and Global Depository Receipts ("GDRs") (i) capital gains
arising from transfer of ADRs and GDRs outside India between non-resident
investors will be free from liability to income tax in India and (ii) capital
gains realized on the sale of shares underlying ADRs and GDRs would be taxed at
the rate of 10% for long-term gains and 48% for short-term gains. Gains from
disposal of the shares underlying the ADR's and GDRs are treated as long-term if
the shares underlying the ADRs and GDRs are held for more than 12 months. For
the purpose of computing capital gains, the cost of acquisition of the shares
underlying the ADR's and GDRs is deemed to be the market price on the date on
which the overseas depository bank advises the domestic custodian bank for
redemption of ADRs and GDRs into underlying shares.
7
<PAGE>
Gains from the disposition of securities are calculated in local currency.
Losses from the disposal of one security can be used to offset gains from the
disposition of another security.
Under the Income Tax Treaty in effect between India and the U.S., the
applicable Indian tax rate on interest income is generally reduced to 15%, This
treaty does not reduce or eliminate the Indian taxation of capital gains the
Fund may realize with respect to its Indian investments. If the Fund elects to
"pass-through" to shareholders amounts of qualified foreign taxes it pays, Fund
shareholders will be required to include such amounts in income (in addition to
the dividends they actually receive) and certain Fund shareholders may be able
to claim a foreign tax credit or deduction on their U.S. federal income tax
returns for their proportionate shares of Indian taxes paid by the Fund, subject
to applicable limitations under the U.S. Internal Revenue Code of 1986, as
amended (the "Code"). "See Dividends, Distributions and U.S. Taxation."
PMC may explore opportunities for the Fund to invest in India through a
structure that would reduce withholding and other taxes imposed by India.
Other Eligible Investments
Equity Securities of Companies That May Benefit From India's Economy. As
noted above, the Fund may invest in the equity securities of companies, other
than Indian Companies (defined above), that may benefit from India's economy.
The Fund's investments in the equity securities of such issuers may involve
some or all of the risks associated with investments in Indian issuers. See
"Risk Factors."
Short-Term Investments. As noted above, the Fund may invest in short-term
investments, consisting of corporate commercial paper and other short-term
commercial obligations, in each case rated or issued by international or
domestic companies with similar securities outstanding that are rated Prime-1 or
better by Moody's, or A-1, AA or better by Standard & Poor's; obligations
(including certificates of deposit, time deposits, demand deposits and bankers'
acceptances) of banks (located in the U.S. or foreign countries) with securities
outstanding that are rated Prime-1, Aa or better by Moody's, or A-1, AA or
better by Standard and Poor's; obligations of comparable quality issued or
guaranteed by the U.S. government or the government of a foreign country or
their respective agencies or instrumentalities; and repurchase agreements.
In addition, the Fund may invest up to 100% of its total assets in such
short-term investments for temporary defensive purposes. The Fund will assume a
temporary defensive posture only when political and economic factors cause PMC
or the Indian Adviser to believe that there are extraordinary risks in being
substantially invested in the equity securities of Indian Companies.
Debt Securities. Although the Fund invests primarily in equity securities
of Indian Companies, the Fund may invest up to 25% of its total assets in debt
securities (including short-term debt securities) issued by Indian Companies or
by the Government of India or its agencies or instrumentalities. The Fund may
invest in debt securities of any quality or maturity. See "Risk Factors." The
net asset value of the Fund attributable to its investments in debt securities
can generally be expected to change as general levels of interest rates
fluctuate. The value of debt securities generally varies inversely with changes
in interest rates, and prices of debt securities with longer maturities are more
sensitive to interest rate changes than those with shorter maturities.
Other Investment Companies. The Fund may invest up to 10% of its total
assets, calculated at the time of purchase, in the securities of closed-end
investment companies. The Fund may not invest more than 5% of its total assets
in the securities of any one investment company or acquire more than 3% of the
voting securities of any other investment company. The Fund will indirectly bear
its proportionate share of any management or other fees paid by closed-end
investment companies in which it invests, in addition to its own fees.
Investments in Depositary Receipts. The Fund may hold securities of
foreign issuers in the form of ADRs, GDRs and other similar instruments or
other securities convertible into securities of eligible issuers. Generally,
ADRs in registered form are designed for use in U.S. securities markets, and
GDRs and other similar global instruments in bearer form are designed for use
in non-U.S. securities markets.
ADRs are denominated in U.S. dollars and represent the right to receive
securities of foreign issuers deposited in a U.S. bank or correspondent bank.
ADRs do not eliminate all the risk inherent in investing in the securities of
non-U.S. issuers. However, by investing in ADRs rather than directly in equity
securities of non-U.S. issuers, the Fund will avoid currency risks during the
settlement period for either purchases or sales. GDRs are not necessarily
denominated in the same currency as the securities for which they may be
exchanged. For purposes of the Fund's investment policies, investments in ADRs,
GDRs and similar instruments will be deemed to be investments in the equity
securities of the foreign issuers into which they may be converted. The Fund may
acquire depositary receipts from banks that do not have a contractual
relationship with the issuer of the security underlying the depositary receipt
to issue and secure such depositary receipt. To the extent the Fund invests in
such unsponsored depositary receipts there may be an increased possibility that
the Fund may not become aware of events affecting the underlying security and
thus the value of the related depositary receipt. In addition, certain benefits
(i.e., rights offerings) which may be associated with the security underlying
the depositary receipt may not inure to the benefit of the holder of such
depositary receipt.
Investments in Initial Public Offerings. The Fund may invest in initial
public offerings of Indian issuers. At the initial stage of such an offering,
the issuer may reserve up to 24% of the offering for nonresident Indian
investors and certain foreign institutional investors such as the Fund. The
issuer
8
<PAGE>
also may reserve up to 20% of the offering for locally offered mutual funds. The
price available to the Fund in such an offering may be higher or lower than the
price available to other institutions. When the Fund commits to purchase from
the reserved portion of such an offering, it may be required to place the
purchase price in a bank deposit account (that does not pay interest) before
receiving securities. In addition, until the purchase is settled, the Fund may
not know if it will receive the amount of securities for which it has
subscribed.
Portfolio Turnover
The Fund will attempt to be substantially fully invested at all times,
except as described above. To the extent consistent with investment
considerations, PMC and the Indian Adviser intend to minimize the Fund's
realization of short-term capital gains with respect to securities subject to
Indian short-term capital gains taxes. See "Indian Taxes." However, changes in
the Fund's portfolio may be made promptly when determined by PMC or the Indian
Adviser to be advisable by reason of developments not foreseen at the time of
the initial investment decision, and usually without reference to the length of
time a security has been held. Accordingly, portfolio turnover rates are not
considered a limiting factor in the execution of investment decisions. It is
anticipated that the portfolio turnover rate of the Fund will not exceed 100% in
the coming year. A high rate of portfolio turnover (100% or more) involves
correspondingly greater transaction costs which must be borne by the Fund and
its shareholders and may, under certain circumstances, make it more difficult
for the Fund to qualify as a regulated investment company under the Code. See
"Dividends, Distributions and Taxation."
The Fund's investment objective and certain investment restrictions
designated as fundamental in the Statement of Additional Information may be
changed by the Board of Trustees only with shareholder approval. The Fund's
investment policies and nonfundamental investment restrictions may be changed by
the Board of Trustees without shareholder approval. See "Investment Policies,
Restrictions and Risk Factors" in the Statement of Additional Information.
IV. MANAGEMENT OF THE FUND
The Fund's Board of Trustees has overall responsibility for management and
supervision of the Fund. The Board meets at least quarterly. By virtue of the
functions performed by PMC as manager and by the Indian Adviser, the Fund
requires no employees other than its executive officers, all of whom receive
their compensation from PMC or other sources. The Statement of Additional
Information contains the names and general business and professional background
of each Trustee and executive officer of the Fund.
The Adviser
The Fund is managed under a contract with PMC. PMC is responsible for the
overall management of the Fund's business affairs and the day-to-day management
of Fund assets that are not under the Indian Adviser's management, subject only
to the authority of the Board of Trustees. PMC is a wholly-owned subsidiary of
The Pioneer Group, Inc. ("PGI"), a publicly-traded Delaware corporation. Pioneer
Funds Distributor, Inc. ("PFD"), an indirect wholly-owned subsidiary of PGI, is
the principal underwriter of the Fund.
Mr. David Tripple, President and Chief Investment Officer of PMC and
Executive Vice President of each Pioneer mutual fund, has general
responsibility for PMC's investment operations and chairs a committee of PMC's
global equity managers which reviews PMC's research and portfolio operations,
including those of the Fund. Mr. Tripple joined PMC in 1974.
Research and management for the Fund is the responsibility of a team of
portfolio managers and analysts focusing on non-U.S. companies. Members of the
team meet regularly to discuss holdings, prospective investments and portfolio
composition. Dr. Norman Kurland, a Senior Vice President of PMC and a Vice
President of the Fund, is the senior member of the team. Dr. Kurland joined PMC
in 1990.
Day-to-day management of the Fund has been the responsibility of Mr.
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 28, 1998, Mr. Mark H. 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. Mr. Manish Modi, Vice President of PMC,
is the senior analyst focusing on India and Indian companies. Mr. Modi joined
PMC in 1994 and has 8 years of investment experience.
PMC manages and serves as the investment adviser for several other mutual
funds and is an investment adviser to certain other institutional accounts.
PMC's and PFD's executive offices are located at 60 State Street, Boston,
Massachusetts 02109. In an effort to avoid conflicts of interest with the Fund,
the Fund and PMC have adopted a Code of Ethics that is designed to maintain a
high standard of personal conduct by directing that all personnel defer to the
interests of the Fund and its shareholders in making personal securities
transactions.
Under the terms of its contract with the Fund, PMC manages the Fund's
business affairs, supervises the Indian Adviser's performance of its portfolio
management responsibilities and allocates the management of Fund assets between
itself and the Indian Adviser. PMC's supervisory responsibilities include
consulting with the Indian Adviser on a regular basis regarding the Indian
Adviser's decisions to purchase, sell or hold particular securities. PMC is
authorized in its discretion to use Fund assets that are under its management to
buy and sell securities for the Fund's account. PMC pays all advisory fees to
the Indian Adviser and all ordinary operating expenses, including executive
salaries and the rental of office space, relating to its services for the Fund,
with the exception of the following which are paid by the Fund: (a) charges and
expenses for fund accounting,
9
<PAGE>
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 Investment Company Act of 1940, as amended (the "1940
Act"); (j) compensation of those Trustees of the Fund who are not affiliated
with or interested persons of PMC, the Fund (other than as Trustees), PGI or
PFD; (k) the cost of preparing and printing share certificates; and (l) interest
on borrowed money, if any. The Fund also pays all brokers' and underwriting
commissions chargeable to the Fund in connection with its portfolio
transactions.
Certain orders for the Fund's portfolio securities transactions in the
Indian securities markets are placed by the Indian Adviser. Orders for the
Fund's portfolio securities transactions in all other markets are placed by PMC.
Both PMC and the Indian Adviser strive to obtain the best price and execution
for each transaction. In circumstances in which two or more broker-dealers are
in a position to offer comparable prices and execution, consideration may be
given by the Indian Adviser or PMC to whether the broker-dealer provides
investment research or brokerage services or sells shares of any Pioneer mutual
fund or other funds for which PMC or any affiliate or subsidiary serves as
investment adviser or manager. See the Statement of Additional Information for a
further description of PMC's and Indian Adviser's brokerage allocation
practices.
As compensation for its management services and certain expenses which PMC
incurs, PMC is entitled to a management fee equal to 1.25% per annum of the
Fund's average daily net assets. While this fee, which is computed daily and
paid monthly, is higher than most management fees, the costs of managing the
Fund are significantly greater than the costs of managing a domestic fund.
PMC has agreed not to impose a portion of its management fee and to make
other arrangements, if necessary, to limit certain other expenses of the Fund to
the extent necessary to limit Class A expenses to 2.25% of the average daily net
assets attributable to Class A shares; the portion of the Fund-wide expenses
attributable to Class B and Class C shares will be reduced only to the extent
such expenses are reduced for Class A shares. This agreement is voluntary and
temporary and may be revised or terminated by PMC at any time.
John F. Cogan, Jr., Chairman and President of the Fund, Chairman 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, 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.
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 from 0.10% to
0.60% of the Fund's average gross assets invested in India's securities markets,
including assets invested in Depositary Receipts for securities traded in
India's securities markets. The fee, which is paid by PMC, accrues monthly and
is paid quarterly.
V. FUND SHARE ALTERNATIVES
The Fund continuously offers three Classes of shares designated as Class A,
Class B and Class C shares, as described more fully in "How to Buy Fund Shares."
If you do not specify in your instructions to the Fund which Class of shares you
wish to purchase, exchange or redeem, the Fund will assume that your
instructions apply to Class A shares.
Class A Shares. If you invest less than $1 million in Class A shares, you
will pay an initial sales charge. Certain purchases may qualify for reduced
initial sales charges. If you invest $1 million or more in Class A shares, no
sales charge will be imposed at the time of purchase; however, shares redeemed
within 12 months of purchase may be subject to a contingent deferred sales
charge ("CDSC"). Class A shares
10
<PAGE>
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 the applicable sales charge. The net asset value per
share of each Class of Fund shares is determined by dividing the fair market
value of its assets, less liabilities attributable to that Class, by the number
of shares of that Class outstanding. The net asset value is computed once daily,
on each day the New York Stock Exchange (the "Exchange") is open as of the close
of regular trading on the Exchange.
Securities are valued at the last sale price on the principal exchange or
market where they are traded. Securities which have not traded on the date of
valuation, or securities for which sales prices are not generally reported, are
valued at the mean between the current bid and asked prices. Securities quoted
in international currencies are converted to U.S. dollars utilizing foreign
exchange rates employed by the Fund's independent pricing services. Generally,
trading in international securities is substantially completed each day at
various times prior to the close of regular trading on the Exchange. The values
of such securities used in computing the net asset value of the Fund's shares
are determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of regular trading on the Exchange.
Occasionally, events which affect the values of such securities and such
exchange rates may occur between the times at which they are determined and the
close of regular trading on the Exchange and will therefore not be reflected in
the computation of the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then these securities 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 plus any applicable sales charge, next computed
after receipt of a purchase order, except as set forth below.
The minimum initial investment is $1,000 for Class A, Class B and Class C
shares except as specified below. The minimum initial investment is $50 for
Class A accounts being established to utilize monthly bank drafts, government
allotments, payroll deduction and other similar automatic investment plans.
Separate minimum investment requirements apply to retirement plans and to
telephone and wire orders placed by broker-dealers; no sales charges or minimum
requirements apply to the reinvestment of dividends or capital gains
distributions. The minimum subsequent investment is $50 for Class A shares and
$500 for Class B and Class C shares except that the subsequent minimum
investment amount for Class B and Class C share accounts may be as little as $50
if an automatic investment plan is established (see "Automatic Investment
Plans").
Telephone Purchases. Your account is automatically authorized to have the
telephone purchase privilege unless
11
<PAGE>
you indicate otherwise on your Account Application or by writing to Pioneering
Services Corporation ("PSC"). The telephone purchase option may be used to
purchase additional shares for an existing Pioneer mutual fund account; it may
not be used to establish a new account. Proper account identification will be
required for each telephone purchase. A maximum of $25,000 per account may be
purchased by telephone each day. The telephone purchase privilege is available
to Individual Retirement Accounts ("IRAs") but may not be available to other
types of retirement plan accounts. Call PSC for more information.
You are strongly urged to consult with your financial representative prior
to requesting a telephone purchase. To purchase shares by telephone, you must
establish your bank account of record by completing the appropriate section of
your Account Application or an Account Options Form. PSC will electronically
debit the amount of each purchase from this predesignated bank account.
Telephone purchases may not be made for 30 days after the establishment of your
bank of record or any change to your bank information.
Telephone purchases will be priced at the net asset value plus any
applicable sales charge next determined after PSC's receipt of a telephone
purchase instruction and receipt of good funds (usually three days after the
purchase instruction). You may always elect to deliver purchases to PSC by mail.
See "Telephone Transactions and Related Liabilities" for additional information.
Class A Shares
You may buy Class A shares at the public offering price, including a sales
charge, as follows:
Sales Charge as a Dealer
Percentage of Allowance
----------------------- as a
Net Percentage of
Offering Amount Offering
Amount of Purchase Price Invested Price
- ------------------------ ---------- ---------- --------------
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than
$ 100,000 4.50 4.71 4.00
$100,000 but less than
$ 250,000 3.50 3.63 3.00
$250,000 but less than
$ 500,000 2.50 2.56 2.00
$500,000 but less than
$ 1,000,000 2.00 2.04 1.75
$1,000,000 or more -0- -0- See below
The schedule of sales charges above is applicable to purchases of Class A
shares of the Fund by (i) an individual, (ii) an individual and his or her
spouse and children under the age of 21 and (iii) a trustee or other fiduciary
of a trust estate or fiduciary account or related trusts or accounts including
pension, profit-sharing and other employee benefit trusts qualified under
Section 401 or 408 of the Code, although more than one beneficiary is involved.
The sales charges applicable to a current purchase of Class A shares of the Fund
by a person listed above is determined by adding the value of shares to be
purchased to the aggregate value (at the then current offering price) of shares
of any of the other Pioneer mutual funds previously purchased and then owned,
provided PFD is notified by such person or his or her broker-dealer each time a
purchase is made which would qualify. Pioneer mutual funds include all mutual
funds for which PFD serves as principal underwriter. At the sole discretion of
PFD, holdings of funds domiciled outside the U.S., but which are managed by
affiliates of PMC, may be included for this purpose.
No sales charge is payable at the time of purchase on investments of $1
million or more or for purchases by participants in certain group plans
(described below) subject to a CDSC of 1% which may be imposed in the event of a
redemption of Class A shares within 12 months of purchase. See "How to Sell Fund
Shares." PFD may, in its discretion, pay a commission to broker-dealers who
initiate and are responsible for such purchases as follows: 1% on the first $5
million invested; 0.50% on the next $45 million; and 0.25% on the excess over
$50 million. These commissions will not be paid if the purchaser is affiliated
with the broker-dealer or if the purchase represents the reinvestment of a
redemption made during the previous 12 calendar months. Broker-dealers who
receive a commission in connection with Class A share purchases at net asset
value by 401(a) or 401(k) retirement plans with 1,000 or more eligible
participants or with at least $10 million in plan assets will be required to
return any commission paid or a pro rata portion thereof if the retirement plan
redeems its shares within 12 months of purchase. See also "See How to Sell Fund
Shares." In connection with PGI's acquisition of Mutual of Omaha Fund Management
Company and contingent upon the achievement of certain sales objectives, PFD may
pay to Mutual of Omaha Investor Services, Inc. 50% of PFD's retention of any
sales commission on sales of the Fund's Class A shares through such dealer. From
time to time, PFD may elect to reallow the entire initial sales charge to
participating dealers for all Class A sales with respect to which orders are
placed during a particular period. Dealers to whom substantially the entire
sales charge is reallowed may be deemed to be underwriters under the federal
securities laws.
Qualifying for a Reduced Sales Charge. Class A shares of the Fund may be
sold at a reduced or eliminated sales charge to certain group plans ("Group
Plans") under which a sponsoring organization makes recommendations to, permits
group solicitation of, or otherwise facilitates purchases by, its employees,
members or participants. Class A shares of the Fund may be sold at net asset
value without a sales charge to 401(k) retirement plans with 100 or more
participants or at least $500,000 in plan assets. Information about such
arrangements is available from PFD.
Class A shares of the Fund may be sold at net asset value per share without
a sales charge to: (a) current or former Trustees and officers of the Fund and
partners and employees of its legal counsel; (b) current or former directors,
officers, employees or sales representatives of PGI or its subsidiaries; (c)
current or former directors, officers, employees or sales representatives of any
subadviser or predecessor investment adviser to any investment company for which
PMC serves as investment adviser, and the subsidiaries or affili-
12
<PAGE>
ates 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 imposition of an initial sales charge.
However, Class B shares redeemed within six years of purchase will be subject to
a CDSC at the rates shown in the table below. The charge will be assessed on the
amount equal to the lesser of the current market value or the original purchase
cost of the shares being redeemed. No CDSC will be imposed on increases in
account value above the initial purchase price, including shares derived from
the reinvestment of dividends or capital gains distributions.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of purchase until the time of redemption of Class B shares. For
the purpose of determining the number of years from the time of any purchase,
all payments during a quarter will be aggregated and deemed to have been made on
the first day of that quarter. In processing redemptions of Class B shares, the
Fund will first redeem shares not subject to any CDSC, and then shares held
longest during the six-year-period. As a result, you will pay the lowest
possible CDSC.
The CDSC for Class B shares subject to a CDSC upon redemption will be
determined as follows:
Year Since CDSC as a Percentage of Dollar
Purchase Amount Subject to CDSC
- ------------------------ -------------------------------
First 4.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter none
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class B shares, including the payment of
compensation to broker-dealers.
Class B shares will automatically convert into Class A shares at the end of
the calendar quarter that is eight years after the purchase date, except as
noted below. Class B
13
<PAGE>
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"), for which the Fund is applying, or an
opinion of counsel that such conversions will not constitute taxable events for
federal tax purposes. There can be no assurance that such ruling or opinion will
be available. The conversion of Class B shares to Class A shares will not occur
if such ruling or opinion is not available and, therefore, Class B shares would
continue to be subject to higher expenses than Class A shares for an
indeterminate period.
Class C Shares
You may buy Class C shares at the net asset value next computed after
receipt of a purchase order without the 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 an UGMA, UTMA a trust account, 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 701/2 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 distribution as defined by the
Code or results from a termination of employment (limited with respect to a
termination to 10% per year of the value of the plan's assets in the Fund as of
the later of the prior December 31 or the date the account was established
unless the plan's assets are being rolled over to or reinvested in the same
class of shares of a Pioneer mutual fund subject to the CDSC of the shares
originally held); (d) the distribution is from an IRA, 403(b) or
employer-sponsored retirement plan and is to be rolled over to or reinvested in
the same class of shares in a Pioneer mutual fund and which will be subject to
the applicable CDSC upon redemption; (e) the distribution is in the form of a
loan to a participant in a plan which permits loans (each repayment of the loan
will constitute a new sale which will be subject to the applicable CDSC upon
redemption); or (f) the distribution is from a qualified defined contribution
plan and represents a participant's directed transfer (provided that this
privilege has been pre-authorized through a prior agreement with PFD regarding
participant directed transfers).
The CDSC on Class C shares and on any Class A shares subject to a CDSC may
be waived or reduced as follows: (a) for automatic redemptions as described in
"Systematic Withdrawal Plans" (limited to 10% of the value of the account); (b)
if the redemption results from the death or a total and permanent disability (as
defined in Section 72 of the Code) occurring after the purchase of the shares
being redeemed of a shareholder or participant in an employer-sponsored
retirement plan; (c) if the distribution is part of a series of substantially
equal payments made over the life expectancy of the participant or the joint
life expectancy of the participant and his or her beneficiary; or (d) if the
distribution is to a participant in an employer-sponsored retirement plan and is
(i) a return of excess employee deferrals or contributions, (ii) a qualifying
hardship as defined by the Code, (iii) from a termination of employment, (iv) in
the form of a loan to a participant in a plan which permits loans, or (v) from a
qualified defined contribution plan and represents a participant's
14
<PAGE>
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.
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 prop-
15
<PAGE>
erly predesignated either on your Account Application or on an Account Options
Form and which must not have changed in the last 30 days. To redeem by fax send
your redemption request to 1-800-225-4240. You may always elect to deliver
redemption instructions to PSC by mail. See "Telephone Transactions and Related
Liabilities" below. Telephone and fax redemptions will be priced as described
above. You are strongly urged to consult with your financial representative
prior to requesting a telephone redemption.
Selling Shares Through Your Broker-Dealer. The Fund has authorized PFD to
act as its agent in the repurchase of shares of the Fund from qualified
broker-dealers and reserves the right to terminate this procedure at any time.
Your broker-dealer must receive your request before the close of business on the
Exchange and transmit it to PFD before PFD's close of business to receive that
day's redemption price. Your broker-dealer is responsible for providing all
necessary documentation to PFD and may charge you for its services.
Small Accounts. The minimum account value is $500. If you hold shares of
the Fund in an account with a net asset value of less than the minimum required
amount due to redemptions or exchanges, the Fund may redeem the shares held in
this account at net asset value if you have not increased the net asset value of
the account to at least the minimum required amount within six months of notice
by the Fund to you of the Fund's intention to redeem the shares.
CDSC on Class A Shares. Purchases of Class A shares of $1 million or more,
or by participants in a Group Plan which were not subject to an initial sales
charge, may be subject to a CDSC upon redemption. A CDSC is payable to PFD on
these investments in the event of a share redemption within 12 months following
the share purchase, at the rate of 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividend and capital gain distributions) or
the total cost of such shares. Shares subject to the CDSC which are exchanged
into another Pioneer mutual fund will continue to be subject to the CDSC 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
FactFoneSM, will be recorded. You are strongly urged to consult with your
financial representative prior to requesting a telephone exchange. See
"Telephone Transactions and Related Liabilities" below.
Automatic Exchanges. You may automatically exchange shares from one Pioneer
mutual fund account for shares of the same Class in another Pioneer mutual fund
account on a monthly or quarterly basis. The accounts must have identical
registrations and the originating account must have a minimum balance of $5,000.
The exchange will be effective on the day of the month designated on your
Account Application or Account Options Form.
General. Exchanges must be at least $1,000. You may exchange your
investment from one Class of Fund shares at net asset value, without a sales
charge, for shares of the same Class of any other Pioneer mutual fund. Not all
Pioneer mutual funds offer more than one Class of shares. A new Pioneer mutual
fund account opened through an exchange must have a registration identical to
that on the original account.
Shares which would normally be subject to a CDSC upon redemption will not
be charged the applicable CDSC at the 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
16
<PAGE>
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.
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-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
therefore, PFD may retain the service fee paid by the Fund with respect to such
shares for the first year after purchase. Commencing in the 13th month following
the purchase of Class C shares, dealers will become eligible for additional
annual distribution fees and service fees of up to 0.75% and 0.25%,
respectively, of the net asset value of such shares.
When a broker-dealer sells Class B or Class C shares and elects, with PFD's
approval, to waive its right to receive the commission normally paid at the time
of the sale, PFD may cause all or a portion of the distribution fees described
above to be paid to the broker-dealer.
Dealers may from time to time be required to meet certain criteria in order
to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan or the Class C Plan for which there
is no dealer of record or for which qualification standards have not been met as
partial consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION
The Fund has elected to be treated, has qualified and intends to qualify
each year as a "regulated investment com-
17
<PAGE>
pany" 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. The Fund's distributions of long-term capital gains to
individuals or other noncorporate taxpayers are subjet to different maximum tax
rates (which will be indicated in the annual tax information the Fund provides
to shareholders), depending generally upon the sources of, and the Fund's
holding periods for the assets that produce the gains.
Unless shareholders specify otherwise, all distributions will be
automatically reinvested in additional full and fractional shares of the Fund.
For federal income tax purposes, all dividends are taxable as described above
whether a shareholder takes them in cash or reinvests them in additional shares
of the Fund. Information as to the federal tax status of dividends and
distributions will be provided to shareholders annually. For further information
on the distribution options available to shareholders, see "Distribution
Options" and "Directed Dividends" below.
The Fund's dividends and distributions generally will not qualify for any
dividends-received deduction available to corporate shareholders.
The Fund will be subject to foreign withholding taxes or other foreign
taxes on income (including interest, dividend and capital gains taxes imposed by
India and possibly other countries) from certain of its foreign investments,
which will reduce the yield on or return from those investments. In any year in
which the Fund qualifies, it may make an election that will permit certain of
its shareholders to take a credit or, a deduction for all or a portion of
foreign income or other qualified taxes, including Indian income taxes on
interest, dividends and capital gains, paid by the Fund. Each shareholder would
then include in gross income (in addition to dividends actually received) his or
her share of the amount of qualified foreign taxes paid by the Fund. If this
election is made, the Fund will notify its shareholders annually as to their
share of the amount of qualified foreign taxes paid and the foreign source
income of the Fund. Certain shareholders, including shareholders not subject to
U.S. federal income taxation, will not be entitled to the benefit of a deduction
or credit with respect to foreign income taxes paid by the Fund. As a result of
certain limitations under the Code on foreign tax credits, which have different
effects depending upon a shareholder's particular tax situation, shareholders
may be able to claim a credit only for less than the full amount of their
proportionate share of the foreign taxes paid by the Fund. Further, the
creditable portion may be smaller to the extent the Fund's income consists of
U.S.-source income, generally including capital gains from the sale of both U.S.
and foreign stocks and securities and certain foreign currency gains, rather
than foreign-source income such as interest and dividends on foreign stocks and
securities.
Dividends and other distributions and the proceeds of redemptions,
exchanges or repurchases of Fund shares paid to individuals and other non-exempt
payees will be subject to 31% backup withholding of federal income tax if the
Fund is not provided with the shareholder's correct taxpayer identification
number and certification that the number is correct and that the shareholder is
not subject to backup withholding or the Fund receives notice from the IRS or a
broker that such withholding applies. Please refer to the Account Application
for additional information.
The description above relates only to U.S. federal income tax consequences
for shareholders who are U.S. persons, i.e., U.S. citizens or residents or U.S.
corporations, partnerships, trusts or estates, and who are subject to U.S.
federal income tax. Non-U.S. shareholders and tax-exempt shareholders are
subject to different tax treatment that is not described above. Shareholders
should consult their own tax advisors regarding state, local and other
applicable tax laws, 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. The Custodian has appointed Standard Chartered
Bank as subcustodian to hold investments purchased by the Fund in India.
Account and Confirmation Statements
PSC maintains an account for each shareholder and all transactions of the
shareholder are recorded in this account. Confirmation statements showing the
details of transactions
18
<PAGE>
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 Pioneering Services Corporation, P.O. Box 9014,
Boston, Massachusetts 02205-9014. 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 to you information about the tax
status of dividends and distributions.
Distribution Options
Dividends and capital gains distributions, if any, will automatically be
invested in additional shares of the Fund, at the applicable net asset value per
share, unless you indicate another option on the Account Application. Two other
options available are (a) dividends in cash and capital gains distributions in
additional shares; and (b) all dividends and capital gains distributions in
cash. These two options are not available, however, for retirement plans or for
an account with a net asset value of less than $500. Changes in your
distribution options may be made by written request to PSC.
If you elect to receive either dividends or capital gains or both in cash
and a distribution check issued to you is returned by the U.S. Postal Service as
not deliverable or a distribution check remains uncashed for six months or more,
the amount of the check may be reinvested in your account. Such additional
shares will be purchased at the then current net asset value. Furthermore, the
distribution option on the account will automatically be changed to the
reinvestment option until such time as you request a different option by writing
to PSC.
Directed Dividends
You may elect (in writing) to have the dividends paid by one Pioneer mutual
fund account invested in a second Pioneer mutual fund account. The value of this
second account must be at least $1,000 ($500 for Pioneer Fund or Pioneer II).
Invested dividends may be in any amount, and there are no fees or charges for
this service. Retirement plan shareholders may only direct dividends to accounts
with identical registrations.
Direct Deposit
If you have elected to take distributions, whether dividends or dividends
and capital gains, in cash, or have established a Systematic Withdrawal Plan,
you may choose to have those cash payments deposited directly into your savings,
checking, or NOW bank account. You may establish this service by completing the
appropriate section on the Account Application when opening a new account or the
Account Options Form for an existing account.
Voluntary Tax Withholding
You may request (in writing) that PSC withhold 28% of the dividends and
capital gains distributions paid from an account (before any reinvestment) and
forward the amount withheld to the IRS as a credit against your federal income
taxes. This option is not available for retirement plan accounts or for accounts
subject to backup withholding.
Telephone Transactions and Related Liabilities
Your account is automatically authorized to have telephone transaction
privileges unless you indicate otherwise on your Account Application or by
writing to PSC. You may purchase, sell or exchange Fund shares by telephone. See
"How to Buy Fund Shares," "How to Sell Fund Shares" and "How to Exchange Fund
Shares" for more information. For personal assistance, call 1-800-225-6292
between 8:00 a.m. and 9:00 p.m. Eastern Time on weekdays. Computer-assisted
transactions may be available to shareholders who have pre-recorded certain bank
information (see "FactFone(SM)"). You are strongly urged to consult with your
financial representative prior to requesting any telephone transaction. To
confirm that each transaction instruction received by telephone is genuine, PSC
will record each telephone transaction,
19
<PAGE>
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.
FactFoneSM allows you to obtain current information on your Pioneer mutual fund
accounts and to inquire about the prices and yields of all publicly available
Pioneer mutual funds. In addition, you may use 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 FactFoneSM.
See "How to Buy Fund Shares," "How to Exchange Fund Shares," "How to Sell Fund
Shares" and "Telephone Transactions and Related Liabilities." Call PSC for
assistance.
Retirement Plans
You should contact the Retirement Plans Department of PSC at 1-800-622-0176
for information relating to 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
checks of $50 or more will be sent to you, or any person designated by you,
monthly or quarterly, and your periodic redemptions of shares may be taxable to
you. Payments can be made either by check or electronic transfer to a bank
account designated by you. If you direct that withdrawal checks be paid to
another person after you have opened your account, a signature guarantee must
accompany your instructions. Purchases of Class A shares of the Fund at a time
when you have a SWP in effect may result in the payment of unnecessary sales
charges and may therefore be disadvantageous.
You may obtain additional information by calling PSC at 1-800-225-6292 or
by referring to the Statement of Additional Information.
Reinvestment Privilege (Class A Shares Only)
If you redeem all or part of your Class A shares of the Fund, you may
reinvest all or part of the redemption proceeds without a sales charge in Class
A shares of the Fund if you send a written request to PSC not more than 90 days
after your shares were redeemed. Your redemption proceeds will be reinvested at
the next determined net asset value of the Class A shares of the Fund
immediately after receipt of the written request for reinstatement. You may
realize a gain or loss for federal income tax purposes as a result of the
redemption, and special tax rules may apply if a reinstatement occurs. In
addition, if a redemption resulted in a loss and an investment is made in shares
of the Fund within 30 days before or after the redemption, you may not be able
to recognize the loss for federal income tax purposes. Subject to the provisions
outlined under "How to Exchange Fund Shares" above, you may also reinvest in
Class A shares of other Pioneer mutual funds; in this case you must meet the
minimum investment requirement for each fund you enter.
The 90-day reinstatement period may be extended by PFD for periods of up to
one year for shareholders living in areas that have experienced a natural
disaster, such as a flood, hurricane, tornado, or earthquake.
----------------------------------------------
The options and services available to shareholders, including the terms of
the Exchange Privilege and the Pioneer Investomatic Plan, may be revised,
suspended, or terminated at any time by PFD or by the Fund. You may establish
the services described in this section when you open your account. You may also
establish or revise many of them on an existing account by completing an Account
Options Form, which you may request by calling 1-800-225-6292.
XIII. THE FUND
Pioneer India Fund is an open-end, diversified management investment
company (commonly referred to as a mutual fund) organized as a Delaware business
trust on April 4, 1994. The Fund has authorized an unlimited number of shares of
beneficial interest. As an open-end management investment com-
20
<PAGE>
pany, 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 the calculation methods and
uses of the Fund's investment results, see the Statement of Additional
Information.
APPENDIX A
INDIA
The information set forth in this Appendix is based on various publicly
available sources. No representation is made that any correlation exists or will
exist between India or its economy in general and the performance of the Fund.
I. THE COUNTRY OF INDIA
Geography and Population
India is the seventh largest country in the world, covering an area of
approximately 3,300,000 square kilometers. It is situated in South Asia and is
bordered by Nepal, Bhutan and China in the north, Myanmar and Bangladesh in the
east, Pakistan in the west and Sri Lanka in the south.
India is the world's second most populous country in the world. In 1995,
India's total population was estimated to be 911 million. Although migration
from rural to urban centers has been increasing steadily, India's population
remains predominantly rural; the 1991 census reported that 74.3% of the total
population still lives in the countryside. India's total population is projected
to exceed 1 billion by the year 2000.
Hindi is the official national language and is spoken by approximately 30%
of India's population. English is widely used in India as the language of
jurisprudence, commercial transactions and higher and technical education.
21
<PAGE>
Government
India became independent from the United Kingdom in 1947. India is a
federal republic and is governed by a parliamentary democracy under the
Constitution of India. The executive, legislative and judicial functions of
India's Government are separated and certain powers are reserved to India's 25
States and 7 Union Territories.
In general, the federal Parliament has jurisdiction over banking, customs,
currency and communication laws, national defense and foreign affairs. The
States have jurisdiction over public health, education, local law and order and
agricultural affairs. The federal and state governments have concurrent
legislative authority over a variety of economic and social matters, although
federal law is superior to state law in these areas.
International Relations
With the exception of Pakistan, India's foreign relations are generally
stable. In 1993, India renegotiated its foreign debt to Russia and undertook to
rebuild its trade ties with the Central Asian states emerging from the break-up
of the former Soviet Union. In addition, in September 1993 India and China
agreed to pursue a negotiated settlement of the two countries' longstanding
border dispute. Although relations with the U.S. have generally improved
following the breakup of the former Soviet Union, important differences persist
between the U.S. and India regarding relations with Pakistan, protection of
intellectual property rights and India's refusal to become a signatory to the
Nuclear Non-Proliferation Treaty. More than one million persons of Indian origin
live in the United States.
India's relations with Pakistan remain tense. The principal dispute between
the two countries relates to Pakistan's claim to the Indian border state of
Jammu and Kashmir, which was created in connection with the partition of India
at the time of independence.
Ethnic and Cultural Diversity and Conflict
India has a diverse mix of ethnic and cultural groups. The major line of
distinction, however, tends to be religion, which in some areas closely mirrors
cultural or ethnic divisions as well. There are a large number of religions
practiced in India, with Hinduism being the major religion, followed by an
estimated 82% of the total population.
Religious and ethnic differences have been a recurring source of conflict
in India throughout the post-independence era and on several occasions have
erupted in violence. Terrorists bombings have occurred from time to time in a
number of Indian cities.
Overview of India's Economy and Recent Developments
Modern economic development in India began in the mid-1940s with the
publication of the Bombay Plan. The Planning Commission was established in 1950
to assess the country's available resources and to identify growth areas. A
centrally planned economic model was adopted and, in order to control the
direction of private investment, all investment and major economic decisions
required government approval. Foreign investment was allowed only selectively.
This protectionist regime held back development of India's economy until the
mid-1980s when there began to be some move towards liberalization and market
orientation of the economy. With the measures introduced in the budget of 1985,
the annual growth of the country's real gross domestic product ("GDP") rose from
an average 3-4 percent since the 1940s to an average 6.1 percent between 1986
and 1990.
In 1991, faced with a rising oil import bill, an adverse balance of
payments and a large foreign debt, India had reached a position where it was
unable to obtain further commercial borrowings. At this time, the government of
Prime Minister Narasimha Rao took office and has since moved to significantly
reform the structure of India's economic system. The Government's reforms
generally have been supported by consensus among India's other main political
parties, including the BJP.
In July 1991, the Government's Finance Minister, Dr. Manmohan Singh,
presented the Government's first budget and announced a new industrial policy.
Consequently, for many industrial sectors, it became no longer necessary to
obtain government approval for new investments. Foreign companies can now hold
up to 51 percent of an Indian company as opposed to 40 percent previously. As a
result of these policies and other factors, foreign investment in India has
greatly increased in recent years. For example, U.S. private sector investment
in India during 1992 and 1993 exceeded the total amount of money invested in
India by U.S. companies during the previous 40 years.
The process of liberalization was taken further with the budget of February
1992 when the rupee was made partially convertible and import tariffs were
reduced. Personal tax rates were brought down and it was announced that foreign
institutional investors would be able to invest directly in the Indian capital
markets. In September 1992, the guidelines for foreign institutional investors
were published and a number of foreign institutional investors have been
registered by the Securities and Exchange Board of India.
While political instability and communal violence have led to a slowdown in
India's economic growth and the implementation of reforms, PMC and the Indian
Adviser believe that the prospects for economic growth and liberalization remain
sound.
The budgets of February 1993 and 1994 continued to demonstrate the
Government of India's commitment to economic reform. In particular, the rupee
was allowed to float freely, interest rates were reduced and major reductions
were made in customs and excise duties. Tax holidays were given to encourage new
investment in industrially backward areas and in new power projects. In order to
stimulate capital investment a system for computing long-term capital gains tax
was introduced, which favors those whose gains accrue over a longer period.
Further, the proposed Finance Bill 1994 proposes to reduce tax rates for certain
corporations and withdraw a surcharge applicable to individual tax rates.
The Government of India continued to focus on its efforts on financial
reform in its 1995 and 1996 budgets. The Government's fiscal deficit had been
reduced progressively from
22
<PAGE>
8.4% of GDP in 1992 to 6.7% in 1996 due to decreases in tax reforms, greater
control in government expenditure, reduction in subsidies and the sale of
certain equity stakes in companies or undertakings owned by the Government. In
its effort to simplify tax systems, the Government of India reduced corporate
tax rates from 50% to 40% for 1995 and 1996.
II. INDIA'S SECURITIES MARKET
There currently are numerous recognized stock exchanges in India (including
the Over The Counter Exchange of India). Activity and broad interest in the
market have increased in recent years compared to historical norms. This
increase reflects the growth of the private sector's role in the Indian economy
and greater participation in the market by individual investors and foreign
institutional investors. In addition, the Government of India has actively
promoted expanded capital market activity by both foreign and domestic investors
and has adopted policies designed to increase domestic companies' reliance on
the capital markets as a source of financing.
In 1991, the Government of India introduced a program of economic
structural reforms, including certain measures to stimulate growth and activity
in India's capital markets. These reforms included the grant of statutory
authority to the SEBI as an independent agency to promulgate and enforce rules
governing India's capital markets. The SEBI has undertaken a number of
initiatives to reform the Indian securities market and regulate the activities
of securities professionals. The SEBI has occasionally encountered resistance to
its reforms from portions of India's community of securities brokers.
A and B Shares
Equity securities that are traded in the Indian securities markets are
divided into two groups, A shares (also known as "specified shares") and B
shares (also known as "non-specified shares"). A shares are actively traded,
listed equity shares of companies which have a large equity base, and which meet
certain other requirements. All other listed equity shares traded in India's
securities markets are B shares.
The distinction between A shares and B shares is important because the
trade settlement practices for these two classes of securities are different.
While B shares trade only on a cash basis, trades in A shares may be effected on
either a cash basis or a "squared-up" basis. Squaring up a position involves
effecting a trade which is the opposite of an earlier trade. On the settlement
date for such a trade, only the net cash from the offsetting or squared-up
trades is transferred. Transactions in A shares are settled once every 14 days
through the Bombay Stock Exchange's clearing house. Transactions involving B
shares are settled once every 7 days among exchange members.
The Bombay Stock Exchange
Shares listed on the BSE account for over 90% of the market capitalization
of securities listed on India's numerous stock exchanges. The BSE was
established in 1875 and is a self-regulatory organization owned by its members
and governed by a Board of Governors. The BSE at present consists of over 560
member brokers. The BSE has a high daily trading volume, both in terms of the
number of transactions and their value. Active trading on the BSE and other
Indian stock exchanges is concentrated in shares of relatively few issuers and
only a limited portion of many companies' shares are part of the public float.
However, compared to the securities markets of many other emerging countries,
India's securities market is broad-based and unconcentrated in that the ten
largest issuers represent a relatively small portion of total market
capitalization.
The BSE is officially open Monday through Friday. Trading is normally
conducted from 10:00 a.m. to 3:30 p.m. each day using a screen-based trading
system. The BSE is closed on bank holidays and certain religious holidays.
Special trading sessions are held outside normal trading hours simultaneously
with the annual Government budget announcements and on the commencement of the
BSE's financial year. A special trading session for odd lots is held for an hour
on Saturdays.
There are separate trading posts for different groups of securities.
Spreads may vary considerably. A computerized system is used for settling daily
transactions. The BSE clearing house is managed by the State Bank of India and
receives payments and deliveries on behalf of members of the BSE in respect of A
shares. For B shares, delivery and payment is made outside the clearing house
directly among members. There is usually a lag of a few days between delivery of
securities by sellers and receipt of payment.
The following table shows performance information for the periods indicated
for the BSE, as represented by the BSE Sensitive Index, stated in local
currency, which is comprised of securities of large capitalization issuers.
BSE SENSITIVE INDEX
[Base at 12-31-78 = 100]
Period-End Index Level
- --------------- ------------
1982 235.83
1983 252.92
1984 271.87
1985 527.36
1986 524.45
1987 442.17
1988 666.26
1989 778.64
1990 1048.29
1991 1908.85
1992 2615.37
1993 3346.06
1994 3926.90
1995 3110.49
1996 3085.20
1997 3,658.98
The Over the Counter Exchange of India
The Over the Counter Exchange of India ("OTCEI") was built along the lines
of the U.S. Nasdaq National Market and began operations in mid-1992. Trading on
this exchange is fully automated. The OTCEI is a "quote driven market" with a
network of market makers and dealers. The OTCEI is oper-
23
<PAGE>
ated only in Bombay at present, and it intends to commence trading in Delhi and
Madras. The OTCEI mainly provides an avenue for raising funds for small
companies having a capital float between 300,000 rupees and 250 million rupees.
Creation of the National Stock Exchange
The NSE was created by the Government of India in part to increase the
interconnectivity among India's several stock exchanges and thereby to reduce
interexchange arbitrage opportunities (i.e., to increase the transparency of
India's securities exchanges). NSE commenced trading in late 1994 with fully
computerized trading, settlement and information dissemination systems.
Financial institutions own the NSE but they must apply and qualify for trading
on the same basis as others wishing to trade. Qualifications for membership
include capital adequacy standards and educational training.
Equity trading is open to both institutional and individual investors.
Trading volumes on the NSE have been increasing steadily, at times exceeding the
BSE's volume. Debt and equity trading will eventually be book-entry with a
central depositary. Futures and option trading began in 1995.
APPENDIX B
CERTAIN INVESTMENT PRACTICES
Forward Foreign Currency Exchange Contracts
The Fund has the ability to hold a portion of its assets in foreign
currencies and to enter into forward foreign currency exchange contracts to
facilitate settlement of foreign securities transactions or to protect against
changes in foreign currency exchange rates. The Fund might sell a foreign
currency on either a spot or forward basis to hedge against an anticipated
decline in the U.S. dollar value of securities in its portfolio or securities it
intends or has contracted to sell or to preserve the U.S. dollar value of
dividends, interest or other amounts it expects to receive. Although this
strategy could minimize the risk of loss due to a decline in the value of the
hedged foreign currency, it could also limit any potential gain which might
result from an increase in the value of the currency. Alternatively, the Fund
might purchase a foreign currency or enter into a forward purchase contract for
the currency to preserve the U.S. dollar price of securities it is authorized to
purchase or has contracted to purchase.
If the Fund enters into a forward contract to buy foreign currency for any
purpose, the Fund will be required to place cash or liquid, high grade debt
securities in a segregated account of the Fund maintained by the Fund's
custodian in an amount equal to the value of the Fund's total assets committed
to the consummation of the forward contract.
The use of forward foreign currency exchange contracts is a highly
specialized activity which involves investment techniques and risks that are
different from those associated with ordinary portfolio transactions. The use of
forward foreign currency exchange contracts involves (1) liquidity risk that
contractual positions cannot be easily closed out in the event of market changes
or generally in the absence of a liquid secondary market, (2) correlation risk
that changes in the value of a hedging position may not match the foreign
currency fluctuations intended to be hedged, and (3) market risk that an
incorrect prediction of exchange rates by PMC or the Indian Adviser may cause
the Fund to perform less favorably than if such position had not been entered.
The loss that may be incurred by the Fund in entering into forward foreign
currency exchange contracts is potentially unlimited. There is no limit on the
percentage of the Fund's assets that may be invested in forward foreign currency
exchange contracts.
There currently is no market, or only a limited market, for forward foreign
currency exchange contracts with respect to the rupee and the currencies of
certain other foreign countries in which the Fund may invest. Consequently,
there can be no assurance that such contracts will be available for hedging
currency risks at the times when the Fund wishes to use them. In addition, the
Fund's transactions in forward foreign currency exchange contracts may be
limited by the requirements for qualification of the Fund as a regulated
investment company for tax purposes. See "Tax Status" in the Statement of
Additional Information.
Repurchase Agreements
The Fund may enter into repurchase agreements not exceeding seven days in
duration. In a repurchase agreement, an investor (e.g., the Fund) purchases a
debt security from a seller which undertakes to repurchase the security at a
specified resale price on an agreed future date (ordinarily a week or less). The
resale price generally exceeds the purchase price by an amount which reflects an
agreed-upon market interest rate for the term of the repurchase agreement.
Repurchase agreements entered into by the Fund will be fully collateralized with
U.S. Treasury and/or U.S. Government agency obligations with a market value of
not less than 100% of the obligation, valued daily. Collateral will be held in a
segregated, safekeeping account for the benefit of the Fund. In the event that a
repurchase agreement is not fulfilled, the Fund could suffer a loss to the
extent that the value of the collateral falls below the repurchase price or if
the Fund is prevented from realizing the value of the collateral by reason of an
order of a court with jurisdiction over an insolvency proceeding with respect to
the other party to the repurchase agreement.
Borrowing
The Fund may borrow money only from banks and only for temporary emergency
purposes such as in connection with the redemption of Fund shares or in
connection with the clearance of portfolio transactions. The aggregate amount of
the Fund's borrowings may not exceed 33-1/3% of the Fund's total assets
(including the amount borrowed) taken at market value. In addition, the Fund
will not purchase securities for its portfolio while the Fund's outstanding
borrowings exceed 5% of its total assets. The Fund will incur interest and other
expenses in connection with its borrowings.
Restricted and Illiquid Securities
The Fund may invest in restricted securities (i.e., securities that would
be required to be registered prior to distribution to the public), including
restricted securities eligible for resale to
24
<PAGE>
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.
25
<PAGE>
THE PIONEER FAMILY OF MUTUAL FUNDS
Growth Funds
Global/International
Pioneer Emerging Markets Fund
Pioneer Europe Fund
Pioneer Gold Shares
Pioneer India Fund
Pioneer International Growth Fund
Pioneer World Equity Fund
United States
Pioneer Capital Growth Fund
Pioneer Growth Shares
Pioneer Micro-Cap Fund*
Pioneer Mid-Cap Fund
Pioneer Small Company Fund
Growth and Income Funds
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer Real Estate Shares
Pioneer II
Income Funds
Taxable
Pioneer America Income Trust
Pioneer Bond Fund
Pioneer Short-Term Income Trust*
Tax-Exempt
Pioneer Intermediate Tax-Free Fund**
Pioneer Tax-Free Income Fund**
Money Market Fund
Pioneer Cash Reserves Fund
*Offers Class A and B Shares only
**Not suitable for retirement accounts
26
<PAGE>
Notes
27
<PAGE>
[PIONEER LOGO]
Pioneer India Fund
60 State Street
Boston, Massachusetts 02109
OFFICERS
JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
JASKARAN S. TEJA, Vice President
NORMAN KURLAND, Ph.D., Vice President
CHRISTOPHER D. LIVELY, Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
INVESTMENT MANAGER
PIONEERING MANAGEMENT CORPORATION
INDIAN INVESTMENT ADVISER
ITI PIONEER AMC LTD.
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANT
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR LLP
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: 1-800-225-6292
SERVICE INFORMATION
If you would like information on the following, please call:
Existing and new accounts, prospectuses,
applications and service forms
and telephone transactions..................... 1-800-225-6292
FactFone(SM)
Automated fund yields, automated prices and
account information............................ 1-800-225-4321
Retirement plans................................ 1-800-622-0176
Toll-free fax................................... 1-800-225-4240
Telecommunications Device for the Deaf (TDD).... 1-800-225-1997
Visit our website......................... www.pioneerfunds.com
0298-4953
(C)Pioneer Funds Distributor, Inc.
<PAGE>
PIONEER INDIA FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
CLASS A, CLASS B AND CLASS C SHARES
February 27, 1998
This Statement of Additional Information is not a Prospectus, but should be
read in conjunction with the Prospectus dated February 27, 1998 (the
"Prospectus") of Pioneer India Fund (the "Fund"). A copy of the Prospectus can
be obtained free of charge by calling Shareholder Services at 1-800-225-6292 or
by written request to the Fund at 60 State Street, Boston, Massachusetts 02109.
The most recent Annual Report to Shareholders is attached to, and is hereby
incorporated into, this Statement of Additional Information.
TABLE OF CONTENTS
PAGE
1. Investment Policies, Restrictions and Risk Factors...................... 2
2. Management of the Fund..................................................10
3. Investment Advisers.....................................................14
4. Principal Underwriter...................................................16
5. Distribution Plans......................................................16
6. Shareholder Servicing/Transfer Agent....................................19
7. Custodian...............................................................19
8. Independent Public Accountant...........................................20
9. Portfolio Transactions..................................................20
10. Tax Status..............................................................22
11. Description of Shares...................................................27
12. Certain Liabilities.....................................................27
13. Determination of Net Asset Value........................................28
14. Systematic Withdrawal Plan..............................................29
15. Letter of Intent........................................................29
16. Investment Results......................................................30
17. Financial Statements....................................................33
Appendix A--Short-Term Debt and Corporate Bond Ratings..................34
Appendix B--Performance Statistics......................................43
Appendix C--Additional Pioneer Information..............................56
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, this standard or other restrictions 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.
RISK FACTORS ASSOCIATED WITH INVESTMENTS IN INDIA AND OTHER FOREIGN COUNTRIES
The Fund is intended for long-term investors who can accept the risks
associated with investing primarily in equity securities of Indian Companies (as
defined in the Prospectus) and other foreign issuers, as well as the risks
associated with investments quoted or denominated in foreign currencies. In
addition, certain of the Fund's potential investment and management techniques
entail special risks. There can be no assurance that the Fund will achieve its
investment objective. See "Investment Objective and Policies--Risk Factors" in
the Prospectus.
The securities markets of India and most other countries with emerging
markets are less liquid, subject to greater price volatility and have a smaller
market capitalization than the United States ("U.S.") securities market. Issuers
and securities markets in India and other emerging market countries are not
subject to as extensive and frequent accounting, financial and other reporting
requirements or as comprehensive government regulations as are issuers and
securities markets in the United States. Certain of the securities markets in
which the Fund may invest are marked by a relatively high concentration of
market capitalization and trading volume in a small number of issuers
representing a limited number of industries, as well as a high concentration of
ownership of such securities by a limited number of investors. See "Risk
Factors" and "Restrictions on Investment in India" in the Prospectus. The
limited liquidity of these securities markets may also affect the Fund's ability
to accurately value its portfolio securities or to acquire or dispose of
securities at the price and time it wishes to do so or in order to meet
redemption requests.
Foreign investment in the securities market of India and in certain other
emerging markets is restricted or controlled to varying degrees. These
restrictions may limit the Fund's ability to invest in these countries and may
increase the expenses of the Fund. For a description of the restrictions on
foreign investment in India, see "Restrictions on Investment in India" in the
Prospectus and Appendix A to the Prospectus.
India and other emerging countries are subject to a greater degree of
economic, political and social instability than is the case in the U.S. and most
Western European countries. Such instability may result from, among other
things, the following: (i) authoritarian governments or military involvement in
political and economic decision making, including changes or attempted changes
in governments through extra-constitutional means; (ii) popular unrest
associated with demands for improved political,
2
<PAGE>
economic or social conditions; (iii) internal insurgencies; (iv) hostile
relations with neighboring countries; and (v) ethnic, religious and racial
disaffection or conflict. Such economic, political and social instability could
disrupt the principal financial markets in which the Fund invests and adversely
affect the value of the Fund's assets. For a description of possible sources of
economic, political and social instability in India, see "Risk Factors" and
"Restrictions on Investment in India" in the Prospectus and Appendix A to the
Prospectus.
The Fund's income and, in some cases, capital gains from foreign securities
will be subject to applicable taxation in certain of the countries in which it
invests, and in some cases treaties may not be available to reduce the otherwise
applicable tax rates. For a description of the Indian taxes that will apply to
the Fund's investments in India, see "Indian Taxes" in the Prospectus. The Fund
may elect, when eligible, to "pass-through" to the Fund's shareholders those
taxes that are treated as income or certain other qualified taxes for U.S.
federal income tax purposes. If the Fund is eligible for and makes such
election, U.S. shareholders will be required to include in income their
proportionate shares of the amount of qualifying non-U.S. taxes paid by the Fund
and may be entitled to claim either a credit or deduction for all or a portion
of such taxes. Certain shareholders, including shareholders not subject to U.S.
taxation, will not be entitled to the benefit of a deduction or credit with
respect to non-U.S. income taxes paid by the Fund. See "Tax Status." If the Fund
does not make the election, it may deduct foreign taxes that it has paid in
computing its income available for distribution to shareholders to satisfy
applicable tax distribution requirements.
Foreign securities markets also have different clearance and settlement
procedures than securities markets in the U.S., and in certain foreign markets
there have been times when settlements have been unable to keep pace with the
volume of securities transactions for a variety of reasons (including, in India,
custodial infrastructure limitations), making it difficult to conduct such
transactions. For a discussion of such problems in India's securities market,
see "Risk Factors" and "Restrictions on Investment in India" in the Prospectus.
Such delays in settlement could result in temporary periods when a portion of
the Fund's assets are uninvested and no return is earned on such assets. The
inability of the Fund to make intended security purchases due to settlement
problems could result in lost opportunities to the Fund due to subsequent
increases in value of the securities. Conversely, the Fund's inability to sell
portfolio securities promptly because of settlement problems may result in
losses to the Fund due to subsequent declines in value of the portfolio
securities. In addition, because payments in connection with securities
transactions in certain foreign countries (including India) generally are made
to and received from brokers (and not clearinghouses) the Fund will be exposed
to broker-counterparty risk in connection with such transactions.
EFFECTS OF FLUCTUATIONS IN FOREIGN CURRENCY EXCHANGE RATES
Because the Fund, under normal circumstances, will invest a substantial
portion of its assets in securities which are denominated or quoted in Indian
rupees (hereinafter "rupees") and other foreign currencies, the strength or
weakness of the U.S. dollar against such currencies will affect the Fund's
investment performance. A decline in the value of any particular foreign
currency against the U.S. dollar will cause a decline in the U.S. dollar value
of the Fund's holdings of securities denominated or quoted in such currency and,
therefore, may cause an overall decline in the Fund's net asset value and any
net investment income and capital gains to be distributed in U.S. dollars to
shareholders of the Fund. Even if the Fund attempts to hedge against the effects
of adverse changes in foreign currency
3
<PAGE>
exchange rates, there will be significant limitations on the Fund's ability
to hedge effectively against the currency risks associated with its portfolio
investments. See Appendix B to the Prospectus.
The rate of exchange between the U.S. dollar and other currencies is
determined by several factors including the supply and demand for particular
currencies, central bank efforts to support particular currencies, the movement
of interest rates, the pace of business activity in certain other countries and
the U.S., and other economic and financial conditions affecting the world
economy.
Although the Fund values its assets daily in terms of U.S. dollars, the
Fund does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. The Fund may do so from time to time, however, and
investors should be aware of the costs of currency conversion. Although currency
dealers do not charge a fee for conversion, they do realize a profit based on
the difference ("spread") between the prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at
one rate, while offering a lesser rate of exchange should the Fund desire to
sell that currency to the dealer.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may conduct foreign currency transactions on a spot (i.e., cash)
basis at the spot rate for purchasing or selling currency prevailing in the
foreign exchange market. The Fund also may enter into forward foreign currency
exchange contracts ("forward contracts") involving rupees or currencies of other
foreign countries in which the Fund may invest. Forward contracts are
contractual agreements to purchase or sell a specified currency at a specified
future date and price set at the time the parties enter into the contract.
Forward contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers.
Currently, there is no market, or only a limited market, for these
contracts with respect to the rupee and the currencies of certain other foreign
countries in which the Fund may invest. Consequently, there can be no assurance
that such contracts will be available for hedging currency risks at the time
when the Fund wishes to use them.
The Fund may enter into forward contracts to hedge against foreign currency
risk in the following circumstances. First, when the Fund intends to purchase or
sell a security denominated or quoted in a foreign currency, or when the Fund
anticipates the receipt in a foreign currency of dividend or interest payments
on such a security that it holds, the Fund may wish to "lock in" the U.S. dollar
price of the security or the U.S. dollar equivalent of such dividend or interest
payment, as the case may be. By entering into a forward contract for the
purchase or sale, for a fixed amount of U.S. dollars, of the amount of foreign
currency involved, the Fund will attempt to protect itself against an adverse
change in the relationship between the U.S. dollar and the subject foreign
currency during the period between the date on which the Fund enters into the
forward contract and the date on which the contract matures or is closed out.
Second, when Pioneering Management Corporation ("PMC"), the Fund's manager
and investment adviser, believes that the currency of a particular foreign
country may suffer a significant decline against the U.S. dollar, it may attempt
to hedge the Fund's exposure to such currency by entering into a forward
contract to sell, for a fixed amount of U.S. dollars, the amount of foreign
currency approximating the value of some or all of the Fund's portfolio
securities denominated or quoted in the
4
<PAGE>
subject foreign currency. The precise matching of the forward contract
amounts and the value of the portfolio securities involved generally will not be
possible because the future value (in foreign currencies) of such securities
will change as a consequence of securities market movements between the date on
which the contract is entered into and the date it matures or is closed out.
The Fund's custodian will place cash or liquid, high grade debt securities
(i.e., securities rated in one of the top three rating categories by Standard &
Poor's Ratings Group ("Standard & Poor's") or by Moody's Investors Service, Inc.
("Moody's") or, if unrated by such rating organizations, determined by PMC to be
of comparable credit quality) into a segregated account in an amount equal to
the value of the Fund's total assets committed to the consummation of forward
contracts requiring the Fund to purchase foreign currencies. If the value of the
securities placed in the segregated account declines, the Fund will place
additional cash or securities in the account so that the value of the account
will equal the amount of the Fund's commitments with respect to such contracts.
The segregated account will be marked-to-market on a daily basis.
Forward contracts entered into by the Fund for hedging purposes will limit
the opportunity for gain in the event that the value of the hedged currency
rises. In addition, the use of forward contracts to protect against a decline in
the value of a foreign currency to which the Fund has exposure will not
eliminate fluctuations in the prices of securities denominated or quoted in such
currency. It simply will establish a rate of exchange which the Fund will be
able to achieve at a specified future point in time. Moreover, it may not be
possible for the Fund to hedge against a currency devaluation that is so
generally anticipated that the Fund is not able to contract to sell the currency
at a price above the anticipated devaluation level.
The cost to the Fund of engaging in foreign currency transactions varies
with such factors as the currency involved, the size of the contract, the length
of the contract period and the market conditions then prevailing. Since
transactions in foreign currency and forward contracts are usually conducted on
a principal basis, no deposits, fees or commissions generally are involved. At
the maturity of a forward contract, the Fund may either accept or make delivery
of the currency specified in the contract or, at or prior to maturity, enter
into a closing purchase transaction involving the purchase or sale of an
offsetting contract. Closing purchase transactions with respect to forward
contracts are usually effected with the currency trader who is a party to the
original forward contract.
ILLIQUID SECURITIES
The Fund may invest up to 15% of its net assets in illiquid securities. See
"Restricted and Illiquid Securities" in Appendix B to the Prospectus. Generally,
a security will be considered illiquid if the Fund is unable to dispose of such
security within seven days at approximately the price at which it values such
security. Securities may also be considered illiquid as a result of certain
legal or contractual restrictions on resale. The sale of illiquid securities, if
they can be sold at all, generally will require more time and result in higher
brokerage charges and other selling expenses than will the sale of liquid
securities, such as securities eligible for trading on U.S. securities exchanges
or in U.S. over-the-counter markets. Moreover, restricted securities (i.e.,
securities that would be required to be registered prior to distribution to the
general public), such as securities eligible for resale pursuant to Rule 144A or
Regulation S under the Securities Act of 1933, as amended (collectively, "144A
securities"), which may be illiquid for purposes of this limitation, often sell
at a price lower than similar securities that are not subject to restrictions on
resale.
5
<PAGE>
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,
with Kothari Pioneer AMC Ltd.'s (the "Indian Adviser") assistance, will monitor
the liquidity of the Fund's portfolio securities on an ongoing basis and will
report periodically to the Trustees on this subject.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements with "primary dealers" in
U.S. Government securities and banks which furnish collateral at least equal in
value or market price to the amount of their repurchase obligation. The Fund may
also enter into repurchase agreements involving certain foreign government
securities. The primary risk associated with repurchase agreements is that, if
the seller defaults, the Fund might suffer a loss to the extent that the
proceeds from the sale of the underlying securities and other collateral held by
the Fund in connection with the related repurchase agreement are less than the
repurchase price. Another risk is that, in the event of bankruptcy of the
seller, the Fund could be delayed in or prohibited from disposing of the
underlying securities and other collateral held by the Fund in connection with
the related repurchase agreement pending court proceedings. In evaluating
whether to enter a repurchase agreement, PMC will carefully consider the
creditworthiness of the seller pursuant to procedures reviewed and approved by
the Trustees. See "Repurchase Agreements" in Appendix B to the Prospectus.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS
The Fund will purchase securities on a when-issued, delayed delivery or
forward commitment basis only with the intention of completing the transaction
and actually purchasing the securities. If deemed appropriate by PMC or the
Indian Adviser, however, the Fund may dispose of or renegotiate a commitment
after it is entered into, and may sell securities it has committed to purchase
before those securities are delivered to the Fund on the settlement date. In
these cases, the Fund may realize a taxable gain or loss.
When the Fund agrees to purchase securities on a when-issued, delayed
delivery or forward commitment basis, the Fund's custodian will set aside cash
or liquid, high grade debt securities equal to the amount of the commitment in a
segregated account. The market value of the Fund's net assets may fluctuate to a
greater degree when it sets aside portfolio securities than when it sets aside
cash. Because the Fund's liquidity and ability to manage its portfolio might be
affected when it sets aside cash or portfolio securities to cover purchase
commitments, the Fund expects that its commitments to purchase when-issued
securities and forward commitments will not exceed 33% of the value of its total
assets absent unusual market conditions. When the Fund engages in when-issued
and forward commitment transactions, it relies on the other party to the
transaction to consummate the trade. Failure of such
6
<PAGE>
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), (6) and
(7) below. For purposes of this restriction, the issuance of shares of
beneficial interest in multiple classes or series, the purchase or sale of
options, futures contracts and options on futures contracts, forward
commitments, forward foreign exchange contracts, repurchase agreements and
reverse repurchase agreements entered into in accordance with the Fund's
policies, and the pledge, mortgage or hypothecation of the Fund's assets within
the meaning of paragraph (3) below are not deemed to be senior securities.
(2) Borrow money, except from banks as a temporary measure for
extraordinary emergency purposes and except pursuant to reverse repurchase
agreements and then only in amounts not to exceed 33 1/3% of the Fund's total
assets (including the amount borrowed) taken at market value. The Fund will not
use leverage to attempt to increase income. The Fund will not purchase
securities while outstanding borrowings (including reverse repurchase
agreements) exceed 5% of the Fund's total assets.
(3) Pledge, mortgage, or hypothecate its assets, except to secure
indebtedness permitted by paragraph (2) above and then only if such pledging,
mortgaging or hypothecating does not exceed 33 1/3% of the Fund's total assets
taken at market value.
(4) Act as an underwriter, except to the extent that, in connection with
the disposition of portfolio securities, the Fund may be deemed to be an
underwriter for purposes of the Securities Act of 1933, as amended (the "1933
Act").
(5) Purchase or sell real estate, except that the Fund may (i) lease office
space for its own use, (ii) invest in securities of issuers that invest in real
estate or interests therein, (iii) invest in securities that are secured by real
estate or interests therein, (iv) purchase and sell mortgage-related securities
and (v) hold and sell real estate acquired by the Fund as a result of the
ownership of securities.
(6) Make loans, except that the Fund may lend portfolio securities in
accordance with the Fund's investment policies and may purchase or invest in
repurchase agreements, bank certificates of deposit, a portion of an issue of
publicly distributed bonds, bank loan participation agreements, bankers'
acceptances, debentures or other securities, whether or not the purchase is made
upon the original issuance of the securities.
7
<PAGE>
(7) Invest in commodities or commodity contracts or in puts, calls, or
combinations of both, except interest rate futures contracts, options on
securities, securities indices, currency and other financial instruments,
futures contracts on securities, securities indices, currency and other
financial instruments and options on such futures contracts, forward foreign
currency exchange contracts, forward commitments, securities index put or call
warrants and repurchase agreements entered into in accordance with the Fund's
investment policies.
(8) With respect to 75% of its total assets, purchase securities of an
issuer (other than the U.S. Government, its agencies or instrumentalities), if
(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,
lend portfolio securities or invest in securities index put and call warrants,
as described in fundamental investment restrictions (2), (6) and (7) above,
during the coming year.
In addition, as a matter of nonfundamental investment policy and in
connection with the offering of its shares in various states and foreign
countries, the Fund has agreed not to:
(a) Participate on a joint-and-several basis in any securities trading
account. The "bunching" of orders for the sale or purchase of marketable
portfolio securities with other accounts under the management of PMC or the
Indian Adviser to save commissions or to average prices among them is not deemed
to result in a securities trading account.
(b) Purchase securities on margin or make short sales unless by virtue of
its ownership of other securities, the Fund has the right to obtain, without
payment of additional consideration, securities equivalent in kind and amount to
the securities sold and, if the right is conditional, the sale is made upon the
same conditions, except that the Fund may obtain such short-term credits as may
be necessary for the clearance of purchases and sales of securities and in
connection with transactions involving forward foreign currency exchange
transactions, options, futures contracts and options on futures contracts.
(c) Purchase a security if, as a result, (i) more than 10% of the Fund's
total assets would be invested in securities of closed-end investment companies,
(ii) such purchase would result in more than 3% of the total outstanding voting
securities of any one such closed-end investment company being held by the Fund,
or (iii) more than 5% of the Fund's total assets would be invested in any one
such closed-end investment company; provided, however, the Fund can exceed such
limitations in connection with a plan of merger or consolidation with or
acquisition of substantially all the assets of such other closed-
8
<PAGE>
end investment company. The Fund will not invest in the securities of any
open-end investment company, except in connection with a plan of merger or
consolidation with, or acquisition of, substantially all the assets of such
other open-end investment company.
(d) Invest more than 10% of its total assets in the aggregate of (1)
securities of any issuer which, together with its predecessors, has been in
operation for less than three years and (2) restricted securities, excluding
securities eligible for resale pursuant to Rule 144A under the 1933 Act or
foreign securities which are offered or sold outside the U.S. in accordance with
Regulation S under the 1933 Act; provided, however, that the Fund may not invest
more than 15% of its net assets in restricted securities including those
eligible for resale under Rule 144A. Securities of non-U.S. issuers that the
Fund acquires in Rule 144A transactions, but which the Fund may resell publicly
in a non-U.S. securities market, are not considered restricted securities.
(e) Invest for the purpose of exercising control over or management of any
company.
(f) Purchase warrants of any issuer, if, as a result of such purchases,
more than 2% of the value of the Fund's net assets would be invested in
warrants, which are not listed on the New York Stock Exchange (the "Exchange"),
the American Stock Exchange or comparable international exchanges or more than
5% of the value of the net assets of the Fund would be invested in warrants
generally, whether or not listed. For these purposes, warrants are to be valued
at the lesser of cost or market, but warrants acquired by the Fund in units with
or attached to debt securities shall be deemed to be without value.
(g) Knowingly purchase or retain securities of an issuer if one or more of
the Trustees or officers of the Fund or directors or officers of PMC, the Indian
Adviser or any investment management subsidiary of PMC or the Indian Adviser
individually owns beneficially more than 0.5% and together own beneficially more
than 5% of the securities of such issuer.
(h) Purchase interests in oil, gas or other mineral leases or exploration
programs; however, this policy will not prohibit the acquisition of securities
of companies engaged in the production or transmission of oil, gas or other
minerals.
(i) Purchase any security which is illiquid, if more than 15% of the net
assets of the Fund, taken at market value, would be invested in such securities.
The Fund may not invest in repurchase agreements maturing in more than seven
days.
(j) Invest more than 5% of its total assets in restricted securities,
excluding Rule 144A securities; provided, however, the Fund may not invest more
than 15% of its total assets in restricted securities, including such Rule 144A
securities. Securities of non-U.S. issuers that the Fund acquires in Rule 144A
transactions, but which the Fund may resell publicly in a non- U.S. securities
market, are not considered restricted securities.
(k) Write covered calls or put options with respect to more than 25% of the
value of its total assets or invest more than 5% of its total assets in puts,
calls, spreads, or straddles, other than protective put options.
9
<PAGE>
(l) Invest in real estate limited partnerships.
2. MANAGEMENT OF THE FUND
The Fund's Board of Trustees provides broad supervision over the affairs of
the Fund. The officers of the Fund are responsible for the Fund's operations.
The Trustees and executive officers of the Fund are listed below, together with
their principal occupations during the past five years. An asterisk indicates
those Trustees who are interested persons of the Fund within the meaning of the
1940 Act.
JOHN F. COGAN, JR.*, CHAIRMAN OF THE BOARD, PRESIDENT AND TRUSTEE,
DOB: JUNE 1926
President, Chief Executive Officer and a Director of The Pioneer Group,
Inc. ("PGI"); Chairman and a Director of Pioneering Management Corporation
("PMC") and Pioneer Funds Distributor, Inc. ("PFD"); Director of Pioneering
Services Corporation ("PSC"), Pioneer Capital Corporation ("PCC"), Pioneer Real
Estate Advisors, Inc., Pioneer Forest, Inc., Pioneer Explorer, Inc., Pioneer
Management (Ireland) Ltd. ("PMIL") and Closed Joint Stock Company
"Forest-Starma"; President and Director of Pioneer Metals and Technology, Inc.
("PMT"), Pioneer International Corp. ("PIntl"), Pioneer First Russia, Inc.
("First Russia") and Pioneer Omega, Inc. ("Omega"); Chairman of the Board and
Director of Pioneer Goldfields Limited ("PGL") and Teberebie Goldfields Limited;
Chairman of the Supervisory Board of Pioneer Fonds Marketing, GmbH, Pioneer
First Polish Trust 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 and
Eastern Europe Fund Plc and Pioneer US Real Estate Fund Plc; and Partner, Hale
and Dorr LLP (counsel to PGI and the Fund).
MARY K. BUSH, TRUSTEE, DOB: APRIL 1948
4201 CATHEDRAL AVENUE, NW, WASHINGTON, DC 20016
President, Bush & Co., an international financial advisory firm;
Director and Trustee of Mortgage Guaranty Insurance Corporation, Novecon
Management Company, Hoover Institution, Folger Shakespeare Library, March of
Dimes, Project 2000, Inc.(not-for-profit organization), Small Enterprise
Assistance Fund and Wilberforce University; Advisory Board Member, Washington
Mutual Investors Fund, a 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 02115
Professor of Management, Boston University School of Management;
Professor of Public Health, Boston University School of Public Health; Professor
of Surgery, Boston University School of Medicine; Director, Boston University
Health Policy Institute and Boston University Medical Center; Executive Vice
President and Vice Chairman of the Board, University Hospital; Academic Vice
President for Health Affairs, Boston University; Director, Essex Investment
Management Company, Inc. (investment adviser), Health Payment Review, Inc.
(health care containment software firm), Mediplex Group, Inc. (nursing care
facilities firm), Peer Review Analysis, Inc. (health care facilities firm) and
Springer-Verlag New York, Inc. (publisher); Honorary Trustee, Franciscan
Children's Hospital; and Trustee of all of the Pioneer mutual funds.
10
<PAGE>
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;
and Trustee of all of the Pioneer mutual funds, except Pioneer Variable
Contracts Trust.
MARGUERITE A. PIRET, TRUSTEE, DOB: MAY 1948
ONE BOSTON PLACE, SUITE 2635, BOSTON, MA 02108
President, Newbury, Piret & Company, Inc. (merchant banking firm);
Trustee of Boston Medical Center; Member of the Board of Governors of the
Investment Company Institute; and Trustee of all of the Pioneer mutual funds.
DAVID D. TRIPPLE*, TRUSTEE AND EXECUTIVE VICE PRESIDENT, DOB: FEBRUARY 1944
Executive Vice President and a Director of PGI; President, Chief
Investment Officer and a Director of PMC; Director of PFD, PCC, PIntl, First
Russia, Omega, Pioneer SBIC Corporation ("Pioneer SBIC"), PMIL, Pioneer Global
Equity Fund Plc, Pioneer Global Bond Fund Plc, Pioneer DM Cashfonds Plc, Pioneer
European Equity Fund Plc, Pioneer Central and 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
Partner, Sullivan & Cromwell (law firm); Trustee, The Winthrop Focus
Funds (mutual funds); and Trustee of all of the Pioneer mutual funds.
JOHN WINTHROP, TRUSTEE, DOB: JUNE 1936
ONE NORTH ADGERS WHARF, CHARLESTON, SC 29401
President, John Winthrop & Co., Inc. (private investment firm); Director of
NUI Corp. (energy sales, services and distribution); Trustee of Alliance Capital
Reserves, Alliance Government Reserves and Alliance Tax Exempt Reserves; and
Trustee of all of the Pioneer mutual funds, except Pioneer Variable Contracts
Trust.
WILLIAM H. KEOUGH, TREASURER, DOB: APRIL 1937
Senior Vice President, Chief Financial Officer and Treasurer of PGI;
Treasurer of PFD, PMC, PSC, PCC, 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.
11
<PAGE>
ERIC W. RECKARD, ASSISTANT TREASURER, DOB: JUNE 1956
Manager of Fund Accounting of PMC since May 1994; Manager of Auditing,
Compliance and Business Analysis for PGI prior to May 1994; and Assistant
Treasurer of all of the Pioneer mutual funds.
ROBERT P. NAULT, ASSISTANT SECRETARY, DOB: MARCH 1964
General Counsel and Assistant Secretary of PGI since 1995; Assistant
Secretary of PMC, PIntl, PGL, First Russia, Omega and all of the Pioneer mutual
funds; Assistant Clerk of PFD and PSC; and junior partner of Hale and Dorr LLP
prior to 1995.
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 and
Pioneer International Growth Fund.
CHRISTOPHER D. LIVELY, VICE PRESIDENT, DOB: JULY 1962
Vice President of PMC and of the Fund (effective March 3, 1998).
The Fund's Declaration of Trust (the "Declaration of Trust") provides that
the holders of two-thirds of its outstanding shares may vote to remove a Trustee
of the Fund at any meeting of shareholders. See "Description of Shares" below.
The business address of all officers is 60 State Street, Boston, Massachusetts
02109.
All of the outstanding capital stock of PFD, PMC and PSC is owned, directly
or indirectly, by PGI, a publicly-owned Delaware corporation. PMC, the Fund's
investment adviser, serves as the investment adviser for the Pioneer mutual
funds listed below and manages the investments of certain institutional
accounts.
The table below lists all the Pioneer mutual funds currently offered to the
public and the investment adviser and principal underwriter for each fund.
Investment Principal
FUND NAME ADVISER UNDERWRITER
Pioneer World Equity Fund PMC PFD
Pioneer International Growth Fund PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer India Fund PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Mid-Cap Fund PMC PFD
12
<PAGE>
Pioneer Growth Shares PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Micro-Cap Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Balanced Fund PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer Interest Shares, Inc. PMC Note 1
Pioneer Variable Contracts Trust PMC Note 2
Note 1 This fund is a closed-end fund.
Note 2 This is a series of ten separate portfolios designed to provide
investment vehicles for the variable annuity and variable life
insurance contracts of various insurance companies and for certain
qualified pension plans.
To the knowledge of the Fund, no officer or Trustee of the Fund
owned 5% or more of the issued and outstanding shares of PGI as of the date of
this Statement of Additional Information, except Mr. Cogan who then owned
approximately 14% of such shares.
On January 31, 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 39% (481,157 shares) of the Fund's
Class B shares and approximately 7.20% (7,164 shares) of the Fund's Class C
shares. On the same date, Smith Barney Inc., 388 Greenwich Street, New York, NY
10013-2375 owned approximately 10.15% (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 5% (5,061 shares) of the Fund's Class C shares
and PFD owned approximately 12.95% (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, however,
the Fund will pay an annual trustees' fee to each Trustee who is not affiliated
with PGI, PMC, PFD or PSC consisting of two components: (a) a base fee of $500
and (b) a variable fee, calculated on the basis of the average net assets of the
Fund. In addition, the Fund will pay a per meeting fee of $100 to each Trustee
who is not affiliated with PGI, PMC, PFD or PSC. The Fund also will pay an
annual committee participation fee to each Trustee who serves as a member of any
committees established to act on behalf of one or more of the Pioneer mutual
funds. Committee fees will be allocated to the Fund on the basis of the Fund's
average net assets. Each Trustee who is a member of the Audit Committee for the
Pioneer mutual
13
<PAGE>
funds will receive an annual fee equal to 10% of the aggregate annual
trustees' fee, except the Committee Chairperson who will receive an annual
trustees' fee equal to 20% of the aggregate annual trustees' fee. Members of the
Pricing Committee for the Pioneer mutual funds, as well as any other committee
which renders material functional services to the Boards of Trustees for the
Pioneer mutual funds, will receive an annual fee equal to 5% of the annual
trustees' fee, except the Committee Chair who will receive an annual trustees'
fee equal to 10% of the annual trustees' fee. Each Trustee who is not affiliated
with PGI, PMC, PFD or PSC also receives $375 per meeting for attendance at
meetings of the Non-Interested Trustees Committee, except for the Committee
Chair who will receive an additional $375 per meeting. Any such fees paid to
affiliates or interested persons of PGI, PMC, PFD or PSC are reimbursed to the
Fund under its Management Contract.
The following table sets forth certain information with respect to the
compensation of each Trustee of the Fund:
<TABLE>
<CAPTION>
Pension or Retirement Total Compensation
Benefits Accrued as from the Fund and
Aggregate Part of the Trust's Other Pioneer Mutual
Compensation Expenses Funds**
NAME OF TRUSTEE FROM THE FUND*
<S> <C> <C> <C>
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, 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 sixty
days' written notice.
14
<PAGE>
As compensation for its management services and expenses incurred, PMC is
entitled to a management fee at the rate of 1.25% per annum of the Fund's
average daily net assets. This fee is normally computed daily and paid monthly.
PMC has agreed not to impose all or a portion of its management fee and to make
other arrangements, if necessary, to limit certain other expenses of the Fund to
the extent necessary to limit Class A expenses to 2.25% of the average daily net
assets attributable to the Fund's Class A shares; the portion of the Fund-wide
expenses attributable to Class B and Class C shares will be reduced only to the
extent such expenses are reduced for Class A shares. This agreement is voluntary
and temporary and may be revised or terminated by PMC at any time.
The Fund paid no management fees for the 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
$272,515, 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.
In accordance with the following schedule, the Indian Adviser is entitled
to a subadvisory fee (payable by PMC and not by the Fund) as compensation for
its subadvisory services and expenses incurred:
o 0.10% of the Fund's average gross assets invested in India's securities
markets, including assets invested in American, Global or other types of
depository receipts for securities traded in India's securities markets
if such gross assets are no greater than $15,000,000;
o 0.20% of such gross assets if such gross assets are greater than
$15,000,000 but no greater than $45,000,000;
o 0.40% of such gross assets if such gross assets are greater than
$45,000,000 but no greater than $60,000,000; and
o 0.60% of such gross assets if such gross assets are greater than
$60,000,000.
The above subadvisory fee is normally computed monthly and paid quarterly. In
addition, the applicable fee rate applies to all assets that are the basis for
the Indian Adviser's fee. For example, if such assets were $50,000,000 for any
one year, the Indian Adviser's fee pursuant to the above fee schedule would be
$200,000 ($50,000,000 X 0.40%). For the 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.
15
<PAGE>
4. PRINCIPAL UNDERWRITER
PFD serves as the principal underwriter in connection with the continuous
offering of the shares of the Fund pursuant to an Underwriting Agreement, dated
June 22, 1994. The Trustees who were not "interested persons" (as defined in the
1940 Act) of the Fund approved the Underwriting Agreement, which will continue
in effect from year to year, if annually approved by the Trustees, in
conjunction with the continuance of the Plans of Distribution. See "Distribution
Plans" below. The Underwriting Agreement provides that PFD will bear certain
distribution expenses not borne by the Fund.
For the fiscal years ending Octoer 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").
16
<PAGE>
CLASS A PLAN
Pursuant to the Class A Plan, the Fund may reimburse PFD for its
expenditures in financing any activity primarily intended to result in the sale
of Class A shares. Certain categories of such expenditures have been approved by
the Board of Trustees and are set forth in the Prospectus. See "Distribution
Plans" in the Prospectus. The expenses of the Fund pursuant to the Class A Plan
are accrued daily at a rate which may not exceed the annual rate of 0.25% of the
Fund's average daily net assets attributable to Class A shares.
CLASS B PLAN
The Class B Plan provides that the Fund shall pay PFD, as the Fund's
distributor for its Class B shares, a distribution fee equal on an annual basis
to 0.75% of the Fund's average daily net assets attributable to Class B shares
and will pay PFD a service fee equal on an annual basis to 0.25% of the Fund's
average daily net assets attributable to Class B shares (which PFD will in turn
pay to securities dealers which enter into a sales agreement with PFD at a rate
of up to 0.25% of the Fund's average daily net assets attributable to Class B
shares owned by investors for whom that securities dealer is the holder or
dealer of record). This service fee is intended to be consideration for personal
services and/or account maintenance services rendered by the dealer with respect
to Class B shares. PFD will advance to dealers the first-year service fee at a
rate equal to 0.25% of the amount invested. As compensation therefor, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Dealers will become eligible for additional service
fees with respect to such shares commencing in the thirteenth month following
purchase. Dealers may from time to time be required to meet other criteria in
order to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class B Plan is to
compensate PFD for its distribution services 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
17
<PAGE>
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 "Distributions Plans" in the Prospectus.)
When a broker-dealer sells Class C shares and elects, with PFD's approval, to
waive its right to receive the commission normally paid at the time of the sale,
PFD may cause all or a portion of the distribution fees described above to be
paid to the broker-dealer.
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
18
<PAGE>
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). In the Trustees'
quarterly review of the Plans, they will consider the Plans' continued
appropriateness and the level of compensation they provide.
During the fiscal year ended October 31, 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 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 90
days' written notice.
Under the terms of its contract with the Fund, PSC will service shareholder
accounts, and its duties will include: (i) processing sales, redemptions and
exchanges of shares of the Fund; (ii) distributing dividends and capital gains
associated with Fund portfolio accounts; and (iii) maintaining account records
and responding to 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
19
<PAGE>
safekeeping and controlling the Fund's cash and securities in the U.S. as
well as in foreign countries, handling the receipt and delivery of securities,
and collecting interest and dividends on the Fund's investments. The Custodian
fulfills its function in foreign countries through a network of subcustodian
banks located in the foreign countries (the "Subcustodians"). The Subcustodian
of Fund assets held in India is Standard Chartered Bank. The Custodian also
provides assistance to the Fund in arranging for forward contracts as described
above under "Investment Policies, Restrictions and Risk Factors."
The Custodian does not determine the investment policies of the Fund or
decide which securities it will buy or sell. The Fund may invest in securities
issued by the Custodian or any of the Subcustodians, deposit cash in the
Custodian or any Subcustodian and deal with the Custodian or any of the
Subcustodians as a principal in securities transactions. Portfolio securities
may be deposited into the Federal Reserve-Treasury Department Book Entry System
or the Depository Trust Company in the U.S. or in recognized central
depositories in foreign countries . In selecting Brown Brothers Harriman & Co.
and its network of foreign subcustodians as the custodians for foreign
securities, the Board of Trustees made certain determinations required by Rule
17f-5 promulgated under the 1940 Act. The Trustees annually review and approve
the continuation of the Fund's international subcustodian arrangements.
8. INDEPENDENT PUBLIC ACCOUNTANT
Arthur Andersen LLP, 225 Franklin Street , Boston, Massachusetts 02110, is
the Fund's independent public accountant, providing audit services, tax return
review, and assistance and consultation with respect to the preparation of
filings with the SEC.
9. PORTFOLIO TRANSACTIONS
Orders for the Fund's portfolio securities transactions in the Indian
securities market are placed by the Indian Adviser. Orders for the Fund's
portfolio securities transactions in all other markets are placed by PMC. In
selecting brokers or dealers, PMC and the Indian Adviser consider factors
relating to best execution, including, but not limited to, the size and type of
the transaction; the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability and financial
condition of the dealer; the dealer's execution services rendered on a
continuing basis; and the reasonableness of any dealer spreads. Many
transactions in foreign equity securities are executed by broker-dealers in
foreign countries in which commission rates are fixed and non-negotiable (unlike
commission rates in the U.S.) and are generally higher than in the United
States.
PMC and the Indian Adviser may select broker-dealers which provide
brokerage and/or research services to the Fund and/or other investment companies
or accounts managed by PMC or the Indian Adviser. Such services may include
advice concerning the value of securities; the advisability of investing in,
purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement). PMC
and the Indian Adviser maintain a listing of broker-dealers who provide such
services on a regular basis. However, 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
20
<PAGE>
such dealers solely because such services were provided. Management of the
Fund believes that no exact dollar value can be calculated for such services.
The research received from broker-dealers may be useful to PMC and the
Indian Adviser in rendering investment management services to the Fund as well
as to other investment companies or accounts managed by PMC or the Indian
Adviser, although not all of such research may be useful to the Fund.
Conversely, such information provided by brokers or dealers who have executed
transaction orders on behalf of such other accounts may be useful to PMC or the
Indian Adviser in carrying out its obligations to the Fund. The receipt of such
research has not reduced PMC's normal independent research activities; however,
it has enabled PMC and the Indian Adviser to avoid the additional expenses which
might otherwise be incurred if it was to attempt to develop comparable
information through its own staff.
In circumstances where two or more broker-dealers offer comparable prices
and executions, preference may be given to a broker-dealer which has sold shares
of the Fund as well as shares of other investment companies or accounts managed
by PMC or the Indian Adviser. This policy does not imply a commitment to execute
all portfolio transactions through all broker-dealers that sell shares of the
Fund. In addition, if PMC or the Indian Adviser determines in good faith that
the amount of commissions charged by a broker is reasonable in relation to the
value of the brokerage and research services provided by such broker, the Fund
may pay commissions to such broker in an amount greater than the amount another
firm may charge.
The Trustees periodically review PMC's and the Indian Adviser's performance
of their respective responsibilities in connection with the placement of
portfolio transactions on behalf of the Fund.
In addition to the Fund, PMC acts as investment adviser to the other
Pioneer mutual funds and certain private accounts with investment objectives
similar to those of the Fund. Similarly, the Indian Adviser acts as investment
adviser to certain investment funds registered in India. These funds have
investment objectives similar to the Fund's investment objective. Accordingly,
securities may meet investment objectives of the Fund, such other funds and such
private accounts. In such cases, the decision to purchase for one fund or
account rather than another is based on a number of factors. The determining
factors in most cases are the amount of securities of the issuer then
outstanding, the value of those securities and the market for them. Other
factors considered include other investments which each fund or account
presently has in a particular industry or country and the availability of funds
in each fund or account.
It is possible that, at times, identical securities will be held by more
than one fund and/or account. However, the position of any fund or account in
the same issue may vary and the length of time that any fund or account may
choose to hold its investment in the same issue may likewise vary. To the extent
that the Fund, another fund in the Pioneer complex or a private account managed
by PMC or the Indian Adviser seeks to acquire the same security at about the
same time, the Fund may not be able to acquire as large a position in the
security as it desires or it may have to pay a higher price for the security.
Similarly, the Fund may not be able to obtain as large an execution of an order
to sell or as high a price for any particular portfolio security if PMC or the
Indian Adviser decides to sell on behalf 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
21
<PAGE>
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, 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. As a result of the enactment of the Taxpayer Relief Act of
1997 (the "1997 TRA") on August 5, 1997, gain recognized after May 6, 1997 from
the sale of a capital asset is taxable to individual (noncorporate) investors at
different maximum federal income tax rates, depending generally upon the tax
holding period for the asset, the federal income tax bracket of the taxpayer,
and the dates the asset was acquired and/or sold. The Treasury Department has
issued guidance under the 1997 TRA that (subject to possible modification by
future "technical corrections" legislation) enables the Fund to pass through to
its shareholders the benefits of the capital gains tax rates enacted in the 1997
TRA. The Fund will provide appropriate information to its shareholders about its
distributions, including the tax rate(s) applicable to its distributions from
long-term capital gains, in accordance with this and any future guidance.
Shareholders should consult their own tax advisers on the correct application of
these new rules in their particular circumstances.
22
<PAGE>
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
23
<PAGE>
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 attributable to realized or unrealized appreciation in the
Fund's portfolio or undistributed taxable income of the Fund. Consequently,
subsequent distributions by the Fund on these shares from such appreciation or
income may be taxable to such investor even if the net asset value of the
investor's shares is, as a result of the distributions, reduced below the
investor's cost for such shares and the distributions economically represent a
return of a portion of the investment.
Redemptions and exchanges are taxable events for shareholders that are
subject to tax. Shareholders should consult their own tax advisers with
reference to their individual circumstances to determine whether any particular
transaction in Fund shares is properly treated as a sale for tax purposes, as
the following discussion assumes, and the character of and tax rate applicable
to any gains or losses recognized in such transactions under the new rate
structure enacted in the 1997 TRA. Any loss realized by a shareholder upon the
redemption, exchange or other disposition of shares with a tax holding period of
six months or less will be treated as a long-term capital loss to the extent of
any amounts treated as distributions of long-term capital gain with respect to
such shares.
In addition, if Class A shares redeemed or exchanged have been held for
less than 91 days, (1) in the case of a reinvestment in the Fund at net asset
value pursuant to the reinvestment privilege, the sales charge paid on such
shares is not included in their tax basis under the Code, and (2) in the case of
an exchange, all or a portion of the sales charge paid on such shares is not
included in their tax basis under the Code, to the extent a sales charge that
would otherwise apply to the shares received is reduced pursuant to the exchange
privilege. In either case, the portion of the sales charge not included in the
tax basis of the shares redeemed or surrendered in an exchange is included in
the tax basis of the shares acquired in the reinvestment or exchange. Losses on
redemptions or other dispositions of shares may be disallowed under "wash sale"
rules in the event of other investments in the Fund (including those made
pursuant to reinvestment of dividends and/or capital gain distributions) within
a period of 61 days beginning 30 days before and ending 30 days after a
redemption or other disposition of shares. In such a case, the disallowed
portion of any loss would be included in the federal tax basis of the shares
acquired in the other investments.
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,
24
<PAGE>
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, in the case of India and possibly other countries, taxes
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
added by the 1997 TRA and other limitations under the Code.
Qualified foreign taxes generally include taxes that would be treated as
income taxes under U.S. tax regulations but do not include most other taxes,
such as stamp taxes, securities transaction taxes, and similar taxes. If the
Fund makes the election described above, shareholders may deduct their pro rata
portion of qualified foreign taxes paid by the Fund (not in excess of the tax
actually 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
25
<PAGE>
realizes and distributes to shareholders will generally not be treated as
income from foreign sources in their hands, nor will distributions of certain
foreign currency gains subject to Section 988 of the Code and of any other
income realized by the Fund that is deemed, under the Code, to be U.S.-source
income in the hands of the Fund. This foreign tax credit limitation may also be
applied separately to certain specific categories of foreign-source income and
the related foreign taxes. As a result of these rules, which may have different
effects depending upon each shareholder's particular tax situation, certain
shareholders may not be able to claim a credit for the full amount of their
proportionate share of the foreign taxes paid by the Fund. Shareholders who are
not liable for U.S. federal income taxes, including tax-exempt shareholders,
will ordinarily not benefit from this election. If the Fund does make the
election, it will provide required tax information to shareholders. If the Fund
does not make the election, it may deduct such taxes in computing its income
available for distribution to shareholders to satisfy applicable tax
distribution requirements.
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 Form W-9, that the Social Security
Number or other Taxpayer Identification Number they provide is their correct
number and that they are not currently subject to backup withholding, or that
they are exempt from backup withholding. The Fund may nevertheless be required
to withhold if it receives notice from the IRS or a broker that the number
provided is incorrect or backup withholding is applicable as a result of
previous underreporting of interest or dividend income.
If, as anticipated, the Fund qualifies as a regulated investment company
under the Code, it will not be required to pay any Massachusetts income,
corporate excise or franchise taxes or any Delaware corporation income tax.
The description of certain federal tax provisions above relates only to
U.S. federal income tax consequences for shareholders who are U.S. persons, I.E.
U.S. citizens or residents or U.S. corporations, partnerships, trusts or
estates, and who are subject to U.S. federal income tax. This description does
not address the special tax rules that may be applicable to particular types of
investors, such as financial institutions, insurance companies, securities
dealers, or tax-exempt or tax-deferred plans, accounts or entities. Investors
other than U.S. persons may be subject to different U.S. tax treatment,
including a possible 30% non-resident alien U.S. withholding tax (or
non-resident alien withholding tax at a lower treaty rate) on amounts treated as
ordinary dividends from the Fund and, unless an effective IRS Form W-8 or
authorized substitute for Form W-8 is on file, to 31% backup withholding on
certain other payments from the Fund. Shareholders should consult their own tax
advisers on these matters and on state, local and other applicable tax laws.
26
<PAGE>
11. DESCRIPTION OF SHARES
The Fund's Agreement and Declaration of Trust permits the Board of Trustees
to authorize the issuance of an unlimited number of full and fractional shares
of beneficial interest (without par value) which may be divided into such
separate series as the Trustees may establish. Currently, the Fund consists of
only one series. The Trustees may, however, establish additional series of
shares , and may divide or combine the shares into a greater or lesser number of
shares without thereby changing the proportionate beneficial interests in the
Fund. The Agreement and Declaration of Trust further authorizes the Trustees to
classify or reclassify any series of the shares into one or more classes.
Pursuant thereto, the Trustees have authorized the issuance of three classes of
shares of the Fund, Class A shares, Class B shares and Class C shares. Each
share of a class of the Fund represents an equal proportionate interest in the
assets of the Fund allocable to that class. Upon liquidation of the Fund,
shareholders of each class of the Fund are entitled to share pro rata in the
Fund's net assets allocable to such class available for distribution to
shareholders. The Fund reserves the right to create and issue additional series
or classes of shares, in which case the shares of each class of a series would
participate equally in the earnings, dividends and assets allocable to that
class of the particular series.
Shareholders are entitled to one vote for each share held and may vote in
the election of Trustees and on other matters submitted to meetings of
shareholders. Although Trustees are not elected annually by the shareholders,
shareholders have, under certain circumstances, the right to remove one or more
Trustees.
The shares of each series of the Fund are entitled to vote separately to
approve investment advisory agreements or changes in investment restrictions,
but shareholders of all series vote together in the election and selection of
Trustees and accountants. Shares of all series of the Fund vote together as a
class on matters that affect all series of the Fund in substantially the same
manner. As to matters affecting a single series or class, shares of such series
or class will vote separately. No amendment adversely affecting the rights of
shareholders may be made to the Fund's Agreement and Declaration of Trust
without the affirmative vote of a majority of its shares. Shares have no
preemptive or conversion rights. Shares are fully paid and non-assessable by the
Fund, except as stated below. See "Certain Liabilities."
12. CERTAIN LIABILITIES
As a Delaware business trust, the Fund's operations are governed by its
Agreement and Declaration of Trust dated April 4, 1994. A copy of the Fund's
Certificate of Trust, also dated April 4, 1994, is on file with the Office of
the Secretary of State of the State of Delaware. Generally, Delaware business
trust shareholders are not personally liable for obligations of the Delaware
business trust under Delaware law. The Delaware Business Trust Act (the
"Delaware Act") provides that a shareholder of a Delaware business trust shall
be entitled to the same limitation of liability extended to shareholders of
private for-profit corporations. The Fund's Agreement and Declaration of Trust
expressly provides that the Fund has been organized under the Delaware Act and
that the Agreement and Declaration of Trust is to be governed by Delaware law.
It is nevertheless possible that a Delaware business trust, such as the Fund,
might become a party to an action in another state whose courts refused to apply
Delaware law, in which case the trust's shareholders could be subject to
personal liability.
27
<PAGE>
To guard against this risk, the Agreement and Declaration of Trust (i)
contains an express disclaimer of shareholder liability for acts or obligations
of the Fund and provides that notice of such disclaimer may be given in each
agreement, obligation and instrument entered into or executed by the Fund or its
Trustees, (ii) provides for the indemnification out of Fund property of any
shareholders held personally liable for any obligations of the Fund or any
series of the Fund and (iii) provides that the Fund shall, upon request, assume
the defense of any claim made against any shareholder for any act or obligation
of the Fund and satisfy any judgment thereon. Thus, the risk of a Fund
shareholder incurring financial loss beyond his or her investment because of
shareholder liability is limited to circumstances in which all of the following
factors are present: (1) a court refused to apply Delaware law; (2) the
liability arose under tort law or, if not, no contractual limitation of
liability was in effect; and (3) the Fund itself would be unable to meet its
obligations. In the light of Delaware law, the nature of the Fund's business and
the nature of its assets, the risk of personal liability to a Fund shareholder
is remote.
The Agreement and Declaration of Trust further provides that the Fund shall
indemnify each of its Trustees and officers against liabilities and expenses
reasonably incurred by them, in connection with, or arising out of, any action,
suit or proceeding, threatened against or otherwise involving such Trustee or
officer, directly or indirectly, by reason of being or having been a Trustee or
officer of the Fund. The Agreement and Declaration of Trust does not authorize
the Fund to indemnify any Trustee or officer against any liability to which he
or she would otherwise be subject by reason of or for willful misfeasance, bad
faith, gross negligence or reckless disregard of such person's duties.
13. DETERMINATION OF NET ASSET VALUE
The net asset value per share of each class of the Fund is determined as of
the close of regular trading (currently 4:00 p.m., Eastern time) on each day on
which the 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 Fund is not required to determine its net asset value
per share on any day in which no purchase orders for the shares of the Fund
become effective and no shares are tendered for redemption.
The net asset value per share of each class of the Fund is computed by
taking the value of all of the Fund's assets attributable to that class, less
the Fund's liabilities attributable to that class, and dividing 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. As stated in the Prospectus, when the Fund
invests in initial public offerings of Indian issuers it may not know if it will
receive the total amount of securities for which it has subscribed. Such
investments will
28
<PAGE>
also be valued at fair value as determined in good faith by the Board of
Trustees, although the actual computations may be made by persons acting
pursuant to the direction of the Board of Trustees.
The 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
another person 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
Letter of Intent section of the Account Application. When you sign the Account
Application, you agree to irrevocably appoint PSC your attorney-in-fact to
surrender for redemption any or all shares held in escrow with full power of
substitution. 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
29
<PAGE>
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 notbe annualized; total return percentages for periods longer
than one year will usually be accompanied by total return percentages for each
year within the period and/or by the average annual compounded total return for
the period. The income and capital components of a given return may be separated
and portrayed in a variety of ways in order to illustrate their relative
significance. Performance may also be portrayed in terms of cash or investment
values, without percentages. Past performance cannot guarantee any particular
future result.
The Fund's average annual total return quotations for each class of its
shares as that information may appear in the Prospectus, this Statement of
Additional Information or in advertising are calculated by standard methods
prescribed by the SEC.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS
Average annual total return quotations for Class A, Class B and Class C
shares are computed by finding the average annual compounded rates of return
that would cause a hypothetical investment in that class made on the first day
of a designated period (assuming all dividends and distributions are reinvested)
to equal the ending redeemable value of such hypothetical investment on the last
day of the designated period in accordance with the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000, less the maximum sales
load of $57.50 for Class A shares or the deduction of the CDSC for
Class B or Class C shares at the end of the period.
T = average annual total return
30
<PAGE>
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 October 31, 1997 were as follows:
1 YEAR LIFE OF FUND
Class A Shares (3.12) (14.69)*
Class B Shares (1.80) (14.64)*
Class C Shares 2.36 (6.80)**
* 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.
31
<PAGE>
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
performance; figures for all quoted bond funds include the maximum applicable
sales charge. A shareholder's actual yield and total return will vary with
changing market conditions. The value of Class A, Class B and Class C shares
32
<PAGE>
(except for Pioneer Cash Reserves Fund, which seeks to maintain a stable $1.00
share price) will also vary and may be worth more or less at redemption than
their original cost.
17. FINANCIAL STATEMENTS
The audited financial statements are included in the Fund's October 31,
1997 Annual Report to Shareholders (filed electronically on December 29, 1997,
file no. 33-77472; accession number 0000921447-97-000009), which is hereby
incorporated by reference into this Statement of Additional Information and
attached hereto in reliance upon the report of Arthur Andersen LLP, independent
public accountants, as experts in accounting and auditing.. A copy of the Fund's
annual report may be obtained without charge by calling Shareholder Services at
1-800-225-6292 or by written request to the Fund at 60 State Street, Boston,
Massachusetts 02109.
33
<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.
34
<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.
35
<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.
36
<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.
37
<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.
38
<PAGE>
APPENDIX B
PIONEER INDIA FUND
CLASS A SHARES
<TABLE>
<CAPTION>
NET ASSET INITIAL NET
INITIAL OFFERING SALES CHARGE SHARES VALUE ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
<S> <C> <C> <C> <C> <C> <C>
6/23/94 $10,000 $12.20 5.75% 819.672 $11.50 $9,425
</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>
39
<PAGE>
PIONEER INDIA FUND
CLASS B SHARES
<TABLE>
<CAPTION>
NET ASSET INITIAL NET
INITIAL OFFERING SALES CHARGE SHARES VALUE ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
<S> <C> <C> <C> <C> <C> <C>
6/23/94 $10,000 $11.50 0.00% 869.565 $11.50 $10,000
</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>
40
<PAGE>
PIONEER INDIA FUND
CLASS C SHARES
<TABLE>
<CAPTION>
NET ASSET INITIAL NET
INITIAL OFFERING SALES CHARGE SHARES VALUE ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
<S> <C> <C> <C> <C> <C> <C>
1/31/96 $10,000 $7.85 0.00% 1,273.885 $7.85 $10,000
</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>
41
<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.
42
<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")
MSCI's international indices are based on the share prices of approximately
1,700 companies listed on stock exchanges in the 22 countries that make up the
MSCI World Index. MSCI's emerging market indices are comprised of approximately
1000 stocks from 26 countries.
Countries in the MSCI EAFE INDEX are: Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia,
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland and
United Kingdom.
Countries in the MSCI EMERGING MARKETS FREE INDEX are: Argentina, Brazil, Chile,
China Free, Czech Republic, Colombia, Greece, Hungary, India, Indonesia Free,
Israel, Jordan, Korea (at 50%), Malaysia Free, Mexico Free, Pakistan, Peru,
Philippines Free, Poland, Portugal, South Africa, Sri Lanka, Taiwan (at 50%),
Thailand Free, Turkey and Venezuela.
6-MONTH CDS
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
43
<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.
44
<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
45
<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>
46
<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>
47
<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>
48
<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>
49
<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>
50
<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.
51
<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.
52
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
The financial highlights of the Registrant for the fiscal year
ended October 31, 1997 are included in Part A of the
Registration Statement and the financial statements of the
Registrant for the fiscal year ended October 31, 1997 are part
of the 1997 Annual Report to Shareholders (filed
electronically on December 29, 1997; File No. 811-08468;
Accession No. 0000921447-97-000009) which is incorporated by
reference into Part B of the Registration Statement.
(b) Exhibits:
1.1 Agreement and Declaration of Trust of the Registrant.**
1.2 Certificate of Trust of the Registrant.**
1.3 Establishment and Designation of Class A, Class B and
Class C shares of Beneficial Interest.**
2. By-Laws of the Registrant.**
3. None.
4. None.
5.1 Management Contract between the Registrant and
Pioneering Management Corporation.**
5.2 Subadvisory Contract between Pioneering Management
Corporation and Kothari Pioneer AMC Ltd. (formerly
ITI Pioneer AMC Ltd.)**
6.1 Underwriting Agreement between the Registrant and
Pioneer Funds Distributor, Inc.**
6.2 Form of Dealer Sales Agreement.**
7. None.
8. Custodian Agreement between the Registrant and
Brown Brothers Harriman & Co.**
9. Investment Company Service Agreement between the
Registrant and Pioneering Services Corporation.**
10. None.
11. Consent of Independent Public Accountants.*
12. None.
13. Share Purchase Agreement.**
14. None.
C-1
<PAGE>
15.1 Class A Distribution Plan.**
15.2 Class B Distribution Plan.**
15.3 Class C Distribution Plan.**
16. None.
17. Financial Data Schedules.*
18.1 Rule 18f-3 Plan Covering Two Classes of Shares.**
18.2 Rule 18f-3 Plan Covering Three Classes of Shares.**
19. Powers of Attorney.**
19.1 Power of Attorney for Mary K. Bush.*
- ------------------------
*Filed herewith.
**Previously filed. Incorporated herein by reference from the exhibits
filed with Post-Effective Amendment No. 3 to the Registration Statement as filed
with the Securities and Exchange Commission (the "SEC") on February 28, 1996
(Accession No. 0000921447-96-000004).
Item 25. Persons Controlled by or Under Common Control with Registrant
No person is controlled by the Registrant. A common control
relationship could exist from a management perspective because the Chairman and
President of the Registrant owns approximately 14% of the outstanding shares of
The Pioneer Group, Inc. (PGI), the parent company of the Registrant's investment
adviser, and certain Trustees or officers of the Registrant (i) hold similar
positions with other investment companies advised by PGI and (ii) are directors
or officers of PGI and/or its direct or indirect subsidiaries. The following
lists all U.S. and the principal non-U.S. subsidiaries of PGI and those
registered investment companies with a common or similar Board of Trustees
advised by PGI.
OWNED PERCENT STATE/COUNTRY OF
COMPANY BY OF SHARES INCORPORATION
Pioneering Management Corp. (PMC) PGI 100% DE
Pioneer Funds Distributor, Inc. (PFD) PMC 100% MA
Pioneer Explorer, Inc. (PEI) PMC 100% DE
Pioneer Fonds Marketing GmbH (GmbH) PFD 100% Germany
Pioneer Forest, Inc. (PFI) PGI 100% DE
CJSC "Forest-Starma" (Forest-Starma) PFI 95% Russia
Pioneer Metals and Technology, Inc. (PMT) PGI 100% DE
Pioneer Capital Corp. (PCC) PGI 100% DE
Pioneer SBIC Corp. PCC 100% MA
Pioneer Real Estate Advisors, Inc. (PREA) PGI 100% DE
Pioneer Management (Ireland) Ltd. (PMIL) PGI 100% Ireland
Pioneer Plans Corporation (PPC) PGI 100% DE
PIOGlobal Corp. (PIOGlobal) PGI 100% DE
Pioneer Investments Corp. (PIC) PGI 100% MA
Pioneer Goldfields Holdings, Inc. (PGH) PGI 100% DE
Pioneer Goldfields Ltd. (PGL) PGH 100% Guernsey
Teberebie Goldfields Ltd. (TGL) PGL 90% Ghana
C-2
<PAGE>
Pioneer Omega, Inc. (Omega) PGI 100% DE
Pioneer First Russia, Inc. (First Russia) Omega 81.65% DE
Pioneering Services Corp. (PSC) PGI 100% MA
Pioneer International Corp. (PIntl) PGI 100% DE
Pioneer First Polish Trust Fund JSC, S.A.
(First Polish) PIntl 100% Poland
Pioneer Czech Investment Company, A.S.
(Pioneer Czech) PIntl 100% Czech Republic
See the Prospectus included in this Registration Statement for a
discussion of PMC's ownership interest in Kothari Pioneer AMC Ltd. (the
Registrant's Indian investment adviser).
Registered investment companies that are parties to management contracts with
PMC:
FUNDS BUSINESS TRUST
Pioneer International Growth Fund MA
Pioneer World Equity Fund DE
Pioneer Europe Fund MA
Pioneer Emerging Markets Fund DE
Pioneer India Fund DE
Pioneer Growth Trust MA
Pioneer Mid-Cap Fund DE
Pioneer Growth Shares DE
Pioneer Small Company Fund DE
Pioneer Fund DE
Pioneer II DE
Pioneer Real Estate Shares DE
Pioneer Short-Term Income Trust MA
Pioneer America Income Trust MA
Pioneer Bond Fund MA
Pioneer Balanced Fund DE
Pioneer Intermediate Tax-Free Fund MA
Pioneer Tax-Free Income Fund DE
Pioneer Money Market Trust DE
Pioneer Variable Contracts Trust DE
Pioneer Interest Shares DE
Pioneer Micro-Cap Fund DE
The following table lists John F. Cogan, Jr.'s positions with the
investment companies, PGI and principal direct or indirect PGI subsidiaries
referenced above and the Registrant's counsel.
C-3
<PAGE>
TRUSTEE/
ENTITY CHAIRMAN PRESIDENT DIRECTOR OTHER
Pioneer mutual
funds X X X
PGL X X X
PGI X X X
PPC X X
PIC X X
PIntl X X
PMT X X
Omega X X
PIOGlobal X X
First Russia X X
PCC X
PSC X
PMIL X
PEI X
PFI X
PREA X
Forest-Starma X
PMC X X
PFD X X
TGL X X
First Polish Chairman of Supervisory
Board
GmbH Chairman of Supervisory
Board
Pioneer Czech Chairman of Supervisory
Board
Hale and Dorr LLP Partner
Item 26. Number of Holders of Securities
(1)
Title of Class (2)
Shares of Beneficial Interest Number of Record Holders
(without par value) as of January 31, 1998
Class A shares 1,918
Class B shares 1,145
Class C shares 99
C-4
<PAGE>
Item 27. Indemnification
Except for the Agreement and Declaration of Trust (the "Declaration"),
dated August 4, 1994, establishing the Registrant as a business trust under
Delaware law, there is no contract, arrangement or statute under which any
Trustee, officer, underwriter or affiliated person of the Registrant is insured
or indemnified. The Declaration provides that no Trustee or officer will be
indemnified against any liability to which the Registrant would otherwise be
subject by reason of or for willful misfeasance, bad faith, gross negligence or
reckless disregard of such person's duties.
Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "1933 Act"), may be available to Trustees, officers
and controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the SEC
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
All of the information required by this item is set forth in the Form
ADV, as amended, of PMC, the Registrant's investment adviser. The following
sections of such Form ADV are incorporated herein by reference:
(a) Items 1 and 2 of Part 2; and
(b) Section 6, Business Background, of each Schedule D.
The business and other connections of the officers and directors of the
Registrant's investment adviser in India, Kothari Pioneer AMC Ltd., are listed
on the Form ADV of Kothari Pioneer AMC Ltd. as currently on file with the SEC
(File No. 801-46648). The following sections of such Form ADV are incorporated
herein by reference:
(a) Items 1 and 2 of Part 2; and
(b) Section 6, Business Background, of Schedule D.
C-5
<PAGE>
Item 29. Principal Underwriters
(a) See Item 25 above.
(b) Directors and officers of PFD:
POSITIONS AND OFFICES WITH POSITIONS AND OFFICES WITH
NAME UNDERWRITER REGISTRANT
John F. Cogan, Jr. Director and Chairman Chairman of the Board,
President and Trustee
Robert L. Butler Director and President None
David D. Tripple Director Executive Vice President and
Trustee
Steven M. Graziano Senior Vice President None
Stephen W. Long Senior Vice President None
Barry G. Knight Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Elizabeth B. Bennett Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy L. Supovitz Vice President None
Mary Kleeman Vice President None
Steven R. Berke Assistant Vice President None
Steven H. Forss Assistant Vice President None
Mary Sue Hoban Assistant Vice President None
Debra A. Levine Assistant Vice President None
Junior Roy McFarland Assistant Vice President None
Marie E. Moynihan Assistant Vice President None
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
C-6
<PAGE>
The principal business address of each of these individuals is 60 State Street,
Boston, Massachusetts 02109-1820.
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts and records are maintained at the Registrant's office at
60 State Street, Boston, Massachusetts; contact the Treasurer.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to deliver or cause to be delivered with
the Prospectus, to each person to whom the Prospectus is sent or
given, a copy of the Registrant's report to shareholders furnished
pursuant to and meeting the requirements of Rule 30d-1 under the
Investment Company Act of 1940, as amended, from which the
specified information is incorporated by reference, unless such
person currently holds securities of the Registrant and otherwise
has received a copy of such report, in which case the Registrant
shall state in the Prospectus that it will furnish, without charge,
a copy of such report on request, and the name, address and
telephone number of the person to whom such a request should be
directed.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment No. 5 to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment No. 5 to its Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Boston and Commonwealth of Massachusetts, on the 27th
day of February, 1998.
PIONEER INDIA FUND
By: /s/ John F. Cogan, Jr.
John F. Cogan, Jr.
Chairman and President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 5 to the Registrant's Registration Statement has
been signed below by the following persons in the capacities and on the date
indicated:
Signature Title
/s/ John F. Cogan, Jr. Chairman of the Board )
John F. Cogan, Jr. and President )
(Principal Executive )
Officer) )
)
)
/s/ William H. Keough Chief Financial Officer )
William H. Keough and Treasurer (Principal )
Financial and Accounting )
Officer) )
)
)
Trustees: )
)
)
Mary K. Bush* )
Mary K. Bush )
)
)
/s/ John F. Cogan, Jr. )
John F. Cogan, Jr. )
)
)
Richard H. Egdahl, M.D.* )
Richard H. Egdahl, M.D. )
<PAGE>
)
)
Margaret B. W. Graham* )
Margaret B. W. Graham )
)
)
John W. Kendrick* )
John W. Kendrick )
)
)
Marguerite A. Piret* )
Marguerite A. Piret )
)
)
David D. Tripple* )
David D. Tripple )
)
)
Stephen K. West* )
Stephen K. West )
)
)
John Winthrop* )
John Winthrop )
)
)
*By: /s/ John F. Cogan, Jr. Dated: February 27, 1998)
John F. Cogan, Jr.
Attorney-in-fact
<PAGE>
Exhibit Index
Exhibit
Number Document Title
11. Consent of Independent Public Accountants
17. Financial Data Schedules
19.1. Power of Attorney for Mary K. Bush
ARTHUR ANDERSEN LLP
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our
report dated December 3, 1997 (and to all references to our firm) included
in or made a part of Pioneer India Fund's Post-Effective Amendment
No. 5 and Amendment No. 7 to Registration Statement File Nos. 33-77472 and
811-08468, respectively.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Boston, Massachusetts
February 26, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
ON FORM N-SAR DATED OCTOBER 31, 1997 FOR PIONEER INDIA FUND AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000921447
<NAME> PIONEER INDIA FUND
<SERIES>
<NUMBER> 001
<NAME> PIONEER INDIA FUND CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 23607354
<INVESTMENTS-AT-VALUE> 19601156
<RECEIVABLES> 323685
<ASSETS-OTHER> 3152
<OTHER-ITEMS-ASSETS> 626806
<TOTAL-ASSETS> 20554799
<PAYABLE-FOR-SECURITIES> 306954
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 206751
<TOTAL-LIABILITIES> 513705
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 31528153
<SHARES-COMMON-STOCK> 1379930
<SHARES-COMMON-PRIOR> 1786561
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7476167)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (4010892)
<NET-ASSETS> 20041094
<DIVIDEND-INCOME> 430752
<INTEREST-INCOME> 58079
<OTHER-INCOME> 0
<EXPENSES-NET> (556066)
<NET-INVESTMENT-INCOME> (67235)
<REALIZED-GAINS-CURRENT> (4655748)
<APPREC-INCREASE-CURRENT> 5135041
<NET-CHANGE-FROM-OPS> 412058
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1176102
<NUMBER-OF-SHARES-REDEEMED> 1582733
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1179174)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (2906393)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 272512
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1020651
<AVERAGE-NET-ASSETS> 11009646
<PER-SHARE-NAV-BEGIN> 6.93
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 0.22
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.14
<EXPENSE-RATIO> 2.29
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
ON FORM N-SAR DATED OCTOBER 31, 1997 FOR PIONEER INDIA FUND AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000921447
<NAME> PIONEER INDIA FUND
<SERIES>
<NUMBER> 002
<NAME> PIONEER INDIA FUND CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 23607354
<INVESTMENTS-AT-VALUE> 19601156
<RECEIVABLES> 323685
<ASSETS-OTHER> 3152
<OTHER-ITEMS-ASSETS> 626806
<TOTAL-ASSETS> 20554799
<PAYABLE-FOR-SECURITIES> 306954
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 206751
<TOTAL-LIABILITIES> 513705
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 31528153
<SHARES-COMMON-STOCK> 1350058
<SHARES-COMMON-PRIOR> 1216378
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7476167)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (4010892)
<NET-ASSETS> 20041094
<DIVIDEND-INCOME> 430752
<INTEREST-INCOME> 58079
<OTHER-INCOME> 0
<EXPENSES-NET> (556066)
<NET-INVESTMENT-INCOME> (67235)
<REALIZED-GAINS-CURRENT> (4655748)
<APPREC-INCREASE-CURRENT> 5135041
<NET-CHANGE-FROM-OPS> 412058
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 626809
<NUMBER-OF-SHARES-REDEEMED> 493129
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1179174)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (2906393)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 272512
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1020651
<AVERAGE-NET-ASSETS> 9766624
<PER-SHARE-NAV-BEGIN> 6.80
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> 0.20
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 6.96
<EXPENSE-RATIO> 2.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
ON FORM N-SAR DATED OCTOBER 31, 1997 FOR PIONEER INDIA FUND AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000921447
<NAME> PIONEER INDIA FUND
<SERIES>
<NUMBER> 003
<NAME> PIONEER INDIA FUND CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 23607354
<INVESTMENTS-AT-VALUE> 19601156
<RECEIVABLES> 323685
<ASSETS-OTHER> 3152
<OTHER-ITEMS-ASSETS> 626806
<TOTAL-ASSETS> 20554799
<PAYABLE-FOR-SECURITIES> 306954
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 206751
<TOTAL-LIABILITIES> 513705
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 31528153
<SHARES-COMMON-STOCK> 115783
<SHARES-COMMON-PRIOR> 82178
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7476167)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (4010892)
<NET-ASSETS> 20041094
<DIVIDEND-INCOME> 430752
<INTEREST-INCOME> 58079
<OTHER-INCOME> 0
<EXPENSES-NET> (556066)
<NET-INVESTMENT-INCOME> (67235)
<REALIZED-GAINS-CURRENT> (4655748)
<APPREC-INCREASE-CURRENT> 5135041
<NET-CHANGE-FROM-OPS> 412058
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 170338
<NUMBER-OF-SHARES-REDEEMED> 136733
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1179174)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (2906393)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 272512
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1020651
<AVERAGE-NET-ASSETS> 1023668
<PER-SHARE-NAV-BEGIN> 6.77
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> 0.20
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 6.93
<EXPENSE-RATIO> 2.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
PIONEER EMERGING MARKETS FUND
PIONEER EUROPE FUND
PIONEER GROWTH TRUST
PIONEER INDIA FUND
PIONEER INTERNATIONAL GROWTH FUND
PIONEER WORLD EQUITY FUND
PIONEER GROWTH SHARES
PIONEER MID-CAP FUND
PIONEER SMALL COMPANY FUND
PIONEER MICRO-CAP FUND
PIONEER BALANCED FUND
PIONEER FUND
PIONEER II
PIONEER REAL ESTATE SHARES
PIONEER AMERICA INCOME TRUST
PIONEER BOND FUND
PIONEER SHORT TERM INCOME TRUST
PIONEER INTERMEDIATE TAX-FREE FUND
PIONEER MONEY MARKET TRUST
POWER OF ATTORNEY
Dated October 7, 1997
I, the undersigned Trustee of each of the above-listed registered
investment companies (each a "Fund"), each a Delaware or a Massachusetts
business trust, do hereby constitute and appoint John F. Cogan, Jr., David D.
Tripple, and Joseph P. Barri, and each of them acting singly, to be my true,
sufficient and lawful attorneys, with full power to each of them, and each of
them acting singly, to sign for me, in my name and in my capacity as trustee,
any and all amendments to the Registration Statement on Form N-1A to be filed by
each Fund under the Investment Company Act of 1940, as amended (the "1940 Act"),
and under the Securities Act of 1933, as amended (the "1933 Act"), with respect
to the offering of its shares of beneficial interest and any and all other
documents and papers relating thereto, and generally to do all such things in my
name and on my behalf in my capacity as trustee to enable each Fund to comply
with the 1940 Act and the 1933 Act, and all requirements of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by said attorneys or each of them to any and all amendments to
said Registration Statement.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument as
of the date first written above.
/s/ Mary K. Bush
Mary K. Bush, Trustee
