As filed with the Securities and Exchange Commission on February 27, 1998
File Nos. 33-61869
811-07339
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. 3 / X /
---
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 4 / X /
(Check appropriate box or boxes)
PIONEER SMALL COMPANY 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 SMALL COMPANY FUND
Class A, Class B and Class C Shares
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
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 and Restrictions;
Appendix A
14. Management of the Fund Statement of Additional Information -
Management of the Fund
15. Control Persons and Principal
Holders of Securities Statement of Additional Information -
Management of the Fund
16. Investment Advisory and Other
Services Statement of Additional Information -
Management of the Fund; Investment
Adviser; Underwriting Agreement and
Distribution Plans; Shareholder
Servicing/Transfer Agent; Custodian;
Principal Underwriter; Independent
Public Accountants; Appendix C
17. Brokerage Allocation and Other
Practices Statement of Additional Information -
Portfolio Transactions
18. Capital Stock and Other Securities Statement of Additional Information -
Description of Shares
19. Purchase, Redemption and Pricing
of Securities Being Offered Statement of Additional Information -
Letter of Intent; Systematic Withdrawal
Plan; Determination of Net Asset Value
20. Tax Status Statement of Additional Information -
Tax Status
21. Underwriters Statement of Additional Information -
Underwriting Agreement and Distribution
Plans; Principal Underwriter
22. Calculation of Performance Data Statement of Additional Information -
Investment Results; Appendix B
23. Financial Statements Statement of Additional Information -
Financial Statements
<PAGE>
February 27, 1998
SUPPLEMENT TO THE PROSPECTUS OF
PIONEER SMALL COMPANY FUND
DATED FEBRUARY 27, 1998
Effective January 5, 1998, Pioneer Small Company Fund (the "Fund") will
accept new accounts.
Prospective investors should be aware that management intends to close
the Fund to new accounts at the end of the 15th calendar day after the Fund has
received $150 million in new assets under management (the "Closing Date").
After the Closing Date, and until further notice, new accounts will not be
accepted by the Fund. Exceptions may be permitted with regard to certain
employer-sponsored retirement plans and transfers of assets in connection with
re-registration. Shareholders of record as of the Closing Date may make
additional investments to an existing account.
0298-4490
(C) Pioneer Funds Distributor, Inc.
<PAGE>
[Pioneer Logo]
Pioneer
Small Company
Fund
Class A, Class B and Class C Shares
Prospectus
February 27, 1998
Pioneer Small Company Fund (the "Fund") seeks capital appreciation by
investing in a diversified portfolio of securities consisting primarily of
common stocks. Any current income generated from these securities is incidental
to the investment objective of the Fund.
In order to achieve its investment objective, the Fund will invest at
least 65% of its total assets in common stocks and common stock equivalents
(such as convertible bonds and preferred stock) of companies with a market
capitalization of less than $1 billion. The Fund may invest a portion of its
assets in foreign securities. See "Investment Objective and Policies" in this
Prospectus. There is no assurance that the Fund will achieve its investment
objective.
Prospective investors should be aware that management reserves the right
to temporarily or permanently close the Fund to new investors or to restrict
investments by existing share-holders. A number of factors will be considered
in making such a decision including, but not limited to, total assets under
management and the flow of new investments into the Fund.
Fund returns and share prices fluctuate and the value of your account
upon redemption may be more or less than your purchase price. Shares in the
Fund are not deposits or obligations of, or guaranteed or endorsed by, any bank
or other depository institution, and the shares are not federally insured by
the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other government agency. Investments in the securities of small capitalization
("cap") companies may offer greater capital appreciation potential than
investments in mid- to large-cap company securities, but may be subject to
greater short-term price fluctuations. 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 Objectives and Policies" for a discussion of
these risks.
This Prospectus provides information about the Fund that you should know
before investing. Please read and retain it for your future reference. More
information about the Fund is included in the Statement of Additional
Information, also dated February 27, 1998, as supplemented or revised from time
A copy of the Statement of Additional Information may be obtained free of
charge by calling Shareholder Services at 1-800-225-6292 or by written request
to the Fund at 60 State Street, Boston, Massachusetts 02109. Other information
about the Fund has been filed with the Securities and Exchange Commission (the
"SEC") and is available upon request and without charge by calling
1-800-225-6292 or through the SEC's Internet web site (http://www.sec.gov).
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
---------------------------------------------------------- -----
<S> <C> <C>
I. EXPENSE INFORMATION ...................................... 2
II. FINANCIAL HIGHLIGHTS ..................................... 3
III. INVESTMENT OBJECTIVE AND POLICIES ........................ 6
IV. MANAGEMENT OF THE FUND ................................... 7
V. FUND SHARE ALTERNATIVES .................................. 8
VI. SHARE PRICE .............................................. 8
VII. HOW TO BUY FUND SHARES ................................... 9
VIII. HOW TO SELL FUND SHARES .................................. 12
IX. HOW TO EXCHANGE FUND SHARES .............................. 13
X. DISTRIBUTION PLANS ....................................... 14
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION .................... 15
XII. SHAREHOLDER SERVICES ..................................... 16
Account and Confirmation Statements ..................... 16
Additional Investments .................................. 16
Automatic Investment Plans .............................. 16
Financial Reports and Tax Information ................... 16
Distribution Options .................................... 16
Directed Dividends ...................................... 16
Direct Deposit .......................................... 16
Voluntary Tax Withholding ............................... 16
Telephone Transactions and Related Liabilities .......... 17
FactFoneSM .............................................. 17
Retirement Plans ........................................ 17
Telecommunications Device for the Deaf (TDD) ............ 17
Systematic Withdrawal Plans ............................. 17
Reinstatement Privilege (Class A Shares Only) ........... 17
XIII. THE FUND ................................................. 18
XIV. INVESTMENT RESULTS ....................................... 18
APPENDIX--CERTAIN INVESTMENT PRACTICES ................... 19
</TABLE>
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
I. EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses
that you, as a shareholder, will bear directly or indirectly when you invest in
the Fund. The table reflects annual operating expenses based on actual expenses
incurred for the fiscal year ended October 31, 1997.
<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 ......................... 0.85% 0.85% 0.85%
12b-1 Fees ............................. 0.24% 1.00% 1.00%
Other Expenses (including accounting
and transfer agent fees, custodian
fees and printing expenses)(3)........ 0.39% 0.33% 0.31%
----- ----- ----
Total Operating Expenses: ............... 1.48% 2.18% 2.16%
===== ===== ====
</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 under "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 Expenses are net of amounts paid in connection with certain expense offset
arrangements. See "Financial Highlights."
Example:
You would pay the following expenses on a $1,000 investment, with or
without redemption at the end of each time period, assuming a 5% annual return,
reinvestment of all dividends and distributions and that the percentage amounts
listed under "Annual Operating Expenses" remain the same each year.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $72 $102 $134 $224
Class B Shares*
--Assuming complete
redemption at end of period $62 $ 98 $137 $234
--Assuming no redemption $22 $ 68 $117 $234
Class C Shares**
--Assuming complete
redemption at end of period $32 $ 68 $116 $249
--Assuming no redemption $22 $ 68 $116 $249
</TABLE>
- --------------------
* Class B shares convert to Class A shares eight years after purchase;
therefore, Class A share expenses are used after year eight.
** Class C shares redeemed during the first year after purchase are subject to a
1% CDSC.
The example is designed for information purposes only, and should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and return will 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" and
"Underwriting Agreement and Distribution Plans" in the Statement of Additional
Information. The Fund's payment of a Rule 12b-1 fee may result in long-term
shareholders paying more than the economic equivalent of the maximum sales
charge permitted under the Conduct Rules of the National Association of
Securities Dealers, Inc.
The maximum initial sales charge is reduced on purchases of specified
larger amounts of Class A shares and the value of shares owned in other Pioneer
mutual funds is taken into account in determining the applicable initial sales
charge. See "How to Buy Fund Shares." No sales charge is applied to exchanges
of shares of the Fund for shares of other publicly available Pioneer mutual
funds. See "How to Exchange Shares."
2
<PAGE>
II. FINANCIAL HIGHLIGHTS
The following information has been audited by Arthur Andersen LLP,
independent public accountants. Arthur Andersen LLP's report on the Fund's
financial statements as of October 31, 1997 appears in the Fund's Annual Report
which is incorporated by reference into the Statement of Additional
Information. The information listed below should be read in conjunction with
those financial statements. The Annual Report includes more information about
the Fund's performance and is available free of charge by calling Shareholder
Services at 1-800-225-6292.
Pioneer Small Company Fund
Selected Data For a Class A Share Outstanding for Each Period Presented:
<TABLE>
<CAPTION>
11/02/95
(Commencement
For the of Operations)
Year Ended to
10/31/97 10/31/96
----------------- ------------------
<S> <C> <C>
Net asset value, beginning of period ..................................................... $ 12.66 $ 10.00
-------- --------
Increase (decrease) from investment operations:
Net investment income (loss) ............................................................ $ (0.11) $ 0.05
Net realized and unrealized gain (loss) on investments .................................. 3.67 2.63
--------- --------
Net increase (decrease) from investment operations ..................................... $ 3.56 $ 2.68
Distributions to shareholders:
Net investment income ................................................................... -- (0.02)
Net realized gain ....................................................................... (0.91) --
Net increase (decrease) in net asset value ............................................ $ 2.65 $ 2.66
-------- --------
Net asset value, end of period ........................................................... $ 15.31 $ 12.66
======== ========
Total return* ............................................................................ 29.88% 26.87%
Ratio of net expenses to average net assets .............................................. 1.49%+ 1.54%**+
Ratio of net investment income (loss) to average net assets .............................. (0.76)%+ 0.34%**+
Portfolio turnover rate .................................................................. 57% 43%**
Average brokerage commission per share ................................................... $ 0.0497 $ 0.0471
Net assets, end of period (in thousands) ................................................. $252,177 $221,601
Ratios assuming no waiver of management fees and assumption of expenses by Pioneering
Management Corporation and no reduction for fees paid indirectly:
Net expenses ........................................................................... 1.49% 1.55%**
Net investment income (loss) ........................................................... (0.76)% 0.33%**
Ratios assuming waiver of management fees and assumption of expenses by Pioneering
Management Corporation and reduction for fees paid indirectly:
Net expenses ........................................................................... 1.48% 1.51%**
Net investment income (loss) ........................................................... (0.75)% 0.37%**
</TABLE>
- ---------
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales charges.
Total return would be reduced if sales charges were taken into account.
** Annualized.
+ Ratios assuming no reduction for fees paid indirectly.
3
<PAGE>
II. FINANCIAL HIGHLIGHTS (continued)
Selected Data For a Class B Share Outstanding for Each Period Presented:
<TABLE>
<CAPTION>
11/02/95
(Commencement
For the of Operations)
Year Ended to
10/31/97 10/31/96
----------------- ------------------
<S> <C> <C>
Net asset value, beginning of period ..................................................... $ 12.59 $ 10.00
-------- --------
Increase (decrease) from investment operations:
Net investment income (loss) ........................................................... $(0.20) $ (0.01)
Net realized and unrealized gain (loss) on investments ................................. 3.62 2.62
--------- --------
Net increase (decrease) from investment operations ..................................... $ 3.42 $ 2.61
Distributions to shareholders:
Net investment income ................................................................... -- (0.02)
Net realized gain ....................................................................... (0.91) --
Net increase (decrease) in net asset value ............................................ $ 2.51 $ 2.59
-------- ---------
Net asset value, end of period ........................................................... $ 15.10 $ 12.59
======== =========
Total return* ............................................................................ 28.88% 26.09%
Ratio of net expenses to average net assets .............................................. 2.19%+ 2.26%**+
Ratio of net investment income (loss) to average net assets .............................. (1.46)%+ (0.42)%**+
Portfolio turnover rate .................................................................. 57% 43%**
Average brokerage commission per share ................................................... $ 0.0497 $ 0.0471
Net assets, end of period (in thousands) ................................................. $267,489 $217,346
Ratios assuming no waiver of management fees and assumption of expenses by Pioneering
Management Corporation and no reduction for fees paid indirectly:
Net expenses ........................................................................... 2.19% 2.27%**
Net investment income (loss) ........................................................... (1.46)% (0.43)%**
Ratios assuming waiver of management fees and assumption of expenses by Pioneering
Management Corporation and reduction for fees paid indirectly:
Net expenses ........................................................................... 2.18% 2.23%**
Net investment income (loss) ........................................................... (1.45)% (0.39)%**
</TABLE>
- ---------
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales charges.
Total return would be reduced if sales charges were taken into account.
** Annualized.
+ Ratios assuming no reduction for fees paid indirectly.
4
<PAGE>
II. FINANCIAL HIGHLIGHTS (continued)
Selected Data For a Class C Share Outstanding for Each Period Presented:
<TABLE>
<CAPTION>
For the 1/31/96
Year Ended to
10/31/97 10/31/96
---------------- ------------------
<S> <C> <C>
Net asset value, beginning of period ................................ $ 12.59 $ 11.01
------- --------
Increase (decrease) from investment operations:
Net investment income (loss) ...................................... $ (0.21) $ (0.03)
Net realized and unrealized gain (loss) on investments ............ 3.64 1.61
------- --------
Net increase (decrease) from investment operations .............. $ 3.43 $ 1.58
Distributions to shareholders:
Net realized gain ................................................. (0.91) --
--------
Net increase (decrease) in net asset value ...................... $ 2.52 $ 1.58
------- --------
Net asset value, end of period ...................................... $ 15.11 $ 12.59
======= ========
Total return* ....................................................... 28.96% 14.35%
Ratio of net expenses to average net assets ......................... 2.17%+ 2.25%**+
Ratio of net investment income (loss) to average net assets ......... (1.44)%+ (0.45)%**+
Portfolio turnover rate ............................................. 57% 43%**
Average brokerage commission per share .............................. $0.0497 $0.0471
Net assets, end of period (in thousands) ............................ $17,927 $16,811
Ratios assuming reduction for fees paid indirectly:
Net expenses ...................................................... 2.16% 2.21%**
Net investment income (loss) ...................................... (1.43)% (0.41)%**
</TABLE>
- ---------
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales charges.
Total return would be reduced if sales charges were taken into account.
** Annualized.
+ Ratios assuming no reduction for fees paid indirectly.
5
<PAGE>
III. INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to seek capital appreciation by
investing in a diversified portfolio of securities consisting primarily of
common stocks.
The Fund is managed in accordance with the value investment philosophy of
Pioneering Management Corporation ("PMC"). This approach consists of developing
a diversified portfolio of securities consistent with the Fund's investment
objective and selected primarily on the basis of PMC's judgment that the
securities have an underlying value, or potential value, which exceeds their
current prices. The analysis and quantification of the economic worth, or basic
value, of individual companies reflects PMC's assessment of a company's assets
and the company's prospects for earnings growth over the next 11/2 to 3 years.
PMC relies primarily on the knowledge, experience and judgment of its own
research staff, but also receives and uses information from a variety of
outside sources, including brokerage firms, electronic data bases, specialized
research firms and technical journals.
Under normal circumstances, at least 65% of the Fund's total assets are
invested in common stocks of companies with a market cap of less than $1
billion determined at the time the security is purchased. The Fund's
investments in common stock include common stock equivalents, that is,
securities with common stock characteristics such as convertible bonds and
preferred stocks. While small-cap company securities may offer a greater
capital appreciation potential than investments in mid- or large-cap company
securities, they may also present greater risks. Small-cap company securities
tend to be more sensitive to changes in earnings expectations and have lower
trading volumes than mid- to large-cap company securities and, as a result,
they may experience more abrupt and erratic price movements.
A convertible security is a long-term debt obligation of the issuer
convertible at a stated exchange rate into common stock of the issuer.
Convertible securities rank senior to common stocks in an issuer's capital
structure and are consequently of higher quality and entail less risk than the
issuer's common stock. As with all debt securities, the market values of
convertible securities tend to increase when interest rates decline and,
conversely, tend to decline when interest rates increase. The Fund may invest
in investment grade debt securities, that is, securities rated "BBB" or higher
by Standard & Poor's Ratings Group or the equivalent rating of other ranking
agencies. If the rating of a security falls below investment grade, management
will consider whatever action is appropriate consistent with the Fund's
investment objective and policies. See the Statement of Additional Information
for a discussion of rating categories.
While there is no requirement to do so, the Fund intends to limit
investments in foreign securities to no more than 25% of its total assets and
investments in the securities of real estate investment trusts ("REITs") to no
more than 15% of its total assets. For more information on REITs see the
Appendix. Any current income produced by a security is not a primary factor in
the selection of investments. The Fund's portfolio often includes a number of
securities which are owned by other equity mutual funds managed by PMC. See
"Investment Policies and Restrictions" in the Statement of Additional
Information for more information.
The Fund's fundamental investment objective and the fundamental investment
restrictions set forth in the Statement of Additional Information may not be
changed without shareholder approval. Certain other investment policies,
strategies and restrictions on investment are noted throughout the Prospectus
and are set forth in the Statement of Additional Information. These
non-fundamental investment policies, strategies and restrictions may be changed
at any time by a vote of the Board of Trustees.
It is the policy of the Fund not to engage in trading for short-term
profits. Nevertheless, changes in the portfolio will be made promptly when
determined to be advisable by reason of developments not foreseen at the time
of the initial investment decision and usually without reference to the length
of time a security has been held. Accordingly, portfolio turnover rate is not
considered a limiting factor in the execution of investment decisions. See
"Financial Highlights" for actual portfolio turnover rates.
The Fund intends to be substantially fully invested at all times. If
suitable investments are not immediately available, the Fund may hold a portion
of its investments in cash and cash equivalents. For temporary defensive
purposes, however, the Fund may invest up to 100% of its assets in short-term
investments. The Fund will assume a defensive posture only when political and
economic factors affect common stock markets to such an extent that PMC
believes there to be extraordinary risks in being substantially invested in
common stocks. A short-term investment is considered to be an investment with a
maturity of one year or less from the date of issuance. Short-term investments
will not normally represent more than 10% of the Fund's assets.
The Fund may enter into repurchase agreements, not to exceed seven days,
with broker-dealers and any member bank of the Federal Reserve System. The
Board of Trustees of the Fund will review and monitor the creditworthiness of
any institution which enters into a repurchase agreement with the Fund. Such
repurchase agreements will be fully collateralized with U.S. Treasury and/or
agency obligations with a market value of not less than 100% of the
obligations, valued daily. Collateral will be held by the Fund's custodian in a
segregated, safekeeping account for the benefit of the Fund. Repurchase
agreements afford the Fund an opportunity to earn income on temporarily
available cash at low risk. 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.
The Fund may lend portfolio securities to member firms of the New York
Stock Exchange (the "Exchange"). As with other extensions of credit, there are
risks of delay in recovery or even loss of rights in the collateral should the
borrower of the securities fail financially. The Fund will lend portfolio
securities only to firms which have been approved in advance by the Board of
Trustees, which will monitor the creditworthiness of any such firms. At no time
would the value of the securities loaned exceed 30% of the value of the Fund's
total assets.
6
<PAGE>
These investment strategies are also described in the Statement of Additional
Information.
In pursuit of its objective, the Fund may employ certain active investment
management techniques including forward foreign currency exchange contracts,
options and futures contracts on currencies, securities and securities indices
and options on such futures contracts. These techniques may be employed in an
attempt to hedge foreign currency risks and other risks associated with the
Fund's portfolio securities. See the Appendix to this Prospectus and the
Statement of Additional Information for a description of these investment
practices and associated risks.
Risk Factors
The Fund may invest in securities issued by companies located in foreign
countries. Investing in securities of foreign companies involves certain
considerations and risks which are not typically associated with investing in
securities of U.S. companies. Foreign companies are not subject to uniform
accounting, auditing and financial standards and requirements comparable to
those applicable to U.S. companies. There may also be less publicly available
information about foreign companies compared to reports and ratings published
about U.S. companies. In addition, foreign securities markets have
substantially less volume than U.S. markets and securities of some foreign
companies are less liquid and more volatile than securities of comparable U.S.
companies. There may also be less government supervision and regulation of
foreign securities exchanges, brokers and listed companies than exists in the
U.S. Dividends or interest or, in some cases capital gains, from foreign
investments may be subject to withholding or other foreign taxes which will
decrease the net return on such investments as compared to the return on the
Fund's U.S. investments. Finally, there may be the possibility of
expropriations, confiscatory taxation, political, economic or social
instability or diplomatic developments which could adversely affect assets of
the Fund held in foreign countries.
The value of foreign securities may also be adversely affected by
fluctuations in the relative rates of exchange between the currencies of
different nations and by exchange control regulations. For example, the value
of a foreign security held by the Fund as measured in U.S. dollars will
decrease if the foreign currency in which the security is denominated declines
in value against the U.S. dollar. In such event, this will cause an overall
decline in the Fund's net asset value and may also reduce net investment income
and capital gains, if any, to be distributed in U.S. dollars to shareholders of
the Fund.
IV. MANAGEMENT OF THE FUND
The Board of Trustees of the Fund has overall responsibility for
management and supervision of the Fund. The Board meets at least quarterly. By
virtue of the functions performed by PMC as investment adviser, the Fund
requires no employees other than its executive officers, all of whom receive
their compensation from PMC or other sources. The Statement of Additional
Information contains the names and general business and professional background
of each Trustee and executive officer of the Fund.
Investment advisory services are provided to the Fund by PMC pursuant to a
management contract between PMC and the Fund. PMC serves as investment adviser
to the Fund and is responsible for the overall management of the Fund's
business affairs, subject only to the authority of the Board of Trustees. PMC
is a wholly owned subsidiary of The Pioneer Group, Inc. ("PGI"), a publicly
traded Delaware corporation. Pioneer Funds Distributor, Inc. ("PFD"), an
indirect wholly owned subsidiary of PGI, is the principal underwriter of the
Fund.
John F. Cogan, Jr., Chairman and President of the Fund, President and a
Director of PGI, and Chairman and a Director of PMC and PFD, owned
approximately 14% of the outstanding capital stock of PGI as of the date of
this Prospectus.
Mr. David Tripple, President and Chief Investment Officer of PMC and
Executive Vice President of each Pioneer mutual fund, has general
responsibility for PMC's investment operations and chairs a committee of PMC's
domestic 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 special equities and smaller
companies. Members of the team meet regularly to discuss holdings, prospective
investments and portfolio composition.
Day-to-day management of the Fund has been the responsibility of Mr. Todd
Grady, Vice President of PMC, since January 24, 1997. Mr. Grady joined PMC in
1994 and has seven years of investment experience.
In addition to the Fund, PMC also manages and serves as the investment
adviser for other mutual funds and is an investment adviser to certain other
institutional accounts. PMC's and PFD's executive offices are located at 60
State Street, Boston, Massachusetts 02109. In an effort to avoid conflicts of
interest with the Fund, the Fund and PMC have adopted a Code of Ethics that is
designed to maintain a high standard of personal conduct by directing that all
personnel defer to the interests of the Fund and its shareholders in making
personal securities transactions.
Under the terms of its contract with the Fund, PMC assists in the
management of the Fund and is authorized in its discretion to buy and sell
securities for the account of the Fund. PMC pays all the expenses, including
executive salaries and the rental of certain office space, related to its
services for the Fund, with the exception of the following which are to be paid
by the Fund: (a) charges and expenses for Fund accounting, pricing and
appraisal services and related overhead, including, to the extent such services
are performed by personnel of PMC or its affiliates, office space and
facilities and personnel compensation, training and benefits; (b) the charges
and expenses of auditors; (c) the charges and expenses of any custodian,
transfer agent, plan agent, dividend disbursing agent and registrar appointed
by the Fund; (d) issue and transfer taxes, chargeable to the Fund in connection
with securities transactions to which the Fund is a party; (e) insurance
premiums, interest charges, dues and
7
<PAGE>
fees for membership in trade associations, and all taxes and corporate fees
payable by the Fund to federal, state or other governmental agencies; (f) fees
and expenses involved in registering and maintaining registrations of the Fund
and/or its shares with the SEC, individual states or blue sky securities
agencies, territories and foreign countries, including the preparation of
Prospectuses and Statements of Additional Information for filing with
regulatory agencies; (g) all expenses of shareholders' and Trustees' meetings
and of preparing, printing and distributing prospectuses, notices, proxy
statements and all reports to shareholders and to governmental agencies; (h)
charges and expenses of legal counsel to the Fund and the Trustees; (i)
distribution fees paid by the Fund in accordance with Rule 12b-1 promulgated by
the SEC pursuant to the Investment Company Act of 1940, as amended (the "1940
Act"); (j) compensation of those Trustees of the Fund who are not affiliated
with or interested persons of PMC, the Fund (other than as Trustees), PGI or
PFD; (k) the cost of preparing and printing share certificates; and (l)
interest on borrowed money, if any. In addition to the expenses described
above, the Fund shall pay all brokers' and underwriting commissions chargeable
to the Fund in connection with securities transactions to which the Fund is a
party.
Orders for the Fund's portfolio securities transactions are placed by PMC,
which strives to obtain the best price and execution for each transaction. In
circumstances in which two or more broker-dealers are in a position to offer
comparable prices and execution, consideration may be given to whether the
broker-dealer provides investment research or brokerage services or sells
shares of any Pioneer mutual fund or other funds for which PMC or any affiliate
or subsidiary serves as investment adviser or manager. See the Statement of
Additional Information for a further description of PMC's brokerage allocation
practices.
As compensation for its management services and certain expenses which PMC
incurs, PMC is entitled to a management fee equal to 0.85% per annum of the
Fund's average daily net assets. See "Expense Information" in the Prospectus
and "Investment Adviser" in the Statement of Additional Information.
V. FUND SHARE ALTERNATIVES
The Fund continuously offers three Classes of shares designated as Class
A, Class B and Class C shares, as described more fully in "How to Buy Fund
Shares." If you do not specify in your instructions to the Fund which Class of
shares you wish to purchase, exchange or redeem, the Fund will assume that your
instructions apply to Class A shares.
Class A Shares. If you invest less than $1 million in Class A shares, you
will pay an initial sales charge. Certain purchases may qualify for reduced
initial sales charges. If you invest $1 million or more in Class A shares, no
sales charge will be imposed at the time of purchase; however, shares redeemed
within 12 months of purchase may be subject to a CDSC. Class A shares are
subject to distribution and service fees at a combined annual rate of up to
0.25% of the Fund's average daily net assets attributable to Class A shares.
Class B Shares. If you plan to invest up to $250,000, Class B shares are
available to you. Class B shares are sold without an initial sales charge, but
are subject to a CDSC of up to 4% if redeemed within six years. Class B shares
are subject to distribution and service fees at a combined annual rate of 1% of
the Fund's average daily net assets attributable to Class B shares. Your entire
investment in Class B shares is available to work for you from the time you
make your investment, but the higher distribution fee paid by Class B shares
will cause your Class B shares (until conversion) to have a higher expense
ratio and to pay lower 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 Pioneer mutual fund originally purchased.
Shares sold outside the U.S. to persons who are not U.S. citizens may be
subject to different sales charges, CDSCs and dealer compensation arrangements
in accordance with local laws and business practices.
VI. SHARE PRICE
Shares of the Fund are sold at the public offering price, which is the net
asset value per share, plus the applicable sales charge. Net asset value per
share of a Class of Fund shares is determined by dividing the value of its
assets, less liabilities attributable to that Class, by the number of shares of
that Class outstanding. The net asset value is computed once daily, on each day
the 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
8
<PAGE>
have not traded on the date of valuation or securities for which sales prices
are not generally reported are valued at the mean between the current bid and
asked prices. Securities quoted in foreign currencies are converted to U.S.
dollars utilizing foreign exchange rates employed by the Fund's independent
pricing services. Generally, trading in foreign securities is substantially
completed each day at various times prior to the close of 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 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 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, unless the purchase of Fund shares has been
restricted by management, 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").
At this time, shares of the Fund may not be purchased by exchanging shares
of any other Pioneer mutual funds that you currently own. This policy will
remain in effect until a review by management indicates that a modification
would be in the best interests of the Fund.
Telephone Purchases. Your account is automatically authorized to have the
telephone purchase privilege unless you indicate otherwise on your Account
Application or by writing to Pioneering Services Corporation ("PSC"). The
telephone purchase option may be used to purchase additional shares for an
existing Pioneer mutual fund account; it may not be used to establish a new
account. Proper account identification will be required for each telephone
purchase. A maximum of $25,000 per account may be purchased by telephone each
day. The telephone purchase privilege is available to Individual Retirement
Accounts ("IRAs") but may not be available to other types of retirement plan
accounts. Call PSC for more information.
You are strongly urged to consult with your financial representative prior
to requesting a telephone purchase. To purchase shares by telephone, you must
establish your bank account of record by completing the appropriate section of
your Account Application or an Account Options Form. PSC will electronically
debit the amount of each purchase from this predesignated bank account.
Telephone purchases may not be made for 30 days after the establishment of your
bank of record or any change to your bank information.
Telephone purchases will be priced at the net asset value plus any
applicable sales charge next determined after PSC's receipt of a telephone
purchase instruction and receipt of good funds (usually three days after the
purchase instruction). You may always elect to deliver purchases to PSC by
mail. See "Telephone Transactions and Related Liabilities" for additional
information.
Class A Shares
You may buy Class A shares at the public offering price, including a sales
charge as follows:
<TABLE>
<CAPTION>
Dealer
Sales Charge as a % of
----------------------- Allowance
Net as a % of
Offering Amount Offering
Amount of Purchase Price Invested Price
- -------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.50 4.71 4.00
$100,000 but less than
$250,000 3.50 3.63 3.00
$250,000 but less than
$500,000 2.50 2.56 2.00
$500,000 but less than
$1,000,000 2.00 2.04 1.75
$1,000,000 or more -0- -0- see below
</TABLE>
The schedule of sales charges above is applicable to purchases of Class A
shares of the Fund by (i) an individual, (ii) an individual and his or her
spouse and children under the age of 21 and (iii) a trustee or other fiduciary
of a trust estate or fiduciary account or related trusts or accounts including
pension, profit-sharing and other employee benefit trusts qualified under
Section 401 or 408 of the Internal Revenue Code of 1986, as amended (the
"Code"), although more than one beneficiary is involved. The sales charges
applicable to a current purchase of Class A shares of the Fund by a person
listed above is determined by adding the value of shares to be purchased to the
aggregate value (at the then current offering price) of shares of any of the
other Pioneer mutual funds previously purchased and then owned, provided PFD is
notified by such person or his or her broker-dealer each time a purchase is made
which would qualify. Pioneer mutual funds include all mutual funds for which PFD
serves as principal underwriter. At the sole discretion of PFD, holdings of
funds domiciled outside the U.S., but which are managed by affiliates of PMC,
may be included for this purpose.
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<PAGE>
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 "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 shares with respect to
which orders are placed during a particular period. Dealers to whom
substantially the entire sales charge is reallowed may be deemed to be
underwriters under the federal securities laws.
Qualifying for a Reduced Sales Charge. Class A shares of the Fund may be
sold at a reduced or eliminated sales charge to certain group plans ("Group
Plans") under which a sponsoring organization makes recommendations to, permits
group solicitation of, or otherwise facilitates purchases by, its employees,
members or participants. Class A shares of the Fund may be sold at net asset
value without a sales charge to 401(k) retirement plans with 100 or more
participants or at least $500,000 in plan assets. Information about such
arrangements is available from PFD.
Class A shares of the Fund may be sold at net asset value without a sales
charge to: (a) current or former Trustees and officers of the Fund and partners
and employees of its legal counsel; (b) current or former directors, officers,
employees or sales representatives of PGI or its subsidiaries; (c) current or
former directors, officers, employees or sales representatives of any
subadviser or predecessor investment adviser to any investment company for
which PMC serves as investment adviser, and the subsidiaries or affiliates of
such persons; (d) current or former officers, partners, employees or registered
representatives of broker-dealers which have entered into 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 providers to Program participants and (iv) the Program provides for
a matching contribution for each participant contribution. Class A shares of
the Fund may also be sold at net asset value without a sales charge in
connection with certain reorganization, liquidation or acquisition transactions
involving other investment companies or personal holding companies.
Reduced sales charges are available for purchases of $50,000 or more of
Class A shares (excluding any reinvestments of dividends and capital gains
distributions) made within a 13-month period pursuant to a Letter of Intent
("LOI") which may be established by completing the Letter of Intent section of
the Account Application. The reduced sales charge will be the charge that would
be applicable to the purchase of the specified amount of Class A shares as if
the shares had all been purchased at the same time. A purchase not made
pursuant to an LOI may be included if the LOI is submitted to PSC within 90
days of such purchase. You may also obtain the reduced sales charge by
including the value (at current offering price) of all your Class A shares in
the Fund and all other Pioneer mutual funds held of record as of the date of
your LOI in the amount used to determine the applicable sales charge for the
Class A shares to be purchased under the LOI. Five percent of your total
intended purchase amount will be held in escrow by PSC, registered in your
name, until the terms of the LOI are fulfilled.
You are not obligated to purchase the amount specified in your LOI. If,
however, the amount actually purchased during the 13-month period is more or
less than that indicated in your LOI, an adjustment in the sales charge will be
made. If a payment to cover actual sales charges is due, it must be paid to PFD
within 20 days after PFD or your dealer sends you a written request otherwise
PFD will direct PSC to liquidate sufficient shares from your escrow account to
cover the amount due. See the Statement of Additional Information for more
information.
Investors who are clients of a broker-dealer with a current sales
agreement with PFD may purchase Class A shares of the Fund at net asset value,
without a sales charge, to the extent that the purchase price is paid out of
proceeds from one or more redemptions by the investor of shares of certain
other mutual funds. In order for a purchase to qualify for this privilege, the
investor must document to the broker-dealer that the redemption occurred within
the 60 days immediately preceding the purchase of Class A shares; that the
client paid a sales charge on the original purchase of the shares
10
<PAGE>
redeemed; and that the mutual fund whose shares were redeemed also offers net
asset value purchases to redeeming shareholders of any of the Pioneer mutual
funds. Further details may be obtained from PFD.
Class B Shares
You may buy Class B shares at the net asset value per share next computed
after receipt of a purchase order without the imposition of an initial sales
charge; however, Class B shares redeemed within six years of purchase will be
subject to a CDSC at the rates shown in the table below. The charge will be
assessed on the amount equal to the lesser of the current market value or the
original purchase cost of the shares being redeemed. No CDSC will be imposed on
increases in account value above the initial purchase price, including shares
derived from the reinvestment of dividends or capital gains distributions.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of purchase until the time of redemption of Class B shares. For
the purpose of determining the number of years from the time of any purchase,
all payments during a quarter will be aggregated and deemed to have been made
on the first day of that quarter. In processing redemptions of Class B shares,
the Fund will first redeem shares not subject to any CDSC, and then shares held
longest during the six-year period. As a result, you will pay the lowest
possible CDSC.
The CDSC for Class B shares subject to a CDSC upon redemption will be
determined as follows:
<TABLE>
<CAPTION>
Year Since CDSC as a Percentage of Dollar
Purchase Amount Subject to CDSC
- -------------------------------- -------------------------------
<S> <C>
First .......................... 4.0%
Second ......................... 4.0%
Third .......................... 3.0%
Fourth ......................... 3.0%
Fifth .......................... 2.0%
Sixth .......................... 1.0%
Seventh and thereafter ......... none
</TABLE>
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class B shares, including the payment of
compensation to broker-dealers.
Class B shares will automatically convert into Class A shares at the end
of the calendar quarter that is eight years after the purchase date, except as
noted below. Class B shares acquired by exchange from Class B shares of another
Pioneer mutual fund will convert into Class A shares based on the date of the
initial purchase and the applicable CDSC. Class B shares acquired through
reinvestment of distributions will convert into Class A shares based on the
date of the initial purchase to which such shares relate. For this purpose,
Class B shares acquired through reinvestment of distributions will be
attributed to particular purchases of Class B shares in accordance with such
procedures as the Trustees may determine from time to time. The conversion of
Class B shares to Class A shares is subject to the continuing availability of a
ruling from the Internal Revenue Service (the "IRS") or an opinion of counsel
that such conversions will not constitute taxable events for federal tax
purposes. There can be no assurance that such ruling will be available. The
conversion of Class B shares to Class A shares will not occur if such ruling 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 per share next computed
after receipt of a purchase order without the imposition of an initial sales
charge; however, Class C shares redeemed within one year of purchase will be
subject to a CDSC of 1%. The charge will be assessed on the amount equal to the
lesser of the current market value or the original purchase cost of the shares
being redeemed. No CDSC will be imposed on increases in account value above the
initial purchase price, including shares derived from the reinvestment of
dividends or capital gains distributions. Class C shares do not convert to any
other Class of Fund shares.
For the purpose of determining the time of any purchase, all payments
during a quarter will be aggregated and deemed to have been made on the first
day of that quarter. In processing redemptions of Class C shares, the Fund will
first redeem shares not subject to any CDSC, and then shares held for the
shortest period of time during the one-year period. As a result, you will pay
the lowest possible CDSC.
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class C shares, including the payment of
compensation to broker-dealers.
Waiver or Reduction of Contingent Deferred Sales Charge. The CDSC on Class
B shares may be waived or reduced for non-retirement accounts if: (a) the
redemption results from the death of all registered owners of an account (in
the case of an UGMA, an UTMA or 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
11
<PAGE>
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 distribution as defined by the Code, (iii) from a
termination of employment, (iv) in the form of a loan to a participant in a
plan which permits loans, or (v) from a qualified defined contribution plan and
represents a participant's directed transfer (provided that this privilege has
been pre-authorized through a prior agreement with PFD regarding participant
directed transfers).
The CDSC on any shares subject to a CDSC may be waived or reduced for
either non-retirement or retirement plan accounts if the redemption is made
pursuant to the Fund's right to liquidate or involuntarily redeem shares in a
shareholder's account. The CDSC on any shares subject to a CDSC will not be
applicable if the selling broker- dealer elects, with PFD's approval, to waive
receipt of the commission normally paid at the time of the sale.
Broker-Dealers. An order for any Class of Fund shares received by 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 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 PFD's close of business. PFD or its
affiliates may provide additional compensation to certain dealers or such
dealers' affiliates based on certain objective criteria established from time
to time by PFD. All such payments are made out of PFD's or the affiliate's own
assets. These payments will not change the price an investor will pay for
shares or the amount that the Fund will receive from such sale.
General. The Fund reserves the right in its sole discretion to withdraw
all or any part of the offering of shares when, in the judgment of the Fund's
management, such withdrawal is in the best interest of the Fund. An order to
purchase shares is not binding on, and may be rejected by, PFD until it has
been confirmed in writing by PFD and payment has been received.
VIII. HOW TO SELL FUND SHARES
You can arrange to sell (redeem) fund shares on any day the Exchange is
open by selling either some or all of your shares to the Fund.
You may sell your shares either through your broker-dealer or directly to
the Fund. Please note the following:
[bullet] If you are selling shares from a retirement account, other than an
IRA, you must make your request in writing (except for exchanges to
other Pioneer mutual funds which can be requested by phone or in
writing). Call 1-800-622-0176 for more information.
[bullet] If you are selling shares from a non-retirement account or IRA,
you may use any of the methods described below.
Your shares will be sold at the share price next calculated after your
order is received in good order less any applicable CDSC. Sale proceeds
generally will be sent to you 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.
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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 by 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 by
electronic funds transfer: the proceeds must be sent to the bank wire address
of record which must have been properly predesignated either on your Account
Application or on an Account Options Form and which must not have changed in
the last 30 days. To 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 with respect
to purchases of Class A shares by 401(a) or 401(k) retirement plans with 1,000
or more eligible participants or with at least $10 million in plan assets.
General. Redemptions may be suspended or payment postponed during any
period in which any of the following conditions exist: the Exchange is closed
or trading on the Exchange is restricted; an emergency exists as a result of
which disposal by the Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Fund to fairly
determine the value of the net assets of its portfolio; or the SEC, by order,
so permits.
Redemptions and repurchases are taxable transactions to shareholders. The
net asset value per share received upon redemption or repurchase may be more or
less than the cost of shares to an investor, depending on the market value of
the portfolio at the time of redemption or repurchase.
IX. HOW TO EXCHANGE FUND SHARES
At this time, you may not purchase Fund shares by exchanging shares from
another Pioneer mutual fund. You may, however, take advantage of the exchange
privileges described below to exchange Fund shares to another Pioneer mutual
fund. Such shares may be exchanged back to this Fund. This policy will remain
in effect until a review by management indicates that a modification would be
in the best interests of the Fund. See "How to Buy 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
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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 an exchange. Shares acquired in
an exchange will be subject to the CDSC of the shares originally held. For
purposes of determining the amount of any applicable CDSC, the length of time
you have owned shares acquired by exchange will be measured from the date you
acquired the original shares and will not be affected by any subsequent
exchange.
Exchange requests received by PSC before 4:00 p.m. Eastern time will be
effective on that day if the requirements above have been met, otherwise, they
will be effective on the next business day. PSC will process exchanges only
after receiving an exchange request in good order. There are currently no fees
or sales charges imposed at the time of an exchange. An exchange of shares may
be made only in states where legally permitted. For federal and (generally)
state income tax purposes, an exchange is considered to be a sale of the shares
of the Fund exchanged and a purchase of shares in another Pioneer mutual fund.
Therefore, an exchange could result in a gain or loss on the shares sold,
depending on the tax basis of these shares and the timing of the transaction,
and special tax rules may apply.
You should consider the differences in objectives and policies of the
Pioneer mutual funds, as described in each fund's current prospectus, before
making any exchange. For the protection of the Fund's performance and
shareholders, the Fund and PFD reserve the right to refuse any exchange request
or restrict, at any time without notice, the number and/or frequency of
exchanges to prevent abuses of the exchange privilege. Such abuses may arise
from frequent trading in response to short-term market fluctuations, a pattern
of trading by an individual or group that appears to be an attempt to "time the
market," or any other exchange request which, in the view of management, will
have a detrimental effect on the Fund's portfolio management strategy or its
operations. In addition, the Fund and PFD reserve the right to charge a fee for
exchanges or to modify, limit, suspend or discontinue the exchange privilege
with notice to shareholders as required by law.
X. DISTRIBUTION PLANS
The Fund, has adopted a Plan of Distribution for each Class of shares (the
"Class A Plan," "Class B Plan" and "Class C Plan") in accordance with Rule
12b-1 under the 1940 Act pursuant to which certain distribution and service
fees are paid.
Pursuant to the Class A Plan, the Fund reimburses PFD for its actual
expenditures to finance any activity primarily intended to result in the sale
of Class A shares or to provide services to holders of Class A shares, provided
the categories of expenses for which reimbursement is made are approved by the
Fund's Board of Trustees. As of the date of this Prospectus, the Board of
Trustees has approved the following categories of expenses for Class A shares
of the Fund: (i) a service fee to be paid to qualified broker-dealers in an
amount not to exceed 0.25% per annum of the Fund's daily net assets
attributable to Class A shares; (ii) reimbursement to PFD for its expenditures
for broker-dealer commissions and employee compensation on certain sales of the
Fund's Class A shares with no initial sales charge (see "How to Buy Fund
Shares"); and (iii) reimbursement to PFD for expenses incurred in providing
services to Class A shareholders and supporting broker-dealers and other
organizations (such as banks and trust companies) in their efforts to provide
such services. Banks are currently prohibited under the Glass-Steagall Act from
providing certain underwriting or distribution services. If a bank was
prohibited from acting in any capacity or providing any of the described
services, management would consider what action, if any, would be appropriate.
Expenditures of the Fund pursuant to the Class A Plan are accrued daily
and may not exceed 0.25% of the Fund's average daily net assets attributable to
Class A shares. Distribution expenses of PFD are expected to substantially
exceed the distribution fees paid by the Fund in a given year. The Class A Plan
does not provide for the carryover of reimbursable expenses beyond 12 months
from the time the Fund is first invoiced for an expense. In the event of
termination or non-continuance of the Class A Plan, the Fund has 12 months to
reimburse any expense which it incurs prior to such event, provided that
payments by the Fund during such 12-month period shall not exceed 0.25% of the
Fund's average daily net assets during such period. 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 Class A shareholders of the Fund.
Both the Class B and the Class C Plan provide that the Fund will pay a
distribution fee at the annual rate of 0.75% of the Fund's average daily net
assets attributable to the applicable Class of shares and will pay PFD a
service fee at the annual rate of 0.25% of the Fund's average daily net assets
attributable to that Class of shares. The distribution fee is intended to
compensate PFD for its Class B and Class C
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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 therefore, 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 shareowner accounts.
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION
The Fund has elected to be treated, has qualified and intends to qualify
each year as a "regulated investment company" under Subchapter M of the Code,
so that it will not pay federal income tax on income and capital gains
distributed to shareholders as required under the Code. Under the Code, the
Fund will be subject to a nondeductible 4% federal excise tax on a portion of
its undistributed ordinary income and capital gains if it fails to meet certain
distribution requirements with respect to each calendar year. The Fund intends
to make distributions in a timely manner and accordingly does not expect to be
subject to the excise tax.
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, 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 to avoid federal
income or excise tax. Generally, dividends from the Fund's net investment
income, market discount income, net short-term capital gains, and certain net
foreign exchange gains are taxable under the Code as ordinary income, and
dividends from the Fund's net long-term capital gains are taxable as long-term
capital gains.
The Fund's distributions of long-term capital gains to individuals or
other noncorporate taxpayers are subject to different maximum tax rates (which
will be indicated in the annual tax information the Fund provides to
shareholders), depending generally upon the sources of, and the Fund's holding
periods for the assets that produce, the gains.
Unless shareholders specify otherwise, all distributions will be
automatically reinvested in additional full and fractional shares of the Fund.
For federal income tax purposes, all dividends are taxable as described above
whether a shareholder takes them in cash or reinvests them in additional shares
of the Fund. Information as to the federal tax status of dividends and
distributions will be provided to shareholders annually. For further
information on the distribution options available to shareholders, see
"Distribution Options" and "Directed Dividends" below.
Distributions by the Fund of the dividend income it receives from U.S.
domestic corporations, if any, may qualify for the dividends-received deduction
for corporate shareholders, subject to holding-period requirements and
debt-financing restrictions under the Code.
The Fund may be subject to foreign withholding taxes or other foreign
taxes on income (possibly including, in some cases, capital gains) on certain
of its foreign investments, which will reduce the yield on or return from those
investments. If, as anticipated, the Fund does not qualify to pass such taxes
through to its shareholders, they will neither treat such taxes as additional
income nor be entitled to any associated foreign tax credits or deductions.
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 if the Fund receives notice
from the IRS or a broker that such withholding applies. Please refer to the
Account Application for additional information.
The description above relates only to U.S. federal income tax consequences
for shareholders who are U.S. persons, i.e., U.S. citizens or residents or U.S.
corporations, partnerships, trusts or estates and who are subject to U.S.
federal income tax. Non-U.S. shareholders and tax-exempt shareholders are
subject to tax treatment that is not described above. Shareholders should
consult their own tax advisors regarding state, local and other applicable tax
laws, including
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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 custodian of the Fund's portfolio
securities and other assets. The principal business address of the mutual fund
division of the Custodian is 40 Water Street, Boston, Massachusetts 02109.
Account and Confirmation Statements
PSC maintains an account for each shareholder and all transactions of the
shareholder are recorded in this account. Confirmation statements showing the
details of transactions are sent to shareholders as transactions occur, except
Automatic Investment Plan transactions which are confirmed quarterly. The
Pioneer Combined Account Statement, mailed quarterly, is available to
shareholders who have more than one Pioneer mutual fund account.
Shareholders whose shares are held in the name of an investment
broker-dealer or other party will not normally have an account with the Fund
and might not be able to utilize some of the services available to shareholders
of record. Examples of services which might not be available are purchases,
exchanges or redemptions of shares by mail or telephone, automatic reinvestment
of dividends and capital gains distributions, withdrawal plans, Letters of
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. A change to your bank information must
be made in writing on an Account Options Form. You should allow up to five
business days for PSC to make changes to an established plan. PSC acts as agent
for the purchaser, the broker-dealer and PFD in maintaining these plans.
Financial Reports and Tax Information
As a shareholder, you will receive financial reports at least
semiannually. In January of each year, the Fund will mail you information about
the tax status of dividends and distributions.
Distribution Options
Dividends and capital gains distributions, if any, will automatically be
invested in additional shares of the Fund, at the applicable net asset value
per share, unless you indicate another option on the Account Application. Two
other options available are (a) dividends in cash and capital gains
distributions in additional shares; and (b) all dividends and capital gains
distributions in cash. These two options are not available, however, for
retirement plans or for an account with a net asset value of less than $500.
Changes in your distribution options may be made by written request to PSC.
If you elect to receive either dividends or 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 your account (before any reinvestment)
and forward the amount withheld to the IRS as a credit against your federal
income taxes. This option is not available for retirement plan accounts or for
accounts subject to backup withholding.
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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.
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 are available to
shareholders who have pre-recorded certain bank information (see "FactFoneSM").
You are strongly urged to consult with your financial representative prior to
requesting any telephone transaction. See "How to Buy Fund Shares," "How to
Sell Fund Shares" and "How to Exchange Fund Shares" for more information. To
confirm that each transaction instruction received by telephone is genuine, PSC
will record each telephone transaction, require the caller to provide the
personal identification number ("PIN") for the account and send you a written
confirmation of each telephone transaction. Different procedures may apply to
accounts that are registered to non-U.S. citizens or that are held in the name
of an institution or in the name of an investment broker-dealer or other third
party. If reasonable procedures, such as those described above, are not
followed, the Fund may be liable for any loss due to unauthorized or fraudulent
instructions. The Fund may implement other procedures from time to time. In all
other cases, neither the Fund, PSC nor PFD will be responsible for the
authenticity of instructions received by telephone; therefore, you bear the
risk of loss for unauthorized or fraudulent telephone transactions.
During times of economic turmoil or market volatility or as a result of
severe weather or a natural disaster, it may be difficult to contact the Fund
by telephone to institute a redemption or exchange. You should communicate with
the Fund in writing if you are unable to reach the Fund by telephone.
FactFoneSM
FactFoneSM is an automated inquiry and telephone transaction system
available to 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 FactFoneSM to make
computer-assisted telephone purchases, exchanges and redemptions from your
Pioneer mutual fund accounts if you have activated your PIN. Telephone
purchases and redemptions require the establishment of a bank account of
record. You are strongly urged to consult with your financial representative
prior to requesting any telephone transaction. Shareholders whose accounts are
registered in the name of a broker-dealer or other third party may not be able
to use FactFoneSM. See "How to Buy Fund Shares," "How to Exchange Fund Shares,"
"How to Sell Fund Shares" and "Telephone Transactions and Related Liabilities."
Call PSC for assistance.
Retirement Plans
You should contact the Retirement Plans Department of PSC at
1-800-622-0176 for information relating to tax- deferred retirement plans for
individuals, businesses and tax-exempt organizations. The Account Application
accompanying this Prospectus should not be used to establish any of these
plans. Separate applications are required.
Telecommunications Device for the Deaf (TDD)
If you have a hearing disability and access to TDD
keyboard equipment, you can call our TDD number toll-free at 1-800-225-1997,
weekdays from 8:30 a.m. to 5:30 p.m. Eastern time, to contact our telephone
representatives with questions about your account.
Systematic Withdrawal Plans
If your account has a total value of at least $10,000 you may establish a
Systematic Withdrawal Plan ("SWP") providing for fixed payments at regular
intervals. Withdrawals from Class B and Class C share accounts are limited to
10% of the value of the account at the time the SWP is implemented. See "Waiver
or Reduction of Contingent Deferred Sales Charge" for more information.
Periodic payments of $50 or more will be sent to you, or any person designated
by you, monthly or quarterly, and your periodic redemptions of shares may be
taxable to you. Payments can be made either by check or electronic transfer to
a bank account designated by you. If you direct that withdrawal 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.
Reinstatement Privilege (Class A Shares Only)
If you redeem all or part of your Class A shares of the Fund, you may
reinvest all or part of the redemption proceeds without a sales charge in Class
A shares of the Fund if you send a written request to PSC not more than 90 days
after your shares were redeemed. Your redemption proceeds will be reinvested at
the next determined net asset value of the Class A shares of the Fund in effect
immediately after receipt of the written request for reinstatement. You may
realize a gain or loss for federal income tax purposes as a result of the
redemption, and special tax rules may apply if a reinstatement occurs. In
addition, if a redemption resulted in a loss and an investment is made in
shares of the Fund within 30 days before or after the redemption, you may not
be able to recognize the loss for federal income tax purposes. Subject to the
provisions outlined under "How to Exchange Fund Shares" above, you may also
reinvest in Class A shares of other Pioneer mutual funds; in this case you must
meet the minimum investment requirements 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
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or terminated at any time by PFD or by the Fund. You may establish the services
described in this section when you open your account. You may also establish or
revise many of them on an existing account by completing an Account Options
Form, which you may request by calling 1-800-225-6292.
XIII. THE FUND
The Fund is a diversified open-end management investment company (commonly
referred to as a mutual fund) organized as a Delaware business trust on August
8, 1995. The Fund has authorized an unlimited number of shares of beneficial
interest. As an open-end management investment company, the Fund continuously
offers its shares to the public and under normal conditions must redeem its
shares upon the demand of any shareholder at the then current net asset value
per share. See "How to Sell Fund Shares." The Fund is not required, and does
not intend, to hold annual shareowner meetings although special meetings may be
called for the purpose of electing or removing Trustees, changing fundamental
investment restrictions or approving a management contract.
The Fund reserves the right to create and issue additional series of
shares. The Trustees have the authority, without further shareholder approval,
to classify and reclassify the shares of the Fund, or any additional series of
the Fund, into one or more classes. As of the date of this Prospectus, the
Trustees have authorized the issuance of 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.
In addition to the requirements under Delaware law, the Declaration of
Trust provides that a shareholder of the Fund may bring a derivative action on
behalf of the Fund only if the following conditions are met: (a) shareholders
eligible to bring such derivative action under Delaware law who hold at least
10% of the outstanding shares of the Fund, or 10% of the outstanding shares of
the series or class to which such action relates, shall join in the request for
the Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such shareholder request and investigate
the basis of such claim. The Trustees shall be entitled to retain counsel or
other advisers in considering the merits of the request and shall require an
undertaking by the shareholders making such request to reimburse the Fund for
the expense of any such advisers in the event that the Trustees determine not
to bring such action.
When issued and paid for in accordance with the terms of the Prospectus
and Statement of Additional Information, shares of the Fund are fully paid and
non-assessable. Shares will remain on deposit with the Fund's transfer agent
and certificates will not normally be issued. The Fund reserves the right to
charge a fee for the issuance of Class A certificates; certificates will not be
issued for Class B or Class C shares.
XIV. INVESTMENT RESULTS
The average annual total return (for a designated period of time) on an
investment in the Fund may be included in advertisements, and furnished to
existing or prospective shareholders. The average annual total return for each
Class is computed in accordance with the SEC's standardized formula. The
calculation for all Classes assumes the reinvestment of all dividends and
distributions at net asset value and does not reflect the impact of federal or
state income taxes. In addition, for Class A shares the calculation assumes the
deduction of the maximum sales charge of 5.75%; for Class B and Class C shares
the calculation reflects the deduction of any applicable CDSC. The periods
illustrated would normally include one, five and ten years (or since the
commencement of the public offering of the shares of a Class, if shorter)
through the most recent calendar quarter.
One or more additional measures and assumptions, including but not limited
to historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share values;
or any graphic illustration of such data may also be used. These data may cover
any period of the Fund's existence and may or may not include the impact of
sales charges, taxes or other factors.
Other investments or savings vehicles and/or unmanaged market indices,
indicators of economic activity or averages of mutual fund results may be cited
or compared with the investment results of the Fund. Rankings or listings by
magazines, newspapers or independent statistical or rating services, such as
Lipper Analytical Services, Inc., may also be referenced. The Fund may also
include securities industry or comparative performance information in
advertising or materials marketing the Fund's shares. Such performance
information may include rankings or listings by magazines, newspapers or
independent statistical or ratings services, such as Lipper Analytical
Services, Inc. or Ibbotson Associates.
The Fund's investment results will vary from time to time depending on
market conditions, the composition of the Fund's portfolio and operating
expenses of the Fund. All quoted investment results are historical and should
not be considered representative of what an investment in the Fund may earn in
any future period. For further information about the calculation methods and
uses of the Fund's investment results, see the Statement of Additional
Information.
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APPENDIX--CERTAIN INVESTMENT PRACTICES
This Appendix provides a brief description of certain
investment techniques that the Fund may employ. For a more complete discussion
of these and other practices, see "Investment Objective and Policies" in this
Prospectus and "Investment Policies and Restrictions" in the Statement of
Additional Information.
Options on Securities Indices
The Fund may purchase put and call options on indices that are based on
securities in which it may invest to manage cash flow and to manage its
exposure to foreign and domestic stocks or stock markets instead of, or in
addition to, buying and selling stock. The Fund may also purchase options in
order to hedge against risks of market-wide price fluctuations.
The Fund may purchase put options in order to hedge against an anticipated
decline in securities prices that might adversely affect the value of the
Fund's portfolio securities. If the Fund purchases a put option on a securities
index, the amount of the payment it would receive upon exercising the option
would depend on the extent of any decline in the level of the securities index
below the exercise price. Such payments would tend to offset a decline in the
value of the Fund's portfolio securities. However, if the level of the
securities index increases and remains above the exercise price while the put
option is outstanding, the Fund will not be able to profitably exercise the
option and will lose the amount of the premium and any transaction costs. Such
loss may be partially offset by an increase in the value of the Fund's
portfolio securities.
The Fund may purchase call options on securities indices in order to
remain fully invested in a particular stock market or to lock in a favorable
price on securities that it intends to buy in the future. If the Fund purchases
a call option on a securities index, the amount of the payment it receives upon
exercising the option depends on the extent of an increase in the level of the
securities index above the exercise price. Such payments would in effect allow
the Fund to benefit from securities market appreciation even though it may not
have had sufficient cash to purchase the underlying securities. Such payments
may also offset increases in the price of securities that the Fund intends to
purchase. If, however, the level of the securities index declines and remains
below the exercise price while the call option is outstanding, the Fund will
not be able to exercise the option profitably and will lose the amount of the
premium and transaction costs. Such loss may be partially offset by a reduction
in the price the Fund pays to buy additional securities for its portfolio.
The Fund may sell an option it has purchased or a similar option prior to
the expiration of the purchased option in order to close out its position in an
option which it has purchased. The Fund may also allow options to expire
unexercised, which would result in the loss of the premium paid.
Forward Foreign Currency Exchange Contracts and Options on Foreign Currencies
The Fund has the ability to hold a portion of its assets in foreign
currencies and to enter into forward foreign currency contracts to facilitate
settlement of foreign securities transactions or to protect against changes in
foreign currency exchange rates. The Fund might sell a foreign currency on
either a spot or forward basis to hedge against an anticipated decline in the
dollar value of securities in its portfolio or securities it intends or has
contracted to sell or to preserve the U.S. dollar value of dividends, interest
or other amounts it expects to receive. Although this strategy could minimize
the risk of loss due to a decline in the value of the hedged foreign currency,
it could also limit any potential gain which might result from an increase in
the value of the currency. Alternatively, the Fund might purchase a foreign
currency or enter into a forward purchase contract for the currency to preserve
the U.S. dollar price of securities it is authorized to purchase or has
contracted to purchase.
The Fund may also engage in cross-hedging by using forward contracts in
one currency to hedge against fluctuations in the value of the securities
denominated in a different currency (including the U.S. dollar), if the Fund's
investment adviser determines that there is a pattern of correlation between
the two currencies. Cross-hedging may also include entering into a forward
transaction involving two foreign currencies, using one foreign currency as a
proxy for the U.S. dollar to hedge against variations in the other foreign
currency if the investment adviser determines that there is a pattern of
correlation between the proxy currency and the U.S. dollar.
If the Fund enters into a forward contract to buy foreign currency, the
Fund will be required to place cash or high grade liquid securities in a
segregated account of the Fund maintained by the Fund's custodian in an amount
equal to the value of the Fund's total assets committed to the consummation of
the forward contract.
The Fund may purchase put and call options on foreign currencies for the
purpose of protecting against declines in the dollar value of foreign portfolio
securities and against increases in the U.S. dollar cost of foreign securities
to be acquired. The purchase of an option on a foreign currency may constitute
an effective hedge against exchange rate fluctuations.
Futures Contracts and Options on Futures Contracts
To hedge against changes in securities prices, currency exchange rates or
interest rates, the Fund may purchase and sell various kinds of futures
contracts, and purchase and write call and put options on any of such futures
contracts. The Fund may also enter into closing purchase and sale transactions
with respect to any of such contracts and options. The futures contracts may be
based on various stock and other securities indices, foreign currencies and
other financial instruments and indices. The Fund will engage in futures and
related options transactions for hedging purposes only. These transactions
involve brokerage costs, require margin deposits and, in the case of contracts
and options obligating the Fund to purchase currencies, require the Fund to
segregate assets to cover such contracts and options.
19
<PAGE>
Limitations and Risks Associated with Transactions in Options, Futures
Contracts and Forward Foreign Currency Exchange Contracts
Transactions involving options on securities and securities indices,
futures contracts and options on futures and forward foreign currency exchange
contracts involve (1) liquidity risk that contractual positions cannot be
easily closed out in the event of market changes or generally in the absence of
a liquid secondary market, (2) correlation risk that changes in the value of
hedging positions may not match the securities market and foreign currency
fluctuations intended to be hedged and (3) market risk that an incorrect
prediction of securities prices or exchange rates by the Fund's investment
adviser may cause the Fund to perform less favorably than if such positions had
not been entered. The Fund will purchase and sell options that are traded only
in a regulated market which is open to the public. Options, futures contracts
and forward foreign currency exchange contracts are highly specialized
activities which involve investment techniques and risks that are different
from those associated with ordinary portfolio transactions. The Fund may not
enter into futures contracts and options on futures contracts for speculative
purposes. All of the Fund's assets may be subject to futures contracts and
options on such contracts entered into for bona fide hedging purposes or in
forward foreign currency exchange contracts. The loss that may be incurred by
the Fund in entering into future contracts and written options thereon and
forward foreign currency exchange contracts is potentially unlimited. The Fund
may not invest more than 5% of its total assets in financial instruments that
are used for non-hedging purposes.
The Fund's transactions in options, forward foreign currency exchange
contracts, futures contracts and options on futures contracts may be limited by
the requirements for qualification of the Fund as a regulated investment
company for tax purposes. See "Tax Status" in the Statement of Additional
Information.
Real Estate Investment Trusts and Associated Risk Factors
REITs are pooled investment vehicles which primarily invest in income
producing real estate or real estate related loans or interests. REITs are
generally classified as equity REITs, mortgage REITs or a combination of equity
and mortgage REITs. Equity REITs invest the majority of their assets directly
in real property and derive income primarily from the collection of rents.
Equity REITs can also realize capital gains by selling properties that have
appreciated in value. Mortgage REITs invest the majority of their assets in
real estate mortgages and derive income from the collection of interest
payments.
Investing in REITs involves certain unique risks. Equity REITs may be
affected by changes in the value of the underlying property owned by the REITs,
while mortgage REITs may be affected by the quality of any credit extended.
REITs are dependent upon management skills, are not diversified, and are
subject to the risks of financing projects. REITs are subject to heavy cash
flow dependency, default by borrowers, self-liquidation, and the possibilities
of failing to qualify for the exemption from tax for distributed income under
the Code and failing to maintain their exemptions from the 1940 Act.
REITs (especially mortgage REITs) are also subject to interest rate risks.
When interest rates decline, the value of a REIT's investment in fixed rate
obligations can be expected to rise. Conversely, when interest rates rise, the
value of a REIT's investment in fixed rate obligations can be expected to
decline.
Investing in REITs involves risks similar to those associated with
investing in small cap companies. Historically, REITs, like small cap stocks,
have been more volatile in price than the larger cap stocks included in the
Standard & Poor's Index of 500 Common Stocks.
20
<PAGE>
Notes
21
<PAGE>
Notes
22
<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
23
<PAGE>
[Pioneer Logo]
Pioneer Small
Company Fund
60 State Street
Boston, Massachusetts 02109
OFFICERS
JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
TODD E. GRADY, Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
INVESTMENT ADVISER
PIONEERING MANAGEMENT CORPORATION
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR LLP
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
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, service forms
and telephone transactions..................... 1-800-225-6292
FactFoneSM
Automated fund yields and prices, account
information and computer transactions.......... 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 web site: www.pioneerfunds.com
0298-4952
[Copyright]Pioneer Funds Distributor, Inc.
<PAGE>
PIONEER SMALL COMPANY 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").
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 Pioneer Small Company Fund
(the "Fund") at 60 State Street, Boston, Massachusetts 02109. The most recent
Annual Report to Shareholders is attached to this Statement of Additional
information and is hereby incorporated in this Statement of Additional
Information by reference.
TABLE OF CONTENTS
PAGE
1. Investment Policies and Restrictions..................................... 2
2. Management of the Fund...................................................11
3. Investment Adviser.......................................................15
4. Underwriting Agreement and Distribution Plans............................16
5. Shareholder Servicing/Transfer Agent.....................................19
6. Custodian................................................................19
7. Principal Underwriter....................................................19
8. Independent Public Accountants...........................................20
9. Portfolio Transactions...................................................20
10. Tax Status...............................................................21
11. Description of Shares....................................................25
12. Certain Liabilities......................................................26
13. Letter of Intent.........................................................27
14. Systematic Withdrawal Plan...............................................27
15. Determination of Net Asset Value.........................................28
16. Investment Results.......................................................28
17. Financial Statements.....................................................31
Appendix A - Description of Corporate Bond Ratings.......................32
Appendix B - Performance Statistics......................................35
Appendix C - Other Pioneer Information...................................47
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 AND RESTRICTIONS
The Prospectus presents the investment objective and the principal investment
policies of the Fund. Additional investment policies and a further description
of some of the policies described in the Prospectus appear 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.
LENDING OF PORTFOLIO SECURITIES
The Fund may lend portfolio securities to member firms of the Exchange under
agreements which would require that the loans be secured continuously by
collateral in cash, cash equivalents or U.S. Treasury bills maintained on a
current basis at an amount at least equal to the market value of the securities
loaned. The Fund would continue to receive the equivalent of the interest or
dividends paid by the issuer on the securities loaned as well as the benefit of
an increase in the market value of the securities loaned and would also receive
compensation based on investment of the collateral. The Fund would not, however,
have the right to vote any securities having voting rights during the existence
of the loan, but would call the loan in anticipation of an important vote to be
taken among holders of the securities or of the giving or withholding of consent
on a material matter affecting the investment.
As with other extensions of credit there are risks of delay in recovery or even
loss of rights in the collateral should the borrower of the securities fail
financially. The Fund will lend portfolio securities only to firms which have
been approved in advance by the Board of Trustees, which will monitor the
creditworthiness of any such firms. At no time would the value of the securities
loaned exceed 30% of the value of the Fund's total assets.
FORWARD FOREIGN CURRENCY TRANSACTIONS
The Fund may engage in foreign currency transactions. These transactions may be
conducted on a spot, i.e., cash basis, at the spot rate for purchasing or
selling currency prevailing in the foreign exchange market. The Fund also has
authority to enter into forward foreign currency exchange contracts involving
currencies of the different countries in which the Fund will invest as a hedge
against possible variations in the foreign exchange rate between these
currencies and the U.S. dollar. This is accomplished through contractual
agreements to purchase or sell a specified currency at a specified future date
and price set at the time of the contract. The Fund's transactions in forward
foreign currency contracts will be limited to hedging either specific
transactions or portfolio positions. Transaction hedging is the purchase or sale
of forward foreign currency contracts with respect to specific receivables or
payables of the Fund, accrued in connection with the purchase and sale of its
portfolio securities denominated in foreign currencies. Portfolio hedging is the
use of forward foreign currency contracts to offset portfolio security positions
denominated or quoted in such foreign currencies. There is no guarantee that the
Fund will be engaged in hedging activities when adverse exchange rate movements
occur. The Fund will not attempt to hedge
2
<PAGE>
all of its foreign portfolio positions, and the Fund will enter into such
transactions only to the extent, if any, deemed appropriate by the investment
adviser. The Fund will not enter into speculative forward foreign currency
contracts.
If the Fund enters into a forward contract to purchase foreign currency, the
custodian bank will segregate cash or high grade liquid debt securities in a
separate account in an amount equal to the value of the total assets committed
to the consummation of such forward contract. Those assets will be valued at
market daily, and if the value of the assets in the separate account declines,
additional cash or securities will be placed in the accounts so that the value
of the account will equal the amount of the Fund's commitment with respect to
such contracts.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also limit the opportunity
for gain if the value of the hedged currency should rise. Moreover, it may not
be possible for the Fund to hedge against a devaluation that is so generally
anticipated that the Fund is not able to contract to sell the currency at a
price above the devaluation level it anticipates. The cost to the Fund of
engaging in foreign currency transactions varies with such factors as the
currency involved, the size of the contract, the length of the contract period
and the market conditions then prevailing. Since transactions in foreign
currency and forward contracts are usually conducted on a principal basis, no
fees or commissions are involved. The Fund may close out a forward position in a
currency by selling the forward contract or by entering into an offsetting
forward contract.
OPTIONS ON SECURITIES
The Fund may write (sell) covered call options on certain portfolio securities,
but options may not be written on more than 25% of the aggregate market value of
any single portfolio security (determined each time a call is sold as of the
date of such sale). The Fund does not intend to write covered call options on
portfolio securities with an aggregate market value exceeding 5% of the Fund's
total assets in the coming year. As the writer of a call option, the Fund
receives a premium less commission and, in exchange, foregoes the opportunity to
profit from increases in the market value of the security covering the call
above the sum of the premium and the exercise price of the option during the
life of the option. The purchaser of such a call written by the Fund has the
option of purchasing the security from the Fund at the option price during the
life of the option. Portfolio securities on which options may be written are
purchased solely on the basis of investment considerations consistent with the
Fund's investment objective. All call options written by the Fund are covered;
the Fund may cover a call option by owning the securities subject to the option
so long as the option is outstanding or using the other methods described below.
In addition, a written call option may be covered by purchasing an offsetting
option or any other option which, by virtue of its exercise price or otherwise,
covers the Fund's net exposure on its written option position. The Fund does not
consider a security covered by a call option to be "pledged" as that term is
used in the Fund's policy which limits the pledging or mortgaging of its assets.
The Fund may purchase call options on securities for entering into a "closing
purchase transaction," i.e., a purchase of a call option on the same security
with the same exercise price and expiration date as a "covered" call already
written by the Fund. These closing sale transactions enable the Fund to
immediately realize gains or minimize losses on its options positions. There is
no assurance that the Fund will be able to effect such closing purchase
transactions at a favorable price. If the Fund cannot enter into such a
transaction it may be required to hold a security that it might otherwise have
sold. The
3
<PAGE>
Fund's portfolio turnover may increase through the exercise of options
if the market price of the underlying securities goes up and the Fund has not
entered into a closing purchase transaction. The commission on purchase or sale
of a call option is higher in relation to the premium than the commission in
relation to the price on purchase or sale of the underlying security.
OPTIONS ON SECURITIES INDICES
The Fund may purchase call and put options on securities indices for the purpose
of hedging against the risk of unfavorable price movements adversely affecting
the value of the Fund's securities or securities which the Fund intends to buy.
Securities index options will not be used for speculative purposes.
The Fund may only purchase and sell options that are traded only in a regulated
market which is open to the public. Currently, options on stock indices are
traded only on national securities exchanges or over the counter, both in the
U.S. and in foreign countries. A securities index fluctuates with changes in the
market values of the securities included in the index. For example, some stock
index options are based on a broad market index such as the S&P 500 or the Value
Line Composite Index in the U.S., the Nikkei in Japan or the FTSE 100 in the
United Kingdom. Index options may also be based on a narrower market index such
as the S&P 100 or on an industry or market segment such as the AMEX Oil and Gas
Index or the Computer and Business Equipment Index.
The Fund may purchase put options in order to hedge against an anticipated
decline in securities prices that might adversely affect the value of the Fund's
portfolio securities. If the Fund purchases a put option on a securities index,
the amount of the payment it would receive upon exercising the option would
depend on the extent of any decline in the level of the securities index below
the exercise price. Such payments would tend to offset a decline in the value of
the Fund's portfolio securities. However, if the level of the securities index
increases and remains above the exercise price while the put option is
outstanding, the Fund will not be able to profitably exercise the option and
will lose the amount of the premium and any transaction costs. Such loss may be
partially offset by an increase in the value of the Fund's portfolio securities.
The Fund may purchase call options on securities indices in order to remain
fully invested in a particular foreign stock market or to lock in a favorable
price on securities that it intends to buy in the future. If the Fund purchases
a call option on a securities index, the amount of the payment it receives upon
exercising the option depends on the extent of an increase in the level of other
securities indices above the exercise price. Such payments would in effect allow
the Fund to benefit from securities market appreciation even though it may not
have had sufficient cash to purchase the underlying securities. Such payments
may also offset increases in the price of securities that the Fund intends to
purchase. If, however, the level of the securities index declines and remains
below the exercise price while the call option is outstanding, the Fund will not
be able to exercise the option profitably and will lose the amount of the
premium and transaction costs. Such loss may be partially offset by a reduction
in the price the Fund pays to buy additional securities for its portfolio.
The Fund may sell the securities index option it has purchased or write a
similar offsetting securities index option in order to close out a position in a
securities index option which it has purchased. These closing sale transactions
enable the Fund to immediately realize gains or minimize losses on its options
positions. However, there is no assurance that a liquid secondary market on an
options exchange will exist for any particular option, or at any particular
time, and for some options no secondary market may
4
<PAGE>
exist. In addition, securities index prices may be distorted by
interruptions in the trading of securities of certain companies or of issuers in
certain industries, or by restrictions that may be imposed by an exchange on
opening or closing transactions, or both, which would disrupt trading in options
on such indices and preclude the Fund from closing out its options positions. If
the Fund is unable to effect a closing sale transaction with respect to options
that it has purchased, it would have to exercise the options in order to realize
any profit.
The hours of trading for options may not conform to the hours during which the
underlying securities are traded. To the extent that the options markets close
before the markets for the underlying securities, significant price and rate
movements can take place in the underlying markets that can not be reflected in
the options markets. The purchase of options is a highly specialized activity
which involves investment techniques and risks different from those associated
with ordinary portfolio securities transactions.
In addition to the risks of imperfect correlation between the Fund's portfolio
and the index underlying the option, the purchase of securities index options
involves the risk that the premium and transaction costs paid by the Fund in
purchasing an option will be lost. This could occur as a result of unanticipated
movements in prices of the securities comprising the securities index on which
the option is based.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
To hedge against changes in securities prices or currency exchange rates, the
Fund may purchase and sell various kinds of futures contracts, and purchase and
write (sell) call and put options on any of such futures contracts. The Fund may
also enter into closing purchase and sale transactions with respect to any of
such contracts and options. The futures contracts may be based on various
securities (such as U.S. Government securities), securities indices, foreign
currencies and other financial instruments and indices. The Fund will engage in
futures and related options transactions for bona fide hedging and non-hedging
purposes as described below. All futures contracts entered into by the Fund are
traded on U.S. exchanges or boards of trade that are licensed and regulated by
the Commodity Futures Trading Commission (the "CFTC") or on foreign exchanges.
FUTURES CONTRACTS. A futures contract may generally be described as an agreement
between two parties to buy and sell particular financial instruments for an
agreed price during a designated month (or to deliver the final cash settlement
price, in the case of a contract relating to an index or otherwise not calling
for physical delivery at the end of trading in the contract).
When interest rates are rising or securities prices are falling, the Fund can
seek to offset a decline in the value of its current portfolio securities
through the sale of futures contracts. When interest rates are falling or
securities prices are rising, the Fund, through the purchase of futures
contracts, can attempt to secure better rates or prices than might later be
available in the market when it effects anticipated purchases. Similarly, the
Fund can sell futures contracts on a specified currency to protect against a
decline in the value of such currency and a decline in the value of its
portfolio securities which are denominated in such currency. The Fund can
purchase futures contracts on a foreign currency to establish the price in U.S.
dollars of a security denominated in such currency that the Fund has acquired or
expects to acquire.
Positions taken in the futures markets are not normally held to maturity but are
instead liquidated through offsetting transactions which may result in a profit
or a loss. While futures contracts on
5
<PAGE>
securities or currency will usually be liquidated in this manner, the Fund
may instead make, or take, delivery of the underlying securities or currency
whenever it appears economically advantageous to do so. A clearing corporation
associated with the exchange on which futures on securities or currency are
traded guarantees that, if still open, the sale or purchase will be performed on
the settlement date.
HEDGING STRATEGIES. Hedging, by use of futures contracts, seeks to establish
with more certainty the effective price, rate of return and currency exchange
rate on portfolio securities and securities that the Fund owns or proposes to
acquire. The Fund may, for example, take a "short" position in the futures
market by selling futures contracts in order to hedge against an anticipated
rise in interest rates or a decline in market prices or foreign currency rates
that would adversely affect the value of the Fund's portfolio securities. Such
futures contracts may include contracts for the future delivery of securities
held by the Fund or securities with characteristics similar to those of the
Fund's portfolio securities. Similarly, the Fund may sell futures contracts in a
foreign currency in which its portfolio securities are denominated or in one
currency to hedge against fluctuations in the value of securities denominated in
a different currency if there is an established historical pattern of
correlation between the two currencies. If, in the opinion of Pioneering
Management Corporation ("PMC"), there is a sufficient degree of correlation
between price trends for the Fund's portfolio securities and futures contracts
based on other financial instruments, securities indices or other indices, the
Fund may also enter into such futures contracts as part of its hedging
strategies. Although under some circumstances prices of securities in the Fund's
portfolio may be more or less volatile than prices of such futures contracts,
PMC will attempt to estimate the extent of this volatility difference based on
historical patterns and compensate for any such differential by having the Fund
enter into a greater or lesser number of futures contracts or by attempting to
achieve only a partial hedge against price changes affecting the Fund's
portfolio securities. When hedging of this character is successful, any
depreciation in the value of portfolio securities will be substantially offset
by appreciation in the value of the futures position. On the other hand, any
unanticipated appreciation in the value of the Fund's portfolio securities would
be substantially offset by a decline in the value of the futures position.
On other occasions, the Fund may take a "long" position by purchasing futures
contracts. This may be done, for example, when the Fund anticipates the
subsequent purchase of particular securities when it has the necessary cash, but
expects the prices or currency exchange rates then available in the applicable
market to be less favorable than prices or rates that are currently available.
OPTIONS ON FUTURES CONTRACTS. The acquisition of put and call options on futures
contracts will give the Fund the right (but not the obligation) for a specified
price to sell or to purchase, respectively, the underlying futures contract at
any time during the option period. As the purchaser of an option on a futures
contract, the Fund obtains the benefit of the futures position if prices move in
a favorable direction but limits its risk of loss in the event of an unfavorable
price movement to the loss of the premium and transaction costs.
The writing of a call option on a futures contract generates a premium which may
partially offset a decline in the value of the Fund's assets. By writing a call
option, the Fund becomes obligated, in exchange for the premium, to sell a
futures contract which may have a value higher than the exercise price.
Conversely, the writing of a put option on a futures contract generates a
premium which may partially offset an increase in the price of securities that
the Fund intends to purchase. However, the Fund becomes obligated to purchase a
futures contract (if the option is exercised) which may have a value lower than
the exercise price. Thus, the loss incurred by the Fund in writing options on
futures is
6
<PAGE>
potentially unlimited and may exceed the amount of the premium received.
The Fund will incur transaction costs in connection with the writing of options
on futures.
The holder or writer of an option on a futures contract may terminate its
position by selling or purchasing an offsetting option on the same series. There
is no guarantee that such closing transactions can be effected. The Fund's
ability to establish and close out positions on such options will be subject to
the development and maintenance of a liquid market.
The Fund may use options on futures contracts for bona fide hedging or
non-hedging purposes as discussed below.
REAL ESTATE INVESTMENT TRUSTS
The Fund may invest in shares of REITs as described in the Prospectus. REITs are
pooled investment vehicles which invest primarily in income producing real
estate or real estate related loans or interests. REITs are generally classified
as equity REITs, mortgage REITs or a combination of equity and mortgage REITs.
Equity REITs invest the majority of their assets directly in real property and
derive income primarily from the collection of rents. Equity REITs can also
realize capital gains by selling properties that have appreciated in value.
Mortgage REITs invest the majority of their assets in real estate mortgages and
derive income from the collection of interest payments. Like investment
companies such as the Fund, REITs are not taxed on income distributed to
shareholders provided they comply with several requirements of the Code. The
Fund will indirectly bear its proportionate share of any expenses paid by REITs
in which it invests in addition to the expenses paid by the Fund.
Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. Equity REITs
may be affected by changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, and
are subject to the risks of financing projects. REITs are subject to heavy cash
flow dependency, default by borrowers, self-liquidation, and the possibilities
of failing to qualify for the exemption from tax for distributed income under
the Code and failing to maintain their exemptions from the 1940 Act. REITs whose
underlying assets include long-term health care properties, such as nursing,
retirement and assisted living homes, may be impacted by federal regulations
concerning the health care industry.
REITs (especially mortgage REITs) are also subject to interest rate risks. When
interest rates decline, the value of a REIT's investment in fixed rate
obligations can be expected to rise. Conversely, when interest rates rise, the
value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investments in such loans will gradually
align themselves to reflect changes in market interest rates, causing the value
of such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
Investing in REITs involves risks similar to those associated with investing in
small capitalization companies. REITs may have limited financial resources, may
trade less frequently and in a limited volume and may be subject to more abrupt
or erratic price movements than larger company securities. Historically, small
capitalization stocks, such as REITs, have been more volatile in price than the
larger capitalization stocks included in the S&P 500.
7
<PAGE>
OTHER CONSIDERATIONS. The Fund will engage in futures and related options
transactions only for bona fide hedging or non-hedging purposes in accordance
with CFTC regulations which permit principals of an investment company
registered under the 1940 Act to engage in such transactions without registering
as commodity pool operators. The Fund is not permitted to engage in speculative
futures trading. The Fund will determine that the price fluctuations in the
futures contracts and options on futures used for hedging purposes are
substantially related to price fluctuations in securities held by the Fund or
which the Fund expects to purchase.
Except as stated below, the Fund's futures transactions will be entered into for
traditional hedging purposes -- i.e., futures contracts will be sold to protect
against a decline in the price of securities (or the currency in which they are
denominated) that the Fund owns, or futures contracts will be purchased to
protect the Fund against an increase in the price of securities (or the currency
in which they are denominated) it intends to purchase. As evidence of this
hedging intent, the Fund expects that on 75% or more of the occasions on which
it takes a long futures or option position (involving the purchase of futures
contracts), the Fund will have purchased, or will be in the process of
purchasing, equivalent amounts of related securities or assets denominated in
the related currency in the cash market at the time when the futures or option
position is closed out. However, in particular cases, when it is economically
advantageous for the Fund to do so, a long futures position may be terminated or
an option may expire without the corresponding purchase of securities or other
assets.
As an alternative to literal compliance with the bona fide hedging definition, a
CFTC regulation permits the Fund to elect to comply with a different test, under
which the sum of the amounts of initial margin deposits on the Fund's existing
non-hedging futures contracts and premiums paid for options on futures entered
into for non-hedging purposes (net of the amount the positions are "in the
money") would not exceed 5% of the market value of the Fund's total assets. The
Fund will engage in transactions in futures contracts and related options only
to the extent such transactions are consistent with the requirements of the Code
for maintaining its qualification as a regulated investment company for federal
income tax purposes.
Transaction costs associated with futures contracts and related options involve
brokerage costs, require margin deposits and, in the case of contracts and
options obligating the Fund to purchase securities or currencies, require the
Fund to segregate assets to cover such contracts and options.
While transactions in futures contracts and options on futures may reduce
certain risks, such transactions themselves entail certain other risks. Thus,
while the Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates, securities prices or currency exchange
rates may result in a poorer overall performance for the Fund than if it had not
entered into any futures contracts or options transactions. In the event of an
imperfect correlation between a futures position and a portfolio position which
is intended to be protected, the desired protection may not be obtained and the
Fund may be exposed to risk of loss. It is not possible to hedge fully or
perfectly against the effect of currency fluctuations on the value of foreign
securities because currency movements impact the value of different securities
in differing degrees.
8
<PAGE>
OTHER POLICIES AND RISKS
It is the policy of the Fund not to concentrate its investments in securities of
companies in any particular industry. In the opinion of the staff of the SEC ,
investments are deemed to be concentrated in a particular industry if such
investments constitute 25% or more of the Fund's total assets. The 1940 Act
provides that the policy of the Fund with respect to concentration is a
fundamental policy.
INVESTMENT RESTRICTIONS
FUNDAMENTAL INVESTMENT RESTRICTIONS. The Fund has adopted certain investment
restrictions which may not be changed without the affirmative vote of the
holders of a "majority" (as defined in 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
investment policy, and the pledge, mortgage or hypothecation of the Fund's
assets within the meaning of paragraph (3) below are not deemed to be senior
securities.
(2) Borrow money, except from banks as a temporary measure to
facilitate the meeting of redemption requests or 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 as it may deemed to be an
underwriter in a sale of restricted securities held in its portfolio.
(5) Purchase or sell real estate, except that the Fund may (i)
lease office space for its own use, (ii) invest in securities of issuers that
invest in real estate or interests therein, (iii) invest in securities that are
secured by real estate or interests therein, (iv) purchase and sell
mortgage-related securities and (v) hold and sell real estate acquired by the
Fund as a result of the ownership of securities.
(6) Make loans, except that the Fund may lend portfolio securities
in accordance with the Fund's investment policies and may purchase or invest in
repurchase agreements, bank certificates of deposit, a portion of an issue of
publicly distributed bonds, bank loan participation agreements, bankers'
acceptances, debentures or other securities, whether or not the purchase is made
upon the original issuance of the securities.
(7) Invest in commodities or commodity contracts or in puts,
calls, or combinations of both, except interest rate futures contracts, options
on securities, securities indices, currency and other
9
<PAGE>
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 SEC, investments are concentrated in a particular industry if
such investments aggregate 25% or more of the Fund's total assets. The Fund's
policy does not apply to investments in U.S. Government securities.
The Fund does not intend to enter into any reverse repurchase agreement, lend
portfolio securities or invest in securities index put and call warrants, as
described in fundamental investment restrictions (2), (6) and (7) above, during
the coming year.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. The following restrictions have been
designated as non-fundamental and may be changed by a vote of the Fund's Board
of Trustees without approval of shareholders.
The Fund may not:
(1) purchase securities for the purpose of controlling management of
other companies;
(2) purchase or retain the securities of any company if officers of the
Fund or Trustees of the Fund, or officers and directors of its adviser or
principal underwriter, individually own more than one-half of 1% of the
securities of such company or collectively own more than 5% of the securities of
such company; or
(3) invest in any security which is illiquid, including any repurchase
agreement maturing in more than seven days, and any securities of any enterprise
which has a business history of less than three years, including the operation
of any predecessor business to which it has succeeded, if more than 15% of the
net assets of the Fund, taken at market value, would be invested in such
securities.
In order to register its shares in certain jurisdictions, the Fund has agreed to
adopt certain additional investment restrictions, which are non-fundamental and
which may be changed by a vote of the Fund's Board of Trustees. Pursuant to
these additional investment restrictions, the Fund may not (i) invest more than
2% of its assets in warrants, valued at the lower of cost or market, provided
that it may invest up to 5% of its total assets, as so valued, in warrants
listed on the New York or American Stock Exchanges, (ii) invest in interests in
oil, gas or other mineral exploration or development leases or programs,
10
<PAGE>
(iii) invest in real estate limited partnerships. The Fund does not intend
to borrow money during the coming year, and in any case would do so only as a
temporary measure for extraordinary purposes or to facilitate redemptions.
2. MANAGEMENT OF THE FUND
The Fund's Board of Trustees provides broad supervision over the affairs of the
Fund. The executive 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 & 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 educational organization), Small Enterprise Assistance Fund
and Wilberforce University; Advisory Board Member, Washington Mutual Investors
Fund, a registered investment company; and Trustee of all of the Pioneer mutual
funds, except Pioneer Variable Contracts Trust.
RICHARD H. EGDAHL, M.D., 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.
11
<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 of the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
JOHN W. KENDRICK, TRUSTEE, DOB: JULY 1917
6363 WATERWAY DRIVE, FALLS CHURCH, VA 22044
Professor Emeritus, George Washington University; Director, American
Productivity and Quality Center; Adjunct Scholar, American Enterprise Institute;
Economic Consultant; and Trustee of all of the Pioneer mutual funds, except
Pioneer Variable Contracts Trust.
MARGUERITE A. PIRET, TRUSTEE, DOB: MAY 1948
ONE BOSTON PLACE, SUITE 2635, BOSTON, MA 02108
President, Newbury, Piret & Company, Inc. (merchant banking firm); Trustee
of Boston Medical Center; Member of the Board of Governors of the Investment
Company Institute; and Trustee of all of the Pioneer mutual funds.
DAVID D. TRIPPLE*, TRUSTEE AND EXECUTIVE VICE PRESIDENT, DOB: FEBRUARY 1944
Executive Vice President and a Director of PGI; President, Chief Investment
Officer and a Director of PMC; Director of PFD, PCC, PIntl, First Russia, Omega,
Pioneer SBIC Corporation ("Pioneer SBIC"), PMIL, Pioneer Global Equity Fund Plc,
Pioneer Global Bond Fund Plc, Pioneer DM Cashfonds Plc, Pioneer European Equity
Fund Plc, Pioneer Central & Eastern Europe Fund Plc and Pioneer US Real Estate
Fund Plc; and Executive Vice President and Trustee of all of the Pioneer mutual
funds.
STEPHEN K. WEST, TRUSTEE, DOB: SEPTEMBER 1928
125 BROAD STREET, NEW YORK, NY 10004
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.
12
<PAGE>
ERIC W. RECKARD, ASSISTANT TREASURER, DOB: JUNE 1956
Manager of Fund Accounting and Compliance of PMC since May 1994; Manager of
Auditing, Compliance and Business Analysis for PGI prior to May 1994; and
Assistant Treasurer of all of the Pioneer mutual funds.
ROBERT P. NAULT, ASSISTANT SECRETARY, DOB: MARCH 1964
General Counsel and Assistant Secretary of PGI since 1995; Assistant Secretary
of PMC, PIntl, PGL, First Russia, Omega and all of the Pioneer mutual funds;
Assistant Clerk of PFD and PSC; and junior partner of Hale and Dorr LLP prior to
1995.
TODD E. GRADY, VICE PRESIDENT, DOB: MARCH 1958
Vice President of PMC. Joined PMC in 1994 and has seven years of investment
experience.
The Fund's Agreement and Declaration of Trust, dated August 8, 1995 (the
"Declaration"), provides that the holders of two-thirds of its outstanding
shares may vote to remove a Trustee of the Fund at any special meeting of
shareholders. See "Description of Shares" below. The business address of all
officers is 60 State Street, Boston, Massachusetts 02109.
All of the outstanding capital stock of PFD, PMC and PSC is owned, directly or
indirectly, by PGI, a publicly owned Delaware corporation. PMC, the Fund's
investment adviser, serves as the investment adviser for the Pioneer mutual
funds listed below and manages the investments of certain institutional
accounts.
The table below lists all the Pioneer mutual funds currently offered to the
public and the investment adviser and principal underwriter for each fund.
Investment Principal
FUND NAME ADVISER UNDERWRITER
- --------- ------- -----------
Pioneer World Equity Fund PMC PFD
Pioneer International Growth Fund PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer India Fund PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Mid-Cap Fund PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Micro-Cap Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Balanced Fund PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Bond Fund PMC PFD
13
<PAGE>
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer Interest Shares PMC Note 1
Pioneer Variable Contracts Trust PMC Note 2
Note 1 This fund is a closed-end fund.
Note 2 This is a series of ten separate portfolios designed to provide
investment vehicles for the variable annuity and variable life insurance
contracts of various insurance companies or 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 on the date of this Statement of
Additional Information, except Mr. Cogan who then owned approximately 14% of
such shares. As of the date of this Statement of Additional Information, the
Trustees and officers of the Fund owned beneficially in the aggregate less than
1% of the outstanding shares of the Fund. As of January 31, 1998, MLPF&S for the
Sole Benefit of its Customers, 4800 Deer Lake Drive East, 3rd Floor,
Jacksonville, FL 32246-6484 owned approximately 6.21% (1,111,147) of the
outstanding Class A shares of the Fund; 13.85% (2,751,007) of the outstanding
Class B shares of the Fund; and approximately 21.64% (291,812) of the
outstanding Class C shares of the Fund.
COMPENSATION OF OFFICERS AND TRUSTEES
The Fund pays no salaries or compensation to any of its officers. The Fund will
pay an annual trustees' fee to each Trustee who is not affiliated with PMC, PGI,
PFD or PSC consisting of two components: (1) 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 and pays an annual trustees' fee of $500
plus expenses to each Trustee affiliated with PGI, PMC, PFD or PSC. The Fund
also will pay an annual committee participation fee to Trustees who serve as
members of committees established to act on behalf of one or more of the Pioneer
mutual funds. Committee fees will be allocated to the Fund on the basis of the
Fund's average net assets. Each Trustee who is a member of the Audit Committee
for the Pioneer mutual funds will receive an annual fee equal to 10% of the
aggregate annual trustee's fee, except the Committee Chair who will receive an
annual trustee's fee equal to 20% of the aggregate annual trustee's fee. Members
of the Pricing Committee for the Pioneer mutual funds, as well as any other
committee which renders material functional services to the Boards of Trustees
for the Pioneer mutual funds, will receive an annual fee equal to 5% of the
annual trustee's fee, except the Committee Chair who will receive an annual
trustee's fee equal to 10% of the annual trustee's 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 affiliated or interested persons of PGI, PMC, PFD or PSC are
reimbursed to the Fund under its management contract.
The following table sets forth certain information with respect to the
compensation of each Trustee of the Fund:
14
<PAGE>
<TABLE>
<CAPTION>
PENSION OR RETIREMENT TOTAL COMPENSATION FROM
BENEFITS ACCRUED AS THE FUND AND OTHER
AGGREGATE PART OF FUND EXPENSES PIONEER MUTUAL FUNDS**
COMPENSATION
FROM
NAME OF TRUSTEE THE FUND*
<S> <C> <C> <C>
John F. Cogan, Jr. $ 500 $0 $ 12,000
Mary K. Bush 768 0 30,000
Richard H. Egdahl, M.D. 2,346 0 62,000
Margaret B.W. Graham 2,346 0 60,000
John W. Kendrick 2,346 0 55,800
Marguerite A. Piret 2,938 0 80,000
David D. Tripple 500 0 12,000
Stephen K. West 2,552 0 63,800
John Winthrop 2,676 0 69,000
----- - ------
$ 16,972 $0 $ 444,600
* For the fiscal year ended October 31, 1997.
** For the calendar year ended December 31, 1997.
</TABLE>
3. INVESTMENT ADVISER
The Fund has contracted with PMC, 60 State Street, Boston, Massachusetts 02109,
to act as its investment adviser. A description of the services provided to the
Fund under its management contract and the expenses paid by the Fund under the
contract is set forth in the Prospectus under the caption "Management of the
Fund."
The term of the management contract is one year and 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). The vote must be 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 upon 60 days' written notice
by vote of the Board of Directors or Trustees or a majority of the Fund's
outstanding voting securities. Pursuant to the management contract, PMC will not
be liable for any error of judgment or mistake of law or for any loss sustained
by reason of the adoption of any investment policy or the purchase, sale or
retention of any securities on the recommendation of PMC. PMC, however, is not
protected against liability by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under the respective management
contract.
As compensation for its management services and expenses incurred, PMC is
entitled to a management fee from the Fund at the rate of 0.85% per annum of he
Fund's average daily net assets. The fee is normally computed and accrued daily
and paid monthly.
15
<PAGE>
For the period November 2, 1995 through October 31, 1996 and for the fiscal year
ended October 31, 1997, the Fund paid or owed total management fees to PMC of
$2,493,161 and $4,269,069, respectively. An expense limitation was in effect
during the fiscal year ended October 31, 1996, and in the absence of that
expense limitation, the Fund would have paid $2,518,176 in management fees for
that period.
4. UNDERWRITING AGREEMENT AND DISTRIBUTION PLANS
The Fund entered into an underwriting agreement with PFD. The underwriting
agreement will continue from year to year if annually approved by the Trustees.
The underwriting agreement provides that PFD will bear expenses for the
distribution of the Fund's shares, except for expenses incurred by PFD for which
it is reimbursed or compensated by the Fund under the distribution plans
(discussed below). PFD bears all expenses it incurs in providing services under
the underwriting agreement. Such expenses include compensation to its employees
and representatives and to securities dealers for distribution related services
performed for the Fund. PFD also pays certain expenses in connection with the
distribution of the Fund's shares, including the cost of preparing, printing and
distributing advertising or promotional materials, and the cost of printing and
distributing prospectuses and supplements to prospective shareholders. The Fund
bears the cost of registering its shares under federal and state securities law
and the laws of certain foreign countries. 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 has adopted a plan of distribution pursuant to Rule 12b-1 under the
1940 Act with respect to its Class A, Class B and Class C shares (the "Class A
Plan," the "Class B Plan" and the "Class C Plan") (together, the "Plans").
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 Fund 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 on
a fiscal year basis and may not exceed, with respect to Class A shares, the
annual rate of 0.25% of the Fund's average annual 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 daily distribution fee equal on an annual basis to
0.75% of the Fund's average daily net assets attributable to Class B shares and
will pay PFD a service fee equal to 0.25% of the Fund's average daily net assets
attributable to Class B shares (which PFD will in turn pay to securities dealers
which enter into a sales agreement with PFD at a rate of up to 0.25% of the
Fund's average daily net assets attributable to Class B shares owned by
investors for whom that securities dealer is the holder or dealer of record).
This service fee is intended to be in consideration of 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
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month following purchase. Dealers may from time to time be required to meet
certain other criteria in order to receive service fees. PFD or its affiliates
are entitled to retain all service fees payable under the Class B Plan for which
there is no dealer of record or for which qualification standards have not been
met as partial consideration for personal services and/or account maintenance
services performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class B Plan is to
compensate PFD for its distribution services 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
"Distributions 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 a Fund will pay PFD, as the Fund's distributor
for its Class C shares, a distribution fee accrued daily and paid quarterly,
equal on an annual basis to 0.75% of the Fund's average daily net assets
attributable to Class C shares and will pay PFD a service fee equal to 0.25% of
the Fund's average daily net assets attributable to Class C shares. PFD will in
turn pay to securities dealers which enter into a sales agreement with PFD a
distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the Fund's average daily net assets attributable to Class C
shares owned by investors for whom that securities dealer is the holder or
dealer of record. The service fee is intended to be in consideration of personal
services and/or account maintenance services rendered by the dealer with respect
to Class C shares. PFD will advance to dealers the first-year service fee at a
rate equal to 0.25% of the amount invested. As compensation therefor, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Commencing in the thirteenth month following a
purchase of Class C shares, dealers will become eligible for additional service
fees at a rate of up to 0.25% of the amount invested and additional compensation
at a rate of up to 0.75% of the net asset value with respect to such shares.
Dealers may from time to time be required to meet certain other criteria in
order to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class C Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class C Plan is to
compensate PFD for its distribution services with respect to the Class C shares
of the Fund. PFD pays commissions to dealers as well as expenses of printing
prospectuses and reports used for sales purposes, expenses with respect to the
preparation and printing of sales literature and other distribution-related
expenses, including, without limitation, the cost necessary to provide
distribution-related services, or personnel, travel, office expenses and
equipment. The Class C Plan also provides that PFD will receive all CDSCs
attributable to Class C shares. (See "Distribution Plans" in the Prospectus.)
When a broker-dealer sells Class C shares and elects, with PFD's approval, to
waive its right to receive the commission normally paid at the time of
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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 had 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 Fund
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 (as defined in the 1940 Act) of the respective
Class of the Fund. A Plan will automatically terminate in the event of its
assignment (as defined in the 1940 Act).
During the fiscal year ended 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: $584,306, $2,430,759 and $172,569. Distribution
fees were paid by the Fund to PFD in reimbursement of or as compensation for
expenses related to servicing of shareholder accounts and to compensate 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 of 4% of the
lower of the cost or market value of the shares and Class C shares may be
subject to a 1% CDSC. During the fiscal year ended October 31, 1997, CDSCs, in
the amount of approximately $644,751 were paid to PFD in reimbursement of or as
compensation for expenses related to servicing shareholder accounts and to
compensate dealers and sales personnel.
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5. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with PSC, 60 State Street, Boston, Massachusetts 02109,
to act as shareholder servicing and transfer agent for the Fund. This contract
may be terminated without penalty by either party upon 90 days' written notice.
Under the terms of its contract with the Fund, PSC services shareholder
accounts, and its duties include: (i) processing sales, redemptions and
exchanges of shares of the Fund; (ii) distributing dividends and capital gains
associated with Fund portfolio accounts; and (iii) maintaining account records
and responding to shareholder inquiries.
PSC receives an annual fee of $22.75 per shareholder account from the Fund as
compensation for the services described above. PSC is also reimbursed by the
Fund for its cash 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 record keeping services. Any such payments by the Fund would be in lieu of
the per account fee which would otherwise be paid by the Fund to PSC.
6. CUSTODIAN
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts 02109, is
the custodian (the "Custodian") of the Fund's assets. The Custodian's
responsibilities include safekeeping and controlling the Fund's cash and
securities, handling the receipt and delivery of securities, and collecting
interest and dividends on the Fund's investments. The Custodian does not
determine the investment policies of the Fund or decide which securities the
Fund will buy or sell. The Fund may, however, invest in securities, including
repurchase agreements, issued by the Custodian and may deal with the Custodian
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.
7. PRINCIPAL UNDERWRITER
PFD, 60 State Street, Boston, Massachusetts 02109, serves as the principal
underwriter for the Fund in connection with the continuous offering of the Class
A, Class B and Class C shares of the Fund. For the period November 2, 1995
through October 31, 1996 and for the fiscal year ended October 31, 1997, net
underwriting commissions retained by PFD in connection with its offering of Fund
shares were approximately $771,640 and $110,220, respectively. Commissions
reallowed to dealers during the same periods were approximately $8,609,629 and
$730,605, respectively. See "Underwriting Agreement and Distribution Plans"
above for a description of the terms of the underwriting agreement with PFD.
The Fund will not generally issue Fund shares for consideration other than cash.
At the Fund's sole discretion, however, it may issue Fund shares for
consideration other than cash in connection with a bona fide reorganization,
statutory merger, or other acquisition of portfolio securities.
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8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, 225 Franklin Street, Boston, Massachusetts 02110, is the
Fund's independent public accountants, providing audit services, tax return
review, and assistance and consultation with respect to the preparation of
filings with the SEC.
9. PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on behalf
of the Fund by PMC pursuant to authority contained in the Fund's management
contract. In selecting brokers or dealers, PMC will consider various relevant
factors, 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.
PMC may select broker-dealers which provide brokerage and/or research services
to the Fund and/or other investment companies or other accounts managed by PMC.
In addition, consistent with Section 28(e) of the Securities Act of 1934, as
amended, the Fund may pay commissions to such broker-dealers in an amount
greater than the amount another firm may charge. Such services may include
advice concerning the value of securities; the advisability of investing in,
purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; providing stock price quotation services;
furnishing analyses, manuals and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy, performance of
accounts, comparative fund statistics and credit rating service information; and
effecting securities transactions and performing functions incidental thereto
(such as clearance and settlement). PMC maintains a listing of broker-dealers
who provide such services on a regular basis. However, because it is anticipated
that many transactions on behalf of the Fund and other investment companies or
accounts managed by PMC are placed with broker-dealers (including broker-dealers
on the listing) without regard to the furnishing of such services, it is not
possible to estimate the proportion of such transactions directed to such
dealers solely because such services were provided.
The research received from broker-dealers may be useful to PMC in rendering
investment management services to the Fund as well as other investment companies
or other accounts managed by PMC, although not all such research may be useful
to the Fund. Conversely, such information provided by brokers or dealers who
have executed transaction orders on behalf of such other PMC clients may be
useful to PMC in carrying out its obligations to the Fund. The receipt of such
research has not reduced PMC's normal independent research activities; however,
it enables PMC to avoid the additional expenses which might otherwise be
incurred if it were to attempt to develop comparable information through its own
staff.
In circumstances where two or more broker-dealers offer comparable prices and
executions, preference may be given to a broker-dealer which has sold shares of
the Fund as well as shares of other investment companies or accounts managed by
PMC. This policy does not imply a commitment to execute all portfolio
transactions through all broker-dealers that sell shares of the Fund.
The Trustees periodically review PMC's performance of its responsibilities in
connection with the placement of portfolio transactions on behalf of the Fund.
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In addition to the Fund, PMC acts as investment adviser to other Pioneer mutual
funds and certain private accounts with investment objectives similar to those
of the Fund. As such, securities may meet the investment objectives of the Fund,
such other funds and such private accounts. In such cases, the decision to
recommend a purchase to 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 in the investment recommendations
include other investments which each fund or account presently has in a
particular industry and the availability of investment funds in each fund or
account.
It is possible that at times identical securities will be held by more than one
fund and/or account. However, positions in the same issue may vary and the
length of time that any fund or account may choose to hold its investment in the
same issue may likewise vary. To the extent that the Fund, another mutual fund
in the Pioneer group or a private account managed by PMC may not be able to
acquire as large a position in such security as it desires, it may have to pay a
higher price for the security. Similarly, the Fund may not be able to obtain as
large an execution of an order to sell or as high a price for any particular
portfolio security if PMC decides to sell on behalf of another account the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one fund or account, the
resulting participation in volume transactions could produce better executions
for the Fund or the account. In the event 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 period November 2, 1995 through October 31, 1996 and for the fiscal year
ended October 31, 1997, the Fund paid aggregate brokerage and underwriting
commissions of approximately $1,018,000 and $1,098,685, respectively.
10. TAX STATUS
It is the Fund's policy to meet the requirements of Subchapter M of the Code for
qualification as a regulated investment company. These requirements relate to
the sources of the Fund's income, the diversification of its assets and the
distribution of its income to shareholders. If the Fund meets all such
requirements and distributes to its shareholders, in accordance with the Code's
timing requirements, all investment company taxable income and net capital gain,
if any, which it earns, the Fund will be relieved of the necessity of paying
federal income tax.
In order to qualify as a regulated investment company under Subchapter M, the
Fund must, among other things, derive at least 90% of its annual gross income
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock, securities or foreign currencies, or
other income (including gains from options, futures and forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies (the "90% income test") and satisfy certain annual distribution and
quarterly diversification requirements.
Dividends from investment company taxable income, which includes net investment
income, net short-term capital gain in excess of net long-term capital loss, and
certain net foreign exchange gains, are taxable as ordinary income, whether
received in cash or reinvested in additional shares. Dividends from net
long-term capital gain in excess of net short-term capital loss ("net capital
gain"), if any, whether received in cash or reinvested in additional shares, are
taxable to the Fund's shareholders as capital gains
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for federal income tax purposes without regard to the length of time shares
of the Fund have been held. As a result of the enactment of the Taxpayer Relief
Act of 1997 (the "1997 TRA") on August 5, 1997, gain recognized after May 6,
1997 from the sale of a capital asset is taxable to individual (noncorporate)
investors at different maximum federal income tax rates, depending generally
upon the tax holding period for the asset, the federal income tax bracket of the
taxpayer, and the dates the asset was acquired and/or sold. The Treasury
Department has issued guidance under the 1997 TRA that (subject to possible
modification by future "technical corrections" legislation) enables the Fund to
pass through to its shareholders the benefits of the capital gains tax rates
enacted in the 1997 TRA. The Fund will provide appropriate information to its
shareholders about its distributions, including the tax rate(s) applicable to
its distributions from long-term capital gains, in accordance with this and any
future guidance. Shareholders should consult their own tax advisers on the
correct application of these new rules in their particular circumstances.
Any dividend declared by the Fund in October, November or December as of a
record date in such a month and paid during the following January will be
treated for federal income tax purposes as received by shareholders on December
31 of the calendar year in which it is declared.
Foreign exchange gains and losses realized by the Fund in connection with
certain transactions involving foreign currency-denominated debt securities,
certain options and futures contracts relating to foreign currency, foreign
currency forward contracts, foreign currencies, or payables or receivables
denominated in a foreign currency are subject to Section 988 of the Code, which
generally causes such gains and losses to be treated as ordinary income and
losses and may affect the amount, timing and character of distributions to
shareholders. Under future regulations, any such transactions that are not
directly related to the Fund's investments in stock or securities (or its
options or futures contracts with respect to stock or securities) may need to be
limited in order to enable the Fund to satisfy the 90% income test. If the net
foreign exchange loss for a year were to exceed the Fund's investment company
taxable income (computed without regard to such loss), the resulting ordinary
loss for such year would not be deductible by the Fund or its shareholders in
future years.
If the Fund acquires any equity interest (under proposed regulations, generally
including not only stock but also an option to acquire stock such as is inherent
in a convertible bond) in certain foreign corporations that receive at least 75%
of their annual gross income from passive sources (such as interest, dividends,
certain rents and royalties or capital gains) or hold at least 50% of their
assets in investments producing such passive income ("passive foreign investment
companies"), the Fund could be subject to federal income tax and additional
interest charges on "excess distributions" received from such companies or gain
from the sale of stock in such companies, even if all income or gain actually
received by the Fund is timely distributed to its shareholders. The Fund would
not be able to pass through to its shareholders any credit or deduction for such
a tax. An election may generally be available that would ameliorate these
adverse tax consequences, but any such election could require the Fund to
recognize taxable income or gain (subject to tax distribution requirements)
without the concurrent receipt of cash. These investments could also result in
the treatment of associated capital gains as ordinary income. The Fund may limit
and/or manage its holdings in passive foreign investment companies to minimize
its tax liability or maximize its return from these investments.
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
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investments for each taxable year, which generally will be prior to the
receipt of the corresponding cash payments. However, the Fund must distribute,
at least annually, all or substantially all of its net income, including such
accrued income, to shareholders to qualify as a regulated investment company
under the Code and avoid federal income and excise taxes. Therefore, the Fund
may have to dispose of its portfolio securities under disadvantageous
circumstances to generate cash, or may have to leverage itself by borrowing the
cash, to satisfy distribution requirements.
For federal income tax purposes, the Fund is permitted to carry forward a net
capital loss for any year to offset its capital gains, if any, during the eight
years following the year of the loss. To the extent subsequent capital gains are
offset by such losses, they would not result in federal income tax liability to
the Fund and therefore are not expected to be distributed as such to
shareholders. As of the end of its most recent taxable year, the Fund had no
capital loss carryforwards.
At the time of an investor's purchase of Fund shares, a portion of the purchase
price may be attributable to realized or unrealized appreciation in the Fund's
portfolio or undistributed taxable income of the Fund. Consequently, subsequent
distributions by the Fund on these shares from such appreciation or income may
be taxable to such investor even if the net asset value of the investor's shares
is, as a result of the distributions, reduced below the investor's cost for such
shares and the distributions economically represent a return of a portion of the
investment.
Redemptions and exchanges are taxable events for shareholders that are subject
to tax. Shareholders should consult their own tax advisers with reference to
their individual circumstances to determine whether any particular transaction
in Fund shares is properly treated as a sale for tax purposes, as the following
discussion assumes, and the character of and tax rate applicable to any gains or
losses recognized in such transactions under the new rate structure enacted in
the 1997 TRA. Any loss realized by a shareholder upon the redemption, exchange
or other disposition of shares with a tax holding period of six months or less
will be treated as a long-term capital loss to the extent of any amounts treated
as distributions of long-term capital gain with respect to such shares.
In addition, if Class A shares redeemed or exchanged have been held for less
than 91 days, (1) in the case of a reinvestment in the Fund at net asset value
pursuant to the reinvestment privilege, the sales charge paid on such shares is
not included in their tax basis under the Code, and (2) in the case of an
exchange, all or a portion of the sales charge paid on such shares is not
included in their tax basis under the Code, to the extent a sales charge that
would otherwise apply to the shares received is reduced pursuant to the exchange
privilege. In either case, the portion of the sales charge not included in the
tax basis of the shares redeemed or surrendered in an exchange is included in
the tax basis of the shares acquired in the reinvestment or exchange. Losses on
redemptions or other dispositions of shares may be disallowed under "wash sale"
rules in the event of other investments in the Fund (including those made
pursuant to reinvestment of dividends and/or capital gain distributions) within
a period of 61 days beginning 30 days before and ending 30 days after a
redemption or other disposition of shares. In such a case, the disallowed
portion of any loss would be included in the federal tax basis of the shares
acquired in the other investments.
Options written or purchased and futures contracts entered into by the Fund on
certain securities, indices and foreign currencies, as well as certain foreign
currency forward contracts, may cause the Fund to recognize gains or losses from
marking-to-market even though such options may not have lapsed, been closed out,
or exercised or such futures or forward contracts may not have been performed or
closed out.
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The tax rules applicable to these contracts may affect the characterization
as long-term or short-term of some capital gains and losses realized by the
Fund. Certain options, futures and forward contracts relating to foreign
currency may be subject to Section 988, as described above, and may accordingly
produce ordinary income or loss. Additionally, the Fund may be required to
recognize gain if an option, futures contract, forward contract, or other
transaction that is not subject to the mark to market rules is treated as a
"constructive sale" of an "appreciated financial position" held by the Fund
under Section 1259 of the Code. Any net mark to market gains and/or gains from
constructive sales may also have to be distributed to satisfy the distribution
requirements referred to above even though no corresponding cash amounts may
concurrently be received, possibly requiring the disposition of portfolio
securities or borrowing to obtain the necessary cash. Losses on certain options,
futures or forward contracts and/or offsetting positions (portfolio securities
or other positions with respect to which the Fund's risk of loss is
substantially diminished by one or more options, futures or forward contracts)
may also be deferred under the tax straddle rules of the Code, which may also
affect the characterization of capital gains or losses from straddle positions
and certain successor positions as long-term or short-term. Certain tax
elections may be available that would enable the Fund to ameliorate some adverse
effects of the tax rules described in this paragraph. The tax rules applicable
to options, futures or forward contracts and straddles may affect the amount,
timing and character of the Fund's income and losses and hence of its
distributions to shareholders.
For purposes of the 70% dividends-received deduction generally available to
corporations under the Code, dividends received by the Fund from U.S. domestic
corporations in respect of any share of stock with a tax holding period of at
least 46 days (91 days in the case of certain preferred stock) extending before
and after each dividend held in an unleveraged position and distributed and
designated by the Fund may be treated as qualifying dividends. Any corporate
shareholder should consult its tax advisor regarding the possibility that its
tax basis in its shares may be reduced, for federal income tax purposes, by
reason of "extraordinary dividends" received with respect to the shares and, to
the extent such basis would be reduced below zero, current recognition of income
may be required. In order to qualify for the deduction, corporate shareholders
must meet the minimum holding period requirement stated above with respect to
their Fund shares, taking into account any holding period reductions from
certain hedging or other transactions or positions that diminish their risk of
loss with respect to their Fund shares, and, if they borrow to acquire or
otherwise incur debt attributable to Fund shares, they may be denied a portion
of the dividends-received deduction. The entire qualifying dividend, including
the otherwise deductible amount, will be included in determining the excess (if
any) of a corporation's adjusted current earnings over its alternative minimum
taxable income, which may increase a corporation's alternative minimum tax
liability.
The Fund may be subject to withholding and other taxes imposed by foreign
countries including taxes on interest, dividends and capital gains with respect
to its investments in those countries. Tax conventions between certain countries
and the U.S. may reduce or eliminate such taxes in some cases. The Fund does not
expect to satisfy the requirements for passing through to its shareholders their
pro rata shares of qualified foreign taxes paid by the Fund, with the result
that shareholders will not include such taxes in their gross incomes and will
not be entitled to a tax deduction or credit for such taxes on their own tax
returns.
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
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<PAGE>
maintained as qualified retirement plans. Shareholders should consult their
tax advisers for more information.
Federal law requires that the Fund withhold (as "backup withholding") 31% of
reportable payments, including dividends, capital gain dividends and the
proceeds of redemptions (including exchanges) and repurchases to shareholders
who have not complied with IRS regulations. In order to avoid this withholding
requirement, shareholders must certify on their Account Applications, or on
separate IRS Forms W-9, that the Social Security Number or other Taxpayer
Identification Number they provide is their correct number and that they are not
currently subject to backup withholding, or that they are exempt from backup
withholding. The Fund may nevertheless be required to withhold if it receives
notice from the IRS or a broker that the number provided is incorrect or backup
withholding is applicable as a result of previous underreporting of interest or
dividend income.
If, as anticipated, the Fund continues to qualify as a regulated investment
company under the Code, it will not be required to pay any Massachusetts income,
corporate excise or franchise taxes or any Delaware corporation income tax.
The description of certain federal tax provisions above relates only to U.S.
federal income tax consequences for shareholders who are U.S. persons, I.E. U.S.
citizens or residents or U.S. corporations, partnerships, trusts or estates, and
who are subject to U.S. federal income tax. This description does not address
the special tax rules that may be applicable to particular types of investors,
such as financial institutions, insurance companies, securities dealers, or
tax-exempt or tax-deferred plans, accounts or entities. Investors other than
U.S. persons may be subject to different U.S. tax treatment, including a
possible 30% non-resident alien U.S. withholding tax (or non-resident alien
withholding tax at a lower treaty rate) on amounts treated as ordinary dividends
from the Fund and, unless an effective IRS Form W-8 or authorized substitute for
Form W-8 is on file, to 31% backup withholding on certain other payments from
the Fund. Shareholders should consult their own tax advisers on these matters
and on state, local and other applicable tax laws.
11. DESCRIPTION OF SHARES
The Declaration permits the Board of Trustees to authorize the issuance of an
unlimited number of full and fractional shares of beneficial interest which may
be divided into such separate series as the Trustees may establish. Currently,
the Fund consists of only one series. The Trustees may, however, establish
additional series of shares, and may divide or combine the shares into a greater
or lesser number of shares without thereby changing the proportionate beneficial
interests in the Fund. The Declaration further authorizes the Trustees to
classify or reclassify any series of the shares into one or more classes.
Pursuant thereto, the Trustees have authorized the issuance of three classes of
shares of the Fund, designated as 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.
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Shareholders are entitled to one vote for each share held and may vote in the
election of Trustees and on other matters submitted to a meeting 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 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 Declaration without the affirmative vote of a
majority of the Fund's shares. Shares have no preemptive or conversion rights.
Shares are fully paid and non-assessable by the Fund, except as stated below.
12. CERTAIN LIABILITIES
As a Delaware business trust, the Fund's operations are governed by its the
Declaration. A copy of the Fund's Certificate of Trust, also dated August 8,
1995, is on file with the office of the Secretary of State of Delaware.
Generally, Delaware business trust shareholders are not personally liable for
obligations of the Delaware business trust under Delaware law. The Delaware
Business Trust Act (the "Delaware Act") provides that a shareholder of a
Delaware business trust shall be entitled to the same limitation of liability
extended to shareholders of private for-profit corporations. The Declaration
expressly provides that the Fund is organized under the Delaware Act and that
the Declaration is to be governed by Delaware law. It is nevertheless possible
that a Delaware business trust, such as the fund, might become a party to an
action in another state whose courts refused to apply Delaware law, in which
case the trust's shareholders could become subject to personal liability.
To guard against this risk, the Declaration (i) contains an express disclaimer
of shareholder liability for acts or obligations of the Fund and provides that
notice of such disclaimer may be given in each agreement, obligation or
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 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 light of Delaware law, the
nature of the Fund's business and the nature of its assets, the risk of personal
liability to a Fund shareholder is remote.
The Declaration further provides that the Fund shall indemnify each of its
Trustees and officers against liabilities and expenses reasonably incurred by
them, in connection with, or arising out of, any action, suit or proceeding,
threatened against or otherwise involving such Trustee or officer, directly or
indirectly, by reason of being or having been a Trustee or officer of the Fund.
The Declaration does not authorize the Fund to indemnify any Trustee or officer
against any liability to which he or she would otherwise be subject by reason of
or for willful misfeasance, bad faith, gross negligence or reckless disregard of
such person's duties.
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<PAGE>
13. LETTER OF INTENT (CLASS A ONLY)
A Letter of Intent ( "LOI") may be established by completing the LOI section of
the Account Application. When you sign the Account Application, you agree to
irrevocably appoint PSC your attorney-in-fact to surrender for redemption any or
all shares held in escrow with full power of substitution. An LOI is not a
binding obligation upon the investor to purchase, or the Fund to sell, the full
amount indicated.
If the total purchases, less redemptions, exceed the amount specified under the
LOI and are in an amount which would qualify for a further quantity discount,
all transactions will be recomputed on the expiration date of the LOI to effect
the lower sales charge. Any difference in the sales charge resulting from such
recomputation will be either delivered to you in cash or invested in additional
shares at the lower sales charge. The dealer, by signing the Account
Application, agrees to return to PFD, as part of such retroactive adjustment,
the excess of the commission previously reallowed or paid to the dealer over
that which is applicable to the actual amount of the total purchases under the
LOI.
If the total purchases, less redemptions, are less than the amount specified
under the LOI, you must remit to PFD any difference between the sales charge on
the amount actually purchased and the amount originally specified in the LOI
section of the Account Application. When the difference is paid, the shares held
in escrow will be deposited to your account. If you do not pay the difference in
sales charge within 20 days after written request from PFD or your dealer, PSC,
after receiving instructions from PFD, will redeem the appropriate number of
shares held in escrow to realize the difference and release any excess. See "How
to Purchase Fund Shares - Letter of Intent" in the Prospectus for more
information.
14. SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan ("SWP") is designed to provide a convenient
method of receiving fixed payments at regular intervals from the Fund deposited
by the applicant under this SWP. The applicant must deposit or purchase for
deposit with PSC shares of the Fund having a total value of not less than
$10,000. Periodic payments of $50 or more will be deposited monthly or quarterly
directly into a bank account designated by the applicant or will be sent by
check to the applicant, or any person designated by the applicant. Class B
accounts must meet the minimum initial investment requirement prior to
establishing a SWP. Withdrawals from Class B and Class C share accounts are
limited to 10% of the value of the account at the time the SWP is established.
See "Waiver or Reduction of Contingent Deferred Sales Charge" in the Prospectus.
Designation of another person to receive the payments subsequent to opening an
account must be accompanied by a signature guarantee.
Any income dividends or capital gains distributions on shares under the SWP will
be credited to the SWP account on the payment date in full and fractional shares
at the net asset value per share in effect on the record date.
SWP payments are made from the proceeds of the redemption of shares deposited
under the SWP in a SWP account. To the extent that such redemptions for periodic
withdrawals exceed dividend income reinvested in the SWP account, such
redemptions will reduce and may ultimately exhaust the number of shares
deposited in the SWP account. Redemptions are potentially taxable transactions
to shareholders. In addition, the amounts received by a shareholder cannot be
considered as yield or income on his or her investment because part of such
payments may be a return of his or her investment.
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<PAGE>
The SWP may be terminated at any time (1) by written notice to PSC or from PSC
to the shareholder; (2) upon receipt by PSC of appropriate evidence of the
shareholder's death; or (3) when all shares under the SWP have been redeemed.
15. DETERMINATION OF NET ASSET VALUE
The net asset value per share of each class of the Fund is determined as of the
close of regular trading on the Exchange (currently 4:00 p.m., Eastern time) on
each day on which the Exchange is open for trading. As of the date of this
Statement of Additional Information, the Exchange is open for trading every
weekday except for the following holidays: New Year's Day, Martin Luther King,
Jr. Day, 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 that the current net
asset value per share might be materially affected by changes in the value of
its portfolio securities. The net asset value per share of the Fund is not
determined on any day in which no purchase orders in good order for the shares
of the Fund are received and no shares are tendered for redemption.
The net asset value per share of each class of the Fund is computed by taking
the value of all of the Fund's assets attributable to a class, less the Fund's
liabilities attributable to that class, and dividing the result by the number of
outstanding shares of the 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 (excluding those whose trading has been suspended) will be valued at
fair value as determined in good faith by the Board of Trustees, although the
actual computations may be made by persons acting pursuant to the direction of
the Board of Trustees.
The Fund's maximum offering price per Class A share is determined by adding the
maximum sales charge to the net asset value per Class A share. Class B shares
and Class C are offered at net asset value without the imposition of an initial
sales charge.
16. INVESTMENT RESULTS
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 rankings prepared by LIPPER ANALYTICAL SERVICES,
INC., a widely recognized independent service which monitors mutual fund
performance; STANDARD & POOR'S 500 STOCK INDEX (the "S&P 500"), an index of
unmanaged groups of common stock; the DOW JONES INDUSTRIAL AVERAGE, a recognized
unmanaged index of common stocks of 30 industrial companies listed on the
Exchange; or the RUSSELL U.S. EQUITY INDEXES or the WILSHIRE TOTAL MARKET VALUE
INDEX, which are recognized unmanaged indexes of broad based common stocks.
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<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, CONSUMERS DIGEST, CONSUMER REPORTS, FINANCIAL
WORLD, FORBES, FORTUNE, INVESTORS BUSINESS DAILY, KIPLINGER'S PERSONAL FINANCE
MAGAZINE, MONEY MAGAZINE, 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 MARKETS, CDA/WIESENBERGER, DONOGHUE'S MUTUAL FUND ALMANAC, INVESTMENT
COMPANY DATA, INC., JOHNSON'S CHARTS, KANON BLOCH CARRE AND CO., LIPPER
ANALYTICAL SERVICES, INC., MICROPAL, INC., MORNINGSTAR, INC., SCHABACKER
INVESTMENT MANAGEMENT and TOWERS DATA SYSTEMS, INC.
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
such 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.
One of the primary methods used to measure the performance of a class of the
Fund is "total return." Total return will normally represent the percentage
change in value of an account, or of a hypothetical investment in a class of the
Fund, over any period up to the lifetime of that class of the Fund. Total return
calculations will usually assume the reinvestment of all dividends and capital
gains distributions and will be expressed as a percentage increase or decrease
from an initial value for the entire period or for one or more specified periods
within the entire period. Total return percentages for periods of less than one
year will usually be annualized; total return percentages for periods longer
than one year will usually be accompanied by total return percentages for each
year within the period and/or by the average annual compounded total return for
the period. The income and capital components of a given return may be separated
and portrayed in a variety of ways in order to illustrate their relative
significance. Performance may also be portrayed in terms of cash or investment
values, without percentages. Past performance cannot guarantee any particular
future result.
The Fund's average annual total return quotations for each of its classes 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 a class of shares are computed by
finding the average annual compounded rates of return that would cause a
hypothetical investment in the class made on the first day of a designated
period (assuming all dividends and distributions are reinvested) to equal the
ending
29
<PAGE>
redeemable value of such hypothetical investment on the last day of the
designated period in accordance with the following formula:
P(1+T)n [superscript] = ERV
Where: P = a hypothetical initial payment of $1,000, less the maximum sales
load of $57.50 for Class A shares or the deduction of the CDSC
for Class B and Class C shares at the end of the period
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1000 initial payment
made at the beginning of the designated period (or fractional
portion thereof)
For purposes of the above computation, it is assumed that 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 a class's
mean account size.
The average annual total returns for each Class of shares of the Fund as of
October 31, 1997, are as follows:
Average Annual Total Return (%)
ONE YEAR FIVE YEARS TEN YEARS SINCE INCEPTION*
Class A Shares 22.43 N/A N/A 24.62
Class B Shares 24.88 N/A N/A 25.90
Class C Shares 28.96 N/A N/A 24.85
*Inception was November 2, 1995 for Class A shares and Class B shares. Class C
Shares were first offered January 31, 1996.
AUTOMATED INFORMATION LINE
FactFoneSM [superscript], 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;
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<PAGE>
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 SEC mandated standard formulas.
In addition, by using a personal identification number ("PIN"),
shareholders may enter purchases, exchanges and redemptions, access their
account balances and last three transactions and may order a duplicate
statement. See "FactFoneSM [superscript]" in the Prospectus for more
information.
All performance numbers communicated through FactFoneSM [superscript]
represent past performance, and figures for all quoted bond funds include the
maximum applicable sales charge. A shareholder's actual yield and total return
will vary with changing market conditions. The value of Class A, Class B and
Class C shares (except for Pioneer Cash Reserves Fund, which seeks to maintain a
stable $1.00 share price) will also vary, and such shares may be worth more or
less at redemption than their original cost.
17. FINANCIAL STATEMENTS
The Fund's financial statements for the fiscal year ended October 31, 1997 and
the Report of Independent Public Accountants contained in the Fund's Annual
Report for that fiscal year end have been included in reliance upon the report
of Arthur Andersen LLP, independent public accountants, as experts in accounting
and auditing. The Fund's Annual Report, filed with the SEC on December 24, 1997
(Accession No. 0000949275-97-000016), is incorporated by reference into this
Statement of Additional Information. The financial highlights table in the
Prospectus and the financial statements incorporated by reference into the
Prospectus have also been so included and incorporated in reliance upon the
report of Arthur Andersen LLP, independent public accountants, given on their
authority as experts in accounting and auditing.
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<PAGE>
APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS1 [superscript]
MOODY'S INVESTORS SERVICE, INC.
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.
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.
- --------
1 The ratings indicated herein are believed to be the most recent ratings
available at the date of this Statement of Additional Information for the
securities listed. Ratings are generally given to securities at the time of
issuance. While the rating agencies may from time to time revise such ratings,
they undertake no obligation to do so, and the ratings indicated do not
necessarily represent ratings which will be given to these securities on the
date of the Fund's fiscal year-end.
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<PAGE>
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 RATINGS GROUP
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
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<PAGE>
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.
PLUS (+) OR MINUS (-): The rating from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within the major categories.
R: This symbol is attached to the ratings of instruments with significant
noncredit risks. It highlights risks to principal or volatility of expected
returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk, such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.
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<PAGE>
APPENDIX B
PIONEER SMALL COMPANY 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>
11/2/95 $10,000 $10.61 5.75% 942.507 $10.00 $9,425
</TABLE>
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
<TABLE>
<CAPTION>
FROM FROM CAPITAL FROM DIVIDENDS TOTAL
DATE INVESTMENT GAINS REINVESTED REINVESTED VALUE
<S> <C> <C> <C> <C>
12/31/95 $10,094 $0 $22 $10,116
12/31/96 $11,669 $865 $25 $12,559
12/31/97 $12,130 $2,781 $26 $14,937
</TABLE>
PIONEER SMALL COMPANY 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>
11/2/95 $10,000 $10.00 0.00% 1,000 $10.00 $10,000
</TABLE>
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
<TABLE>
<CAPTION>
CONTINGENT
FROM FROM CAPITAL FROM DIVIDENDS DEFERRED TOTAL CDSC
DATE INVESTMENT GAINS REINVESTED REINVESTED SALES CHARGE VALUE PERCENTAGE
<S> <C> <C> <C> <C>
12/31/95 $10,710 $0 $17 $400 $10,327 4.00%
12/31/96 $12,280 $917 $19 $400 $12,816 4.00%
12/31/97 $12,660 $2,941 $20 $300 $15,321 $3.00%
</TABLE>
35
<PAGE>
PIONEER SMALL COMPANY 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>
1/31/96 $10,000 $11.01 0.00% 908.265 $11.01 $10,000
</TABLE>
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
<TABLE>
<CAPTION>
CONTINGENT
DATE FROM FROM CAPITAL FROM DIVIDENDS DEFERRED TOTAL CDSC
INVESTMENT GAINS REINVESTED REINVESTED SALES CHARGE VALUE PERCENTAGE
<S> <C> <C> <C> <C> <C>
12/31/96 $11,154 $831 $0 $100 $11,885 1.00%
12/31/97 $11,508 $2,668 $0 $0 $14,176 0.00%
</TABLE>
36
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
The following securities indices are well known, unmanaged measures of market
performance. Advertisements and sales literature for the Fund may refer to these
indices or may present comparisons between the performance of the Fund and one
or more of the indices. Other indices may also be used, if appropriate. The
indices are not available for direct investment. The data presented are not
meant to be indicative of the performance of the Fund, do not reflect past
performance and do not guarantee future results.
S&P 500
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P 500 includes 500 of
the largest stocks (in terms of stock market value) in the U.S.
DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of stocks of 30 blue chip
companies widely held by individuals and institutional investors. The 30 stocks
represent about a fifth of the $8 trillion-plus market value of all U.S. stocks
and about a fourth of the value of stocks listed on the New York Stock Exchange
(NYSE).
U.S. SMALL STOCK INDEX
This index is a market value weighted index of the ninth and tenth deciles of
the NYSE, plus stocks listed on the American Stock Exchange and over the counter
with the same or less capitalization as the upper bound of the NYSE ninth
decile.
U.S. INFLATION
THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S. Department of Labor, Bureau of Labor Statistics, Washington, DC.
S&P/BARRA INDEXES
The S&P/BARRA GROWTH AND VALUE INDEXES are constructed by dividing the stocks in
the S&P 500 according to price-to-book ratios. The GROWTH INDEX contains stocks
with higher price-to-book ratios, and the VALUE INDEX contains stocks with lower
price-to-book ratios. Both indexes are market capitalization weighted.
MERRILL LYNCH MICRO-CAP INDEX
The MERRILL LYNCH MICRO-CAP INDEX represents the performance of 2,036 stocks
ranging in market capitalization from $50 million to $220 million. Index returns
are calculated monthly.
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<PAGE>
LONG-TERM U.S. GOVERNMENT BONDS
The total returns on long-term government bonds after 1977 are constructed with
data from The Wall Street Journal and are calculated as the change in the flat
price or and-interest price. From 1926 to 1976, data are obtained from the
government bond file at the Center for Research in Security Prices (CRSP),
Graduate School of Business, University of Chicago. Each year, a one-bond
portfolio with a term of approximately 20 years and a reasonably current coupon
was used and whose returns did not reflect potential tax benefits, impaired
negotiability or special redemption or call privileges. Where callable bonds had
to be used, the term of the bond was assumed to be a simple average of the
maturity and first call dates minus the current date. The bond was "held" for
the calendar year and returns were computed.
INTERMEDIATE-TERM U.S. GOVERNMENT BONDS
Total returns of intermediate-term government bonds after 1987 are calculated
from The Wall Street Journal prices, using the change in flat price. Returns
from 1934 to 1986 are obtained from the CRSP government bond file.
Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than five years, and this bond is
"held" for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934 to 1942, almost all bonds
with maturities near five years were partially or fully tax-exempt and were
selected using the rules described above. Personal tax rates were generally low
in that period, so that yields on tax-exempt bonds were similar to yields on
taxable bonds. From 1926 to 1933, there are few bonds suitable for construction
of a series with a five-year maturity. For this period, five-year bond yield
estimates are used.
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.
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.
38
<PAGE>
From 1926 to 1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946 to 1968,
Ibbotson and Sinquefield backdated the Salomon Brothers' index, using Salomon
Brothers' monthly yield data with a methodology similar to that used by Salomon
Brothers for 1969 to 1995. Capital appreciation returns were calculated from
yields assuming (at the beginning of each monthly holding period) a 20-year
maturity, a bond price equal to par, and a coupon equal to the
beginning-of-period yield. For the period 1926 to 1945, Standard & Poor's
monthly high-grade corporate composite yield data were used, assuming a 4%
coupon and a 20-year maturity. The conventional present-value formula for bond
price for the beginning and end-of-month prices was used. (This formula is
presented in Ross, Stephen A., and Westerfield, Randolph W., Corporate Finance,
Times Mirror/Mosby, St. Louis, 1990, p. 97 ["Level-Coupon Bonds"].) The monthly
income return was assumed to be one-twelfth the coupon.
U.S. (30-DAY) TREASURY BILLS
For the U.S. TREASURY BILL INDEX, data from The Wall Street Journal are used
after 1977; the CRSP government bond file is the source until 1976. Each month a
one-bill portfolio containing the shortest-term bill having not less than one
month to maturity is constructed. (The bill's original term to maturity is not
relevant.) To measure holding period returns for the one-bill portfolio, the
bill is priced as of the last trading day of the previous month-end and as of
the last trading day of the current month.
NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT TRUSTS ("NAREIT")EQUITY REIT
INDEX
All of the data are based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMEX and NASDAQ. The data are
market-value-weighted. Prior to 1987 REITs were added to the index the January
following their listing. Since 1987 newly formed or listed REITs are added to
the total shares outstanding figure in the month that the shares are issued.
Only common shares issued by the REIT are included in the index. The total
return calculation is based upon the weighting at the beginning of the period.
Only those REITs listed for the entire period are used in the total return
calculation. Dividends are included in the month based upon their payment date.
There is no smoothing of income. Liquidating dividends, whether full or partial,
are treated as income.
RUSSELL U.S. EQUITY INDEXES
The RUSSELL 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.
39
<PAGE>
The index contains performance data on five major categories of property:
office, retail, industrial, apartment and miscellaneous. The companies in the
index are 91.66% equity and hybrid REITs and 8.33% REOCs.
STANDARD & POOR'S MIDCAP 400 INDEX
The S&P 400 is a market-capitalization-weighted index. The performance data for
the index were calculated by taking the stocks presently in the index and
tracking them backwards in time as long as there were prices reported. No
attempt was made to determine what stocks "might have been" in the S&P 400 five
or ten years ago had it existed. Dividends are reinvested on a monthly basis
prior to June 30, 1991, and are reinvested daily thereafter.
LIPPER BALANCED FUNDS INDEX
This index represents equally weighted performance, adjusted for capital gains
distributions and income dividends, of approximately 30 of the largest funds
with a primary objective of conserving principal by maintaining at all times a
balanced portfolio of stocks and bonds. Typically, the stock/bond ratio ranges
around 60%/40%.
BANK SAVINGS ACCOUNT
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963 to 1987; and The Wall Street Journal thereafter.
Sources: Ibbotson Associates, Towers Data Systems, Lipper Analytical
Services, Inc. and PGI
40
<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>
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>
41
<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>
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>
42
<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>
43
<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>
44
<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>
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>
45
<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>
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.
46
<PAGE>
APPENDIX C
OTHER PIONEER INFORMATION
The Pioneer group of mutual funds was established in 1928 with the creation of
Pioneer Fund. Pioneer is one of the oldest and most experienced money managers
in the United States.
As of December 31, 1997, PMC employed a professional investment staff of 58,
with a combined average of 12 years' experience in the financial services
industry.
Total assets of all Pioneer mutual funds at December 31, 1997, were
approximately $19.8 billion representing 1,177,148 shareholder accounts, 791,468
non-retirement accounts and 385,680 retirement accounts.
47
g:\edgar\sai\current\smallco2.doc
<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 24, 1997; File No. 811-07339;
Accession No. 0000949275-97-000016) which is incorporated by
reference into Part B of the Registration Statement.
(b) Exhibits:
1.1. Agreement and Declaration of Trust.*
1.2. Certificate of Trust.*
1.3. Certificate of Amendment of the Certificate of Trust.**
2. By-Laws.*
3. None.
4.1. Form of Class A Share Certificate.**
4.2. Form of Class B Share Certificate.**
5. Form of Management Contract between the Registrant and
Pioneering Management Corporation.*
6.1. Form of Underwriting Agreement between the Registrant and
Pioneer
Funds Distributor, Inc.**
6.2. Form of Dealer Sales Agreement.**
7. None.
8. Form of Custodian Agreement between the Registrant and
Brown Brothers Harriman & Co.*
9. Form of Investment Company Service Agreement between the
Registrant and
Pioneering Services Corporation.**
10. None.
11. Consent of Independent Public Accountants.+
12. None.
13. Form of Share Purchase Agreement.**
14. None.
15.1. Form of Class A Distribution Plan.**
15.2. Form of Class B Distribution Plan.**
15.3. Class C Distribution Plan.***
16. None.
17. Financial Data Schedules.+
18. Multiple Class Plan pursuant to Rule 18f-3.***
19. Powers of Attorney.**
19.1. Power of Attorney for Mary K. Bush.+
C-1
<PAGE>
- ------------------------
+Filed herewith.
*Previously filed. Incorporated herein by reference from the exhibits filed
with Registrant's initial Registration Statement (File No. 33-61869) as filed
with the Securities and Exchange Commission (the "SEC") on August 16, 1995
(Accession No. 0000949275-95-000006).
**Previously filed. Incorporated herein by reference from the exhibits
filed with Pre-Effective Amendment No. 1 to the Registration Statement as filed
with the SEC on November 2, 1995 (Accession No. 0000949275-95-000013).
***Previously filed. Incorporated herein by reference from the exhibits
filed with Post-Effective Amendment No. 1 to the Registration Statement as filed
with the SEC on February 28, 1997 (Accession No. 0000949275-97-000004).
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
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
C-2
<PAGE>
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
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.
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
C-3
<PAGE>
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 22,258
Class B shares 18,205
Class C shares 993
C-4
<PAGE>
Item 27. Indemnification
Except for the Agreement and Declaration of Trust (the "Declaration"),
dated August 8, 1995, establishing the Registrant as a business trust under
Delaware law, there is no contract, arrangement or statute under which any
Trustee, officer, underwriter or affiliated person of the Registrant is insured
or indemnified. The Declaration provides that no Trustee or officer will be
indemnified against any liability to which the Registrant would otherwise be
subject by reason of or for willful misfeasance, bad faith, gross negligence or
reckless disregard of such person's duties.
Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "1933 Act"), may be available to Trustees, officers
and controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the SEC
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
All of the information required by this item is set forth in the Form
ADV, as amended, of PMC, the Registrant's investment adviser. The following
sections of such Form ADV are incorporated herein by reference:
(a) Items 1 and 2 of Part 2; and
(b) Section 6, Business Background, of each Schedule D.
Item 29. Principal Underwriters
(a) See Item 25 above.
(b) Directors and officers of PFD:
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
C-5
<PAGE>
Stephen W. Long Senior Vice President None
Barry G. Knight Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Elizabeth B. Bennett Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy L. Supovitz Vice President None
Mary Kleeman Vice President None
Steven R. Berke Assistant Vice President None
Steven H. Forss Assistant Vice President None
Mary Sue Hoban Assistant Vice President None
Debra A. Levine Assistant Vice President None
Junior Roy McFarland Assistant Vice President None
Marie E. Moynihan Assistant Vice President None
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
The principal business address of each of these individuals is 60 State Street,
Boston, Massachusetts 02109-1820.
(c) Not applicable.
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.
C-6
<PAGE>
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. 3 to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment No. 3 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 26th
day of February, 1998.
PIONEER SMALL COMPANY 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. 3 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 26, 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 Small Company Fund's Post-Effective Amendment
No. 3 and Amendment No. 4 to Registration Statement File Nos. 33-61869 and
811-07339, 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 SMALL COMPANY FUND AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000949275
<NAME> PIONEER SMALL COMPANY FUND
<SERIES>
<NUMBER> 001
<NAME> PIONEER SMALL COMPANY 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> 473937250
<INVESTMENTS-AT-VALUE> 538281903
<RECEIVABLES> 7270767
<ASSETS-OTHER> 8273
<OTHER-ITEMS-ASSETS> 143514
<TOTAL-ASSETS> 545704457
<PAYABLE-FOR-SECURITIES> 6422989
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1689491
<TOTAL-LIABILITIES> 8112480
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 409016642
<SHARES-COMMON-STOCK> 16472656
<SHARES-COMMON-PRIOR> 17502573
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 64230682
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 64344653
<NET-ASSETS> 537591977
<DIVIDEND-INCOME> 2053143
<INTEREST-INCOME> 1629092
<OTHER-INCOME> 0
<EXPENSES-NET> (9266907)
<NET-INVESTMENT-INCOME> (5584672)
<REALIZED-GAINS-CURRENT> 69812627
<APPREC-INCREASE-CURRENT> 65111218
<NET-CHANGE-FROM-OPS> 129339173
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (15757933)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4220016
<NUMBER-OF-SHARES-REDEEMED> 6412012
<SHARES-REINVESTED> 1162079
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 7668
<ACCUMULATED-GAINS-PRIOR> 32601127
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4269069
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9300374
<AVERAGE-NET-ASSETS> 242026097
<PER-SHARE-NAV-BEGIN> 12.66
<PER-SHARE-NII> (0.11)
<PER-SHARE-GAIN-APPREC> 3.67
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.91)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.31
<EXPENSE-RATIO> 1.49
<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 SMALL COMPANY FUND AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000949275
<NAME> PIONEER SMALL COMPANY FUND
<SERIES>
<NUMBER> 002
<NAME> PIONEER SMALL COMPANY 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> 473937250
<INVESTMENTS-AT-VALUE> 538281903
<RECEIVABLES> 7270767
<ASSETS-OTHER> 8273
<OTHER-ITEMS-ASSETS> 143514
<TOTAL-ASSETS> 545704457
<PAYABLE-FOR-SECURITIES> 6422989
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1689491
<TOTAL-LIABILITIES> 8112480
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 409016642
<SHARES-COMMON-STOCK> 17715296
<SHARES-COMMON-PRIOR> 17265964
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 64230682
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 537591977
<DIVIDEND-INCOME> 2053143
<INTEREST-INCOME> 1629092
<OTHER-INCOME> 0
<EXPENSES-NET> (9266907)
<NET-INVESTMENT-INCOME> (5584672)
<REALIZED-GAINS-CURRENT> 69812627
<APPREC-INCREASE-CURRENT> 65111218
<NET-CHANGE-FROM-OPS> 129339173
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (15659376)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1871189
<NUMBER-OF-SHARES-REDEEMED> 1067469
<SHARES-REINVESTED> 2489326
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 7668
<ACCUMULATED-GAINS-PRIOR> 32601127
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4269069
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9300374
<AVERAGE-NET-ASSETS> 243244279
<PER-SHARE-NAV-BEGIN> 12.59
<PER-SHARE-NII> (0.20)
<PER-SHARE-GAIN-APPREC> 3.62
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.91)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.10
<EXPENSE-RATIO> 2.19
<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 SMALL COMPANY FUND AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000949275
<NAME> PIONEER SMALL COMPANY FUND
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<NAME> PIONEER SMALL COMPANY FUND CLASS C
<MULTIPLIER> 1,000
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 473937250
<INVESTMENTS-AT-VALUE> 538281903
<RECEIVABLES> 7270767
<ASSETS-OTHER> 8273
<OTHER-ITEMS-ASSETS> 143514
<TOTAL-ASSETS> 545704457
<PAYABLE-FOR-SECURITIES> 6422989
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1689491
<TOTAL-LIABILITIES> 8112480
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 409016642
<SHARES-COMMON-STOCK> 16472656
<SHARES-COMMON-PRIOR> 17502573
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 64230682
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 64344653
<NET-ASSETS> 537591977
<DIVIDEND-INCOME> 2053143
<INTEREST-INCOME> 1629092
<OTHER-INCOME> 0
<EXPENSES-NET> (9266907)
<NET-INVESTMENT-INCOME> (5584672)
<REALIZED-GAINS-CURRENT> 69812627
<APPREC-INCREASE-CURRENT> 65111218
<NET-CHANGE-FROM-OPS> 129339173
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1198552)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 152724
<NUMBER-OF-SHARES-REDEEMED> 372397
<SHARES-REINVESTED> 71249
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 7668
<ACCUMULATED-GAINS-PRIOR> 32601127
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4269069
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9300374
<AVERAGE-NET-ASSETS> 17262413
<PER-SHARE-NAV-BEGIN> 12.59
<PER-SHARE-NII> (0.21)
<PER-SHARE-GAIN-APPREC> 3.64
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.91)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.11
<EXPENSE-RATIO> 2.17
<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
