As filed with the Securities and Exchange Commission on July 3, 2001
File No. 2-62436
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
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/___/ Pre-Effective Amendment No. ___ Post-Effective Amendment No. /___/
(Check appropriate box or boxes)
________________________________________________________________________________
Exact Name of Registrant
as Specified in Charter: Area Code and Telephone Number:
Pioneer Bond Fund (617) 742-7825
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Address of Principal Executive Offices: (Number, Street, City, State, ZIP Code)
60 State Street, Boston, Massachusetts 02109
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Name and Address of Agent for Service:
Joseph P. Barri, Hale and Dorr LLP
60 State Street, Boston, Massachusetts 02109
(Number and Street) (City) (State) (ZIP Code)
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Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this registration
statement under the Securities Act of 1933.
It is proposed that this registration statement will become effective on
August 2, 2001 pursuant to Rule 488 under the Securities Act of 1933.
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Title of Securities Being Registered:
Shares of Beneficial Interest (without par value) (no filing fee is due because
of reliance on Section 24(f) under the Investment Company Act of 1940)
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PIONEER LIMITED MATURITY BOND FUND
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
1-800-622-3265
NOTICE OF MEETING OF SHAREHOLDERS
SCHEDULED FOR SEPTEMBER 18, 2001
This is the formal agenda for your fund's shareholder meeting. It tells you
what matters will be voted on and the time and place of the meeting, in case you
want to attend in person.
TO THE SHAREHOLDERS OF PIONEER LIMITED MATURITY BOND FUND:
A meeting of shareholders of your fund will be held at the offices of Hale
and Dorr LLP, 60 State Street, 26th Floor, Boston, Massachusetts on Tuesday,
September 18, 2001, at 2:00 p.m., Eastern time, to consider the following:
1. A proposal to approve an Agreement and Plan of Reorganization between
your fund and Pioneer Bond Fund. Under this Agreement your fund would
transfer all of its assets to Bond Fund in exchange for shares of Bond
Fund. These shares would be distributed proportionately to you and the
other shareholders of your fund. Bond Fund would also assume your fund's
liabilities. YOUR BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR THIS
PROPOSAL.
2. Any other business that may properly come before the meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN THE
ENCLOSED PROXY CARD.
Shareholders of record as of the close of business on July 20, 2001 are
entitled to vote at the meeting and any related follow-up meetings.
By Order of the Board of Trustees,
Joseph P. Barri, Secretary
Boston, Massachusetts
August 3, 2001
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10321-00-0801
PROXY STATEMENT OF
PIONEER LIMITED MATURITY BOND FUND
PROSPECTUS
FOR CLASS A, CLASS B AND CLASS Y SHARES
OF PIONEER BOND FUND
This proxy statement and prospectus contains the information you should
know before voting on the proposed reorganization of your fund into Pioneer Bond
Fund. Please read it carefully and retain it for future reference.
HOW THE REORGANIZATION WILL WORK:
-- Your fund will transfer all of its assets to Bond Fund. Bond Fund will
assume your fund's liabilities.
-- Bond Fund will issue Class A shares to your fund with an aggregate
value equal to the value of your fund's Class A shares. These shares
will be distributed to your fund's Class A shareholders in proportion
to their holdings on the reorganization date. In this same manner,
Bond Fund will issue Class B and Class Y shares to your fund that will
be distributed to your fund's Class B and Class Y shareholders in
proportion to their respective holdings on the reorganization date.
-- The reorganization will not result in income, gain or loss for federal
income tax purposes.
-- Your fund will be terminated and you will end up as a shareholder of
Bond Fund.
WHY YOUR FUND'S TRUSTEES RECOMMEND THE REORGANIZATION:
The trustees of your fund believe that reorganizing your fund into a larger
fund with similar investment policies would enable the shareholders of your fund
to benefit from increased diversification, the ability to achieve better net
prices on securities trades and economies of scale that could contribute to a
lower expense ratio. Therefore, the trustees recommend you vote FOR the
reorganization.
1
INVESTMENT OBJECTIVES
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LIMITED MATURITY BOND BOND
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A high level of current income consistent with a To provide current income from an investment grade
relatively high level of principal stability. portfolio with due regard to preservation of
capital and prudent investment risk. Bond Fund
also seeks a relatively stable level of dividends;
however, the level of dividends will be maintained
only if consistent with preserving the investment
grade quality of the fund's portfolio.
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MORE INFORMATION IS AVAILABLE
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WHAT WHERE
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- Bond Fund's annual and more recent semiannual
reports to shareholders. These reports are
incorporated by reference into this proxy
statement and prospectus.
- Your fund's annual report and more recent
semiannual reports to shareholders.
- Most recent prospectuses of your fund and Bond On file with the Securities and Exchange
Fund (dated April 2, 2001 and September 29, Commission (SEC) and available at no charge by
2000, respectively, as supplemented). calling 1-800-622-3265.
- Statement of additional information dated August
3, 2001. It contains additional information
about your fund and Bond Fund. This statement of
additional information is incorporated by
reference into this proxy statement and
prospectus.
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To ask questions about this proxy statement and Call our toll-free telephone number:
prospectus: 1-800-622-3265.
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AN INVESTMENT IN BOND FUND IS NOT A BANK DEPOSIT AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
NO GOVERNMENT SECURITIES COMMISSION OR AGENCY HAS APPROVED BOND FUND'S
SHARES OR DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIME.
THE DATE OF THIS PROXY STATEMENT AND PROSPECTUS IS AUGUST 3, 2001.
2
TABLE OF CONTENTS
PAGE
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Introduction........................................................... 3
Summary of Proxy Statement/Prospectus.................................. 4
Risk/Return Summary.................................................... 7
Capitalization......................................................... 16
Boards' Evaluation and Recommendation.................................. 17
Voting Rights and Required Vote........................................ 17
Additional Information About the Funds................................. 17
Information Concerning the Meeting..................................... 34
Ownership of Shares of the Funds....................................... 35
Experts................................................................ 35
Available Information.................................................. 35
Exhibit A: Agreement and Plan of Reorganization........................ 36
Exhibit B: Excerpts from Your Fund's and Bond Fund's most
recent Annual and Semiannual Reports................................. 46
INTRODUCTION
This proxy statement and prospectus is being used by the board of trustees
of your fund to solicit proxies to be voted at a meeting of shareholders of your
fund. This meeting will be held at the offices of Hale and Dorr LLP, 60 State
Street, 26th Floor, Boston, Massachusetts on Tuesday, September 18, 2001, at
2:00 p.m., Boston time. The purpose of the meeting is to consider a proposal to
approve an Agreement and Plan of Reorganization providing for the reorganization
of your fund into Pioneer Bond Fund. This proxy statement and prospectus is
being mailed to your fund's shareholders on or about August 3, 2001.
WHO IS ELIGIBLE TO VOTE?
Shareholders of record on July 20, 2001 are entitled to attend and vote at
the meeting or any adjourned meeting. Each share is entitled to one vote. Shares
represented by properly executed proxies, unless revoked before or at the
meeting, will be voted according to shareholders' instructions. If you sign a
proxy, but do not fill in a vote, your shares will be voted to approve the
Agreement and Plan of Reorganization. If any other business comes before the
meeting, your shares will be voted at the discretion of the persons named as
proxies.
3
SUMMARY OF PROXY STATEMENT/PROSPECTUS
The following is a summary of more complete information appearing later in
this proxy statement. You should carefully read the entire proxy statement and
exhibits because they contain details that are not in the summary.
COMPARISON OF LIMITED MATURITY BOND FUND WITH BOND FUND
BUSINESS AND INVESTMENTS
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LIMITED MATURITY BOND BOND
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NET ASSETS AS OF JUNE 30, $ million $ million
2001:
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INVESTMENT OBJECTIVE: A high level of current income To provide current income from an
consistent with a relatively high level investment grade portfolio with due
of principal stability. regard to preservation of capital and
prudent investment risk. Bond fund also
seeks a relatively stable level of
dividends; however, the level of
dividends will be maintained only if
consistent with preserving the
investment grade quality of the fund's
portfolio.
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PRIMARY INVESTMENTS: At least 90% of your fund's assets are Normally, Bond Fund invests at least 80%
U.S. government securities or debt of its total assets in:
securities that are rated investment debt securities issued or guaranteed by
grade at the time of purchase or cash the U.S. government or its agencies and
and cash equivalents. Your fund invests instrumentalities, debt securities,
primarily in: including convertible debt securities, or
debt securities issued or guaranteed by corporate and other issuers rated at least
the U.S. government or its agencies and investment grade at the time of investment,
instrumentalities, mortgage-backed and and comparably rated commercial paper and
asset-backed securities and short-term cash and cash equivalents, certificates
money market instruments. of deposit, repurchase agreements
maturing in one week or less and
bankers' acceptances.
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INVESTMENT IN BELOW INVESTMENT Your fund may invest up to 10% of its Bond Fund may invest up to 20% of its
GRADE SECURITIES: assets in debt securities rated below total assets in debt securities rated
investment grade or, if unrated, of below investment grade or, if unrated,
equivalent quality as determined by of equivalent quality as determined by
Pioneer. Pioneer.
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PAYMENT AND RESET TERMS: Each fund's investments may have fixed or variable principal payments and all
types of interest rate payment and reset terms, including fixed rate, adjustable
rate, zero coupon, contingent, deferred, payment in kind and auction rate
features.
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MATURITY: The average life of your fund's Bond Fund may invest in securities with
portfolio will be in the 1 to 5 year a broad range of maturities and
range. The average life of any single maintains an average portfolio maturity
issue will be no greater than 10 years. which varies upon Pioneer's judgment.
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OTHER INVESTMENTS: Your fund may invest in securities of Bond Fund may invest in securities of
Canadian issuers to the same extent as Canadian issuers to the same extent as
securities of U.S. issuers. Your fund securities of U.S. issuers. Bond Fund
may invest without limit in debt may invest up to 15% of its total assets
securities of non-U.S. issuers when (at the time of purchase) in equity and
Pioneer believes that it is in the debt securities of non-U.S. corporate
fund's best interest. Under normal issuers and in debt securities of
circumstances, no more than 25% of the non-U.S. government issuers.
fund's total assets (at the time of
purchase) will be invested in securities
of non-U.S. issuers.
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INVESTMENTS IN EMERGING Each fund may invest up to 5% of its total assets (at the time of purchase) in
MARKETS: debt securities of emerging market issuers.
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PERMITTED TRANSACTIONS IN Each fund may use futures, options, forward foreign currency contracts and other
DERIVATIVE INSTRUMENTS: derivatives subject to the Fund's general policies on derivatives.
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INDUSTRY CONCENTRATION: Neither fund concentrates 25% or more of its net assets in any one industry.
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4
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LIMITED MATURITY BOND BOND
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The investment adviser for both funds is Pioneer Investment Management, Inc.
("Pioneer").
Day-to-day management of each fund's portfolio is the responsibility of a team of
INVESTMENT ADVISER AND fixed income portfolio managers and analysts supervised by Kenneth J. Taubes. Mr.
PORTFOLIO MANAGERS: Taubes is responsible for overseeing Pioneer's U.S. and global fixed income team.
He joined Pioneer as a senior vice president in September 1998 and has been an
investment professional since 1986. Prior to joining Pioneer, Mr. Taubes had
served since 1991 as a senior vice president and senior portfolio manager for
several Putnam Investments institutional accounts and mutual funds. The fixed
income team may draw upon the research and investment management experience of
Pioneer's affiliate, Pioneer Investment Management Limited.
Mr. Taubes and his team operate under the supervision of Theresa A. Hamacher,
chief investment officer of Pioneer. She joined Pioneer in 1997 and has been an
investment professional since 1984, most recently as a chief investment officer at
another investment adviser.
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BUSINESS: Your fund is a diversified open-end Bond Fund is a diversified open-end
investment company organized as a investment company organized as a
Massachusetts business trust. Delaware business trust.
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In deciding whether to approve the reorganization, you should consider the
similarities and differences between the investment objectives and policies of
your fund and Bond Fund. In particular, you should consider whether the amount
and character of investment risk involved in the authorized investments of Bond
Fund is commensurate with the amount and character of investment risk involved
in the authorized investments of your fund. The investment policies and risks of
the two funds are similar but not identical. In that regard, you should note
that the Bond Fund may have a longer average maturity than your fund and may
invest a higher percentage of its assets in below investment grade securities.
On the other hand, your fund may invest a higher percentage of its assets in
securities of non-U.S. issuers.
Pioneer does not believe that any significant portion of your fund's assets
would be sold as a condition to or as a result of the reorganization. At March
30, 2001, 76% of Bond Fund's assets were invested in debt securities with an
average life of less than 10 years. If the reorganization had been completed on
such date, the percentage of Bond Fund's assets that would have been represented
by debt securities with an average life of less than 10 years would have been
80%.
CLASSES OF SHARES
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LIMITED MATURITY BOND BOND
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CLASS A SHARES Your fund's Class A shares are offered Bond Fund's Class A shares are offered
Class A shares of both funds with front-end sales charges up to 2.50% with front-end sales charges up to 4.50%
have the same characteristics, of the fund's offering price, depending of the fund's offering price, depending
but the sales charges are on the amount invested. on the amount invested.
different
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For both funds:
- There is no front-end sales charge for investments of $1 million or more, but
there is a contingent deferred sales charge (CDSC) of 0.50% for your fund and
1.00% for Bond fund on shares sold within one year of purchase.
- Investors can combine multiple purchases of Class A shares to take advantage of
breakpoints in the sales charge schedule.
- Class A shares are subject to 12b-1 distribution and service fees up to 0.25%
annually of average daily net assets.
- Sales charges are waived or reduced for the categories of investors listed in
each fund's prospectus.
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5
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LIMITED MATURITY BOND BOND
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CLASS B SHARES: Your fund's Class B shares are offered Bond Fund's Class B shares are offered
Class B shares of both funds without a front-end sales charge, but without a front-end sales charge, but
have the same characteristics are subject to a CDSC if sold within are subject to a CDSC if sold within six
but the CDSC structure is three years after purchase. The CDSC is years after purchase. The CDSC is up to
different up to 2.00% depending on how long the 4.00% depending on how long the shares
shares are held. No CDSC is imposed on are held. No CDSC is imposed on shares
shares held more than three years. Class held more than six years. Class B shares
B shares automatically convert to Class automatically convert to Class A shares
A shares after five years. after eight years.
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Any Class B shares of Bond Fund issued in the reorganization would continue to be
subject to a CDSC at the rate for your fund and for the same period as that of a
share of your fund held immediately prior to the reorganization.
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For both funds:
- CDSCs are waived for the categories of investors listed in each fund's
prospectus.
- Class B shares are subject to 12b-1 distribution and service fees of up to 1.00%
annually of average daily net assets.
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CLASS Y SHARES: For both funds:
Class Y shares of both funds - Class Y shares are offered without a front-end sales charge or a CDSC.
have the same characteristics - Class Y shares are also not subject to any 12b-1 distribution or service fee.
- Class Y shares have no conversion feature. Although authorized, Bond Fund does
not have any outstanding Class Y shares.
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BUYING, SELLING AND The procedures for buying, selling and exchanging shares are identical for both
EXCHANGING: funds. These procedures are described in detail below.
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REORGANIZATION
- The reorganization is scheduled to occur as of 5:00 p.m., Eastern time,
on September 28, 2001, but may occur as of any later date before January
2, 2002. Your fund will transfer all of its assets to Bond Fund. Bond
Fund will assume your fund's liabilities. The net asset values of both
funds will be computed as of the close of the New York Stock Exchange
(normally 4:00 p.m. Eastern time) on the reorganization date.
- Bond Fund will issue to your fund Class A shares of Bond Fund with an
aggregate value equal to the aggregate net asset value of your fund's
Class A shares. Your fund will immediately distribute these shares to
your fund's Class A shareholders in proportion to their holdings on the
reorganization date. In this same manner, Bond Fund will issue to your
fund Class B and Class Y shares that will be distributed to your fund's
Class B and Class Y shareholders in proportion to their respective
holdings on the reorganization date. As a result, Class A shareholders of
your fund will end up as Class A shareholders of Bond Fund, Class B
shareholders of your fund will end up as Class B shareholders of Bond
Fund and Class Y shareholders of your fund will end up as Class Y
shareholders of Bond Fund.
- After the shares are issued, your fund will be terminated.
- The reorganization will not result in income, gain or loss for federal
tax purposes and will not take place unless both funds receive a
satisfactory opinion concerning the federal income tax consequences of
the reorganization from Hale and Dorr LLP, counsel to the funds.
Other Consequences of the Reorganization. Each fund pays monthly advisory
fees equal to the following annual percentage of average daily net assets:
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FUND ASSETS ANNUAL FEE RATE
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Limited Maturity Bond Fund $Up to $100 million 0.50%
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$100 to 300 million 0.45%
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Over $300 million 0.40%
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Bond Fund At all asset levels 0.50%
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At current asset levels, each fund's shareholders currently pay management
fees at the same rates. You should note that your fund's management agreement
provides for break points for assets in excess of $100 million. Bond Fund's
management agreement does not provide break points. Consequently, the
reorganization would eliminate the potential benefits of such break points. The
reorganization will, however, provide other economic benefits to your fund's
shareholders. For instance, your fund's expenses have historically been lower
6
than those of Bond Fund solely due to a voluntary expense limitation agreement
that Pioneer may terminate at November 30, 2001, the end of your fund's current
fiscal year. Bond Fund's Class A expense ratio of 1.18% for the fiscal year
ended June 30, 2000, as well as its pro forma expense ratio of 1.15%, are lower
than your fund's gross Class A expense ratio of 1.58% (0.85% for net expenses
with the expense limitation) for your fund's fiscal year ended November 30,
2000. Both funds pay the same 12b-1 fee rates for each fund's Class A and Class
B shares.
Without Pioneer's voluntary agreement to limit your fund's expenses, your
fund's total annual operating expenses would be higher than Bond Fund's. In
light of your fund's inability to attract significant assets, Pioneer may not
continue to subsidize a portion of your fund's expenses indefinitely. If Pioneer
discontinued this voluntary limitation, your fund's total annual operating
expenses would rise above those of Bond Fund.
RISK/RETURN SUMMARY
INVESTMENT OBJECTIVES
Limited Maturity Bond Fund. A high level of current income consistent with
a relatively high level of principal stability.
Bond Fund. To provide current income from an investment grade portfolio
with due regard to preservation of capital and prudent investment risk. Bond
Fund also seeks a relatively stable level of dividends; however, the level of
dividends will be maintained only if consistent with preserving the investment
grade quality of the fund's portfolio.
INVESTMENT STRATEGIES
Limited Maturity Bond Fund. Your fund invests primarily in debt securities
issued or guaranteed by the U.S. government, its agencies and instrumentalities,
debt securities of U.S. and non-U.S. corporate issuers, mortgage-backed and
asset-backed securities and short-term money market instruments.
At least 90% of your fund's assets are U.S. government securities or debt
securities that are rated investment grade at the time of purchase or cash and
cash equivalents. The remainder of the fund's investments may be rated below
investment grade or determined to be of equivalent credit quality by Pioneer.
The average life of the fund's portfolio is in the 1 to 5 year range. The
average life of any single issue will be no greater than 10 years.
Bond Fund. Normally, Bond Fund invests at least 80% of its total assets
in: debt securities issued or guaranteed by the U.S. government or its agencies
and instrumentalities, debt securities, including convertible debt securities,
of corporate and other issuers rated at least investment grade at the time of
investment, and comparably rated commercial paper and, cash and cash
equivalents, certificates of deposit, repurchase agreements maturing in one week
or less and bankers' acceptances.
The remainder of Bond Fund's investments may be rated below investment
grade or determined to be of equivalent credit quality by Pioneer.
Bond Fund may invest and has in the past invested in securities with a
broad range of maturities and maintains an average portfolio maturity which
varies based upon the judgment of Pioneer.
Bond Fund may invest a substantial portion of its assets in
mortgage-related securities, which represent interests in pools of mortgage
loans assembled for sale to investors by various U.S. governmental agencies,
government-related organizations and private issuers. These investments may
include mortgage-related derivative securities such as collateralized mortgage
obligations (CMOs).
Common policies. Each fund's securities may have fixed or variable
principal payments and all types of interest rate payment and reset terms,
including fixed rate, adjustable rate, zero coupon, contingent, deferred,
payment in kind and auction rate features.
Pioneer, each fund's investment adviser, considers both broad economic and
issuer specific factors in selecting a portfolio designed to achieve each fund's
investment objective. In assessing the appropriate maturity, rating and sector
weighting of each fund's portfolio, Pioneer considers a variety of factors that
are expected to influence economic activity and interest rates. These factors
include fundamental economic indicators, such as the rates of economic growth
and inflation, Federal Reserve monetary policy and the relative value of the
U.S. dollar compared to other currencies. Once Pioneer determines the preferable
portfolio characteristics, Pioneer selects individual securities based upon the
terms of the securities (such as yields compared to U.S. Treasuries or
comparable issuers), liquidity and rating, sector and issuer diversification.
Pioneer also employs fundamental research and due diligence to assess an
issuer's credit quality, taking into account financial condition and
profitability, future capital needs, potential for change in rating, industry
outlook, the competitive environment and management ability. In making these
portfolio decisions, Pioneer relies on the knowledge, experience and judgment of
its staff who have access to a wide variety of research.
7
PRINCIPAL RISKS OF INVESTING IN THE FUNDS
Each fund is subject to similar risks. Each fund invests in debt securities
and is subject to market risk, interest rate risk and credit risk associated
with investing in debt securities. Bond Fund has greater flexibility in the
maturity of its portfolio and is therefor potentially subject to greater
interest rate risk. Bond Fund is also subject to greater credit risk--up to 20%
of its total assets may be invested in below investment grade securities and it
may invest a substantial portion of its assets in mortgage-related securities.
Even though your fund seeks a high level of current income and principal
stability and Bond Fund seeks current income, you could lose money on your
investment or each fund could fail to generate current income if:
-- Interest rates go up, causing the value of the fund's investments to
decline
-- The issuer of a securities owned by the fund defaults on its
obligation to pay principal and/or interest or has its credit rating
downgraded
-- During periods of declining interest rates, the issuer of a security
may exercise its option to prepay principal earlier than scheduled,
forcing the fund to reinvest in lower yielding securities. This is
known as call or prepayment risk
-- During periods of rising interest rates, the average life of certain
types of securities may be extended because of slower than expected
principal payments. This may lock in a below market interest rate,
increase the security's duration and reduce the value of the security.
This is known as extension risk
-- Pioneer's judgment about the attractiveness, relative value or
potential appreciation of a particular sector, security or investment
strategy proves to be incorrect
To the extent either fund invests significantly in mortgage-backed
securities, and in the case of your fund, asset-backed and other
mortgage-related securities, that fund's exposure to prepayment and extension
risks may be greater than other investments in fixed income securities.
8
EACH FUND'S PAST PERFORMANCE ANNUAL RETURN CLASS A SHARES
The bar chart and table indicate (Year ended December 31)
the risks of investing in each fund
by showing how the funds have
performed in the past. Each fund's LIMITED MATURITY
performance varies from year to year. BOND FUND BOND FUND
A fund's past performance does not ----------------- ---------
necessarily indicate how it will
perform in the future. As a '91 15.54
shareholder, you may lose or make '92 7.88
money on your investment. '93 5.88 11.43
The chart shows the performance '94 0.18 -4.20
of your fund's Class A shares for '95 10.12 18.16
each full calendar year since the '96 4.38 1.96
fund's inception on August 10, 1992 '97 6.21 9.16
and Bond Fund's Class A shares for '98 6.24 7.69
each of the past ten calendar years. '99 0.68 -3.20
Class B and Class Y shares have '00 7.25 8.45
different performance. The chart does
not reflect any Class A sales charges
you may pay when you buy or sell fund
shares. Any sales charge will reduce
your return.
Limited Maturity Bond Fund's
highest calendar quarterly return for
Class A shares was 3.39% (12/31/94 to
3/31/95); Bond Fund's highest
calendar quarterly return for Class A
shares was 6.11% (3/31/95 to 6/30/95)
Limited Maturity Bond Fund's
lowest calendar quarterly return for
Class A shares was -0.26% (3/31/94 to
6/30/94); Bond Fund's lowest calendar
quarterly return for Class A shares
was -3.03% (12/31/93 to 3/31/94)
At 3/31/01, your fund's and Bond
Fund's year-to-date returns were
3.72% and 3.31%, respectively.
COMPARATIVE PERFORMANCE
The table shows the average annual total returns of each class of the funds
over time and compares these returns to the returns of the Lehman Brothers
Government/Credit Bond Index-Intermediate, a composite index of the U.S. bond
market which represents only securities with one to ten years to maturity, and
the Lehman Brothers Government/Credit Bond Index, a widely recognized composite
index of the U.S. bond market. Unlike either fund, the indices are not managed
and do not incur expenses. The table:
-- Reflects sales charges applicable to the class
-- Assumes that you sell your shares at the end of the period
-- Assumes you reinvest all of your dividends and distributions
AVERAGE ANNUAL TOTAL RETURN
(for periods ended December 31, 2000)
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
Limited Maturity Bond:
Class A 4.62% 4.39% n/a 4.72% 8/10/92
Class B 4.28% 4.14% n/a 4.40% 4/4/94
Class Y 7.66% n/a n/a 4.98% 4/9/98
Bond:
Class A 3.52% 3.75% 6.57% 8.25% 10/31/78
Class B 3.30% 3.69% n/a 5.17% 4/4/94
Class Y n/a n/a n/a n/a 9/7/01*
Lehman Brothers
Government/Credit Bond
Index-Intermediate 10.12% 6.11% n/a 6.36%** --
Lehman Brothers
Government/Credit Bond
Index 11.85% 6.24% 8.00% 9.57%*** --
* This is a new class of shares.
** Reflects the return of the index since the inception of your fund's Class A
shares. The return of the index since the inception of your fund's Class B
shares and Class Y shares are 6.94% and 6.21%, respectively.
*** Reflects the return of the index since the inception of Bond Fund's Class A
shares. The return of the index since the inception of Bond Fund's Class B
shares is 6.94%.
9
FEES AND EXPENSES
Shareholders of both funds pay various expenses, either directly or
indirectly. The first two expense tables appearing below show fund expenses for
the most recently completed fiscal year. Future expenses may be greater or less.
LIMITED MATURITY BOND FUND
CLASS A CLASS B CLASS Y
SHAREOWNER FEES PAID DIRECTLY FROM YOUR INVESTMENT ------- ------- -------
Maximum sales charge (load) when you buy shares as a
percentage of offering price.............................. 2.50% None None
Maximum deferred sales charge (load) as a percentage of
offering price or the amount you receive when you sell
shares, whichever is less................................. None(1) 2.00% None
ANNUAL FUND OPERATING EXPENSES PAID FROM THE ASSETS OF THE FUND AS A
PERCENTAGE OF AVERAGE DAILY NET ASSETS CLASS A CLASS B CLASS Y
------- ------- -------
Management Fee.............................................. 0.50% 0.50% 0.50%
Distribution and Service (12b-1) Fee........................ 0.25% 1.00% 0.00%
Other Expenses.............................................. 0.83% 0.71% 0.59%
Total Operating Expenses.................................... 1.58% 2.21% 1.09%
Fee Waiver and Expense Limitation(2)........................ (0.73)% (0.72)% (0.74)%
Net Expenses(2).................................................0.85% 1.49% 0.35%
- -------------
(1) Except for investments of $1 million or more.
(2) The expenses in the table reflect the expense limitation in effect through
November 30, 2001 under which Pioneer has agreed not to impose all or a
portion of its management fee, and, if necessary, to limit other ordinary
operating expenses to the extent required to reduce Class A expenses to
0.85% of the average daily net assets attributable to Class A shares; the
portion of fund expenses attributable to Class B shares and Class Y shares
will be reduced only to the extent such expenses are reduced for Class A
shares.
LIMITED MATURITY BOND FUND EXAMPLE
This example helps you compare the cost of investing in the fund with the
cost of investing in other mutual funds. It assumes that: a) you invest $10,000
in the fund for the time periods shown, b) you reinvest all dividends and
distributions, c) your investment has a 5% return each year, d) the fund's
operating expenses remain the same, and e) Pioneer's expense limitation is in
effect for year one.
Although your actual costs may be higher or lower, under these assumptions
your costs would be:
YEAR 1 YEAR 3 YEAR 5 YEAR 10
LIMITED MATURITY BOND FUND ------ ------ ------ -------
Class A shares.............................................. $335 $667 $1,022 $2,021
Class B shares:
Assuming redemption at end of period...................... 552 922 1,319 1,682
Assuming no redemption.................................... 152 622 1,119 1,682
Class Y shares:............................................. 36 273 529 1,262
BOND FUND
CLASS A CLASS B CLASS Y*
SHAREOWNER FEES PAID DIRECTLY FROM YOUR INVESTMENT ------- ------- --------
Maximum sales charge (load) when you buy shares as a
percentage of offering price.............................. 4.50% None None
Maximum deferred sales charge (load) as a percentage of
offering price or the amount you receive when you sell
shares, whichever is less................................. None(1) 4.00% None
ANNUAL FUND OPERATING EXPENSES PAID FROM THE ASSETS OF THE
FUND AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS CLASS A CLASS B CLASS Y
------- ------- --------
Management Fee.............................................. 0.50% 0.50% 0.50%
Distribution and Service (12b-1) Fee........................ 0.25% 1.00% 0.00%
Other Expenses.............................................. 0.43% 0.55% x.xx%*
Total Annual Fund Operating Expenses........................ 1.18% 2.05% x.xx%*
- -------------
* Based on estimated expenses for the current fiscal year.
(1) Except for investments of $1 million or more.
10
BOND FUND EXAMPLE
This example helps you compare the cost of investing in the fund with the
cost of investing in other mutual funds. It assumes that: a) you invest $10,000
in the fund for the time periods shown, b) you reinvest all dividends and
distributions, c) your investment has a 5% return each year and d) the fund's
operating expenses remain the same.
Although your actual costs may be higher or lower, under these assumptions
your costs would be:
YEAR 1 YEAR 3 YEAR 5 YEAR 10
BOND FUND ------ ------ ------ -------
Class A shares.............................................. $565 $808 $1,070 $1,817
Class B shares:
Assuming redemption at end of period...................... 608 943 1,303 2,156
Assuming no redemption.................................... 208 643 1,103 2,156
Class Y shares.............................................. [xx]
PRO FORMA EXPENSE TABLE
The next expense table shows the pro forma expenses of Bond Fund assuming
that a reorganization with your fund occurred on January 1, 2000. The expenses
shown in the table are based on fees and expenses incurred by the funds during
the year ended December 31, 2000. Bond Fund's actual expenses after the
reorganization may be greater or less than those shown. The pro forma expense
example shows what you would pay on a $10,000 investment if the reorganization
had occurred on January 1, 2000 using the assumptions previously stated for
the funds individually. The pro forma example is for comparison purposes only
and is not a representation of Bond Fund's actual expenses or returns, either
past or future.
BOND FUND (PRO FORMA)
(Assuming reorganization with Limited Maturity Bond Fund)
CLASS A CLASS B CLASS Y
SHAREOWNER FEES PAID DIRECTLY FROM YOUR INVESTMENT ------- ------- -------
Maximum sales charge (load) when you buy shares as a
percentage of offering price.............................. 4.50% None None
Maximum deferred sales charge (load) as a percentage of
offering price or the amount you receive when you sell
shares, whichever is less................................. None(1) 4.00% None
ANNUAL FUND OPERATING EXPENSES PAID FROM THE ASSETS OF THE
FUND AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS CLASS A CLASS B CLASS Y
------- ------- -------
Management Fee............................................. 0.50% 0.50% 0.50%
Distribution and Service (12b-1) Fee....................... 0.25% 1.00% 0.00%
Other Expenses............................................. 0.43% 0.55% N/A%
Total Annual Fund Operating Expenses....................... 1.18% 2.05% N/A%
PRO FORMA EXAMPLE
YEAR 1 YEAR 3 YEAR 5 YEAR 10
SHARE CLASS ------ ------ ------ -------
Class A shares.............................................. $565 $808 $1,070 $1,817
Class B shares:
Assuming redemption at end of period...................... 608 943 1,303 2,156
Assuming no redemption.................................... 208 643 1,103 2,156
Class Y shares.............................................. [xx]
- -------------
(1) Except for investments of $1 million or more.
OTHER INVESTMENT STRATEGIES
As discussed, your fund invests primarily in short-term debt securities to
seek a high level of current income and principal stability. Bond Fund invests
primarily in a broad range of investment grade debt securities to provide
current income.
This section describes additional investments that a fund may make or
strategies that it may pursue to a lesser degree to achieve the fund's goal.
Some of the funds' secondary investment policies also entail risks. To learn
more about these investments and risks, you should obtain and read the statement
of additional information (SAI).
11
Bond Fund may invest up to 20% and your fund may invest up to 10% of their
respective total assets in debt securities rated below investment grade, or, if
unrated, of equivalent quality as determined by Pioneer. Debt securities rated
below investment grade are commonly referred to in the U.S. as "junk bonds" and
are considered speculative. Below investment grade debt securities involve
greater risk of loss, are subject to greater price volatility and are generally
less liquid, especially during periods of economic uncertainty or change, than
higher quality debt securities.
Each fund may invest in securities of Canadian issuers to the same extent
as securities of U.S. issuers. Although your fund normally does not invest more
than 25% of its total assets (at the time of purchase) in securities of non-U.S.
issuers, the fund may invest without limit in debt securities of non-U.S.
issuers when Pioneer believes that it is in the fund's best interest. Bond Fund
invests in non-U.S. securities to diversify its portfolio when they offer
similar or greater potential to provide income and capital gains compared to
U.S. securities. Bond Fund may invest up to 15% (at the time of purchase) in
equity and debt securities of non-U.S. corporate issuers and in debt securities
of non-U.S. government issuers. Each fund will not invest more than 5% of its
total assets (at the time of purchase) in the securities of emerging markets
issuers. Your fund's non-U.S. securities may be issued by non-U.S. governments,
banks or corporations and certain supranational organizations, such as the World
Bank and the European Union.
Investing in Canadian and non-U.S. issuers may involve unique risks
compared to investing in securities of U.S. issuers. These risks may include:
-- Less information about non-U.S. issuers or markets may be available
due to less rigorous disclosure or accounting standards or regulatory
practices
-- Many non-U.S. markets are smaller, less liquid and more volatile than
U.S. markets. In a changing market, Pioneer may not be able to sell
the fund's portfolio securities in amounts and at prices it considers
reasonable
-- Adverse effect of currency exchange rates or controls on the value of
the fund's investments
-- Economic, political and social developments that adversely affect the
securities markets
-- Withholding and other non-U.S. taxes may decrease the fund's return
TEMPORARY INVESTMENTS
Normally, each fund invests substantially all of its assets to meet its
investment objective. Each fund may invest the remainder of its assets in
securities with remaining maturities of less than one year, cash equivalents or
may hold cash. For temporary defensive purposes, each fund may depart from its
principal investment strategies and invest part or all of its assets in these
securities or may hold cash. During such periods, each fund may not be able to
achieve its investment objective. The funds intend to adopt a defensive strategy
only when Pioneer believes securities in which the funds normally invest have
extraordinary risks due to political or economic factors.
SHORT-TERM TRADING
The funds usually do not trade for short-term profits. Each fund will sell
an investment, however, even if it has only been held for a short time, if it no
longer meets the fund's investment criteria. If a fund does a lot of trading, it
may incur additional operating expenses, which would reduce performance, and
could cause shareholders to incur a higher level taxable income or capital
gains.
DERIVATIVES
Each fund may use futures, options, forward foreign currency exchange
contracts and other derivatives. A derivative is a security or instrument whose
value is determined by reference to the value or the change in value of one or
more securities, currencies, indices or other financial instruments. Each fund
does not use derivatives as a primary investment technique and generally limits
their use to hedging. However, each fund may use derivatives for a variety of
non-principal purposes, including:
-- As a hedge against adverse changes in interest rates or currency
exchange rates
-- As a substitute for purchasing or selling securities
-- To increase the fund's return as a non-hedging strategy that may be
considered speculative
12
Even a small investment in derivatives can have a significant impact on a
fund's exposure to interest rates or currency exchange rates. If changes in a
derivative's value do not correspond to changes in the value of the fund's other
investments, the fund may not fully benefit from or could lose money on the
derivative position. In addition, some derivatives involve risk of loss if the
person who issued the derivative defaults on its obligation. Certain derivatives
may be less liquid and more difficult to value.
PROPOSAL 1
APPROVE THE AGREEMENT
AND PLAN OF REORGANIZATION
DESCRIPTION OF REORGANIZATION
The shareholders of your fund are being asked to approve an Agreement and
Plan of Reorganization, a copy of which is attached as Exhibit A. The Agreement
provides for a reorganization on the following terms:
-- The reorganization is scheduled to occur as of 5:00 p.m., Eastern
time, on September 28, 2001, but may occur on any later date before
January 2, 2002. Your fund will transfer all of its assets to Bond
Fund, and Bond Fund will assume all of your fund's liabilities. This
will result in the addition of your fund's assets to Bond Fund's
portfolio. The net asset values of both funds will be computed as of
the close of the New York Stock Exchange (normally 4:00 p.m. Eastern
time) on the reorganization date.
-- Bond Fund will issue to your fund Class A shares of Bond Fund with an
aggregate value equal to the aggregate net asset value of your fund's
Class A shares. As part of the liquidation of your fund, your fund
will immediately distribute these shares to Class A shareholders of
record of your fund in proportion to their holdings on the
reorganization date. In this same manner, Bond Fund will issue to your
fund Class B and Class Y shares that will be distributed to your
fund's Class B and Class Y shareholders in proportion to their
respective holdings on the reorganization date. As a result, Class A
shareholders of your fund will end up as Class A shareholders of Bond
Fund, Class B shareholders of your fund will end up as Class B
shareholders of Bond Fund, and Class Y shareholders of your fund will
end up as Class Y shareholders of Bond Fund.
-- After the shares are issued, your fund will be terminated.
REASONS FOR THE PROPOSED REORGANIZATION
The board of trustees of your fund believes that the proposed
reorganization will be advantageous to the shareholders of your fund for several
reasons. The board of trustees considered the following matters, among others,
in approving the proposal.
First, that Bond Fund shares received in the reorganization will provide
your fund's shareholders with substantially the same investment advantages as
they currently have, with potential for higher return.
Second, that a combined fund offers better potential for economies of scale
and better control over expenses than is possible for your fund due to its small
size. Both funds incur substantial costs for accounting, legal, transfer agency,
insurance, advisory and custodial and administrative services some of which do
not vary with the size of the fund.
Third, that, without giving effect to the expense limitation, Bond Fund's
expenses are currently lower than your fund's expenses. If Pioneer terminates
the voluntary limitation on your fund's per share expenses, your fund's expenses
would be substantially higher than Bond Fund's per share expenses. Shareholders
of your fund would pay relatively lower expenses each month as shareholders of
Bond Fund than they would if the voluntary expense limitation on your fund's
expenses were discontinued.
Fourth, that Bond Fund is more widely recognized in the broker community as
Pioneer's primary investment grade fixed income fund. By offering both funds
simultaneously, it has been increasingly difficult to attract assets to your
fund. Although shares of your fund have been offered since August 10, 1992, your
fund had net assets of $ at June 30, 2001 compared to Bond Fund's net
assets of $ on such date.
Fifth, that, although your fund outperformed Bond Fund during 2000, Bond
Fund has generally performed better than your fund since its inception. While
past performance cannot predict future results, the trustees believe that Bond
Fund is better positioned than your fund to continue to generate strong returns
because of its lower expense ratio and more flexible investment policies.
Sixth, Pioneer believes that, as evidenced by the relative sizes of the
Funds, investors in Pioneer's distribution channels have more interest in a fund
with the potential return of a broader portfolio of debt securities such as Bond
Fund or in funds that offer the safety of a stable net asset value such as money
market funds. Your fund focuses on investing in shorter term bonds and thus,
falls into a middle ground between the two categories. Your fund does not offer
the greater return potential of a bond fund with a more flexible portfolio of
securities yet it also does not offer the same degree of safety and stability of
principal as a money market fund. In addition, Bond Fund has
13
a significantly larger asset size than your fund. In recent years, your fund's
assets have decreased significantly from approximately $59,776,000 for the
fiscal year ended November 30, 1998 to approximately $35,169,000 for the fiscal
year ended November 30, 2000.
The board of trustees of Bond Fund considered that the reorganization
presents an excellent opportunity for Bond Fund to acquire investment assets
without the obligation to pay commissions or other transaction costs that are
normally associated with the purchase of securities. The trustees also believe
that your fund's shareholders and Bond Fund's shareholders will benefit from
improved diversification as a result of the reorganization. Because Bond Fund is
a significantly larger fund than your fund and because it does not place as many
restrictions on the maturity of the securities in which the fund may invest, the
trustees feel that the addition of your fund's assets will improve the
diversification of Bond Fund's overall portfolio. This opportunity provides an
economic benefit to Bond Fund and its shareholders. Similarly, the trustees feel
that shareholders of your fund will benefit from the greater diversification of
Bond Fund's investment portfolio after the transaction.
The boards of trustees of both funds also considered that the adviser and
the funds' distributor will also benefit from the reorganization. For example,
the adviser might realize time savings from a consolidated portfolio management
effort and from the need to prepare fewer reports and regulatory filings as well
as prospectus disclosure for one fund instead of two. The trustees believe,
however, that these savings will not amount to a significant economic benefit.
Because of the fee waiver on your fund, Pioneer will also receive a higher
effective fee for managing the assets attributable to your fund if they are a
part of Bond Fund than if the reorganization does not take place.
Comparative Fees and Expense Ratios. As discussed above in the Summary,
Bond Fund's Class A expense ratio of 1.18% for the fiscal year ended June 30,
2000, as well as its pro forma expense ratio of 1.15%, are lower than your
fund's gross Class A expense ratio of 1.58% (0.85% for net expenses with the
expense limitation) for your fund's fiscal year ended November 30, 2000. Both
funds pay the same 12b-1 fee rates for each class.
The trustees do not believe, given your fund's current size and growth
rate, that your fund will grow to an asset size which would allow your fund to
realize the benefits of economies of scale, including better control over
expenses. The trustees also do not believe that your fund will reach an asset
size which will allow your fund to significantly improve the diversification of
its investment portfolio. In light of your fund's inability to attract
significant assets, the adviser may not continue to subsidize a portion of your
fund's expenses. When the adviser discontinues this voluntary limitation, your
fund's expense ratio will rise above Bond Fund's.
Comparative Performance. The trustees also took into consideration the
relative performance of your fund and Bond Fund. As shown in the table in the
Summary, although your fund outperformed Bond Fund during 2000, Bond Fund has
generally performed better than your fund since its inception.
UNREIMBURSED CLASS A DISTRIBUTION AND SHAREHOLDER SERVICE EXPENSES
The boards of trustees of your fund and Bond Fund have determined that, if
the reorganization occurs, unreimbursed distribution and shareholder service
expenses incurred under your fund's Class A Rule 12b-1 Plan will be reimbursable
expenses under Bond Fund's Class A Rule 12b-1 Plan. However, the maximum
aggregate amount payable annually under Bond Fund's Class A Rule 12b-1 Plan
(0.25% of average daily net assets attributable to Class A shares) will not
increase. The Rule 12b-1 Plan for Class B is a compensation plan and,
consequently, the amount payable under the Plan is not determined by references
to actual distribution expenses incurred.
The following table shows the actual and pro forma unreimbursed
distribution and shareholder service expenses of Class A shares of your fund and
Bond Fund. The table shows both the dollar amount of these expenses and the
percentage of each class' net assets that they represent.
- -----------------------------------------------------------------------------------------------------------------------------
LIMITED MATURITY BOND BOND
UNREIMBURSED CLASS A RULE 12B-1 EXPENSES CLASS A SHARES CLASS A SHARES
- -----------------------------------------------------------------------------------------------------------------------------
Actual expenses as of December 31, 2000 $45,152 $171,858
0.576% 1.533%
- -----------------------------------------------------------------------------------------------------------------------------
Pro forma combined expenses as of January 1, 2001 $- $217,010
-% 1.517%%
- -----------------------------------------------------------------------------------------------------------------------------
The Class A Plan does not provide for the carryover of reimbursable
expenses beyond 12 months from the time a fund is first invoiced for an expense.
The limited carryover provision in the Class A Plan may result in an expense
invoiced to a fund in one fiscal year being paid in the subsequent fiscal year
and thus being treated for purposes of calculating the maximum expenditures of
the fund as having been incurred in the subsequent fiscal year. In the event of
termination or non-continuance of the Class A Plan, a fund has 12 months to
reimburse any expense which it incurs prior to such termination or
non-continuance, provided that payments by the fund during such 12-month period
shall not exceed 0.25% of the fund's average daily net assets during such
period.
14
TAX STATUS OF THE REORGANIZATION
The reorganization will be not result in income, gain or loss for federal
income tax purposes and will not take place unless both funds receive a
satisfactory opinion from Hale and Dorr LLP, counsel to the funds, substantially
to the effect that the reorganization described above will be a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
As a result, for federal income tax purposes:
-- No gain or loss will be recognized by your fund upon (1) the transfer
of all of its assets to Bond Fund as described above or (2) the
distribution by your fund of Bond Fund shares to your fund's
shareholders;
-- No gain or loss will be recognized by Bond Fund upon the receipt of
your fund's assets solely in exchange for the issuance of Bond Fund
shares to your fund and the assumption of all of your fund's
liabilities by Bond Fund;
-- The basis of the assets of your fund acquired by Bond Fund will be the
same as the basis of those assets in your fund immediately before the
transfer;
-- The tax holding period of the assets of your fund in Bond Fund will
include your fund's tax holding period for those assets;
-- The shareholders of your fund will not recognize gain or loss upon the
exchange of all their shares of your fund solely for Bond Fund shares
as part of the reorganization;
-- The basis of Bond Fund shares received by your fund's shareholders in
the reorganization will be the same as the basis of the shares of your
fund surrendered in exchange;
-- The tax holding period of the Bond Fund shares received by your fund's
shareholders will include, for each shareholder, the tax holding
period of the shares of your fund surrendered in exchange, provided
that shares of your fund were held as capital assets on the date of
the exchange; and
-- In addition, the use of certain tax attributes of your fund, such as
capital loss carryforwards by Bond Fund may be limited after the
reorganization.
ADDITIONAL TERMS OF AGREEMENT AND PLAN OF REORGANIZATION
Surrender of Share Certificates. If you hold a share certificate for
shares of your fund, it will not represent ownership of Bond Fund shares after
the reorganization. Pioneer will contact you (at your address and/or phone
number on its records) to arrange to deposit your certificated shares in
book-entry form prior to the reorganization. If the reorganization is completed,
the transfer agent will issue Class A share certificates for Bond Fund shares
only at your request. If you haven't heard from Pioneer, please call
1-800-XXX-XXXX to discuss arrangements for your certificate. If these
arrangements are not made and Pioneer cannot reach you by mail or by phone, or
you have not contacted Pioneer about your certificate, your Bond Fund shares
will remain deposited in book-entry form on the transfer agent's records until
you contact Pioneer to reissue a certificate. Certificates will be issued for
Class A shares only.
Conditions to Closing the Reorganization. The obligation of your fund to
consummate the reorganization is subject to the satisfaction of certain
conditions, including the performance by Bond Fund of all its obligations under
the Agreement and the receipt of all consents, orders and permits necessary to
consummate the reorganization (see Agreement, sections 6 and 8).
The obligation of Bond Fund to consummate the reorganization is subject to
the satisfaction of certain conditions, including your fund's performance of all
of its obligations under the Agreement, the receipt of certain documents and
financial statements from your fund and the receipt of all consents, orders and
permits necessary to consummate the reorganization (see Agreement, sections 7
and 8).
The obligations of both funds are subject to the approval of the Agreement
by the necessary vote of the outstanding shares of your fund, in accordance with
the provisions of your fund's declaration of trust and by-laws. The funds'
obligations are also subject to the receipt of a favorable opinion of Hale and
Dorr LLP as to certain federal income tax consequences of the reorganization
(see Agreement, paragraph 8.7).
Termination of Agreement. The board of trustees of either your fund or
Bond Fund may terminate the Agreement (even if the shareholders of your fund
have approved it) at any time before the reorganization date, if that board
believes that proceeding with the reorganization would no longer be advisable.
Expenses of the Reorganization. Pioneer has agreed to bear the expenses
incurred in connection with entering into and carrying out the provisions of the
Agreement, whether or not the reorganization occurs.
15
CAPITALIZATION
The following table sets forth the capitalization of each fund as of
December 31, 2000, and the pro forma combined capitalization of both funds as if
the reorganization was in effect on such date. The table reflects pro forma
exchange ratios of approximately 0.4124 Class A Bond Fund shares being issued
for each Class A share of your fund, approximately 0.4144 Class B Bond Fund
shares being issued for each Class B share of your fund and approximately 0.4154
Class Y Bond Fund shares being issued for each Class Y share of your fund. If
the reorganization occurs, the actual exchange ratios on the reorganization date
will vary due to changes in the market value of the portfolio securities of both
Bond Fund and your fund between December 31, 2000 and the reorganization date,
changes in the amount of undistributed net investment income and net realized
capital gains of Bond Fund and your fund during that period resulting from
income and distributions, and changes in the accrued liabilities of Bond Fund
and your fund during the same period.
DECEMBER 31, 2000
LIMITED BOND
MATURITY BOND BOND PRO FORMA
------------- ---- ---------
Net Assets......................... $35,247,026 $134,628,705 $169,875,731
Net Asset Value Per Share
Class A.......................... $3.62 $8.72 $8.72
Class B.......................... $3.62 $8.69 $8.69
Class C.......................... N/A $8.70 $8.70
Class Y.......................... $3.64 N/A $8.72
Shares Outstanding
Class A.......................... 7,839,659 11,068,122 14,301,205
Class B.......................... 1,783,122 3,940,588 4,679,480
Class C.......................... N/A 708,171 708,171
Class Y.......................... 75,107 N/A 31,203
It is impossible to predict how many Class A, Class B and Class Y shares of
Bond Fund will actually be received and distributed by your fund on the
reorganization date. The table should not be relied upon to determine the number
or value of Bond Fund shares that will actually be received and distributed.
COMPARISON OF BUSINESS TRUSTS UNDER DELAWARE AND MASSACHUSETTS LAW
Your fund is organized as a Massachusetts business trust. Bond Fund is
organized as a Delaware business trust. The following is a comparison of the
laws of Massachusetts and Delaware applicable to business trusts.
Limitation of Shareholders' and Funds' Liability. Delaware law provides
that the shareholders of a Delaware business trust shall not be subject to
liability for the debts or obligations of the trust. Under Massachusetts law,
shareholders of a Massachusetts business trust (such as your fund) may, under
certain circumstances, be liable for the debts and obligations of that trust.
Although the risk of liability of shareholders of a Massachusetts business trust
who do not participate in the management of the trust may be remote, your board
of trustees has determined that Delaware law affords greater protection against
potential shareholder liability. Similarly, Delaware law provides that, to the
extent that a Delaware business trust issues multiple series of shares, each
series shall not be liable for the debts or obligations of any other series,
another potential, although remote, risk in the case of multiple series of a
Massachusetts business trust. While your board of trustees believes that a
Massachusetts business trust will only be liable for its own obligations, there
is no direct statutory or judicial support for that position.
Limitation of Trustee Liability. Delaware law provides that, except to the
extent otherwise provided in a trust's declaration of trust or by-laws, trustees
will not be personally liable to any person (other than the business trust or a
shareholder thereof) for any act, omission or obligation of the business trust
or any trustee thereof. Delaware law also provides that a trustee's actions
under a Delaware business trust's declaration of trust or by-laws will not
subject the trustee to liability to the business trust or its shareholders if
the trustee takes such action in good faith reliance on the provisions of the
business trust's declaration of trust or by-laws. The declaration of trust of a
Massachusetts business trust may limit the liability of a trustee who is not
also an officer of the trust for breach of fiduciary duty except for, among
other things, any act or omission not in good faith which involves intentional
misconduct or a knowing violation of law or any transaction from which such
trustee derives an improper direct or indirect financial benefit. The
limitations on trustee liability under Delaware law are equivalent to the
protections for liability provided to directors of a corporation under Delaware
law. These limitations will be beneficial in attracting and retaining in future
qualified persons to act as trustees.
Shareholder Voting. Delaware law provides that a Delaware business trust's
declaration of trust or by-laws may set forth provisions related to voting in
any manner. This provision appears to permit trustee and shareholder voting
through computer or electronic media.
16
For an investment company with a significant number of institutional
shareholders, all with access to computer or electronic networks, the use of
such voting methods could significantly reduce the costs of shareholder voting.
However, the advantage of such methods may not be realizable unless the SEC
modifies its proxy rules. Also, as required by the Investment Company Act of
1940 (the "1940 Act"), votes on certain matters by trustees would still need to
be taken at in-person meetings.
Declarations of Trust. Although neither a Delaware business trust nor a
Massachusetts business trust is required to hold annual shareholder meetings,
Delaware law affords to the trustees the ability to adapt the Delaware business
trust to future contingencies without the necessity of holding a special
shareholder meeting. The trustees of a Delaware business trust may have the
power to amend the business trust's governing instrument to create a class or
series of shares of beneficial interest that was not previously outstanding; to
dissolve the business trust; to incorporate the Delaware business trust; to
merge or consolidate with another entity; to sell, lease, exchange, transfer,
pledge or otherwise dispose of all or any part of the business trust's assets;
to cause any series to become a separate trust; and to change the Delaware
business trust's domicile--all without shareholder vote. Any exercise of
authority by the trustees will be subject to applicable state and federal law.
The flexibility of Delaware business trusts should help to assure that a
Delaware business trust always operates under the most advantageous form of
organization and is intended to reduce the expense and frequency of future
shareholder meetings for non-investment-related operational issues.
BOARDS' EVALUATION AND RECOMMENDATION
For the reasons described above, the board of trustees of your fund,
including the trustees who are not "interested persons" of your fund or the
adviser (the independent trustees), approved the reorganization. In particular,
the trustees determined that the reorganization was in the best interests of
your fund and that the interests of your fund's shareholders would not be
diluted as a result of the reorganization. Similarly, the board of trustees of
Bond Fund, including the independent trustees, approved the reorganization. They
also determined that the reorganization was in the best interests of Bond Fund
and that the interests of Bond Fund's shareholders would not be diluted as a
result of the reorganization.
THE TRUSTEES OF YOUR FUND RECOMMEND THAT YOU VOTE FOR THE PROPOSAL TO
APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
VOTING RIGHTS AND REQUIRED VOTE
Each share of your fund is entitled to one vote. Approval of the above
proposal requires the affirmative vote of a majority of the shares of your fund
outstanding and entitled to vote. For this purpose, a majority of the
outstanding shares of your fund means the vote of the lesser of:
(1) 67% or more of the shares present at the meeting, if the holders of
more than 50% of the shares of the fund are present or represented by
proxy, or
(2) more than 50% of the outstanding shares of the fund.
Shares of your fund represented in person or by proxy, including shares
which abstain or do not vote with respect to the proposal, will be counted for
purposes of determining whether there is a quorum at the meeting. Accordingly,
an abstention from voting has the same effect as a vote against the proposal.
However, if a broker or nominee holding shares in "street name" indicates
on the proxy card that it does not have discretionary authority to vote on the
proposal, those shares will not be considered present and entitled to vote on
the proposal. Thus, a "broker non-vote" has no effect on the voting in
determining whether the proposal has been adopted in accordance with clause (1)
above, if more than 50% of the outstanding shares (excluding the "broker
non-votes") are present or represented. However, for purposes of determining
whether the proposal has been adopted in accordance with clause (2) above, a
"broker non-vote" has the same effect as a vote against the proposal because
shares represented by a "broker non-vote" are considered to be outstanding
shares.
If the required approval of shareholders is not obtained, your fund will
continue to engage in business as a separate mutual fund and the board of
trustees will consider what further action may be appropriate.
ADDITIONAL INFORMATION ABOUT THE FUNDS
NET ASSET VALUE
Each fund's net asset value is the value of its portfolio of securities
plus any other assets minus its operating expenses and any other liabilities.
Each fund calculates a net asset value for each class of shares every day the
New York Stock Exchange is open when regular trading closes (normally 4:00 p.m.
Eastern time).
17
Each fund generally values its portfolio securities based on market prices
or quotations. When market prices are not available or are considered by Pioneer
to be unreliable, the fund may use an asset's fair value. Fair value is
determined in accordance with procedures approved by the fund's trustees.
International securities markets may be open on days when the U.S. markets are
closed. For this reason, the values of any international securities owned by
either fund could change on a day when you cannot buy or sell shares of the
fund.
You buy or sell shares at the net asset value per share calculated on the
day of your transaction, adjusted for any applicable sales charge. When you buy
Class A shares, you pay an initial sales charge. When you sell Class B shares,
you may pay a CDSC depending on how long you have owned your shares. Class Y
shares have neither an initial sales charge nor a CDSC.
CHOOSING A CLASS OF SHARES
Each fund offers Class A, Class B and Class Y shares. Bond Fund also offers
Class C shares. Each class has different sales charges and expenses, allowing
you to choose the class that best meets your needs.
Factors you should consider include:
-- How long you expect to own the shares
-- The expenses paid by each class
-- Whether you qualify for any reduction or waiver of sales charges
Your investment professional can help you determine which class meets your
goals. Your investment firm may receive different compensation depending upon
which class you choose. If you are not a U.S. citizen and are purchasing shares
outside the U.S., you may pay different sales charges under local laws and
business practices.
DISTRIBUTION PLANS
Each fund has adopted a distribution plan for its Class A and Class B
shares in accordance with Rule 12b-1 under the 1940 Act. Bond Fund has also
adopted a Rule 12b-1 plan for its Class C shares. Under each plan, the fund pays
distribution and service fees to the distributor. Because these fees are an
ongoing expense, over time they increase the cost of your investment and your
shares may cost more than shares that are subject to other types of sales
charges.
CLASS A CLASS B CLASS
WHY YOU MIGHT PREFER EACH Class A shares may be your You may prefer Class B You may prefer Class Y
CLASS best alternative if you shares if you do not want to shares if you do not wish to
prefer to pay an initial pay an initial sales charge, pay an initial sales charge
sales charge and have lower or if you plan to hold your and you can invest at least
annual expenses, or if you investment for at least $5,000,000.
qualify for any reduction or three years for Limited
waiver of the initial sales Maturity Bond Fund and at
charge. least six years for Bond
Fund. Class B shares are not
recommended if you are
investing $250,000 or more.
INITIAL SALES CHARGE Up to 2.50% for Limited None None
Maturity Bond Fund and 4.50%
for Bond Fund of the
offering price, which is
reduced or waived for large
purchases and certain types
of investors. At the time of
your purchase, your
investment firm may receive
a commission from the
distributor of up to 2% for
Limited Maturity Bond Fund
and 4% for Bond Fund,
declining as the size of
your investment increases.
18
CLASS A CLASS B CLASS
CONTINGENT DEFERRED SALES None, except in certain Up to 2% for Limited None
CHARGES circumstances when the Maturity Bond Fund and 4%
initial sales charge is for Bond Fund is charged if
waived. you sell your shares. The
charge is reduced over time
and not charged after three
years for Limited Maturity
Bond Fund and six years for
Bond Fund. Your investment
firm may receive a
commission from the
distributor at the time of
your purchase of up to 2%
for Limited Maturity Bond
Fund and 4% for Bond Fund.
DISTRIBUTION AND SERVICE Up to 0.25% of average daily Up to 1% of average daily None
FEES net assets. net assets.
ANNUAL EXPENSES (INCLUDING Lower than Class B. Higher than Class A shares; Lower than Class A or Class
DISTRIBUTION AND SERVICE B.
FEES)
EXCHANGE PRIVILEGE Class A shares of other Class B shares convert to Class Y shares of other
Pioneer mutual funds. Class A shares after five Pioneer mutual funds.
years for Limited Maturity
Bond Fund and eight years
for Bond Fund. Class B
shares of other Pioneer
mutual funds.
SALES CHARGES: CLASS A SHARES
You pay the offering price when you buy Class A shares unless you qualify
to purchase shares at net asset value. You pay a lower sales charge as the size
of your investment increases. You do not pay a sales charge when you reinvest
dividends or distribution paid by the fund.
INVESTMENTS OF $1 MILLION OR MORE
You do not pay a sales charge when you purchase Class A shares if you are
investing $1 million or more or you are a participant in certain group plans.
However, you pay a contingent deferred sales charge if you sell your Class A
shares within one year of purchase. The sales charge is equal to 0.50% for your
fund and 1% for Bond Fund of your investment or your sales proceeds, whichever
is less.
REDUCED SALES CHARGES
You may qualify for a reduced Class A sales charge if you own or are
purchasing shares of Pioneer mutual funds. If you or your investment
professional notifies the distributor of your eligibility for a reduced sales
charge at the time of your purchase, the distributor will credit you with the
combined value (at the current offering price) of all your Pioneer mutual fund
shares and the shares of your spouse and the shares of any children under 21.
Certain trustees and fiduciaries may also qualify for a reduced sales charge.
For this purpose, Pioneer mutual funds include any fund for which the
distributor is principal underwriter and, at the distributor's discretion, may
include funds organized outside the U.S. and managed by Pioneer or an affiliate.
SALES CHARGES: CLASS A SHARES
SALES CHARGE AS A % OF
-------------------------------------------------
BOND FUND OFFERING PRICE NET AMOUNT INVESTED
AMOUNT OF PURCHASE -------------- -------------------
Less than $100,000.......................................... 4.50 4.71
$100,000 but less than $250,000............................. 3.50 3.63
$250,000 but less than $500,000............................. 2.50 2.56
$500,000 but less than $1 million........................... 2.00 2.04
$1 million or more.......................................... -0- -0-
19
SALES CHARGES FOR CLASS A SHARES
SALES CHARGE AS A % OF
-------------------------------------------------
LIMITED MATURITY BOND FUND OFFERING PRICE NET AMOUNT INVESTED
AMOUNT OF PURCHASE -------------- -------------------
Less than $50,000........................................... 2.50 2.56
$50,000 but less than $100,000.............................. 2.00 2.06
$100,000 but less than $250,000............................. 1.50 1.52
$250,000 but less than $1 million........................... 1.00 1.01
$1 million or more.......................................... -0- -0-
SALES CHARGES: CLASS B SHARES
You buy Class B shares at net asset value per share without paying an
initial sales charge. However, you will pay a CDSC to the distributor if you
sell your Class B shares within three years of purchase for Limited Maturity
Bond Fund and six years of purchase for Bond Fund. The CDSC decreases as the
number of years since your purchase increases.
CONTINGENT DEFERRED SALES CHARGE
AS A % OF DOLLAR AMOUNT SUBJECT TO THE SALES CHARGE
---------------------------------------------------
ON SHARES SOLD BEFORE THE END OF YEAR LIMITED MATURITY BOND FUND BOND FUND
- ------------------------------------- -------------------------- ---------
1 2 4
2 3 4
3 1 3
4 -0- 3
5 -0- 2
6 Convert to Class A shares 1
after five years
7 -0-
8 -0-
9 Convert to Class A
shares after eight
years
CONVERSION TO CLASS A SHARES
Class B shares automatically convert into Class A shares. This helps you
because Class A shares pay lower expenses.
Your Class B shares will convert to Class A shares at the beginning of the
calendar month (calendar quarter for shares purchased before October 1, 1998)
that is five years after the date of purchase for Limited Maturity Bond Fund and
eight years after the date of purchase for Bond Fund except that:
-- Shares purchased by reinvesting dividends and capital gain
distributions will convert to Class A shares at the same time as
shares on which the dividend or distribution was paid
-- Shares purchased by exchanging shares from another fund will convert
on the date that the shares originally acquired would have converted
into Class A shares
Currently, the Internal Revenue Service permits the conversion of shares to
take place without imposing a federal income tax. Conversion may not occur if
the Internal Revenue Service deems it a taxable event for federal tax purposes.
PAYING THE CONTINGENT DEFERRED SALES CHARGE
Several rules apply for Class B shares so that you pay the lowest possible
CDSC.
-- The CDSC is calculated on the current market value or the original
cost of the shares you are selling, whichever is less
-- You do not pay a CDSC on reinvested dividends or distributions
-- In determining the number of years since your purchase, all purchases
are considered to have been made on the first day of that month
(quarter for shares purchased before October 1, 1998)
-- If you sell only some of your shares, the transfer agent will first
sell your shares that are not subject to any CDSC and then the shares
that you have owned the longest
20
-- You may qualify for a waiver of the CDSC normally charged
OPENING YOUR ACCOUNT
For all classes: If your shares are held in your investment firm's name,
the options and services available to you may be different from those discussed
in this prospectus. Ask your investment professional for more information.
If you invest in the fund through investment professionals or other
financial intermediaries, including wrap programs and fund supermarkets,
additional conditions may apply to your investment in the fund, and the
investment professional or intermediary may charge you a transaction-based or
other fee for its services. These conditions and fees are in addition to those
imposed by the fund and its affiliates. You should ask your investment
professional or financial intermediary about its services and any applicable
fees.
For Class Y shares: If you are an individual or other non-institutional
investor, open your Class Y share account by completing an account application
and sending it to the transfer agent by mail or by fax. If you are any other
type of investor, please call the transfer agent to obtain a Class Y share
account application and an account number.
The transfer agent must receive your account application before you send
your initial check or federal funds wire. In addition, you must provide a bank
wire address of record when you establish your account.
ACCOUNT OPTIONS
Use your account application to select options and privileges for your
account. You can change your selections at any time by sending a completed
account options form to the transfer agent. You may be required to obtain a
signature guarantee to make certain changes to an existing account.
Call or write to the fund's transfer agent for account applications,
account options forms and other account information:
Pioneer Investment Management Shareholder Services, Inc.
P.O. Box 9014
Boston, Massachusetts 02205-9014
Telephone 1-800-225-6292
TELEPHONE TRANSACTION PRIVILEGES
If your account is registered in your name, you can, in the case of Class A
or Class B shares, buy, exchange or sell fund shares by telephone or in the case
of Class Y shares, exchange or sell fund shares by telephone. If you do not want
your account to have telephone transaction privileges, you must indicate that
choice on your account application or by writing to the transfer agent.
When you request a telephone transaction the transfer agent will try to
confirm that the request is genuine. The transfer agent records the call,
requires the caller to provide the personal identification number for the
account and sends you a written confirmation. The fund may implement other
confirmation procedures from time to time. Different procedures may apply if you
have a non-U.S. account or if your account is registered in the name of an
institution, broker-dealer or other third party.
GENERAL RULES ON BUYING, EXCHANGING AND SELLING YOUR FUND SHARES
SHARE PRICE
For Class A and Class B shares: If you place an order with your investment
firm before the New York Stock Exchange closes and your investment firm submits
the order to the distributor prior to the distributor's close of business
(usually 5:30 p.m. Eastern time), your share price will be calculated that day.
Otherwise, your price per share will be calculated at the close of the New York
Stock Exchange after the distributor receives your order. Your investment firm
is responsible for submitting your order to the distributor.
For Class Y shares: When you place an order to purchase, exchange or sell
Class Y shares it must be received in good order by the transfer agent or by
your broker-dealer by the close of regular trading on the New York Stock
Exchange (currently 4:00 p.m. Eastern time) in order to purchase shares at the
price determined on that day.
If you place your order through a broker-dealer, you must place the order
before the close of regular trading on the New York Stock Exchange and your
broker-dealer much submit the order to the distributor prior to the
distributor's close of business (usually 5:30 p.m. Eastern time) for your share
price to be determined at the close of regular trading on the date your order is
received. Your broker-dealer is responsible for transmitting your order to the
distributor. In all other cases, except as described below for wire transfers,
your share price will be calculated at the close of the New York Stock Exchange
after the distributor receives your order.
21
BUYING
For Class A and Class B shares: You may buy fund shares from any
investment firm that has a sales agreement with the distributor. If you do not
have an investment firm, please call 1-800-225-6292 for information on how to
locate an investment professional in your area.
You can buy fund shares at the offering price. The distributor may reject
any order until it has confirmed the order in writing and received payment. The
fund reserves the right to stop offering any class of shares.
For Class Y shares: You can buy Class Y shares at net asset value per
share. The fund does not impose any initial, contingent deferred or asset based
sales charge on Class Y shares. The distributor may reject any order until it
has confirmed the order in writing and received payment.
MINIMUM INVESTMENT AMOUNTS
For Class A and Class B shares: Your initial investment must be at least
$1,000. Additional investments must be at least $100 for Class A shares and $500
for Class B shares. You may qualify for lower initial or subsequent investment
minimums if you are opening a retirement plan account, establishing an automatic
investment plan or placing your trade through your investment firm.
For Class Y shares: Your initial Class Y share investment must be at least
$5 million. This amount may be invested in one or more of the Pioneer mutual
funds that currently offer Class Y shares. There is no minimum additional
amount.
EXCHANGING
You may exchange your shares for shares of the same class of another
Pioneer mutual fund.
Your exchange request must be for at least $1,000 unless the fund you are
exchanging into has a different minimum. The fund allows you to exchange your
shares at net asset value without charging you either an initial or contingent
deferred sales charge at the time of the exchange. Shares you acquire as part of
an exchange will continue to be subject to any contingent deferred sales charge
that applies to the shares you originally purchased. When you ultimately sell
your shares, the date of your original purchase will determine your contingent
deferred sales charge.
Before you request an exchange, consider each fund's investment objective
and policies as described in the fund's prospectus.
SELLING
Your shares will be sold at net asset value per share next calculated after
the fund receives your request in good order.
If the shares you are selling are subject to a deferred sales charge, it
will be deducted from the sale proceeds. The fund generally will send your sale
proceeds by check, bank wire or electronic funds transfer. Normally you will be
paid within seven days. If you recently sent a check to purchase the shares
being sold, the fund may delay payment of the sale proceeds until your check has
cleared. This may take up to 15 calendar days from the purchase date.
If you are selling shares from a non-retirement account or certain IRAs,
you may use any of the methods described below. If you are selling shares from a
retirement account other than an IRA, you must make your request in writing.
You may have to pay income taxes on a sale or an exchange.
GOOD ORDER MEANS THAT:
- -- You have provided adequate instructions
- -- There are no outstanding claims against your account
- -- There are no transaction limitations on your account
- -- If you have any fund share certificates, you submit them and they are
signed by each record owner exactly as the shares are registered
- -- Your request includes a signature guarantee if you:
-- Are selling over $100,000 or exchanging over $500,000 worth of shares
-- Changed your account registration or address within the last 30 days
-- Instruct the transfer agent to mail the check to an address different
from the one on your account
-- Want the check paid to someone other than the account owner(s)
-- Are transferring the sale proceeds to a Pioneer mutual fund account
with a different registration
22
BUYING, EXCHANGING AND SELLING CLASS A AND CLASS B SHARES
BUYING SHARES
THROUGH Normally, your investment firm will send your
YOUR purchase request to the fund's transfer agent.
INVESTMENT CONSULT YOUR INVESTMENT PROFESSIONAL FOR MORE
FIRM INFORMATION. Your investment firm may receive a
commission from the distributor for your purchase of
fund shares. The distributor or its affiliates may
pay additional compensation, out of their own assets,
to certain investment firms or their affiliates based
on objective criteria established by the distributor.
BY PHONE YOU CAN USE THE TELEPHONE PURCHASE PRIVILEGE IF you
have an existing non-retirement account or certain
IRAs. You can purchase additional fund shares by
phone if:
-- You established your bank account of record at
least 30 days ago
-- Your bank information has not changed for at
least 30 days
-- You are not purchasing more than $25,000 worth of
shares per account per day
-- You can provide the proper account identification
When you request a telephone purchase, the transfer
agent will electronically debit the amount of the
purchase from your bank account of record. The
transfer agent will purchase fund shares for the
amount of the debit at the offering price determined
after the transfer agent receives your telephone
purchase instruction and good funds. It usually takes
three business days for the transfer agent to receive
notification from your bank that good funds are
available in the amount of your investment.
IN WRITING, You can purchase fund shares for an existing fund
BY MAIL account by MAILING A CHECK TO THE TRANSFER AGENT.
OR BY FAX Make your check payable to the fund. Neither initial
nor subsequent investments should be made by third
party check. Your check must be in U.S. dollars and
drawn on a U.S. bank. Include in your purchase
request the fund's name, the account number and the
name or names in the account registration.
EXCHANGING SHARES
THROUGH Normally, your investment firm will send your
YOUR exchange request to the fund's transfer agent.
INVESTMENT CONSULT YOUR INVESTMENT PROFESSIONAL FOR MORE
FIRM INFORMATION ABOUT EXCHANGING YOUR SHARES.
BY PHONE After you establish your fund account, YOU CAN
EXCHANGE FUND SHARES BY PHONE IF:
-- You are using the exchange to establish a new
account, provided the new account has a
registration identical to the original account
-- The fund into which you are exchanging offers the
same class of shares
-- You are not exchanging more than $500,000 worth
of shares per account per day
-- You can provide the proper account identification
information
IN WRITING, You can exchange fund shares by MAILING OR FAXING A
BY MAIL LETTER OF INSTRUCTION TO THE TRANSFER AGENT. You can
OR BY FAX exchange fund shares directly through the fund only
if your account is registered in your name. However,
you may not fax an exchange request for more than
$500,000. Include in your letter:
-- The name, social security number and signature of
all registered owners
-- A signature guarantee for each registered owner
if the amount of the exchange is more than $500,000
-- The name of the fund out of which you are
exchanging and the name of the fund into which
you are exchanging
-- The class of shares you are exchanging
-- The dollar amount or number of shares you are
exchanging
23
SELLING SHARES
SELLING SHARES
Normally, your investment firm will send your request
to sell shares to the fund's transfer agent. CONSULT
YOUR INVESTMENT PROFESSIONAL FOR MORE INFORMATION.
The fund has authorized the distributor to act as its
agent in the repurchase of fund shares from qualified
investment firms. The fund reserves the right to
terminate this procedure at any time.
YOU MAY SELL UP TO $100,000 PER ACCOUNT PER DAY. You
may sell fund shares held in a retirement plan
account by phone only if your account is an IRA. You
may not sell your shares by phone if you have changed
your address (for checks) or your bank information
(for wires and transfers) in the last 30 days.
You may receive your sale proceeds:
-- By check, provided the check is made payable
exactly as your account is registered
-- By bank wire or by electronic funds transfer,
provided the sale proceeds are being sent to your
bank address of record
You can sell some or all of your fund shares by
writing directly to the fund only if your account is
registered in your name. Include in your request your
name, your social security number, the fund's name,
your fund account number, the class of shares to be
sold, the dollar amount or number of shares to be
sold and any other applicable requirements as
described below. The transfer agent will send the
sale proceeds to your address of record unless you
provide other instructions. Your request must be
signed by all registered owners and be in good order.
The transfer agent will not process your request
until it is received in good order. You may sell up
to $100,000 per account per day by fax.
EXCHANGING SHARES
HOW TO CONTACT US
BY PHONE
For information or to request a telephone transaction
between 8:00 a.m. and 9:00 p.m. (Eastern time) by
speaking with a shareholder services representative
call 1-800-225-6292
To request a transaction using FactFone(SM) call
1-800-225-4321
Telecommunications Device for the Deaf (TDD)
1-800-225-1997
BY MAIL
Send your written instructions to: PIONEER INVESTMENT
MANAGEMENT SHAREHOLDER SERVICES, INC.
P.O. Box 9014
Boston, Massachusetts 02205-9014
BY FAX
Fax your exchange and sale requests to:
1-800-225-4240
EXCHANGE PRIVILEGE
You make up to four exchange redemptions of $25,000
or more per account per calendar year.
The fund and the distributor 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. Abuses include frequent trading in
response to short-term market fluctuations and a
pattern of trading that appears to be an attempt to
"time the market." In addition, the fund and the
distributor reserve the right, at any time without
notice, to charge a fee for exchanges or to modify,
limit, suspend or discontinue the exchange privilege.
The fund will provide 60 days' notice of material
amendment to or termination of the privilege.
24
SELLING SHARES
SHAREOWNER ACCOUNT POLICIES
SIGNATURE GUARANTEES AND OTHER REQUIREMENTS
You are required to obtain a signature guarantee when
you are:
-- Requesting certain types of exchanges or sales of
fund shares
-- Redeeming shares for which you hold a share
certificate
-- Requesting certain types of changes for your
existing account
You can obtain a signature guarantee from most
broker-dealers, banks, credit unions (if authorized
under state law) and federal savings and loan
associations. You cannot obtain a signature guarantee
from a notary public.
Fiduciaries and corporations are required to submit
additional documents to sell fund shares.
EXCHANGE LIMITATION
Each fund's exchange limitation policies are intended
to discourage short-term trading in fund shares.
Short-term trading can increase the expenses incurred
by the fund and make portfolio management less
efficient
SHAREOWNER ACCOUNT POLICIES
TELEPHONE ACCESS
You may have difficulty contacting the fund by
telephone during times of market volatility or
disruption in telephone service. On New York Stock
Exchange holidays or on days when the exchange closes
early, the telephone center will adjust its hours
accordingly. If you are unable to reach the fund by
telephone, you should communicate with the fund in
writing.
SHARE CERTIFICATES
Normally, your shares will remain on deposit with the
transfer agent and certificates will not be issued.
If you are legally required to obtain a certificate,
you may request one for your Class A shares only. A
fee may be charged for this service
EXCHANGING SHARES
HOW TO CONTACT US
The exchange limitation policy may not apply to
transactions made through an omnibus account for fund
shares. In determining whether the redemption fee applies
or the exchange redemption limit has been reached, Pioneer
may aggregate a series of transactions and/or fund
accounts if the accounts making the transactions appear to
be under common ownership or control. Pioneer may view
accounts for which one person gives instructions or
accounts that act on advice provided by a single source to
be under common control.
The exchange limitation does not apply to automatic
exchange transactions or to exchanges made by participants
in employer-sponsored retirement plans qualified under
Section 401(a) of the Internal Revenue Code. The exchange
limitation does not apply to accounts that have a written
exchange agreement with the distributor.
MINIMUM ACCOUNT SIZE
The fund requires that you maintain a minimum account
value of $500. If you hold less than the minimum in your
account because you have sold or exchanged some of your
shares, the fund will notify you of its intent to sell
your shares and close your account. You may avoid this by
increasing the value of your account to at least the
minimum within six months of the notice from the fund.
OTHER POLICIES
The fund may suspend transactions in shares when trading
on the New York Stock Exchange is closed or restricted,
when an emergency exists that makes it impracticable for
the fund to sell or value its portfolio securities or with
the permission of the Securities and Exchange Commission.
The fund or the distributor may revise, suspend or
terminate the account options and services available to
shareholders at any time.
The fund reserves the right to redeem in kind by
delivering portfolio securities to a redeeming shareowner,
provided that the fund must pay redemptions in cash if a
shareowner's aggregate redemptions in a 90-day period are
less than $250,000 or 1% of the fund's net assets.
25
BUYING, EXCHANGING AND SELLING CLASS Y SHARES
BUYING SHARES
IN WRITING, You can purchase Class Y shares by mailing a check to
BY MAIL the transfer agent. Make your check payable to the
OR BY FAX fund. Neither initial nor subsequent investments
should be made by third party check. Your check must
be in U.S. dollars and drawn on a U.S. bank. Include
in your purchase request the fund's name, the account
number and the name or names in the account
registration.
If you are registering an account in the name of a
corporation or other fiduciary, you must send your
completed account set-up forms to the transfer agent
prior to making your initial purchase.
BY PHONE BY WIRE
OR WIRE If you have an existing Class Y account, YOU MAY WIRE
FUNDS TO PURCHASE CLASS Y SHARES. Note, however,
that:
-- State Street Bank must receive your wire no later
than 11:00 a.m. Eastern time on the business day
after the fund receives your request to purchase
shares
-- If State Street Bank does not receive your wire
by 11:00 a.m. Eastern time on the next business day,
your transaction will be canceled at your expense
and risk
-- Wire transfers normally take two or more hours to
complete and a fee may be charged by the sending
bank
-- Wire transfers may be restricted on holidays and
at certain other times
INSTRUCT YOUR BANK TO WIRE FUNDS TO:
Receiving Bank:
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02101
ABA Routing No. 011000028
For further credit to:
Shareholder Name
Existing Pioneer Account No.
Pioneer Limited Maturity Bond Fund
THROUGH CONSULT YOUR INVESTMENT PROFESSIONAL FOR MORE
YOUR INFORMATION.
INVESTMENT
FIRM
EXCHANGING SHARES
IN WRITING, You can exchange Class Y shares by MAILING OR FAXING
BY MAIL A LETTER OF INSTRUCTION TO THE TRANSFER AGENT. You
OR BY FAX can exchange fund shares directly through the fund
only if your account is registered in your name.
However, you may not fax an exchange request for more
than $5 million. Include in your letter:
-- The name and signature of all registered owners
-- A signature guarantee for each registered owner
if the amount of the exchange is more than $5 million
-- The name of the fund our of which you are
exchanging and the name of the fund into which
you are exchanging
-- The dollar amount or number of Class Y shares you
are exchanging
BY PHONE BY PHONE
OR WIRE After you establish your fund account, YOU CAN
EXCHANGE FUND SHARES BY PHONE IF:
-- You are using the exchange to establish a new
account, provided the new account has a
registration identical to the original account
-- The fund into which you are exchanging offers
class Y shares
-- You are not exchanging more than $5 million worth
of shares per account per day
-- You can provide the proper account identification
information
THROUGH CONSULT YOUR INVESTMENT PROFESSIONAL FOR MORE
YOUR INFORMATION ABOUT EXCHANGING YOUR SHARES.
INVESTMENT
FIRM
26
SELLING SHARES HOW TO CONTACT US
You can sell some or all of your Class Y shares by writing BY PHONE
directly to the fund only if your account is registered in For information or to request a
your name. Include in your request your name, the fund's telephone transaction between 8:00
name, your fund account number, the class of shares to be a.m. and 9:00 p.m. (Eastern time)
sold, the dollar amount or number of Class Y shares to be by speaking with a shareholder
sold and any other applicable requirements as described services representative call
below. 1-800-294-4480
-- The transfer agent will send the sale proceeds to your To request a transaction using
address of record unless you provide other FactFone(SM) call 1-800-225-4321
instructions.
-- Your request must be signed by all registered owners BY MAIL
-- The transfer agent will not process your request until Send your written instructions to:
it is received in good order. PIONEER INVESTMENT MANAGEMENT
SHAREHOLDER SERVICES, INC.
BY FAX
-- You may sell up to $5 million per account per day if P.O. Box 9014 Boston,
the proceeds are directed to your bank of record Massachusetts 02205-9014
-- You may sell up to $100,000 per account per day if the
proceeds are not directed to your bank of record BY FAX
Fax your exchange and sale
BY PHONE requests to: 1-888-294-4485
-- You may sell up to $5 million per account per day if
the proceeds are directed to your bank of record EXCHANGE PRIVILEGE
-- You may sell up to $100,000 per account per day if the The fund and the distributor
proceeds are not directed to your bank of record reserve the right to refuse any
exchange request or restrict, at
You may sell fund shares held in a retirement plan account any time without notice, the
by phone only if your account is an IRA. You may not sell number and/or frequency of
your shares by phone if you have changed your address (for exchanges to prevent abuses of the
checks) or your bank information (for wires and transfers) exchange privilege. Abuses include
in the last 30 days frequent trading in response to
short-term market fluctuations and
You may receive your sale proceeds: a pattern of trading that appears
-- By check, provided the check is made payable exactly as to be an attempt to "time the
your account is registered market." In addition, the fund and
-- By bank wire or by electronic funds transfer, provided the distributor reserve the right,
the sale proceeds are being sent to your bank address at any time without notice, to
of record charge a fee for exchanges or to
modify, limit, suspend or
CONSULT YOUR INVESTMENT PROFESSIONAL FOR MORE INFORMATION. discontinue the exchange
The fund has authorized the distributor to act as its agent privilege. The fund will provide
in the repurchase of fund shares from qualified investment 60 days' notice of material
firms. The fund reserves the right to terminate this amendment to or termination of the
procedure at any time privilege.
OTHER REQUIREMENTS
If you must use a written request
to exchange or sell your Class Y
shares and your account is
registered in the name of a
corporation or other fiduciary you
must include the name of an
authorized person and a certified
copy of a current corporate
resolution, certificate of
incumbency or similar legal
document showing that the named
individual is authorized to act on
behalf of the record owner.
DIVIDENDS AND CAPITAL GAINS
Each fund declares a dividend daily. The dividend consists of substantially
all of the fund's net income. You begin to earn dividends on the first business
day following receipt of payment for shares. You continue to earn dividends up
to and including the date of sale. Dividends are normally paid on the last
business day of each month. Each fund makes distributions from net short- and
long-term capital gains, if any, in November. Each fund may also pay dividends
and capital gain distributions at other times if necessary for the fund to
27
avoid federal income or excise tax. If you invest in a fund close to the time
that the fund makes a distribution, generally you will pay a higher price per
share and you will pay taxes on the amount of the distribution whether you
reinvest the distribution or receive it as cash.
TAXES
For federal income tax purposes, your distributions from a fund's net
long-term capital gains are considered long-term capital gains and may be
taxable to you at different maximum rates depending upon their source and other
factors. Dividends and short-term capital gain distributions are taxable as
ordinary income. Dividends and distributions are taxable, whether you take
payment in cash or reinvest them to buy additional fund shares. When you sell or
exchange fund shares you will generally recognize a capital gain or capital loss
in an amount equal to the difference between the net amount of sale proceeds
(or, in the case of an exchange, the fair market value of the shares) that you
receive and your tax basis for the shares that you sell or exchange. In January
of each year the fund will mail to you information about your dividends,
distributions and any shares you sold in the previous calendar year.
You must provide your social security number or other taxpayer
identification number to the fund along with the certifications required by the
Internal Revenue Service when you open an account. If you do not or if it is
otherwise legally required to do so, the fund will withhold "backup withholding"
tax from your dividends and distributions, sale proceeds and any other payments
to you.
You should ask your tax adviser about any federal and state tax
considerations, including possible additional withholding taxes for non-U.S.
shareholders. You may also consult the fund's statement of additional
information for a more detailed discussion of federal income tax considerations
that may affect the fund and its shareowners.
28
FINANCIAL HIGHLIGHTS
PIONEER LIMITED MATURITY BOND FUND
SELECTED DATA FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
FOR THE YEAR ENDED NOVEMBER 30,
---------------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
Net asset value, beginning of period................... $ 3.62 $ 3.78 $ 3.77 $ 3.79 $ 3.84
Increase (decrease) from investment operations:
Net investment income (loss)........................... $ 0.22 $ 0.21 $ 0.22 $ 0.21 $ 0.24
Net realized and unrealized gain (loss) on
investments.......................................... (0.04) (0.16) 0.01 -- (0.05)
------- ------- ------- ------- -------
Net increase (decrease) from investment operations..... $ 0.18 $ 0.05 $ 0.23 $ 0.21 $ 0.19
Distributions to shareholders:
Net investment income.................................. (0.22) (0.21) (0.22) (0.23) (0.24)
------- ------- ------- ------- -------
Net increase (decrease) in net asset value............. $ (0.04) $ (0.16) $ 0.01 $ (0.02) $ (0.05)
------- ------- ------- ------- -------
Net asset value, end of period......................... $ 3.58 $ 3.62 $ 3.78 $ 3.77 $ 3.79
======= ======= ======= ======= =======
Total return*.......................................... 5.18% 1.47% 6.28% 5.64% 5.20%
RATIOS/SUPPLEMENTAL DATA
Ratio of net expenses to average net assets+........... 0.88% 0.88% 0.85% 0.87% 0.87%
Ratio of net investment income (loss) to average net
assets+.............................................. 6.11% 5.75% 5.78% 6.10% 6.25%
Portfolio turnover rate................................ 43% 86% 70% 31% 65%
Net assets, end of period (in thousands)............... $28,684 $47,781 $49,072 $42,058 $54,637
Ratios assuming no waiver of management fees and
assumption of expenses by Pioneer and no reduction
for fees paid indirectly:
Net expenses........................................... 1.58% 1.31% 1.30% 1.44% 1.33%
Net investment income (loss)........................... 5.41% 5.32% 5.33% 5.53% 5.79%
Ratios assuming waiver of management fees and
assumption of expenses by Pioneer and reduction for
fees paid indirectly:
Net expenses........................................... 0.85% 0.85% 0.85% 0.85% 0.85%
Net investment income (loss)........................... 6.14% 5.78% 5.78% 6.12% 6.27%
- -------------
* 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.
+ Ratios assuming no reduction for fees paid indirectly.
29
FINANCIAL HIGHLIGHTS (CONTINUED)
PIONEER LIMITED MATURITY BOND FUND
SELECTED DATA FOR A CLASS B SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
FOR THE YEAR ENDED NOVEMBER 30
------------------------------------------------
2000 1999 1998 1997 1996
------ ------- ------- ------ ------
Net asset value, beginning of period...................... $ 3.62 $ 3.78 $ 3.76 $ 3.79 $ 3.85
Increase (decrease) from investment operations:
Net investment income (loss).............................. $ 0.20 $ 0.18 $ 0.19 $ 0.20 $ 0.21
Net realized and unrealized gain (loss) on investments.... (0.04) (0.16) 0.01 (0.03) (0.05)
------ ------- ------- ------ ------
Net increase (decrease) from investment operations........ $ 0.16 $ 0.02 $ 0.20 $ 0.17 $ 0.16
Distributions to shareholders:
Net investment income..................................... (0.20) (0.18) (0.18) (0.20) (0.21)
In excess of net investment income........................ -- -- -- -- (0.01)
Net increase (decrease) in net asset value................ $(0.04) $ (0.16) $ 0.02 $(0.03) $(0.06)
------ ------- ------- ------ ------
Net asset value, end of period............................ $ 3.58 $ 3.62 $ 3.78 $ 3.76 $ 3.79
====== ======= ======= ====== ======
Total return*............................................. 4.44% 0.64% 5.49% 4.60% 4.37%
RATIOS/SUPPLEMENTAL DATA
Ratio of net expenses to average net assets+.............. 1.52% 1.62% 1.63% 1.67% 1.69%
Ratio of net investment income (loss) to average net
assets+................................................. 5.49% 5.04% 5.00% 5.29% 5.40%
Portfolio turnover rate................................... 43% 86% 70% 31% 65%
Net assets, end of period (in thousands).................. $6,215 $10,018 $10,264 $5,187 $4,969
Ratios assuming no waiver of management fees and
assumption of expenses by Pioneer and no reduction for
fees paid indirectly:
Net expenses.............................................. 2.21% 2.05% 1.99% 2.25% 2.15%
Net investment income (loss).............................. 4.80% 4.61% 4.64% 4.71% 4.94%
Ratios assuming waiver of management fees and assumption
of expenses by Pioneer and reduction for fees paid
indirectly:
Net expenses.............................................. 1.49% 1.61% 1.62% 1.66% 1.67%
Net investment income (loss).............................. 5.52% 5.05% 5.01% 5.30% 5.42%
- -------------
* 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.
+ Ratios assuming no reduction for fees paid indirectly.
30
FINANCIAL HIGHLIGHTS (CONTINUED)
PIONEER LIMITED MATURITY BOND FUND
SELECTED DATA FOR A CLASS Y SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
FOR THE
YEAR ENDED
NOVEMBER 30 APRIL 9, 1998
---------------- THROUGH
2000 1999 NOVEMBER 30, 1998
------ ------ -----------------
Net asset value, beginning of period........................ $ 3.62 $ 3.79 $ 3.77
Increase (decrease) from investment operations:
Net investment income (loss)................................ $ 0.23 $ 0.23 $ 0.14
Net realized and unrealized gain (loss) on investments...... (0.03) (0.17) 0.02
------ ------ ------
Net increase (decrease) from investment operations.......... $ 0.20 $ 0.06 $ 0.16
Distributions to shareholders:
Net investment income....................................... (0.23) (0.23) (0.14)
In excess of net investment income.......................... -- -- --
Net increase (decrease) in net asset value.................. $(0.03) $(0.17) $ 0.02
------ ------ ------
Net asset value, end of period.............................. $ 3.59 $ 3.62 $ 3.79
====== ====== ======
Total return*............................................... 5.60% 1.64% 4.35%
RATIOS/SUPPLEMENTAL DATA
Ratio of net expenses to average net assets+................ 0.40% 0.48% 0.55%**
Ratio of net investment income (loss) to average net
assets+................................................... 6.62% 6.18% 5.99%**
Portfolio turnover rate..................................... 43% 86% 70%
Net assets, end of period (in thousands).................... $ 270 $ 391 $ 440
Ratios assuming no waiver of management fees and assumption
of expenses by Pioneer and no reduction for fees paid
indirectly:
Net expenses................................................ 1.09% 0.90% 0.74%**
Net investment income (loss)................................ 5.93% 5.76% 5.80%**
Ratios assuming waiver of management fees and assumption of
expenses by Pioneer and reduction for fees paid
indirectly:
Net expenses................................................ 0.35% 0.46% 0.55%**
Net investment income (loss)................................ 6.67% 6.20% 5.99%**
- -------------
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period and no sales charges.
** Annualized.
+ Ratios assuming no reduction for fees paid indirectly.
31
FINANCIAL HIGHLIGHTS (CONTINUED)
PIONEER BOND FUND
SELECTED DATA FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
FOR THE SIX MONTH FOR THE YEAR ENDED JUNE 30
PERIOD ENDED -------------------------------------------------------
DECEMBER 31, 2000 2000 1999 1998 1997 1996
(unaudited)
----------------- -------- -------- -------- ------- --------
Net asset value, beginning of period............... $8.47 $ 8.94 $ 9.37 $ 9.07 $ 9.08 $ 9.35
Increase (decrease) from investment operations:
Net investment income (loss)....................... $0.29 $ 0.58 $ 0.56 $ 0.59 $ 0.63 $ 0.64
Net realized and unrealized gain (loss) on
investments...................................... $0.25 (0.47) (0.43) 0.30 (0.01) (0.27)
-------- -------- -------- -------- ------- --------
Net increase (decrease) from investment
operations....................................... $0.54 $ 0.11 $ 0.13 $ 0.89 $ 0.62 $ 0.37
Distributions to shareholders:
Net investment income.............................. (0.29) (0.58) (0.56) (0.59) (0.63) (0.64)
Net increase (decrease) in net asset value......... 0.25 $ (0.47) $ (0.43) $ 0.30 $ (0.01) $ (0.27)
-------- -------- -------- -------- ------- --------
Net asset value, end of period..................... $8.72 $ 8.47 $ 8.94 $ 9.37 $ 9.07 $ 9.08
======== ======== ======== ======== ======= ========
Total return*...................................... 6.47% 1.30% 1.35% 10.04% 7.09% 4.02%
RATIOS/SUPPLEMENTAL DATA
Ratio of net expenses to average net assets+....... 1.28%** 1.18% 1.04% 1.18% 1.14% 1.19%
Ratio of net investment income (loss) to average
net assets+...................................... 6.53%** 6.68% 6.01% 6.34% 6.97% 6.80%
Portfolio turnover rate............................ 26%** 60% 46% 44% 48% 39%
Net assets, end of period (in thousands)........... $96,541 $102,349 $129,487 $114,326 $98,310 $101,957
Ratios assuming reduction for fees paid indirectly:
Net expenses....................................... 1.25%** 1.15% 1.02% 1.17% 1.12% 1.18%
Net investment income (loss)....................... 6.56%** 6.71% 6.03% 6.35% 6.99% 6.81%
- ---------------
* 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.
PIONEER BOND FUND
SELECTED DATA FOR A CLASS B SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
FOR THE SIX MONTHS FOR THE YEAR ENDED JUNE 30
ENDED ---------------------------------------------------
DECEMBER 31, 2000 2000 1999 1998 1997 1996
(unaudited)
------------------ ------- ------- ------- ------- -------
Net asset value, beginning of period.................. $8.44 $ 8.91 $ 9.33 $ 9.03 $ 9.02 $ 9.31
Increase (decrease) from investment operations:
Net investment income (loss).......................... $0.24 $ 0.50 $ 0.48 $ 0.51 $ 0.56 $ 0.57
Net realized and unrealized gain (loss) on
investments......................................... 0.25 (0.46) (0.42) 0.31 (0.01) (0.28)
-------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations.... $0.49 $ 0.04 $ 0.06 $ 0.82 $ 0.55 $ 0.29
Distributions to shareholders:
Net investment income................................. (0.24) (0.51) (0.48) (0.52) (0.54) (0.57)
In excess of net investment income.................... -- -- -- -- -- (0.01)
Net increase (decrease) in net asset value............ $0.25 $ (0.47) $ (0.42) $ 0.30 $ 0.01 $ (0.29)
-------- ------- ------- ------- ------- -------
Net asset value, end of period........................ $8.69 $ 8.44 $ 8.91 $ 9.33 $ 9.03 $ 9.02
======== ======= ======= ======= ======= =======
Total return*......................................... 5.86% 0.48% 0.57% 9.21% 6.24% 3.15%
RATIOS/SUPPLEMENTAL DATA
Ratio of net expenses to average net assets+.......... 2.37%** 2.05% 1.86% 1.98% 1.97% 1.96%
Ratio of net investment income (loss) to average net
assets+............................................. 5.48%** 5.81% 5.18% 5.52% 6.12% 6.10%
Portfolio turnover rate............................... 26%** 60% 46% 44% 48% 39%
Net assets, end of period (in thousands).............. $34,247 $37,269 $49,816 $30,888 $20,104 $14,843
Ratios assuming reduction for fees paid indirectly:
Net expenses.......................................... 2.36%** 2.03% 1.83% 1.97% 1.96% 1.94%
Net investment income (loss).......................... 5.49%** 5.83% 5.21% 5.53% 6.13% 6.03%
- ---------------
* 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.
32
FINANCIAL HIGHLIGHTS (CONTINUED)
PIONEER BOND FUND
SELECTED DATA FOR A CLASS C SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
FOR THE SIX MONTH
PERIOD ENDED FOR THE YEAR ENDED JUNE 30 JANUARY 31, 1996
DECEMBER 31, ------------------------------------- THROUGH
2000 2000 1999 1998 1997 JUNE 30, 1996
(unaudited)
----------------- ------ ------- ------ ------ ----------------
Net asset value, beginning of period............. $8.46 $ 8.89 $ 9.31 $ 9.02 $ 9.02 $ 9.54
Increase (decrease) from investment operations:
Net investment income (loss)..................... $0.26 $ 0.48 $ 0.48 $ 0.52 $ 0.54 $ 0.23
Net realized and unrealized gain (loss) on
investments.................................... 0.24 (0.45) (0.42) 0.29 -- (0.52)
-------- ------ ------- ------ ------ --------
Net increase (decrease) from investment
operations..................................... $0.50 $ 0.03 $ 0.06 $ 0.81 $ 0.54 $ (0.29)
Distributions to shareholders:
Net investment income............................ (0.26) (0.46) (0.48) (0.52) (0.54) (0.22)
In excess of net investment income............... -- -- -- -- -- (0.01)
Net increase (decrease) in net asset value....... $0.24 $(0.43) $ (0.42) $ 0.29 $ -- $ (0.52)
-------- ------ ------- ------ ------ --------
Net asset value, end of period................... $8.70 $ 8.46 $ 8.89 $ 9.31 $ 9.02 $ 9.02
======== ====== ======= ====== ====== ========
Total return*.................................... 6.01% 0.36% 0.60% 9.12% 6.13% (3.00)%
RATIOS/SUPPLEMENTAL DATA
Ratio of net expenses to average net assets+..... 1.95%** 2.32% 1.86% 1.90% 2.05% 2.18%**
Ratio of net investment income (loss) to average
net assets+.................................... 5.86%** 5.53% 5.17% 5.58% 5.83% 5.79%**
Portfolio turnover rate.......................... 26%** 60% 46% 44% 48% 39%
Net assets, end of period (in thousands)......... $6,158 $6,264 $10,369 $8,515 $4,588 $ 343
Ratios assuming reduction for fees paid
indirectly:
Net expenses..................................... 1.92%** 2.30% 1.83% 1.89% 1.92% 2.13%**
Net investment income (loss)..................... 5.89%** 5.55% 5.20% 5.59% 5.96% 5.84%**
- ---------------
* 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.
PIONEER BOND FUND
SELECTED DATA FOR A CLASS Y SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
Since Class Y shares are a new class of shares for Bond Fund, no financial
highlights for Class Y shares are available.
33
INFORMATION CONCERNING THE MEETING
SHAREHOLDER PROPOSALS
Your fund is not required to hold annual meetings of shareholders and does
not currently intend to hold a meeting of shareholders in 2001. Shareholder
proposals to be presented at the next meeting of shareholders, whenever held,
must be received at the fund's offices, 60 State Street, Boston, Massachusetts
02109, at a reasonable time prior to the trustees' solicitation of proxies for
the meeting. The submission by a shareholder of a proposal for inclusion in a
proxy statement does not guarantee that it will be included.
Shareholder proposals are subject to certain regulations under the federal
securities laws.
SHARES HELD IN RETIREMENT PLANS
The trustee or custodian of certain retirement plans is required to vote
any unvoted shares held in such plans in proportion to the percentages voted by
shareholders in person and by proxy.
PROXIES, QUORUM AND VOTING AT THE MEETING
Any shareholder who has given his or her proxy to someone has the power to
revoke that proxy at any time prior to its exercise by executing a superseding
proxy or by submitting a notice of revocation to the secretary of the fund. In
addition, although mere attendance at the shareholder meeting will not revoke a
proxy, a shareholder present at the shareholder meeting may withdraw his or her
proxy and vote in person. All properly executed and unrevoked proxies received
in time for the shareholder meeting will be voted in accordance with the
instructions contained in the proxies. If no instruction is given, the persons
named as proxies will vote the shares represented thereby in favor of the
proposals described above and will use their best judgment in connection with
the transaction of such other business as may properly come before the
shareholder meeting or any adjournment thereof.
With respect to your fund, a majority of the shares entitled to vote,
present in person or represented by proxy, constitutes a quorum for the
transaction of business with respect to any proposal (unless otherwise noted in
the proxy statement). In the event that, at the time any session of the
shareholder meeting for the fund is called to order, a quorum is not present in
person or by proxy, the persons named as proxies may vote those proxies which
have been received to adjourn the shareholder meeting to a later date. In the
event that a quorum is present but sufficient votes in favor of any of the
proposals have not been received, the persons named as proxies may propose one
or more adjournments of the shareholder meeting to permit further solicitation
of proxies with respect to such proposal. Any such adjournment will require the
affirmative vote of more than one half of the shares of the fund present in
person or by proxy at the session of the shareholder meeting to be adjourned.
The persons named as proxies will vote those proxies which they are entitled to
vote in favor of any such proposal in favor of such an adjournment and will vote
those proxies required to be voted against any such proposal against any such
adjournment. A shareholder vote may be taken on one or more of the proposals in
the proxy statement prior to such adjournment if sufficient votes for its
approval have been received and it is otherwise appropriate. Such vote will be
considered final regardless of whether the meeting is adjourned to permit
additional solicitation with respect to any other proposal.
Shares of the fund represented in person or by proxy, including shares
which abstain or do not vote with respect to a proposal, will be counted for
purposes of determining whether there is a quorum at the shareholder meeting.
Accordingly, an abstention from voting has the same effect as a vote against a
proposal. However, if a broker or nominee holding shares in "street name"
indicates on the proxy card that it does not have discretionary authority to
vote on a proposal, those shares will not be considered present and entitled to
vote on that proposal. Thus, a "broker non-vote" has no effect on the voting in
determining whether a proposal has been adopted by 67% or more of the fund's
shares present at the shareholder meeting, if more than 50% of the outstanding
shares (excluding the "broker non-votes") of the fund are present or
represented. However, for purposes of determining whether a proposal has been
adopted by more than 50% of the outstanding shares of the fund, a "broker
non-vote" has the same effect as a vote against that proposal because shares
represented by a "broker non-vote" are considered to be outstanding shares.
METHOD OF SOLICITATION AND EXPENSES
The cost of preparing, assembling and mailing this proxy statement and
prospectus and the attached notice of special meeting of shareholders and the
accompanying proxy card will be borne by Pioneer. In addition to soliciting
proxies by mail, Pioneer may, at its expense, have one or more of the funds'
officers, representatives or compensated third-party agents, including Pioneer,
Pioneer Investment Management Shareholder Services, Inc. ("PIMSS") and Pioneer
Funds Distributor, aid in the solicitation of proxies by personal interview or
telephone and telegraph and may request brokerage houses and other custodians,
nominees and fiduciaries to forward proxy soliciting material to the beneficial
owners of the shares held of record by such persons.
The fund may also arrange to have votes recorded by telephone, the internet
or other electronic means. The voting procedures used in connection with such
voting methods are designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting
34
of their shares in accordance with their instructions and to confirm that their
instructions have been properly recorded. If these procedures were subject to a
successful legal challenge, such votes would not be counted at the shareholder
meeting. The fund is unaware of any such challenge at this time. In the case of
telephone voting, shareholders would be called at the phone number PIMSS has in
its records for their accounts, and would be asked for their Social Security
number or other identifying information. The shareholders would then be given an
opportunity to authorize proxies to vote their shares at the meeting in
accordance with their instructions. In the case of automated telephone and
internet voting, shareholders would be required to provide their Social Security
number or other identifying information and will receive a confirmation of their
instructions.
Persons holding shares as nominees will be reimbursed by Pioneer, upon
request, for the reasonable expenses of mailing soliciting materials to the
principals of the accounts.
OUTSTANDING SHARES
As of July 20, 2001, Class A shares, Class B
shares and Class Y shares of beneficial interest of your fund
were outstanding. Only shareholders of record on July 20, 2001 (the record date)
are entitled to notice of and to vote at the meeting.
OTHER BUSINESS
While the shareholder meeting has been called to transact any business that
may properly come before it, the only matters that the trustees intend to
present are those matters stated in the attached notice of special meeting of
shareholders. However, if any additional matters properly come before the
shareholder meeting, and on all matters incidental to the conduct of the
meeting, the persons named in the enclosed proxy intend to vote the proxy in
accordance with their judgment on such matters unless instructed to the
contrary.
OWNERSHIP OF SHARES OF THE FUNDS
To the knowledge of the fund, as of May 31, 2001, the following persons
owned of record or beneficially 5% or more of the outstanding Class A, Class B
and Class C shares of your fund and Bond Fund:
PRO FORMA OWNERSHIP OF BOND FUND AS OF
NAMES AND ADDRESSES OF LIMITED MATURITY BOND , 2001
OWNERS OF MORE THAN 5% OF SHARES CLASS A CLASS B CLASS C CLASS Y CLASS A CLASS B CLASS C CLASS Y
- ---------------------------------------------------------------------------------------------------------------------------------
n/a
n/a
Bond Fund
n/a
n/a
As of May 31, 2001, the trustees and officers of your fund and Bond Fund,
each as a group, owned in the aggregate less than 1% of the outstanding shares
of the respective funds.
EXPERTS
The financial statements and the financial highlights of Limited Maturity
Bond Fund and Bond Fund, as of November 30, 2000 and June 30, 2000,
respectively, are incorporated by reference into this proxy statement and
prospectus. The financial statements and highlights have been independently
audited by Arthur Andersen LLP, as stated in their reports with respect thereto.
These financial statements and highlights are included in reliance upon the
reports given upon the authority of such firm as experts in giving said reports.
AVAILABLE INFORMATION
Each fund is subject to the informational requirements of the Securities
Exchange Act of 1934 and the 1940 Act and files reports, proxy statements and
other information with the SEC. You can view these reports, proxy statements and
other information at the SEC's Public Reference Room in Washington, D.C. Call
1-202-942-8090 for information. The SEC charges a fee for copies. You can get
the same information free from the SEC's EDGAR database on the Internet
(http://www.sec.gov). You may also e-mail requests for these documents to
publicinfo@sec.gov or make a request in writing to the SEC's Public Reference
Section Washington, D.C. 20549-0102.
35
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "AGREEMENT") is made as of
this th day of , 2001, between Pioneer Bond Fund (the "ACQUIRING
FUND"), a business trust organized under the laws of the State of Delaware with
its principal place of business at 60 State Street, Boston, Massachusetts 02109,
and Pioneer Limited Maturity Bond Fund, a business trust organized under the
laws of the Commonwealth of Massachusetts with its principal place of business
at 60 State Street, Boston, Massachusetts 02109 (the "ACQUIRED FUND").
This Agreement is intended to be and is adopted as a plan of reorganization
within the meaning of Section 368(a) of the United States Internal Revenue Code
of 1986, as amended (the "CODE"). The reorganization (the "REORGANIZATION") will
consist of (a) the transfer of all of the assets of the Acquired Fund to the
Acquiring Fund in exchange for (i) the issuance to the Acquired Fund of shares
of beneficial interest of each Class of the Acquiring Fund that corresponds to
each Class of shares of the Acquired Fund (collectively, the "ACQUIRING FUND
SHARES" and each, an "ACQUIRING FUND SHARE"), and (ii) the assumption by the
Acquiring Fund of (I) the liabilities of the Acquired Fund that are included in
the calculation of net asset value ("NAV") on the closing date set forth below
(the "CLOSING DATE") and (II) the liabilities of the Acquired Fund with respect
to its investment operations that are not required by generally accepted
accounting principles ("GAAP") to be included in the calculation of NAV
consistent with liabilities incurred by registered management investment
companies in the ordinary course of their businesses (i.e., not including any
extraordinary obligations, including, but not limited to legal proceedings,
shareholder claims and distribution payments) (the "ASSUMED LIABILITIES"), and
(b) the distribution by the Acquired Fund, on the Closing Date, or as soon
thereafter as practicable, of the Acquiring Fund Shares to the shareholders of
the Acquired Fund in liquidation of the Acquired Fund and the termination of the
Acquired Fund, all upon the terms and conditions hereinafter set forth in this
Agreement.
WHEREAS, the Acquiring Fund and the Acquired Fund are each registered
investment companies classified as management companies of the open-end type,
and the Acquired Fund owns securities that generally are assets of the character
in which the Acquiring Fund is permitted to invest;
WHEREAS, the Acquiring Fund is authorized to issue shares of beneficial
interest;
WHEREAS, the Board of Trustees of the Acquiring Fund has determined that
the exchange of all of the assets of the Acquired Fund for Acquiring Fund Shares
and the assumption of the Assumed Liabilities of the Acquired Fund by the
Acquiring Fund are in the best interests of the Acquiring Fund shareholders;
WHEREAS, the Board of Trustees of the Acquired Fund has determined that the
exchange of all of the assets of the Acquired Fund for Acquiring Fund Shares and
the assumption of the Assumed Liabilities of the Acquired Fund by the Acquiring
Fund are in the best interests of the Acquired Fund shareholders.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1.TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING
FUND SHARES AND ASSUMPTION OF THE ASSUMED LIABILITIES AND LIQUIDATION AND
TERMINATION OF THE ACQUIRED FUND.
1.1. Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Acquired Fund agrees
to transfer its assets as set forth in paragraph 1.2 to the Acquiring Fund free
and clear of all liens and encumbrances (other than those arising under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), liens for taxes not
yet due and contractual restrictions on the transfer of the acquired assets),
and the Acquiring Fund agrees in exchange therefor: (a) to issue to the Acquired
Fund the number of Acquiring Fund Shares of each Class, including fractional
Acquiring Fund Shares, determined (to at least two decimal places) by dividing
the value of the Acquired Fund's net assets attributable to a Class of shares
and transferred to the Acquiring Fund, computed in the manner and as of the time
and date set forth in paragraph 2.1, by the NAV of one Acquiring Fund Share of
the applicable Class, computed in the manner and as of the time and date set
forth in paragraph 2.2; and (b) to assume the Assumed Liabilities, as set forth
in paragraph 1.3. Such transactions shall take place at the closing provided for
in paragraph 3.1 (the "CLOSING").
1.2. (a) The assets of the Acquired Fund to be acquired by the Acquiring
Fund shall consist of all of its property, including, without limitation, all
goodwill, all contractual rights of the Acquired Fund, all other intangible
property owned by the Acquired Fund and originals or copies of all books and
records of the Acquired Fund.
(b) The Acquired Fund has provided the Acquiring Fund with a list of all of
the Acquired Fund's securities and other assets as of the date of this
Agreement. The Acquired Fund reserves the right to sell any of these securities
but will not, without the prior approval of the Acquiring Fund, acquire any
additional securities other than securities of the type in which the Acquiring
Fund is permitted to invest and
36
shall not acquire, without the consent of the Acquiring Fund, any securities
that are valued at "fair value" under the valuation procedures of either the
Acquired Fund or the Acquiring Fund.
1.3. The Acquired Fund will endeavor to discharge all the Acquired Fund's
known liabilities and obligations that are or will become due prior to the
Closing Date. The Acquired Fund shall prepare an unaudited statement of assets
and liabilities (the "CLOSING STATEMENT"), as of the Valuation Date (as defined
in paragraph 2.1), in accordance with GAAP consistently applied from the prior
audited period, including a calculation of the net assets of the Acquired Fund
as of the close of business on the Closing Date. The Acquiring Fund shall assume
the Assumed Liabilities.
1.4. On the Closing Date or as soon thereafter as is conveniently
practicable, the Acquired Fund shall liquidate and distribute pro rata to the
Acquired Fund's shareholders of record determined as of the close of business on
the Closing Date (the "ACQUIRED FUND SHAREHOLDERS") the Acquiring Fund Shares it
receives pursuant to paragraph 1.1. Such liquidation and distribution will be
accomplished by the Acquired Fund instructing the Acquiring Fund to transfer the
Acquiring Fund Shares then credited to the account of the Acquired Fund on the
books of the Acquiring Fund to open accounts on the share records of the
Acquiring Fund in the names of the Acquired Fund Shareholders (as provided to
the Acquiring Fund by the Acquired Fund) and representing the respective pro
rata number of the Acquiring Fund Shares due such shareholders. The Acquired
Fund shall promptly provide the Acquiring Fund with evidence of such liquidation
and distribution. All issued and outstanding shares of the Acquired Fund will
simultaneously be cancelled on the books of the Acquired Fund, although share
certificates representing interests in the Acquired Fund will represent a number
of Acquiring Fund Shares after the Closing Date as determined in accordance with
paragraph 1.1. The Acquiring Fund will not issue share certificates representing
Acquiring Fund Shares unless a shareholder specifically requests the Acquiring
Fund Shares in certificated form and, if applicable, in exchange for outstanding
certificates representing.
1.5. Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent. Acquiring Fund Shares will be issued in the
manner described in the Acquiring Fund's Registration Statement on Form N-14 in
the form attached to this Agreement as Annex A.
1.6. Any transfer taxes payable upon issuance of the Acquiring Fund Shares
in a name other than the registered holder of the Acquired Fund shares on the
books of the Acquired Fund as of the time of issuance shall, as a condition of
such issuance and transfer, be paid by the person to whom such Acquiring Fund
Shares are to be issued and transferred.
1.7. Any reporting responsibility of the Acquired Fund is and shall remain
the responsibility of the Acquired Fund up to and including the Closing Date and
such later date on which the Acquired Fund is terminated.
1.8. The Acquired Fund shall, following the Closing Date and the making of
all distributions pursuant to paragraph 1.4, be terminated under the laws of the
Commonwealth of Massachusetts and in accordance with the Agreement and
Declaration of Trust (the "Declaration of Trust") and By-Laws of the Acquired
Fund.
2. VALUATION
2.1. The value of the assets of the Acquired Fund to be acquired by the
Acquiring Fund hereunder shall be the value of such assets computed as of the
close of regular trading on the New York Stock Exchange, Inc. on the Closing
Date (such time and date being hereinafter called the "VALUATION DATE"), using
the valuation procedures set forth in the prospectus or statement of additional
information of the Acquired Fund as in effect on the date hereof.
2.2. The NAV of the Acquiring Fund shares shall be calculated in accordance
with the valuation procedures described in paragraph 2.1.
2.3. All computations of value shall be made by Pioneer Investment
Management, Inc., or its agent, in accordance with its regular practice as
pricing agent for the Acquired Fund.
3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be September , 2001, or such later date as
the parties may agree to in writing. All acts taking place at the Closing shall
be deemed to take place simultaneously as of the close of business on the
Closing Date unless otherwise provided. The Closing shall be held as of 5:00
p.m. (Eastern time) at the offices of Hale and Dorr LLP, 60 State Street,
Boston, Massachusetts, or at such other time and/or place as the parties may
agree.
3.2. Portfolio securities shall be presented by the Acquired Fund to Brown
Brothers Harriman & Co. ("BBH") as custodian for the Acquiring Fund for
examination no later than three business days preceding the Valuation Date. The
Acquiring Fund may, in its sole discretion, reject any securities if it
reasonably believes that the ownership of such securities by the Acquired Fund
or the acquisition of such securities by the Acquiring Fund would violate the
investment policies and restrictions of the Acquired Fund and the Acquiring
Fund. The portfolio securities, cash and due bills shall be delivered by the
Acquired Fund to BBH as custodian for the Acquiring Fund for the account of the
Acquiring Fund at the Closing duly endorsed in proper form for transfer in such
condition as to constitute good delivery
37
thereof in accordance with the custom of brokers. The cash shall be delivered by
wire in federal funds or transferred to an account of the Acquiring Fund
specified by the Acquiring Fund.
3.3. BBH, custodian for the Acquired Fund, shall deliver at the Closing a
certificate of an authorized officer stating that: (a) the Acquired Fund's
assets have been delivered in proper form to the Acquiring Fund on the Closing
Date and (b) all necessary transfer taxes including all applicable federal and
state stock transfer stamps, if any, have been paid, or provision for payment
shall have been made, in conjunction with the delivery of portfolio securities.
3.4. In the event that on the Valuation Date (a) the primary trading market
for portfolio securities of the Acquired Fund shall be closed to trading or
trading thereon shall be restricted or (b) trading or the reporting of trading
on such market shall be disrupted so that accurate calculation based upon
available market prices of the value of the net assets of the parties hereto is
impracticable, the Closing Date shall be postponed until the first business day
after the day when trading shall have been fully resumed and reporting shall
have been restored, provided that unless the parties otherwise agree, if the
transactions contemplated by this Agreement shall not have occurred on or prior
to December 31, 2001, each party's obligations under this Agreement shall
terminate without liability to the other party, except for any liability that
may arise out of a party's breach of its obligations under this Agreement prior
to such termination.
3.5. The Acquired Fund shall deliver to the Acquiring Fund at the Closing
(or, if not reasonably available at the Closing, as soon as practicable
thereafter) a list of the names, addresses, taxpayer identification numbers and
backup withholding and nonresident alien withholding status of the Acquired Fund
Shareholders and the number and percentage ownership of outstanding shares owned
by each such shareholder immediately prior to the Closing, certified by the
President, Executive Vice President or Treasurer of the Acquired Fund as being
an accurate record of the information (i) provided by Acquired Fund Shareholders
or (ii) derived from the Acquired Fund's records by such officers or one of the
Acquired Fund's service providers.
3.6. The Acquiring Fund shall issue and deliver a confirmation evidencing
the Acquiring Fund Shares to be credited to the Acquired Fund's account on the
Closing Date to the Secretary of the Acquired Fund, or provide evidence
satisfactory to the Acquired Fund that such Acquiring Fund Shares have been
credited to the Acquired Fund's account on the books of the Acquiring Fund. At
the Closing, each party shall deliver to the other such bills of sale, checks,
assignments, share certificates, if any, receipts or other documents as such
other party or its counsel may reasonably request.
4. LIQUIDATION AND TERMINATION OF ACQUIRED FUND
4.1. As soon as practicable after the Closing, the Acquired Fund shall
liquidate and distribute pro rata to the Acquired Fund Shareholders the
Acquiring Fund Shares received pursuant to paragraph 1.1. Such liquidation and
distribution will be accomplished by the transfer of the Acquiring Fund Shares
credited to the account of the Acquired Fund to open accounts on the share
records in the names of Acquired Fund Shareholders as delivered to the Acquiring
Fund prior to the Closing Date in accordance with paragraph 3.5 and representing
the respective pro rata entitlement of each Acquired Fund Shareholder in the
Acquiring Fund Shares of the corresponding Class held by the Acquired Fund
Shareholder at the time of the Closing.
4.2. In connection with such liquidating distributions, (a) the Acquiring
Fund shall not deliver certificates representing its shares and (b) the share
transfer books of the Acquired Fund shall be permanently closed as of the
Closing Date and arrangements satisfactory to the Acquiring Fund, acting
reasonably, shall be made to restrict the further transfer of the Acquired
Fund's shares.
4.3. As soon as practicable after the liquidation of the Acquired Fund, the
Acquired Fund shall terminate its existence as a business trust under the laws
of the Commonwealth of Massachusetts and in accordance with the Declaration of
Trust and By-Laws of the Acquired Fund.
5. REPRESENTATIONS AND WARRANTIES
5.1. The Acquired Fund represents and warrants to the Acquiring Fund, which
representations and warranties will be true and correct on the date hereof and
on the Closing Date as though made on and as of the Closing Date, as follows:
(a) The Acquired Fund is a business trust validly existing and in good
standing under the laws of the Commonwealth of Massachusetts and has the
power to own all of its properties and assets and, subject to approval by
the Acquired Fund Shareholders, to perform its obligations under this
Agreement. The Acquired Fund is not required to qualify to do business in
any jurisdiction in which it is not so qualified or where failure to
qualify would not subject it to any material liability or disability. The
Acquired Fund has all necessary federal, state and local authorizations to
own all of its properties and assets and to carry on the business of the
Acquired Fund as now being conducted;
(b) The Acquired Fund is a registered investment company classified as
a management company of the open-end type, and its registration with the
Securities and Exchange Commission (the "COMMISSION") as an investment
company under the Investment Company Act of 1940 (the "INVESTMENT COMPANY
ACT") is in full force and effect;
38
(c) The Acquired Fund is not, and the execution, delivery and
performance of this Agreement will not result, in a material violation of
its Declaration of Trust or By-Laws or of any material agreement,
indenture, instrument, contract, lease or other undertaking with respect to
the Acquired Fund to which it is a party or by which its assets are bound;
(d) Except as included in the calculation of NAV on the Valuation
Date, the Acquired Fund has no material contracts or other commitments
(other than this Agreement) which will be terminated with liability to the
Acquired Fund on or prior to the Closing Date;
(e) No litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or to its
knowledge threatened against the Acquired Fund or any of the Acquired
Fund's properties or assets, except as previously disclosed in writing to,
and acknowledged in writing by, the Acquiring Fund. The Acquired Fund is
not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and adversely
affects the Acquired Fund's business or its ability to consummate the
transactions herein contemplated;
(f) The statement of assets and liabilities of the Acquired Fund as of
November 30, 2000 has been audited by Arthur Andersen LLP, independent
certified public accountants, has been prepared in accordance with GAAP
consistently applied and fairly reflects the financial condition of the
Acquired Fund as of such date; except for the Assumed Liabilities, the
Acquired Fund will not have any known or contingent liabilities on the
Closing Date;
(g) Since November 30, 2000, except as disclosed on a schedule to this
Agreement or specifically disclosed in the Acquired Fund's prospectus or
statement of additional information as in effect on the date of this
Agreement, there has not been any material adverse change in the Acquired
Fund's financial condition, assets, liabilities, business or prospects, or
any incurrence by the Acquired Fund of indebtedness, except for normal
contractual obligations incurred in the ordinary course of business or in
connection with the settlement of purchases and sales of portfolio
securities. For the purposes of this subparagraph (g), a decline in NAV per
share of the Acquired Fund arising out of its normal investment operations
or a decline in net assets of the Acquired Fund as a result of redemptions
shall not constitute a material adverse change;
(h) For each taxable year of its operation, the Acquired Fund has met
the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and has elected to be treated
as such and will qualify as such as of the Closing Date. The Acquired Fund
has not taken any action which has caused or will cause the Acquired Fund
to fail to qualify as a regulated investment company under the Code. The
Acquired Fund has not been notified that any tax return or other filing of
the Acquired Fund has been reviewed or audited by any federal, state, local
or foreign taxing authority. Except as set forth on Schedule 5.1:
(A) Within the times and in the manner prescribed by law, the
Acquired Fund has filed all federal, state and local tax returns,
including all information returns and payee statements, and all tax
returns for foreign countries, provinces and other governing bodies that
have jurisdiction to levy taxes upon it and which are required to be
filed;
(B) The Acquired Fund has paid all taxes, interest, penalties,
assessments and deficiencies which have become due or which have been
claimed to be due;
(C) All tax returns filed by the Acquired Fund constitute complete
and accurate reports of the respective tax liabilities of the Acquired
Fund or, in the case of information returns and payee statements, the
amounts required to be reported accurately set forth all items required
to be included or reflected in such returns except for such instances of
misreporting with respect to which, individually or in the aggregate,
the Acquired Fund is not required to notify any shareholder;
(D) The Acquired Fund has not waived or extended any applicable
statute of limitations relating to the assessment of federal, state,
local or foreign taxes; and
(E) The Acquired Fund has not been notified that any examinations
of the federal, state, local or foreign tax returns of the Acquired Fund
are currently in progress or threatened and no deficiencies have been
asserted or assessed against the Acquired Fund as a result of any audit
by the Internal Revenue Service or any state, local or foreign taxing
authority, and no such deficiency has been proposed or threatened;
(i) All issued and outstanding shares of the Acquired Fund are, and at
the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable. To the Acquired Fund's knowledge, all of the
issued and outstanding shares of the Acquired Fund will, at the time of
Closing, be held of record by the persons and in the amounts set forth in
the records of the transfer agent as provided in paragraph 3.5. The
Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any shares of the Acquired Fund, nor is
there outstanding any security convertible into any shares of the Acquired
Fund;
(j) At the Closing Date, the Acquired Fund will have good and
marketable title to the assets to be transferred to the Acquiring Fund
pursuant to paragraph 1.1 and full right, power and authority to sell,
assign, transfer and deliver such assets hereunder, and,
39
upon delivery and payment for such assets, the Acquiring Fund will acquire
good and marketable title thereto, subject to no restrictions on the full
transfer thereof, except such restrictions as might arise under the
Securities Act, other than as disclosed in writing to, and acknowledged in
writing by, the Acquiring Fund;
(k) The Acquired Fund has the power and authority to enter into and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
action on the part of the Acquired Fund's Board of Trustees, and, subject
to the approval of the Acquired Fund Shareholders, assuming due
authorization, execution and delivery by the Acquiring Fund, this Agreement
will constitute a valid and binding obligation of the Acquired Fund,
enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating
to or affecting creditors' rights and to general equity principles;
(l) Any information furnished by the Acquired Fund for use in
registration statements, proxy materials and any information necessary to
compute the total return of the Acquired Fund shall be accurate and
complete in all material respects and shall comply in all material respects
with federal securities and other laws and regulations applicable thereto
or the requirements of any form for which its use is intended;
(m) The proxy statement to be included in the Acquiring Fund's
Registration Statement on Form N-14 attached hereto as Annex A (other than
information therein that relates to Pioneer Investment Management, Inc.,
the Acquiring Fund or their affiliates) will, on the effective date of that
Registration Statement and on the Closing Date, not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading;
(n) Except as set forth on Schedule 5.1 and as will be obtained on or
prior to the Closing Date, no consent, approval, authorization or order of
any court or governmental authority is required for the consummation by the
Acquired Fund of the transactions contemplated by this Agreement;
(o) To the Acquired Fund's knowledge, all of the issued and
outstanding shares of beneficial interest of the Acquired Fund have been
offered for sale and sold in conformity with all applicable federal and
state securities laws;
(p) The Acquired Fund currently complies in all material respects with
and since its organization has complied in all material respects with the
requirements of, and the rules and regulations under, the Investment
Company Act, the Securities Act, the Securities Exchange Act of 1934 (the
"EXCHANGE ACT"), state "Blue Sky" laws and all other applicable federal and
state laws or regulations. The Acquired Fund currently complies in all
material respects with, and since its organization has complied in all
material respects with, all investment objectives, policies, guidelines and
restrictions and any compliance procedures established by the Acquired
Fund. All advertising and sales material used by the Acquired Fund complies
in all material respects with and has complied in all material respects
with the applicable requirements of the Securities Act, the rules and
regulations of the Commission, and, to the extent applicable, the Conduct
Rules of the National Association of Securities Dealers, Inc. (the "NASD")
and any applicable state regulatory authority. All registration statements,
prospectuses, reports, proxy materials or other filings required to be made
or filed with the Commission, the NASD or any state securities authorities
by the Acquired Fund have been duly filed and have been approved or
declared effective, if such approval or declaration of effectiveness is
required by law. Such registration statements, prospectuses, reports, proxy
materials and other filings under the Securities Act, the Exchange Act and
the Investment Company Act (i) are or were in compliance in all material
respects with the requirements of all applicable statutes and the rules and
regulations thereunder and (ii) do not or did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not false or misleading;
(q) The prospectus of the Acquired Fund dated March 1, 2001, and any
amendments or supplements thereto, previously furnished to the Acquiring
Fund, did not as of their dates or the dates of their distribution to the
public contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such
statements were made, not misleading; and
(r) The Acquired Fund Tax Representation Certificate to be delivered
by the Acquired Fund to the Acquiring Fund at Closing pursuant to Section
8.4 (the "Acquired Fund Tax Representation Certificate") will not on the
Closing Date contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not
misleading.
5.2. The Acquiring Fund represents and warrants to the Acquired Fund, which
representations and warranties will be true and correct on the date hereof and
on the Closing Date as though made on and as of the Closing Date, as follows:
(a) The Acquiring Fund is a business trust, validly existing and in
good standing under the laws of the State of Delaware and has the power to
own all of its properties and assets and to perform its obligations under
this Agreement. The Acquiring Fund is not required to qualify to do
business in any jurisdiction in which it is not so qualified or where
failure to qualify would not subject it to
40
any material liability or disability. The Acquiring Fund has all necessary
federal, state and local authorizations to own all of its properties and
assets and to carry on its business as now being conducted;
(b) The Acquiring Fund is a registered investment company classified
as a management company of the open-end type, and its registration with the
Commission as an investment company under the Investment Company Act is in
full force and effect;
(c) The prospectus and statement of additional information of the
Acquiring Fund included in the Acquiring Fund's registration statement that
will be in effect on the Closing Date will conform in all material respects
with the applicable requirements of the Securities Act and the Investment
Company Act and the rules and regulations of the Commission thereunder and
will not as of its date and as of the Closing Date contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading;
(d) The Acquiring Fund is not, and its execution, delivery and
performance of this Agreement will not result, in a violation of its
Declaration of Trust or By-Laws or a material violation of any agreement,
indenture, instrument, contract, lease or other undertaking with respect to
the Acquiring Fund to which it is a party or by which its assets are bound;
(e) No litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or to its
knowledge threatened against the Acquiring Fund or any of the Acquiring
Fund's properties or assets, except as previously disclosed in writing to,
and acknowledged in writing by, the Acquired Fund. The Acquiring Fund is
not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and adversely
affects the Acquiring Fund's business or its ability to consummate the
transactions herein contemplated;
(f) The Acquiring Fund has the power and authority to enter into and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
action, if any, on the part of the Acquiring Fund's Board of Trustees, and,
assuming due authorization, execution and delivery by the Acquired Fund,
this Agreement will constitute a valid and binding obligation of the
Acquiring Fund, enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights and to general equity
principles;
(g) The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund, for the account of the Acquired Fund Shareholders, pursuant
to the terms of this Agreement, will at the Closing Date have been duly
authorized and, when so issued and delivered, will be duly and validly
issued Acquiring Fund Shares and will be fully paid and non-assessable; the
Acquiring Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any Acquiring Fund Shares, nor is there
outstanding any security convertible into any of the Acquiring Fund Shares;
(h) The information to be furnished by the Acquiring Fund for use in
proxy materials and other documents which may be necessary in connection
with the transactions contemplated hereby shall be accurate and complete in
all material respects and shall comply in all material respects with
federal securities and other laws and regulations applicable thereto or the
requirements of any form for which its use is intended;
(i) The Acquiring Fund is a qualified institutional buyer as defined
in Rule 144A under the Securities Act;
(j) Neither the Acquiring Fund nor, to the knowledge of the Acquiring
Fund, any "affiliated person" of the Acquiring Fund has been convicted of
any felony or misdemeanor, described in Section 9(a)(1) of the Investment
Company Act, nor, to the knowledge of the Acquiring Fund, has any
affiliated person of the Acquiring Fund been the subject, or presently is
the subject, of any proceeding or investigation with respect to any
disqualification that would be a basis for denial, suspension or revocation
of registration as an investment adviser under Section 203(e) of the
Investment Advisers Act of 1940 or Rule 206(4)-4(b) thereunder or of a
broker-dealer under Section 15 of the Exchange Act, or for disqualification
as an investment adviser, employee, officer or director of an investment
company under Section 9 of the Investment Company Act;
(k) For each taxable year of its operation, the Acquiring Fund has met
the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and has elected to be treated
as such and will qualify as such as of the Closing Date. The Acquiring Fund
has not taken any action which has caused or will cause the Acquiring Fund
to fail to qualify as a regulated investment company under the Code. The
Acquiring Fund has not been notified that any tax return or other filing of
the Acquiring Fund has been reviewed or audited by any federal, state,
local or foreign taxing authority. Except as set forth on Schedule 5.1:
(A) Within the times and in the manner prescribed by law, the
Acquiring Fund has filed all federal, state and local tax returns,
including all information returns and payee statements, and all tax
returns for foreign countries, provinces and other governing bodies that
have jurisdiction to levy taxes upon it and which are required to be
filed;
41
(B) The Acquiring Fund has paid all taxes, interest, penalties,
assessments and deficiencies which have become due or which have been
claimed to be due;
(C) All tax returns filed by the Acquiring Fund constitute complete
and accurate reports of the respective tax liabilities of the Acquiring
Fund or, in the case of information returns and payee statements, the
amounts required to be reported accurately set forth all items required
to be included or reflected in such returns except for such instances of
misreporting with respect to which, individually or in the aggregate,
the Acquiring Fund is not required to notify any shareholder;
(D) The Acquiring Fund has not waived or extended any applicable
statute of limitations relating to the assessment of federal, state,
local or foreign taxes; and
(E) The Acquiring Fund has not been notified that any examinations
of the federal, state, local or foreign tax return of the Acquiring Fund
are currently in progress or threatened and no deficiencies have been
asserted or assessed against the Acquiring Fund as a result of any audit
by the Internal Revenue Service or any state, local or foreign taxing
authority, and no such deficiency has been proposed or threatened;
(l) Immediately prior to the Closing, the Acquiring Fund will be in
compliance in all material respects with all applicable laws, rules and
regulations, including, without limitation, the Investment Company Act, the
Securities Act, the Exchange Act and all applicable state securities laws.
Immediately prior to the Closing, the Acquiring Fund will be in compliance
in all material respects with the applicable investment policies and
restrictions set forth in its registration statement currently in effect
and will have calculated its NAV in accordance with the Acquiring Fund's
registration statement;
(m) The Acquiring Fund Shares to be issued pursuant to this Agreement
shall on the Closing Date be duly registered under the Securities Act by a
Registration Statement on Form N-14 of the Acquiring Fund then in effect
and qualified for sale under the applicable state securities laws;
(n) The Acquiring Fund Shares to be issued pursuant to this Agreement
are duly authorized and on the Closing Date will be validly issued and
fully paid and non-assessable and will conform in all material respects to
the description thereof contained in the Acquiring Fund's Registration
Statement on Form N-14. On the Closing Date, the Acquiring Fund shall not,
except as provided herein, have outstanding any warrants, options,
convertible securities or any other type of right pursuant to which any
person could acquire Acquiring Fund Shares; and
(o) The Acquiring Fund Tax Representation Certificate to be delivered
by the Acquiring Fund to the Acquired Fund at Closing pursuant to Section
7.3 (the "Acquiring Fund Tax Representation Certificate") will not on the
Closing Date contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not
misleading.
6. COVENANTS OF EACH OF THE PARTIES
6.1. The Acquired Fund will operate its business in the ordinary course
between the date hereof and the Closing Date. It is understood that such
ordinary course of business will include the declaration and payment of
customary dividends and distributions and any other dividends and distributions
necessary or advisable (except to the extent distributions that are not
customary may be limited by representations made in connection with the issuance
of the tax opinion described in paragraph 9.5 hereof), in each case payable
either in cash or in additional shares.
6.2. The Acquired Fund will call a meeting of the Acquired Fund
Shareholders to consider and act upon the matters set forth in the proxy
statement. Each of the Acquired Fund and the Acquiring Fund will use reasonable
efforts to promptly prepare and file with the Commission a Registration
Statement on Form N-14 relating to the transactions contemplated by this
Agreement.
6.3. The Acquired Fund covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired for the purpose of making any
distribution thereof other than in accordance with the terms of this Agreement.
6.4. The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the Acquired Fund's shares.
6.5. Subject to the provisions of this Agreement, each of the Acquired Fund
and the Acquiring Fund will take, or cause to be taken, all actions, and do or
cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
6.6 Neither the Acquired Fund nor the Acquiring Fund shall take any action
that is inconsistent with the representations set forth in, with respect to the
Acquired Fund, the Acquired Fund Tax Representation Certificate, and with
respect to the Acquiring Fund, the Acquiring Fund Tax Representation
Certificate, to the extent such action would prevent the Reorganization from
qualifying as a "reorganization" under Section 368(a) of the Code.
42
6.7. The Acquired Fund shall furnish to the Acquiring Fund on the Closing
Date the Closing Statement, which statement shall be prepared in accordance with
GAAP consistently applied and shall be certified by the Acquired Fund's
Treasurer or any Assistant Treasurer. As promptly as practicable, but in any
case within 90 days after the Closing Date, the Acquired Fund shall furnish to
the Acquiring Fund, in such form as is reasonably satisfactory to the Acquiring
Fund, a statement of the earnings and profits of the Acquired Fund for federal
income tax purposes, and of any capital loss carryovers and other items that
will be carried over to the Acquiring Fund as a result of Section 381 of the
Code, and which statement will be certified by the Treasurer of the Acquired
Fund.
6.8. The Acquired Fund shall provide the Acquiring Fund with information
reasonably necessary for the preparation of a prospectus, which will include the
proxy statement, referred to in paragraph 5.1(m), all to be included in the
Acquiring Fund's Registration Statement on Form N-14, in compliance with the
Securities Act, the Exchange Act and the Investment Company Act in connection
with the meeting of the Acquired Fund Shareholders to consider approval of this
Agreement and the transactions contemplated herein.
6.9. The Acquired Fund shall maintain errors and omissions insurance
covering management of the Acquired Fund prior to and including the Closing
Date.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all of the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following further
conditions, unless waived by the Acquired Fund in writing:
7.1. All representations and warranties made in this Agreement by the
Acquiring Fund shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date;
7.2. The Acquiring Fund shall have delivered to the Acquired Fund a
certificate executed in its name by its President, Executive Vice President,
Treasurer or any Assistant Treasurer, in form and substance reasonably
satisfactory to the Acquired Fund and dated as of the Closing Date, to the
effect that the representations and warranties made in this Agreement by of the
Acquiring Fund are true and correct in all material respects at and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Agreement; and
7.3 The Acquiring Fund shall have delivered to the Acquired Fund an
Acquiring Fund Tax Representation Certificate substantially in the form attached
to this Agreement as Annex B concerning certain tax-related matters with respect
to the Acquiring Fund.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all of its obligations hereunder on or before the Closing Date
and, in addition thereto, the following further conditions:
8.1. All representations and warranties made in this Agreement by the
Acquired Fund shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date;
8.2. The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities showing the federal tax
bases and holding periods as of the Closing Date, certified by the Acquired
Fund's Treasurer or any Assistant Treasurer;
8.3. The Acquired Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in its name by its President, Executive Vice
President, Treasurer or any Assistant Treasurer, in form and substance
reasonably satisfactory to the Acquiring Fund and dated as of the Closing Date,
to the effect that the representations and warranties made in this Agreement are
true and correct in all material respects at and as of the Closing Date, except
as they may be affected by the transactions contemplated by this Agreement; and
8.4 The Acquired Fund shall have delivered to the Acquiring Fund an
Acquired Fund Tax Representation Certificate substantially in the form attached
to this Agreement as Annex C concerning certain tax-related matters with respect
to the Acquired Fund.
9. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH OF THE PARTIES
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to either party hereto, the other party to this
Agreement shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
9.1. This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of each of the Acquired
Fund's Declaration of Trust and
43
By-Laws, and certified copies of the votes evidencing such approval shall have
been delivered to the Acquiring Fund. Notwithstanding anything herein to the
contrary, neither party hereto may waive the conditions set forth in this
paragraph 9.1;
9.2. On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein;
9.3. All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state Blue Sky and securities authorities) deemed
necessary by either party hereto to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of
either party hereto, provided that either party may for itself waive any of such
conditions;
9.4. The Acquiring Fund's Registration Statement on Form N-14 shall have
become effective under the Securities Act and no stop orders suspending the
effectiveness thereof shall have been issued and, to the best knowledge of the
parties hereto, no investigation or proceeding for that purpose shall have been
instituted or be pending, threatened or contemplated under the Securities Act;
9.5. The parties shall have received a favorable opinion of Hale and Dorr
LLP, addressed to the Acquiring Fund and the Acquired Fund and satisfactory to
the Acquiring Fund and the Acquired Fund, substantially to the effect that for
federal income tax purposes, on the basis of the facts, representations and
assumptions set forth in such opinion, the acquisition by the Acquiring Fund of
all of the assets of the Acquired Fund solely in exchange for the issuance of
Acquiring Fund Shares to the Acquired Fund and the assumption of all of the
Assumed Liabilities by the Acquiring Fund, followed by the distribution by the
Acquired Fund, in liquidation of the Acquired Fund, of Acquiring Fund Shares to
the Acquired Fund Shareholders in exchange for their Acquired Fund shares of
beneficial interest and the termination of the Acquired Fund and will constitute
a reorganization within the meaning of Section 368(a) of the Code.
10. BROKERAGE FEES AND EXPENSES
10.1. Each party hereto represents and warrants to the other party hereto
that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
10.2. The parties have been informed by Pioneer Investment Management, Inc.
that it will pay all expenses incurred in connection with the Reorganization
(including, but not limited to, the preparation of the proxy statement and
solicitation expenses).
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1. The parties hereto agree that no party has made any representation,
warranty or covenant not set forth herein or referred to in paragraph 9.6 hereof
and that this Agreement constitutes the entire agreement between the parties.
11.2. The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder.
12. TERMINATION
12.1. This Agreement may be terminated at any time prior to the Closing
Date by: (a) the mutual agreement of the Acquired Fund and the Acquiring Fund;
(b) any party in the event that the other party hereto shall breach any material
representation, warranty or agreement contained herein to be performed at or
prior to the Closing Date and has not cured such breach within 10 days of notice
thereof; or (c) a condition herein expressed to be precedent to the obligations
of the terminating party has not been met and it reasonably appears that it will
not or cannot be met.
12.2. In the event of any such termination, there shall be no liability for
damages on the part of any party hereto or their respective Trustees or officers
to the other party, but, except as provided in Section 10, each shall bear the
expenses incurred by it incidental to the preparation and carrying out of this
Agreement.
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of the
Acquired Fund and the Acquiring Fund; provided, however, that following the
meeting of the Acquired Fund Shareholders called by the Acquired Fund pursuant
to paragraph 6.2 of this Agreement, no such amendment may have the effect of
changing the provisions for determining the number of the Acquiring Fund Shares
to be issued to the Acquired Fund Shareholders under this Agreement to the
detriment of the Acquired Fund Shareholders without their further approval.
44
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provision of this Agreement shall be in writing and shall be given by hand,
prepaid telegraph, telecopy or certified mail addressed to the Acquired Fund and
the Acquiring Fund at 60 State Street, Boston, Massachusetts 02109.
15. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF
LIABILITY
15.1. The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15.2. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
15.3. This Agreement shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts.
15.4. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by
either party without the written consent of the other party hereto. Nothing
herein expressed or implied is intended or shall be construed to confer upon or
give any person, firm, corporation or other entity, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.
15.5 It is expressly agreed that the obligations of the Acquiring Fund and
the Acquired Fund shall not be binding upon any of their respective Trustees,
shareholders, nominees, officers, agents or employees personally, but bind only
the property of the Acquiring Fund or the Acquired Fund, as the case may be, as
provided in the Declaration of Trust of the Acquiring Fund and the Acquired
Fund, respectively. The execution and delivery of this Agreement have been
authorized by the Trustees of each of the Acquiring Fund and the Acquired Fund
and this Agreement has been executed by authorized officers of the Acquiring
Fund and the Acquired Fund acting as such, and neither such authorization by
such Trustees nor such execution and delivery by such officers shall be deemed
to have been made by any of them individually or to impose any liability on any
of them personally, but shall bind only the property of the Acquiring Fund and
the Acquired Fund, as the case may be, as provided in the Declaration of Trust
of the Acquiring Fund and the Acquired Fund, respectively.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its President or Executive Vice President and attested by its
Secretary or Assistant Secretary.
Attested PIONEER LIMITED MATURITY BOND FUND
By: By:
------------------------------------- ---------------------------------------
Name: Joseph P. Barri Name:
Title: Secretary Title:
Attest: PIONEER BOND FUND
By: By:
------------------------------------- ---------------------------------------
Name: Joseph P. Barri Name:
Title: Secretary Title:
45
EXHIBIT B
EXCERPTS FROM LIMITED MATURITY BOND FUND'S NOVEMBER 30, 2000 ANNUAL REPORT
PIONEER LIMITED MATURITY BOND FUND
INVESTMENT RETURNS (CLASS A SHARES)
The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Limited Maturity Bond Fund, compared to the growth of the Merrill Lynch
1-3 Year Treasury Index and the Lehman Brothers Government/Credit Bond
Index-Intermediate.
AVERAGE ANNUAL TOTAL RETURNS
(as of November 30, 2000)
PERIOD NET ASSET VALUE PUBLIC OFFERING PRICE*
Life of Fund (8/10/92) 4.88% 4.56%
5 Years 4.74% 4.21%
1 Year 5.18% 2.63%
* Reflects deduction of the maximum 2.5% sales charge at the beginning of the
period and assumes reinvestment of distributions at net asset value.
LEHMAN BROTHERS
PIONEER LIMITED MATURITY MERRILL LYNCH 1-3 YEAR GOVERNMENT/CREDIT BOND
BOND FUND* TREASURY INDEX INDEX-INTERMEDIATE
------------------------ ---------------------- ----------------------
8/92 9750.00 10000.00 10000.00
11/92 9809.00 10018.00 9969.00
10204.00 10372.00 10562.00
10425.00 10623.00 10938.00
10466.00 10586.00 10700.00
11/94 10457.00 10697.00 10739.00
11122.00 11375.00 11732.00
11466.00 11810.00 12297.00
11606.00 11975.00 12270.00
11/96 12062.00 12494.00 13013.00
12332.00 12766.00 13175.00
12743.00 13235.00 13835.00
13094.00 13657.00 14337.00
11/98 13543.00 14207.00 15059.00
13633.00 14380.00 15022.00
13743.00 14674.00 15228.00
13820.00 14978.00 15394.00
11/00 14455.00 15684.00 16410.00
PIONEER LIMITED MATURITY BOND FUND
INVESTMENT RETURNS (CLASS B SHARES)
AVERAGE ANNUAL TOTAL RETURNS
(as of November 30, 2000)
PERIOD IF HELD IF REDEEMED*
Life of Fund (4/4/94) 4.20% 4.20%
5 Years 3.89% 3.89%
1 Year 4.44% 2.46%
* Reflects deduction of the maximum applicable contingent deferred sales charge
(CDSC) at the end of the period and assumes reinvestment of distributions. The
maximum CDSC of 2% declines over three years.
LEHMAN BROTHERS
PIONEER LIMITED MATURITY MERRILL LYNCH 1-3 YEAR GOVERNMENT/CREDIT BOND
BOND FUND* TREASURY INDEX INDEX-INTERMEDIATE
------------------------ ---------------------- ----------------------
4/94 10000.00 10000.00 10000.00
9987.00 10014.00 10007.00
9961.00 10119.00 10043.00
10539.00 10761.00 10972.00
11/95 10850.00 11172.00 11501.00
10910.00 11328.00 11475.00
11325.00 11819.00 12170.00
11521.00 12077.00 12322.00
11845.00 12520.00 12939.00
5/98 12107.00 12919.00 13409.00
12496.00 13440.00 14084.00
12521.00 13603.00 14049.00
12576.00 13881.00 14242.00
12603.00 14169.00 14397.00
11/00 13135.00 14837.00 15347.00
PIONEER LIMITED MATURITY BOND FUND
INVESTMENT RETURNS (CLASS Y SHARES)
The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Limited Maturity Bond Fund, compared to the growth of the Merrill Lynch
1-3 Year Treasury Index and the Lehman Brothers Government/Credit Bond
Index-Intermediate.
AVERAGE ANNUAL TOTAL RETURNS
(as of November 30, 2000)
PERIOD NET ASSET VALUE PUBLIC OFFERING PRICE*
Life of Fund (4/9/98) 4.37% 4.37%
1 Year 5.60% 5.60%
* Assumes reinvestment of distributions at net asset value.
LEHMAN BROTHERS
PIONEER LIMITED MATURITY MERRILL LYNCH 1-3 YEAR GOVERNMENT/CREDIT BOND
BOND FUND* TREASURY INDEX INDEX-INTERMEDIATE
------------------------ ---------------------- ----------------------
4/98 10000.00 10000.00 10000.00
10050.00 10053.00 10073.00
10255.00 10281.00 10333.00
11/98 10432.00 10458.00 10580.00
10444.00 10485.00 10524.00
10518.00 10585.00 10554.00
10488.00 10682.00 10560.00
11/99 10602.00 10801.00 10699.00
10631.00 10885.00 10711.00
10678.00 11026.00 10815.00
11014.00 11295.00 11220.00
11/00 11196.00 11545.00 11529.00
+ Index comparison begins 8/31/92 for Class A shares, 4/30/94 for Class B shares
and 4/30/98 for Class Y shares. The Merrill Lynch 1-3 Year Treasury Index is
an unmanaged, composite index of debt obligations of the U.S. Treasury and
U.S. government agencies (excluding mortgage-backed securities). All issues
have a maturity of at least one year and no more than three years. The Lehman
Brothers Government/Credit Bond Index-Intermediate is an unmanaged, composite
index of the U.S. bond market and represents only securities with one to ten
years to maturity. Index returns are calculated monthly, assume reinvestment
of dividends and, unlike Fund returns, do not reflect any fees, expenses or
sales charges. You cannot invest directly in the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
46
PIONEER LIMITED MATURITY BOND FUND
PORTFOLIO MANAGEMENT DISCUSSION 11/30/00
Treasury securities, particularly long-term bonds, outperformed the overall
fixed income market during the 12-month period ended November 30, 2000. In the
following discussion, Richard Schlanger, a key member of the team responsible
for the management of Pioneer Limited Maturity Bond Fund, provides an update on
the Fund, the economic environment and the investment strategies that influenced
performance during the fiscal year.
Q: HOW DID PIONEER LIMITED MATURITY BOND FUND PERFORM OVER THE 12-MONTH
PERIOD?
A: For the 12 months ended November 30, the Fund's Class A shares and Class
B shares returned 5.18% and 4.44%, respectively, at net asset value. In
comparison, the average return of funds in the short-intermediate
investment-grade debt category of Lipper, Inc. was 6.55%. (Lipper is an
independent firm that tracks mutual fund performance.) For the year ended
November 30, 2000, the Merrill Lynch 1-3 Year Treasury Index and the Lehman
Brothers Government/Corporate Bond Index returned 6.87% and 7.77%, respectively.
Throughout the 12-month period, the Fund delivered a consistent level of
income. The 30-day SEC yield of Class A shares, for example, was 6.67% on
November 30, 2000 compared to 6.83% six months ago, despite nearly a 0.70% drop
in 5-year Treasury note yields.
On a total return basis, performance improved markedly during the second
half of the year as we encountered fewer credit problems. Fund performance was
helped by our decisions to increase Treasuries and to decrease finance-related
securities because of their credit risks. We sold NationsBank Corp. when it was
acquired by Citigroup, and also liquidated Citicorp and Bank One. We chose to
sell premium mortgage securities and instead buy current coupon mortgages to
lessen prepayment risks.
Q: WHAT WAS THE INVESTMENT ENVIRONMENT LIKE?
A: It was a year of contrasts, with interest rates rising and bond prices
falling during the first half, while rates fell and bond prices rose during the
second six months. Throughout the 12-month period, long-term Treasuries, in
which the Fund cannot invest, led the fixed income market's performance. The
performance of Treasuries was helped by several technical factors that shifted
the supply/demand relationship. Strong tax receipts helped increase the federal
government's budget surplus, and the Treasury Department continued to pay down
debt. Faced with a diminishing supply of Treasuries, investors flocked to
Treasuries with longer maturities, which were in particularly limited supply.
Elsewhere in the fixed income markets, the differences or spreads between
the yields of Treasuries and other securities grew larger--or widened--with
non-Treasury securities underperforming Treasuries. Faced with the possibility
of slowing economic growth, investors tended to de-emphasize debt securities
with credit risk and migrated to solid corporate credits. Just as with stocks,
if there were a problem within a sector, the securities of companies in the
entire sector became victims of guilt by association and most names suffered.
Particularly hard hit were lower-quality, high yield bonds, whose prices fell
even as Treasury securities increased in price. Examples of Fund holdings
affected by this trend included J.C. Penny and Shopko stores.
Q: WHAT WERE YOUR PRINCIPAL STRATEGIES DURING THE PERIOD?
A: During the first half of the year, the Fund's Treasury weighting
declined. These securities were the most liquid--or easily traded--instruments
during a time when investors moved away from most types of corporate securities.
In the final six months of the period, however, we added to our Treasury
position, while reducing our bank and finance exposure. We believed we were late
in this period of economic expansion, and banks could begin to experience
problems with non-performing loans. We also reduced premium--or high-
coupon--mortgage securities because we thought that, as interest rates declined,
homeowners could refinance their mortgages at lower interest rates. If
prepayments were to increase, the prices of mortgage-backed securities,
especially those with premium coupons, could decline. At the same time that we
lowered the Fund's premium mortgage holdings, we increased exposure to other
mortgages with more pre-payment protection, as well as to energy
industry-related securities, which we thought would perform well in a period of
stable, high energy prices. We added Valero Energy and Nisource Finance Corp. to
the portfolio over the period.
During the final six months of the fiscal year, we raised the Fund's
weightings in Treasury and government-agency securities, in mortgage
pass-through securities and in industrial sector bonds. Treasuries and agencies
rose from 8.0% at May 31, 2000 to 12.5% of net assets, mortgage-pass through
securities climbed from 19.8% to 22.9% of net assets and industrial issues rose
from 20.4% to 23.9% of net assets. In the same six-month period, bank and
finance bonds were reduced from 16.2% of net assets to 7.0%, collateralized
mortgage obligations (CMOs) declined from 14.2% to 13.8% of net assets and
asset-backed securities declined from 13.9% to 12.3% of net assets. In the final
six months of the fiscal year, we did not dramatically shorten or extend the
Fund's duration. At November 30, 2000, the Fund's duration (or measurement of
risk) was 2.84 years. Average credit quality of the portfolio has remained
relatively high, at AA. (Ratings apply to underlying portfolio securities, not
Fund shares.)
47
Q: WHAT IS YOUR OUTLOOK?
A: We believe economic growth is beginning to slow, and that the Federal
Reserve will lower short-term interest rates. We have already begun to see signs
that the spreads between the yields of corporate securities and Treasuries may
narrow, which should support the performance of corporate securities. We believe
short-term rates may decline more than long-term rates, which already have
fallen substantially since the beginning of the year.
Given this view, we are optimistic about the market for investment grade,
limited maturity bonds and think the Fund is well positioned to provide
shareowners with an attractive total return.
48
EXCERPTS FROM LIMITED MATURITY BOND FUND'S MAY 31, 2001 SEMIANNUAL REPORT
[TO BE PROVIDED WHEN AVAILABLE]
PIONEER LIMITED MATURITY BOND FUND
INVESTMENT RETURNS (CLASS A SHARES)
The mountain chart on the right shows the growth of a $10,000 investment
made in Pioneer Limited Maturity Bond Fund, compared to the growth of the
Merrill Lynch 1-3 Year Treasury Index and the Lehman Brothers Government/Credit
Bond Index-Intermediate.
AVERAGE ANNUAL TOTAL RETURNS
(as of May 31, 2001)
[LINE CHART]
PERIOD NET ASSET VALUE PUBLIC OFFERING PRICE*
Life of Fund (8/10/92) [xx]% [xx]%
5 Years [xx]% [xx]%
1 Year [xx]% [xx]%
* Reflects deduction of the maximum 2.5% sales charge at the beginning of the
period and assumes reinvestment of distributions at net asset value.
PIONEER LIMITED MATURITY BOND FUND
INVESTMENT RETURNS (CLASS B SHARES)
AVERAGE ANNUAL TOTAL RETURNS
(as of May 31, 2001)
[LINE CHART]
PERIOD IF HELD IF REDEEMED*
Life of Fund (4/4/94) [xx]% [xx]%
5 Years [xx]% [xx]%
1 Year [xx]% [xx]%
* Reflects deduction of the maximum applicable contingent deferred sales charge
(CDSC) at the end of the period and assumes reinvestment of distributions. The
maximum CDSC of 2% declines over three years.
PIONEER LIMITED MATURITY BOND FUND
INVESTMENT RETURNS (CLASS Y SHARES)
AVERAGE ANNUAL TOTAL RETURNS
(as of May 31, 2001)
[LINE CHART]
PERIOD IF HELD IF REDEEMED*
Life of Fund (4/9/98) [xx]% [xx]%
1 Year [xx]% [xx]%
* Assumes reinvestment of distributions
+ Index comparison begins 8/31/92 for Class A shares, 4/30/94 for Class B
shares and 4/30/98 for Class Y shares. The Merrill Lynch 1-3 Year Treasury
Index is an unmanaged composite index of debt obligations of the U.S.
Treasury and U.S. government agencies (excluding mortgage-backed
securities). All issues have a maturity of at least one year and no more
than three years. Lehman Brothers Government/Credit Bond
Index-Intermediate is an unmanaged, composite index of the U.S. bond
market. and represents only securities with one to ten years to maturity.
Index returns are calculated monthly, assume reinvestment of dividends
and, unlike Fund returns, do not reflect any fees, expenses or sales
charges. You cannot invest directly in the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
49
EXCERPTS FROM BOND FUND'S JUNE 30, 2000 ANNUAL REPORT
PIONEER BOND FUND
INVESTMENT RETURNS (CLASS A SHARES)
The mountain chart on the right shows the growth of a $10,000 investment
made in Pioneer Limited Maturity Bond Fund, compared to the growth of the Lehman
Brothers Government/Corporate Bond Index.
AVERAGE ANNUAL TOTAL RETURNS
(as of June 30, 2000)
PERIOD NET ASSET VALUE PUBLIC OFFERING PRICE*
10 Years 6.87% 6.38%
5 Years 4.70% 3.75%
1 Year 1.30% -3.25%
* Reflects deduction of the maximum 4.5% sales charge at the beginning of the
period and assumes reinvestment of distributions at net asset value.
LEHMAN BROTHERS
PIONEER LIMITED MATURITY BOND FUND* GOVERNMENT/CORPORATE BOND INDEX
----------------------------------- -------------------------------
6/90 9550.00 10000.00
6/91 10518.00 11020.00
11888.00 12580.00
13394.00 14235.00
6/94 13226.00 14028.00
14745.00 15820.00
15337.00 16555.00
6/97 16424.00 17836.00
18073.00 19849.00
17317.00 20386.00
6/00 18555.00 21263.00
PIONEER BOND FUND
INVESTMENT RETURNS (CLASS B SHARES)
AVERAGE ANNUAL TOTAL RETURNS
(as of June 30, 2000)
PERIOD IF HELD IF REDEEMED*
Life of Fund (4/4/94) 4.64% 4.64%
5 Years 3.88% 3.72%
1 Year 0.48% -3.31%
* Reflects deduction of the maximum applicable contingent deferred sales charge
(CDSC) at the end of the period and assumes reinvestment of distributions. The
maximum CDSC of 4% declines over six years.
LEHMAN BROTHERS
PIONEER LIMITED MATURITY BOND FUND* GOVERNMENT/CORPORATE BOND INDEX
----------------------------------- -------------------------------
4/94 10000.00 10000.00
6/94 9896.00 9958.00
9906.00 10044.00
10942.00 11229.00
11600.00 11977.00
6/96 11286.00 11752.00
11729.00 12325.00
11990.00 12663.00
12713.00 13527.00
6/98 13095.00 14091.00
13579.00 14809.00
13170.00 14471.00
13056.00 14491.00
6/00 13233.00 15096.00
+ Index comparison begins 4/4/94 for Class B shares. The Lehman Brothers
Government/Corporate Bond Index is an unmanaged, composite index of the U.S.
bond market. It contains over 5,000 issues, including Treasury and government
agency securities, investment-grade corporate bonds and Yankee bonds. Index
returns are calculated monthly, assume reinvestment of dividends and, unlike
Fund returns, do not reflect any fees, expenses or sales charges. You cannot
invest directly in the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
50
PIONEER BOND FUND
PORTFOLIO MANAGEMENT DISCUSSION 6/30/00
Extraordinarily strong economic growth and the U.S. Federal Reserve Board's
efforts to restrain this growth and limit inflation dominated the fixed income
market in the United States during the 12 months ended June 30, 2000. In the
following discussion, Kenneth J. Taubes details the factors that influenced your
Fund's performance during the fiscal year. Mr. Taubes, co-head of Pioneer's
fixed income group, oversees the team responsible for the daily management of
Pioneer Bond Fund.
Q: PIONEER BOND FUND ACHIEVED POSITIVE RETURNS DURING A PERIOD OF RISING
INTEREST RATES AND FALLING PRICES FOR MOST TYPES OF FIXED INCOME
INVESTMENTS. WHAT FACTORS MOST AFFECTED PERFORMANCE?
A: The Fund's holdings in long-term Treasury bonds and other types of
high-quality long-term investments helped performance. However, corporate bonds
in general, especially high yield bonds, lagged Treasuries in performance and
detracted from Fund returns. Overall, the Fund's competitive yield overcame
price losses to result in positive total returns. On June 30, 2000, the Fund's
30-day SEC yield on Class A shares was 6.83%, an increase from the 6.57% yield
on December 31, 1999 and substantially higher than the 5.63% yield a year
earlier. For the 12-month period, Class A shares returned 1.30%, Class B shares
returned 0.48% and Class C shares had a total return of 0.36%, all at net asset
value. In comparison, the average return for the same period of the 173 funds in
Lipper, Inc.'s Corporate Debt A-rated category was 2.78%. (Lipper is an
independent company that tracks mutual fund performance.)
Q: ESPECIALLY IN THE FINAL SIX MONTHS OF THE PERIOD, U.S. TREASURIES SEEMED
TO GAIN IN PRICE EVEN AS MOST CORPORATE SECURITIES LOST VALUE. WHAT
CONTRIBUTED TO THIS ENVIRONMENT?
A: The main factors were the strong economy and the reactions to this
strength. We had high rates of Gross Domestic Product (GDP) growth and falling
unemployment rates. The Federal Reserve Board became increasingly concerned that
the growth rates were unsustainable and could drive up the costs of resources,
increasing inflationary pressures. Starting in June 1999, the Fed raised short-
term interest rates six different times, by a total of 1.75%. However, during
the final six months of the fiscal period, the strong economy resulted in a
rising revenue flow to the federal government, which was able to reduce debt by
buying back higher-coupon, long-term Treasury bonds. This resulted in rising
prices and declining interest rates for both intermediate-and long-term Treasury
obligations. As a consequence, the yields on longer-term Treasury obligations
actually fell below those of shorter-term government notes. Investors in fixed
income securities call this an inversion of the yield curve. Under most
conditions the yield curve is characterized by higher yields for longer-maturity
securities. While long-term Treasuries rallied, corporate bonds presented a much
different situation. Lower credit quality securities in general underperformed
Treasuries as investors feared that economic growth would eventually slow and
undermine the financial health of companies issuing bonds. Corporate securities,
especially high-yielding, lower quality bonds, fell in price and their yields
rose. The difference--or spread--between the yields of corporate securities and
government securities grew wider and corporate bonds underperformed government
bonds of comparable maturities. While investment grade corporate securities also
underperformed Treasuries, they still performed better than higher yielding,
lower quality bonds. Mortgage securities did better than investment grade
corporate bonds, although not as well as Treasuries.
Q: DID YOU MAKE ANY CHANGES IN STRATEGY DURING THIS PERIOD?
A: As the end of the fiscal year approached, the spread widening--or
growing difference in yields between Treasuries and non-Treasuries--resulted in
extremely attractive yields in the corporate sector, especially the high yield
sector. Believing that high yield securities offered very good value after two
years of underperformance, we increased our allocation to this sector close to
our mandated maximum of 20% of total assets. We did this by redeploying assets,
principally from mortgage securities that had been performing well for the Fund.
We invested where we saw the greatest relative value at current prices. For the
same reason, we also invested in more intermediate-term securities, which had
been underperforming. This resulted in a lower average maturity and lower
duration for the Fund, which we thought made sense in a period following a rally
in long-term Treasuries.
Q: WHAT IS YOUR OUTLOOK?
A: During the closing months of the last fiscal year, we saw some signs
that economic growth was beginning to cool down in the United States. Growth in
consumer spending was lower, and the manufacturing sector was beginning to slow.
Investors in the bond market are beginning to think that the Fed Board may be
approaching the end of its series of interest-rate hikes, although some further
rate increases certainly are possible. While we don't think the economy will
slow dramatically, we do think growth will become more moderate, providing a
better opportunity for a decline in interest rates later in the current fiscal
year.
51
EXCERPTS FROM BOND FUND'S DECEMBER 31, 2000 SEMIANNUAL REPORT
PIONEER BOND FUND
INVESTMENT RETURNS (CLASS A SHARES)
The mountain chart on the right shows the growth of a $10,000 investment
made in Pioneer Limited Maturity Bond Fund, compared to the growth of the Lehman
Brothers Government/Credit Bond Index.
AVERAGE ANNUAL TOTAL RETURNS
(as of December 31, 2000)
PERIOD NET ASSET VALUE PUBLIC OFFERING PRICE*
10 Years 7.06% 6.57%
5 Years 4.70% 3.75%
1 Year 8.45% 3.52%
* Reflects deduction of the maximum 4.5% sales charge at the beginning of the
period and assumes reinvestment of distributions at net asset value.
LEHMAN BROTHERS GOVERNMENT/CREDIT
PIONEER LIMITED MATURITY BOND FUND* BOND INDEX**
----------------------------------- ---------------------------------
12/90 9550.00 10000.00
11034.00 11610.00
12/92 11904.00 12490.00
13265.00 13871.00
12/94 12708.00 13384.00
15016.00 15961.00
12/96 15310.00 16421.00
16712.00 18023.00
12/98 17998.00 19731.00
17421.00 19306.00
12/00 18894.00 21594.00
PIONEER BOND FUND
INVESTMENT RETURNS (CLASS B SHARES)
AVERAGE ANNUAL TOTAL RETURNS
(as of December 31, 2000)
PERIOD IF HELD IF REDEEMED*
Life of Fund (4/4/94) 5.17% 5.17%
5 Years 3.85% 3.69%
1 Year 7.30% 3.30%
* Reflects deduction of the maximum applicable contingent deferred sales charge
(CDSC) at the end of the period and assumes reinvestment of distributions. The
maximum CDSC of 4% declines over six years.
LEHMAN BROTHERS GOVERNMENT/CREDIT
BOND INDEX** PIONEER BOND FUND*
--------------------------------- ------------------
4/94 10000.00 10000.00
9927.00 9958.00
12/94 9938.00 10044.00
10976.00 11229.00
11637.00 11977.00
11321.00 11752.00
12/96 11766.00 12325.00
12028.00 12663.00
12753.00 13527.00
13136.00 14091.00
12/98 13622.00 14808.00
13211.00 14471.00
13098.00 14490.00
13275.00 15096.00
12/00 14054.00 16208.00
+ Index comparison begins 4/4/94 for Class B shares. The Lehman Brothers
Government/Credit Bond Index is an unmanaged, composite index of the U.S.
bond market. The Index is composed of the Lehman Brothers Government Bond
Index and the Lehman Brothers Credit Index. The Lehman Brothers
Government/Credit Index is split into three composites: Aggregate,
Intermediate (maturities up to 10 years) and Long-Term Maturities (of 10
years and greater). Only the Aggregate Index has market value. Index returns
are calculated monthly, assume reinvestment of dividends and, unlike Fund
returns, do not reflect any fees, expenses or sales charges. You cannot
invest directly in the Index.
** The name of the Lehman Brothers Government/Corporate Bond Index was changed
to the Lehman Brothers Government/Credit Index on July 1, 2000.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
52
PIONEER BOND FUND
PORTFOLIO MANAGEMENT DISCUSSION 6/30/00
Most domestic fixed income securities, with the exception of lower-rated
corporate bonds, performed well during the final six months of 2000,
outperforming stocks for the first time in several years. In the following
discussion, Kenneth J. Taubes details the factors that influenced Pioneer Bond
Fund's performance during the six months. Mr. Taubes, head of Pioneer's Fixed
Income Group, oversees the team responsible for the daily management of the
Fund.
Q: WHAT FACTORS MOST CONTRIBUTED TO THE PIONEER BOND FUND'S DRAMATICALLY
IMPROVED PERFORMANCE IN THE FINAL SIX MONTHS OF 2000?
A: Strong performance by the portfolio's higher grade bonds helped sustain
returns in a period of declining interest rates and rising prices for
high-quality securities. Performance also was helped by sector selection in
corporate bonds and by our decision to extend duration, which is a measure of a
bond's susceptibility to price changes as interest rates move up or down. Most
interest rates fell during the period, and declining interest rates tend to
raise the prices of longer-duration bond funds. At the end of the period,
effective duration was 5.06 years. Throughout the period, the Fund delivered
healthy, competitive income. On December 31, 2000, the Fund's 30-day SEC yield
on Class A shares was 6.20%. The Fund's Class A shares had a total return of
6.47% at net asset value for the six-month period while Class B shares returned
5.86% and Class C shares returned 6.01%. In comparison, the average return for
the same period of the 187 funds in Lipper Inc.'s corporate debt A-rated
category was 6.56%. (Lipper is an independent company that tracks mutual fund
performance.)
Q: WHAT WAS THE ENVIRONMENT LIKE FOR THE SIX MONTHS?
A: It was very positive for U.S. government, mortgage-backed securities and
high-grade corporate bonds. As the six-month period progressed, long-term and
intermediate-term interest rates declined among higher quality securities,
pushing up their prices. For a time, long-term Treasury yields actually fell to
lower levels than the yields of short-term securities, reversing the normal
relationship in which yields tend to be higher as maturities are longer. Prior
to the six-month period, the Federal Reserve Board had steadily raised
short-term interest rates in an effort to help head off inflation and slow
economic growth. At the same time, a lower federal deficit diminished the supply
of long-term U.S. Treasuries, encouraging yields of long- and intermediate-term
securities to fall and prices to rise. Yields also fell on longer-maturity bonds
because investors began to anticipate that the Federal Reserve eventually would
reverse its policy and begin to lower short-term interest rates. All these
factors helped the performance of high-quality securities, which tended to rise
in price. In contrast, lower-rated corporate bonds performed poorly. Investors
worried that a slowing economy would cut into the ability of corporations to
meet their bond obligations. As a result, prices of lower-rated corporate bonds
fell.
Q: HOW DID THIS ENVIRONMENT AFFECT STRATEGY?
A: We focused on intermediate Treasury and government agency securities,
which we believed would have the greatest performance potential in an
environment that favored high-quality bonds. Within the corporate sector, we
focused on higher-rated corporate securities, and de-emphasized sectors, such as
banking, which were vulnerable to credit risks in a slowing economy. All these
steps tended to help performance. On December 31, 2000, Treasuries and rate
securities rated A or higher comprised 33.5% of assets. We also invested in
select domestic high-yield bonds, which accounted for 18.9% of net assets. We
believe high yield bonds afford the Fund another element of diversification
while providing a source of generous income. Although these securities detracted
from performance on a total return basis, their impact was muted by good
security and sector selection. At the end of the six-month period, average
credit quality was investment-grade at A.
Q: WHAT IS YOUR OUTLOOK?
A: We think we should see an improved environment for investing in
corporate bonds. As we entered 2001, corporate bonds were priced very cheaply,
reflecting investors' desire to avoid credit risk as corporate profits were
slowing. In effect, investors have priced corporate securities as if they expect
a recession. If the economy continues to grow, corporate bonds would be a
particularly good value. In January 2001, the Federal Reserve Board lowered
short-term interest rates by 1.00% to help head off a recession and stabilize
the economy. We expect the Fed to lower rates even further in the months ahead.
As interest rates come down, corporations could begin to realize the benefits of
the lower costs of financing. This development would work to the economy's
advantage and help improve the performance of corporate bonds. The Fund, with
its allocations to both investment-grade and high-yield corporate bonds, is very
well positioned to benefit as the economy stabilizes and corporate bond prices
recover.
(Investment Company Act File No. 811-02864)
53
FORM OF PROXY
- -------------------------- -----------------------------------------------------
PIONEER LIMITD MATURITY BOND FUND PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TO BE HELD SEPTEMBER 18, 2001
- --------------------------------------------------------------------------------
[triangle] Please fold and detach at perforation before mailing [triangle]
PIONEER LIMITED MATURITY BOND FUND
I (we), having received notice of the meeting and management's proxy statement
therefore, and revoking all prior proxies, hereby appoint John F. Cogan, Jr.,
David D. Tripple, Dorothy E. Bourassa, Joseph P. Barri, David Phelan, and each
of them, my (our) attorneys (with full power of substitution in them and each of
them) for and in my (our) name(s) to attend the Special Meeting of Shareholders
of my (our) fund to be held on Tuesday, September 18, 2001, at 2 p.m. (Boston
time) at the offices of Hale and Dorr LLP, counsel to the fund, 60 State Street,
26th Floor, Boston, Massachusetts 02109, and any adjourned session or sessions
thereof, and there to vote and act upon the following matters (as more fully
described in the accompanying proxy statement) in respect of all shares of the
fund which I (we) will be entitled to vote or act upon, with all the powers I
(we) would possess if personally present.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
PROPOSAL.
VOTE VIA THE INTERNET: HTTPS://WWW.PROXY-DIRECT.COM
VOTE VIA THE TELEPHONE: 1-800-597-7836
[CONTROL NUMBER]
NOTE: In signing, please write name(s)
exactly as appearing hereon. When signing
as attorney, executor, administrator or
other fiduciary, please give your full
title as such. Joint owners should each
sign personally.
Signature(s)
Signature of joint shareholder(s)
Date _______________________, 2001
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD
IN THE ENCLOSED ENVELOPE.
[triangle] Please fold and detach at perforation before mailing [triangle]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF YOUR FUND AND
SHOULD BE RETURNED AS SOON AS POSSIBLE IN THE ENVELOPE PROVIDED. THE BOARD
RECOMMENDS THAT YOU VOTE IN FAVOR OF THE FOLLOWING:
PLEASE VOTE BY FILLING IN THE BOXES BELOW.
FOR AGAINST ABSTAIN
1. To approve an Agreement and Plan of Reorganization between your fund and
Pioneer Bond Fund. Under this Agreement your fund would transfer all of its
assets to Bond Fund in exchange for shares of Bond Fund. These shares would be
distributed proportionately to you and the other shareholders of your fund. Bond
Fund would also assume your fund's liabilities.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD
SHAREHOLDER LETTER
Pioneer Limited Maturity Bond Fund
60 State Street
Boston, MA 02109
July 2001
Dear Fellow Shareowner,
I am writing to let you know that a meeting will be held on September 18, 2001
for shareowners to vote on an important proposal for Pioneer Limited Maturity
Bond Fund (the Fund). As a shareowner in the Fund, you have the opportunity to
voice your opinion on this matter.
This package contains information about the proposal, along with a proxy card
for you to vote by mail. Please take a moment to read the enclosed materials and
cast your vote using the proxy card.
(callout in margin) VOTING YOUR SHARES BY MAIL IS QUICK AND EASY. EVERYTHING
YOU NEED IS ENCLOSED.
The proposal has been reviewed by the Board of Trustees, whose primary role is
to protect your interests as a shareowner. The Trustees recommend that you vote
FOR the proposal.
HERE IS WHAT A FOR VOTE MEANS FOR THE PROPOSAL.
(callout in margin) THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR THE
PROPOSAL.
THE PROPOSAL:
APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN THE FUND AND PIONEER
BOND FUND, allowing the Fund to transfer all of its assets and liabilities to
Pioneer Bond Fund in exchange for shares of Pioneer Bond Fund.
If the Proposal is approved, shareowners of Pioneer Limited Maturity Bond Fund
will receive shares of Pioneer Bond Fund, of the same class and total value. The
Funds have similar investment styles and objectives. While this change will
result in a moderate increase in overall risk, the Trustees believe that Pioneer
Bond Fund offers shareowners a more broadly diversified portfolio and the
possibility of greater return potential from a larger and more flexible blend of
securities. The reorganization will be tax-free for shareowners and the Funds.
(callout in margin) PLEASE VOTE! YOUR VOTE IS EXTREMELY IMPORTANT, NO MATTER
HOW MANY SHARES YOU OWN.
Cast your vote by completing and signing the proxy card enclosed in this
package. Please mail your completed and signed proxy card as quickly as
possible, using the postage-paid envelope provided. Thank you for your prompt
response.
Sincerely,
David Tripple
10324-00-0801
PIONEER BOND FUND
STATEMENT OF ADDITIONAL INFORMATION
August 3, 2001
This statement of additional information is not a prospectus. It should be read
in conjunction with the related prospectus (also dated August 3, 2001) which
covers Class A, Class B and Class Y shares of beneficial interest of Pioneer
Bond Fund ("Bond Fund") to be issued in exchange for all of the net assets of
Pioneer Limited Maturity Bond Fund ("Limited Maturity Bond Fund"). Please read
this statement of additional information carefully and retain it for further
reference.
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 Bond Fund at 60 State
Street, Boston, Massachusetts 02109. You can also obtain a copy of the Bond
Fund's Class A, Class B and Class C shares prospectus from our website at:
www.pioneerfunds.com.
TABLE OF CONTENTS
INTRODUCTION
ADDITIONAL INFORMATION ABOUT LIMITED MATURITY BOND FUND
Fund History
Description of Limited Maturity Bond Fund and Its Investmentsand Risks
Management of Limited Maturity Bond Fund
Investment Advisory and Other Services
Brokerage Allocation and Other Practices
Capital Stock and Other Securities
Purchase, Redemption and Pricing of Limited Maturity Bond Fund Shares
Taxation of Limited Maturity Bond Fund
Principal Underwrite
Calculation of Performance Data
Financial Statements
ADDITIONAL INFORMATION ABOUT BOND FUND
Fund History
Description of Bond Fund and Its Investments and Risks
Management of Bond Fund
Control Persons and Principal Holders of Bond Fund Shares
Investment Advisory and Other Services
Brokerage Allocation and Other Practices
Capital Stock and Other Securities
Purchase, Redemption and Pricing of Bond Fund Shares
Taxation of Bond Fund
Principal Underwriter
Calculation of Performance Data
Financial Statements
EXHIBITS
A Statement of Additional Information, dated April 2, 2001
of Pioneer Limited Maturity Bond Fund.
B Statement of Additional Information, dated September 29, 2000 as
supplemented, of Pioneer Bond Fund.
C Audited Financial Statements of Pioneer Limited Maturity Bond Fund as of
November 30, 2000.
Unaudited Financial Statements of
Pioneer Limited Maturity Bond Fund
as of May 31, 2001.
D Audited Financial Statements of Pioneer Bond Fund as of June 30, 2000.
Unaudited Financial Statements of Pioneer Bond Fund as of December 31,
2000.
E Pro Forma Combined Financial
Statements at December 31, 2000 and
for the 12 months then ended of
Pioneer Bond Fund and at December
31, 2000 and for the 12 months then
ended of Pioneer Limited Maturity
Bond Fund.
INTRODUCTION
This statement of additional information is intended to supplement the
information provided in a proxy statement and prospectus dated August 3, 2001
(the "Proxy Statement and Prospectus"). The Proxy Statement and Prospectus has
been sent to the shareholders of Limited Maturity Bond Fund in connection with
the solicitation by the management of Limited Maturity Bond Fund of proxies to
be voted at the Meeting of Shareholders of Limited Maturity Bond Fund to be held
on September 18, 2001. This statement of additional information includes the
statements of additional information, dated April 2, 2001 of Limited Maturity
Bond Fund (the "Limited Maturity Bond Fund SAI") and dated September 29, 2000
as supplemented November 22, 2000 and January 2, 2001 of Bond Fund
(the "Bond Fund SAI").
ADDITIONAL INFORMATION ABOUT LIMITED MATURITY BOND FUND
FUND HISTORY
For additional information about Limited Maturity Bond Fund generally and its
history, see "Fund History" and "Description of Shares" in the Limited Maturity
Bond Fund SAI.
DESCRIPTION OF LIMITED MATURITY BOND FUND AND ITS INVESTMENTS AND RISKS
For additional information about Limited Maturity Bond Fund's investment
objective and policies, see "Investment Policies, Risks and Restrictions" in the
Limited Maturity Bond Fund SAI.
MANAGEMENT OF LIMITED MATURITY BOND FUND
For additional information about Limited Maturity Bond Fund's Board of Trustees,
officers and management personnel, see "Management of the Fund" and "Investment
Adviser" in the Limited Maturity Bond Fund SAI.
INVESTMENT ADVISORY AND OTHER SERVICES
For additional information about Limited Maturity Bond Fund's investment
adviser, custodian and independent accountants, see "Investment Adviser,"
"Principal Underwriter and Distribution Plans," "Shareholder Servicing/Transfer
Agent," "Custodian" and "Independent Public Accountants" in the Limited Maturity
Bond Fund SAI.
BROKERAGE ALLOCATION AND OTHER PRACTICES
For additional information about Limited Maturity Bond Fund's brokerage
allocation practices, see "Portfolio Transactions" in the Limited Maturity Bond
Fund SAI.
CAPITAL STOCK AND OTHER SECURITIES
For additional information about the voting rights and other characteristics of
shares of beneficial interest of Limited Maturity Bond Fund, see "Description of
Shares" in the Limited Maturity Bond Fund SAI.
PURCHASE, REDEMPTION AND PRICING OF LIMITED MATURITY BOND FUND SHARES
For additional information about the purchase, redemption and pricing of Limited
Maturity Bond Fund shares, see "Sales Charges," "Redeeming Shares," "Telephone
Transactions" and "Pricing of Shares" in the Limited Maturity Bond Fund SAI.
TAXATION OF LIMITED MATURITY BOND FUND
For additional information about the tax status of Limited Maturity Bond Fund,
see "Tax Status" in the Limited Maturity Bond Fund SAI.
PRINCIPAL UNDERWRITER
For additional information about Limited Maturity Bond Fund's principal
underwriter and the distribution contract between the principal underwriter and
Limited Maturity Bond Fund, see "Principal Underwriter and Distribution Plans"
in the Limited Maturity Bond Fund SAI.
CALCULATION OF PERFORMANCE DATA
For additional information about the investment performance of Limited Maturity
Bond Fund, see "Investment Results" in the Limited Maturity Bond Fund SAI.
FINANCIAL STATEMENTS
Audited financial statements of Limited Maturity Bond Fund as of November 30,
2000 and unaudited financial statements as of May 31, 2001 are attached as
Exhibit C.
ADDITIONAL INFORMATION ABOUT BOND FUND
FUND HISTORY
For additional information about Bond Fund generally and its history, see "Fund
History" and "Description of Shares" in the Bond Fund SAI.
DESCRIPTION OF BOND FUND AND ITS INVESTMENTS AND RISKS
For additional information about Bond Fund's investment objective, policies and
restrictions see "Investment Objective, Risks and Policies" in the Bond Fund
SAI.
MANAGEMENT OF BOND FUND
For additional information about Bond Fund's Board of Trustees, officers and
management personnel, see "Management of the Fund" and "Investment Adviser" in
the Bond Fund SAI.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF BOND FUND SHARES
For additional information about control persons of Bond Fund and principal
holders of shares of Bond Fund see "Management of the Fund" in the Bond Fund
SAI.
INVESTMENT ADVISORY AND OTHER SERVICES
For additional information about Bond Fund's investment adviser, custodian and
independent accountants, see "Investment Adviser," "Principal Underwriter and
Distribution Plans," "Shareholder Servicing/Transfer Agent," "Custodian" and
"Independent Public Accountants" in the Bond Fund SAI.
BROKERAGE ALLOCATION AND OTHER PRACTICES
For additional information about Bond Fund's brokerage allocation practices, see
"Portfolio Transactions" in the Bond Fund SAI.
CAPITAL STOCK AND OTHER SECURITIES
For additional information about the voting rights and other characteristics of
shares of beneficial interest of Bond Fund, see "Description of Shares" in the
Bond Fund SAI.
PURCHASE, REDEMPTION AND PRICING OF BOND FUND SHARES
For additional information about the purchase, redemption and pricing of Bond
Fund shares, see "Sales Charges," "Redeeming Shares," "Telephone Transactions"
and "Pricing of Shares" in the Bond Fund SAI.
TAXATION OF BOND FUND
For additional information about the tax status of Bond Fund, see "Tax Status"
in the Bond Fund SAI.
PRINCIPAL UNDERWRITER
For additional information about Bond Fund's principal underwriter and the
distribution contract between the principal underwriter and Bond Fund, see
"Principal Underwriter and Distribution Plans" in the Bond Fund SAI.
CALCULATION OF PERFORMANCE DATA
For additional information about the investment performance of Bond Fund, see
"Investment Results" in the Bond Fund SAI.
FINANCIAL STATEMENTS
Audited financial statements of Bond Fund at June 30, 2000 and unaudited
financial statements at December 31, 2000 are attached as Exhibit D. Pro Forma
Combined Financial Statement at December 31, 2000 and for the 12 months then
ended for Bond Fund as though a reorganization had occurred on January 1, 2000
are attached as Exhibit E.
EXHIBIT A
PIONEER LIMITED MATURITY BOND FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
Class A, Class B and Class Y Shares
April 2, 2001
This statement of additional information is not a prospectus. It should be read
in conjunction with the fund's Class A and Class B shares prospectus and its
Class Y shares prospectus, each dated April 2, 2001, as supplemented or revised
from time to time. A copy of each prospectus can be obtained free of charge by
calling Shareholder Services at 1-800-225-6292 or by written request to the fund
at 60 State Street, Boston, Massachusetts 02109. You can also obtain a copy of
the fund's Class A and Class B shares prospectus from our website at:
www.pioneerfunds.com. The fund's financial statements for the fiscal year ended
November 30, 2000 are incorporated into this statement of additional information
by reference. The most recent annual report to shareholders is attached to this
statement of additional information.
TABLE OF CONTENTS
Page
----
1. Fund History.........................................................2
2. Investment Policies, Risks and Restrictions..........................2
3. Management of the Fund..............................................22
4. Investment Adviser..................................................25
5. Principal Underwriter and Distribution Plans........................27
6. Shareholder Servicing/Transfer Agent................................31
7. Custodian...........................................................31
8. Independent Public Accountants......................................32
9. Portfolio Transactions..............................................32
10. Description of Shares...............................................33
11. Sales Charges.......................................................34
12. Redeeming Shares....................................................38
13. Telephone Transactions..............................................39
14. Pricing of Shares...................................................40
15. Tax Status..........................................................41
16. Investment Results..................................................46
17. Financial Statements................................................48
18. Appendix A - Annual Fee, Expense and Other Information..............50
19. Appendix B - Description of Short-Term Debt, Corporate Bond
and Preferred Stock Ratings.........................................54
20. Appendix C - Performance Statistics.................................61
21. Appendix D - Other Pioneer Information..............................78
1. FUND HISTORY
The fund is a diversified open-end management investment company. The fund was
organized as a Massachusetts business trust on April 30, 1992. The fund changed
its name from Pioneer Short-Term Income Trust to its current name effective
September 17, 1999.
2. INVESTMENT POLICIES, RISKS AND RESTRICTIONS
The prospectuses present the investment objective and the principal investment
strategies and risks of the fund. This section supplements the disclosure in the
fund's prospectuses and provides additional information on the fund's investment
policies or restrictions. Restrictions or policies stated as a maximum
percentage of the fund's assets are only applied immediately after a portfolio
investment to which the policy or restriction is applicable (other than the
limitations on borrowing and illiquid securities). 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 restrictions and policies.
Primary Investments
Under normal circumstances, at least 90% of the fund's total assets are U.S.
government securities, other debt securities rated investment grade at the time
of purchase or cash and cash equivalents, as described in the prospectuses.
U.S. Government Securities
U.S. government securities in which the fund invests include debt obligations of
varying maturities issued by the U.S. Treasury or issued or guaranteed by an
agency or instrumentality of the U.S. government, including the Federal Housing
Administration, Federal Financing Bank, Farmers Home Administration,
Export-Import Bank of the U.S., Small Business Administration, Government
National Mortgage Association ("GNMA"), General Services Administration, Central
Bank for Cooperatives, Federal Farm Credit Banks, Federal Home Loan Banks,
Federal Home Loan Mortgage Corporation ("FHLMC"), Federal National Mortgage
Association ("FNMA"), Maritime Administration, Tennessee Valley Authority,
District of Columbia Armory Board, Student Loan Marketing Association,
Resolution Trust Corporation and various institutions that previously were or
currently are part of the Farm Credit System (which has been undergoing
reorganization since 1987). Some U.S. government securities, such as U.S.
Treasury bills, Treasury notes and Treasury bonds, which differ only in their
interest rates, maturities and times of issuance, are supported by the full
faith and credit of the United States. Others are supported by: (i) the right of
the issuer to borrow from the U.S. Treasury, such as securities of the Federal
Home Loan Banks; (ii) the discretionary authority of the U.S. government to
purchase the agency's obligations, such as securities of the FNMA; or (iii) only
the credit of the issuer. No assurance can be given that the U.S. government
will provide financial support in the future to U.S. government agencies,
authorities or instrumentalities that are not supported by the full faith and
credit of the United States. Securities guaranteed as to principal and interest
by the U.S. government, its agencies, authorities or instrumentalities include:
(i) securities for which the payment of principal and interest is backed by an
irrevocable letter of credit issued by the U.S. government or any of its
agencies, authorities or instrumentalities; and (ii) participations in loans
made to non-U.S. governments or other entities that are so guaranteed. The
secondary market for certain of these participations is limited and, therefore,
may be regarded as illiquid.
U.S. government securities may include zero coupon securities that may be
purchased when yields are attractive and/or to enhance portfolio liquidity. Zero
coupon U.S. government securities are debt
2
obligations that are issued or purchased at a significant discount from face
value. The discount approximates the total amount of interest the security will
accrue and compound over the period until maturity or the particular interest
payment date at a rate of interest reflecting the market rate of the security at
the time of issuance. Zero coupon U.S. government securities do not require the
periodic payment of interest. These investments benefit the issuer by mitigating
its need for cash to meet debt service, but generally require a higher rate of
return to attract investors who are willing to defer receipt of cash. These
investments may experience greater volatility in market value than U.S.
government securities that make regular payments of interest. The fund accrues
income on these investments for tax and accounting purposes, which is
distributable to shareholders and which, because no cash is received at the time
of accrual, may require the liquidation of other portfolio securities to satisfy
the fund's distribution obligations, in which case the fund will forego the
purchase of additional income producing assets with these funds. Zero coupon
U.S. government securities include STRIPS and CUBES, which are issued by the
U.S. Treasury as component parts of U.S. Treasury bonds and represent scheduled
interest and principal payments on the bonds.
Mortgage-Backed Securities
The fund may invest in mortgage pass-through certificates and multiple-class
pass-through securities, such as real estate mortgage investment conduits
("REMIC") pass-through certificates, collateralized mortgage obligations and
stripped mortgage-backed securities ("SMBS"), interest only mortgage-backed
securities, principal only mortgage-backed securities and other types of
"mortgage-backed securities" that may be available in the future. A
mortgage-backed security is an obligation of the issuer backed by a mortgage or
pool of mortgages or a direct interest in an underlying pool of mortgages. Some
mortgage-backed securities, such as collateralized mortgage obligations
("CMOs"), make payments of both principal and interest at a variety of
intervals; others make semiannual interest payments at a predetermined rate and
repay principal at maturity (like a typical bond). Mortgage-backed securities
are based on different types of mortgages including those on commercial real
estate or residential properties. Mortgage-backed securities often have stated
maturities of up to thirty years when they are issued, depending upon the length
of the mortgages underlying the securities. In practice, however, unscheduled or
early payments of principal and interest on the underlying mortgages may make
the securities' effective maturity shorter than this, and the prevailing
interest rates may be higher or lower than the current yield of the fund's
portfolio at the time the fund receives the payments for reinvestment.
Mortgage-backed securities may have less potential for capital appreciation than
comparable fixed income securities, due to the likelihood of increased
prepayments of mortgages as interest rates decline. If the fund buys
mortgage-backed securities at a premium, mortgage foreclosures and prepayments
of principal by mortgagors (which may be made at any time without penalty) may
result in some loss of the fund's principal investment to the extent of the
premium paid.
The value of mortgage-backed securities may also change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities markets as a whole. Non-governmental
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
governmental issues.
Guaranteed Mortgage Pass-Through Securities. Guaranteed mortgage pass-through
securities represent participation interests in pools of residential mortgage
loans and are issued by U.S. governmental or private lenders and guaranteed by
the U.S. government or one of its agencies or instrumentalities, including but
not limited to GNMA, FNMA and FHLMC. GNMA certificates are guaranteed by the
full faith and credit of the U.S. government for timely payment of principal and
interest on the certificates. FNMA certificates are guaranteed by FNMA, a
federally chartered and privately owned corporation, for full and timely payment
of principal and interest on the certificates. FHLMC
3
certificates are guaranteed by FHLMC, a corporate instrumentality of the U.S.
government, for timely payment of interest and the ultimate collection of all
principal of the related mortgage loans.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of conventional residential mortgage loans. Such issuers may,
in addition, be the originators and/or servicers of the underlying mortgage
loans as well as the guarantors of the mortgage-related securities. Because
there are no direct or indirect government or agency guarantees of payments in
pools created by such non-governmental issuers, they generally offer a higher
rate of interest than government and government-related pools. Timely payment of
interest and principal of these pools may be supported by insurance or
guarantees, including individual loan, title, pool and hazard insurance and
letters of credit. The insurance and guarantees are issued by governmental
entities, private insurers and the mortgage poolers. There can be no assurance
that the private insurers or guarantors can meet their obligations under the
insurance policies or guarantee arrangements.
Mortgage-related securities without insurance or guarantees may be purchased if
Pioneer Investment Management, Inc. ("Pioneer"), the fund's investment adviser,
determines that the securities meet the fund's quality standards.
Mortgage-related securities issued by certain private organizations may not be
readily marketable.
Multiple-Class Pass-Through Securities and Collateralized Mortgage Obligations.
CMOs and REMIC pass-through or participation certificates may be issued by,
among others, U.S. government agencies and instrumentalities as well as private
issuers. REMICs are CMO vehicles that qualify for special tax treatment under
the Internal Revenue Code of 1986, as amended (the "Code") and invest in
mortgages principally secured by interests in real property and other
investments permitted by the Code. CMOs and REMIC certificates are issued in
multiple classes and the principal of and interest on the mortgage assets may be
allocated among the several classes of CMOs or REMIC certificates in various
ways. Each class of CMO or REMIC certificate, often referred to as a "tranche,"
is issued at a specific adjustable or fixed interest rate and must be fully
retired no later than its final distribution date. Generally, interest is paid
or accrues on all classes of CMOs or REMIC certificates on a monthly basis.
Typically, CMOs are collateralized by GNMA, FNMA or FHLMC certificates but also
may be collateralized by other mortgage assets such as whole loans or private
mortgage pass-through securities. Debt service on CMOs is provided from payments
of principal and interest on collateral of mortgaged assets and any reinvestment
income thereon.
Stripped Mortgage-Backed Securities. SMBS are multiple-class mortgage-backed
securities that are created when a U.S. government agency or a financial
institution separates the interest and principal components of a mortgage-backed
security and sells them as individual securities. The fund invests in SMBS that
are usually structured with two classes that receive different proportions of
interest and principal distributions on a pool of mortgage assets. A typical
SMBS will have one class receiving some of the interest and most of the
principal, while the other class will receive most of the interest and the
remaining principal. The holder of the "principal-only" security ("PO") receives
the principal payments made by the underlying mortgage-backed security, while
the holder of the "interest-only" security ("IO") receives interest payments
from the same underlying security. The prices of stripped mortgage-backed
securities may be particularly affected by changes in interest rates. As
interest rates fall, prepayment rates tend to increase, which tends to reduce
prices of IOs and increase prices of POs. Rising interest rates can have the
opposite effect. Although the market for these securities is increasingly
liquid, Pioneer may determine that certain stripped mortgage-backed securities
issued by the U.S. government, its agencies or instrumentalities are not readily
marketable. If so, these securities, together with privately-issued stripped
mortgage-backed securities, will be considered illiquid for purposes of the
fund's limitation on
4
investments in illiquid securities. The yields and market risk of interest only
and principal only SMBS, respectively, may be more volatile than those of other
fixed income securities.
The fund also may invest in planned amortization class ("PAC") and target
amortization class ("TAC") CMO bonds which involve less exposure to prepayment,
extension and interest rate risks than other mortgage-backed securities,
provided that prepayment rates remain within expected prepayment ranges or
"collars." To the extent that the prepayment rates remain within these
prepayment ranges, the residual or support tranches of PAC and TAC CMOs assume
the extra prepayment, extension and interest rate risks associated with the
underlying mortgage assets.
Risk Factors Associated with Mortgage-Backed Securities. Investing in
mortgage-backed securities involves certain risks, including the failure of a
counterparty to meet its commitments, adverse interest rate changes and the
effects of prepayments on mortgage cash flows. In addition, investing in the
lowest tranche of CMOs and REMIC certificates involves risks similar to those
associated with investing in equity securities. However, due to adverse tax
consequences under current tax laws, the fund does not intend to acquire
"residual" interests in REMICs. Further, the yield characteristics of
mortgage-backed securities differ from those of traditional fixed income
securities. The major differences typically include more frequent interest and
principal payments (usually monthly), the adjustability of interest rates of the
underlying instrument, and the possibility that prepayments of principal may be
made substantially earlier than their final distribution dates.
Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social and other factors and cannot be
predicted with certainty. Both adjustable rate mortgage loans and fixed rate
mortgage loans may be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of principal
prepayments in an increasing interest rate environment. Under certain interest
rate and prepayment rate scenarios, the fund may fail to recoup fully its
investment in mortgage-backed securities notwithstanding any direct or indirect
governmental, agency or other guarantee. When the fund reinvests amounts
representing payments and unscheduled prepayments of principal, it may obtain a
rate of interest that is lower than the rate on existing adjustable rate
mortgage pass-through securities. Thus, mortgage-backed securities, and
adjustable rate mortgage pass-through securities in particular, may be less
effective than other types of U.S. government securities as a means of "locking
in" interest rates.
Asset-Backed Securities
The fund may invest in asset-backed securities, which are securities that
represent a participation in, or are secured by and payable from, a stream of
payments generated by particular assets, most often a pool or pools of similar
assets (e.g., trade receivables). The credit quality of these securities depends
primarily upon the quality of the underlying assets and the level of credit
support and/or enhancement provided.
The underlying assets (e.g., loans) are subject to prepayments which shorten the
securities' weighted average maturity and may lower their return. If the credit
support or enhancement is exhausted, losses or delays in payment may result if
the required payments of principal and interest are not made. The value of these
securities also may change because of changes in the market's perception of the
creditworthiness of the servicing agent for the pool, the originator of the
pool, or the financial institution or trust providing the credit support or
enhancement.
When-Issued and Delayed Delivery Securities
The fund may purchase securities, including U.S. government securities, on a
when-issued basis or may purchase or sell securities for delayed delivery. In
such transactions, delivery of the securities occurs
5
beyond the normal settlement period, but no payment or delivery is made by the
fund prior to the actual delivery or payment by the other party to the
transaction. The fund will not earn income on these securities until delivered.
The purchase of securities on a when-issued or delayed delivery basis involves
the risk that the value of the securities purchased will decline prior to the
settlement date. The sale of securities for delayed delivery involves the risk
that the prices available in the market on the delivery date may be greater than
those obtained in the sale transaction. When-issued and delayed delivery
transactions will be fully collateralized by segregating liquid assets. See
"Asset Segregation."
Warrants
The fund may invest in warrants, which are securities permitting, but not
obligating, their holder to subscribe for other securities. Warrants do not
carry with them the right to dividends or voting rights with respect to the
securities that they entitle their holders to purchase, and they do not
represent any rights in the assets of the issuer. As a result, an investment in
warrants may be considered more speculative than certain other types of
investments. In addition, the value of a warrant does not necessarily change
with the value of the underlying securities, and a warrant expires worthless if
it is not exercised on or prior to its expiration date.
Preferred Shares
The fund may invest in preferred shares of beneficial interest of trust
instruments. Preferred shares are equity securities, but they have many
characteristics of fixed income securities, such as a fixed dividend payment
rate and/or a liquidity preference over the issuer's common shares. However,
because preferred shares are equity securities, they may be more susceptible to
risks traditionally associated with equity investments than the fund's fixed
income securities.
Illiquid Securities
The fund will not invest more than 15% of its net assets in illiquid and other
securities that are not readily marketable. Repurchase agreements maturing in
more than seven days will be included for purposes of the foregoing limit.
Securities subject to restrictions on resale under the Securities Act of 1933,
as amended (the "1933 Act"), are considered illiquid unless they are eligible
for resale pursuant to Rule 144A or another exemption from the registration
requirements of the 1933 Act and are determined to be liquid by Pioneer. Pioneer
determines the liquidity of Rule 144A and other restricted securities according
to procedures adopted by the Board of Trustees. The Board of Trustees monitors
Pioneer's application of these guidelines and procedures. The inability of the
fund to dispose of illiquid investments readily or at reasonable prices could
impair the fund's ability to raise cash for redemptions or other purposes. If
the fund sold restricted securities other than pursuant to an exception from
registration under the 1933 Act such as Rule 144A, it may be deemed to be acting
as an underwriter and subject to liability under the 1933 Act.
Debt Securities Rating Criteria
Investment grade debt securities are those rated "BBB" or higher by Standard &
Poor's Ratings Group ("Standard & Poor's") or the equivalent rating of other
nationally recognized securities rating organizations. Debt securities rated BBB
are considered medium grade obligations with speculative characteristics, and
adverse economic conditions or changing circumstances may weaken the issuer's
ability to pay interest and repay principal. If the rating of an investment
grade debt security falls below investment grade, Pioneer will consider if any
action is appropriate in light of the fund's investment objective and policies.
6
Below investment grade debt securities are those rated "BB" and below by
Standard & Poor's or the equivalent rating of other nationally recognized
securities rating organizations. See Appendix B for a description of rating
categories. [ The fund may invest in debt securities rated 'C' or better.]
Below investment grade debt securities or comparable unrated securities are
commonly referred to as "junk bonds" and are considered predominantly
speculative and may be questionable as to principal and interest payments.
Changes in economic conditions are more likely to lead to a weakened capacity to
make principal payments and interest payments. The amount of junk bond
securities outstanding has proliferated as an increasing number of issuers have
used junk bonds for corporate financing. An economic downturn could severely
affect the ability of highly leveraged issuers to service their debt obligations
or to repay their obligations upon maturity. Factors having an adverse impact on
the market value of lower quality securities will have an adverse effect on the
fund's net asset value to the extent that it invests in such securities. In
addition, the fund may incur additional expenses to the extent it is required to
seek recovery upon a default in payment of principal or interest on its
portfolio holdings.
The secondary market for junk bond securities may not be as liquid as the
secondary market for more highly rated securities, a factor which may have an
adverse effect on the fund's ability to dispose of a particular security when
necessary to meet its liquidity needs. Under adverse market or economic
conditions, the secondary market for junk bond securities could contract
further, independent of any specific adverse changes in the condition of a
particular issuer. As a result, the fund could find it more difficult to sell
these securities or may be able to sell the securities only at prices lower than
if such securities were widely traded. Prices realized upon the sale of such
lower rated or unrated securities, under these circumstances, may be less than
the prices used in calculating the fund's net asset value.
Since investors generally perceive that there are greater risks associated with
lower quality debt securities of the type in which the fund may invest a portion
of its assets, the yields and prices of such securities may tend to fluctuate
more than those for higher rated securities. In the lower quality segments of
the debt securities market, changes in perceptions of issuers' creditworthiness
tend to occur more frequently and in a more pronounced manner than do changes in
higher quality segments of the debt securities market, resulting in greater
yield and price volatility.
Lower rated and comparable unrated debt securities tend to offer higher yields
than higher rated securities with the same maturities because the historical
financial condition of the issuers of such securities may not have been as
strong as that of other issuers. However, lower rated securities generally
involve greater risks of loss of income and principal than higher rated
securities. Pioneer will attempt to reduce these risks through portfolio
diversification and by analysis of each issuer and its ability to make timely
payments of income and principal, as well as broad economic trends and corporate
developments.
Risks of Non-U.S. Investments
Investing in securities of non-U.S. issuers involves considerations and risks
not typically associated with investing in the securities of issuers in the U.S.
These risks are heightened with respect to investments in countries with
emerging markets and economies. The risks of investing in securities of non-U.S.
issuers or issuers with significant exposure to non-U.S. markets may be related,
among other things, to (i) differences in size, liquidity and volatility of, and
the degree and manner of regulation of, the securities markets of certain
non-U.S. markets compared to the securities markets in the U.S.; (ii) economic,
political and social factors; and (iii) foreign exchange matters, such as
restrictions on the repatriation of capital, fluctuations in exchange rates
between the U.S. dollar and the currencies in which the fund's portfolio
securities are quoted or denominated, exchange control regulations and costs
associated with currency exchange. The political and economic structures in
certain countries, particularly emerging markets, are expected to undergo
significant evolution and rapid development, and such countries may lack the
social, political and economic stability characteristic of more developed
countries. Unanticipated political or social developments may affect the values
of the
7
fund's investments in such countries. The economies and securities and
currency markets of many emerging markets have experienced significant
disruption and declines. There can be no assurances that these economic and
market disruptions will not continue.
Non-U.S. Securities Markets and Regulations. There may be less publicly
available information about non-U.S. markets and issuers than is available with
respect to U.S. securities and issuers. Non-U.S. companies generally are not
subject to accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to U.S. companies. The trading
markets for most non-U.S. securities are generally less liquid and subject to
greater price volatility than the markets for comparable securities in the U.S.
The markets for securities in certain emerging markets are in the earliest
stages of their development. Even the markets for relatively widely traded
securities in certain non-U.S. markets, including emerging market countries, may
not be able to absorb, without price disruptions, a significant increase in
trading volume or trades of a size customarily undertaken by institutional
investors in the U.S. Additionally, market making and arbitrage activities are
generally less extensive in such markets, which may contribute to increased
volatility and reduced liquidity. The less liquid a market, the more difficult
it may be for the fund to price its portfolio securities accurately or to
dispose of such securities at the times determined by Pioneer to be appropriate.
The risks associated with reduced liquidity may be particularly acute in
situations in which the fund's operations require cash, such as in order to meet
redemptions and to pay its expenses.
Economic, Political and Social Factors. Certain countries, including emerging
markets, may be subject to a greater degree of economic, political and social
instability than is the case in the U.S. and Western European countries. Such
instability may result from, among other things: (i) authoritarian governments
or military involvement in political and economic decision making; (ii) popular
unrest associated with demands for improved economic, political and social
conditions; (iii) internal insurgencies; (iv) hostile relations with neighboring
countries; and (v) ethnic, religious and racial disaffection and conflict. Such
economic, political and social instability could significantly disrupt the
financial markets in such countries and the ability of the issuers in such
countries to repay their obligations. Investing in emerging market countries
also involves the risk of expropriation, nationalization, confiscation of assets
and property or the imposition of restrictions on foreign investments and on
repatriation of capital invested. In the event of such expropriation,
nationalization or other confiscation in any emerging country, the fund could
lose its entire investment in that country.
Certain emerging market countries restrict or control foreign investment in
their securities markets to varying degrees. These restrictions may limit the
fund's investment in those markets and may increase the expenses of the fund. In
addition, the repatriation of both investment income and capital from certain
markets in the region is subject to restrictions such as the need for certain
governmental consents. Even where there is no outright restriction on
repatriation of capital, the mechanics of repatriation may affect certain
aspects of the fund's operations.
Economies in individual countries may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross domestic product, rates of
inflation, currency valuation, capital reinvestment, resource self-sufficiency
and balance of payments positions. Many countries have experienced substantial,
and in some cases extremely high, rates of inflation for many years. Inflation
and rapid fluctuations in inflation rates have had, and may continue to have,
very negative effects on the economies and securities markets of certain
emerging countries.
Unanticipated political or social developments may also affect the values of the
fund's investments and the availability to the fund of additional investments in
such countries. During 1997 and 1998, the political stability, economies and
securities and currency markets of many markets in India and the Asian
subcontinent experienced significant disruption and declines. There can be no
assurances that these economic and market disruptions will not continue or
spread to other countries in the region.
8
Economies in emerging market countries generally are heavily dependent upon
international trade and, accordingly, have been and may continue to be affected
adversely by trade barriers, exchange controls, managed adjustments in relative
currency values and other protectionist measures imposed or negotiated by the
countries with which they trade. These economies also have been, and may
continue to be, affected adversely by economic conditions in the countries with
which they trade.
Currency Risks. The value of the securities quoted or denominated in
international currencies may be adversely affected by fluctuations in the
relative currency exchange rates and by exchange control regulations. The fund's
investment performance may be negatively affected by a devaluation of a currency
in which the fund's investments are quoted or denominated. Further, the fund's
investment performance may be significantly affected, either positively or
negatively, by currency exchange rates because the U.S. dollar value of
securities quoted or denominated in another currency will increase or decrease
in response to changes in the value of such currency in relation to the U.S.
dollar.
Custodian Services and Related Investment Costs. Custodial services and other
costs relating to investment in international securities markets generally are
more expensive than in the U.S. Such markets have settlement and clearance
procedures that differ from those in the U.S. In certain markets there have been
times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the fund to make intended securities purchases due to settlement
problems could cause the fund to miss attractive investment opportunities.
Inability to dispose of a portfolio security caused by settlement problems could
result either in losses to the fund due to a subsequent decline in value of the
portfolio security or could result in possible liability to the fund. In
addition, security settlement and clearance procedures in some emerging
countries may not fully protect the fund against loss or theft of its assets.
Withholding and Other Taxes. The fund will be subject to taxes, including
withholding taxes, on income (possibly including, in some cases, capital gains)
that are or may be imposed by certain countries with respect to the fund's
investments in such countries. These taxes will reduce the return achieved by
the fund. Treaties between the U.S. and such countries may not be available to
reduce the otherwise applicable tax rates.
Economic Monetary Union (EMU). On January 1, 1999, 11 European countries adopted
a single currency - the Euro. The conversion to the Euro is being phased in over
a three-year period. During this time, valuation, systems and other operational
problems may occur in connection with the fund's investments quoted in the Euro.
For participating countries, EMU will mean sharing a single currency and single
official interest rate and adhering to agreed upon limits on government
borrowing. Budgetary decisions will remain in the hands of each participating
country but will be subject to each country's commitment to avoid "excessive
deficits" and other more specific budgetary criteria. A European Central Bank is
responsible for setting the official interest rate to maintain price stability
within the Euro zone.
EMU is driven by the expectation of a number of economic benefits, including
lower transaction costs, reduced exchange risk, greater competition, and a
broadening and deepening of European financial markets. However, there are a
number of significant risks associated with EMU. Monetary and economic union on
this scale has never been attempted before. There is a significant degree of
uncertainty as to whether participating countries will remain committed to EMU
in the face of changing economic conditions. This uncertainty may increase the
volatility of European markets.
Real Estate Investment Trusts ("REITs") and Associated Risk Factors
The fund may invest up to 10% of its total assets in debt securities issued by
REITs. 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
9
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. REITs are
not taxed on income distributed to shareholders provided they comply with the
applicable requirements of the Internal Revenue Code of 1986, as amended (the
"Code"). The fund will indirectly bear its proportionate share of any management
and other expenses paid by REITs in which it invests in addition to the expenses
paid by the fund. Debt securities issued by REITs are, for the most part,
general and unsecured obligations and are subject to risks associated with
REITs.
Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. An equity REIT
may be affected by changes in the value of the underlying properties owned by
the REIT. A mortgage REIT may be affected by changes in interest rates and the
ability of the issuers of its portfolio mortgages to repay their obligations.
REITs are dependent upon the skills of their managers and are not diversified.
REITs are generally dependent upon maintaining cash flows to repay borrowings
and to make distributions to shareholders and are subject to the risk of default
by lessees or borrowers. REITs whose underlying assets are concentrated in
properties used by a particular industry, such as health care, are also subject
to risks associated with such 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. If the REIT invests in adjustable rate mortgage loans the interest
rates on which are reset periodically, yields on a REIT's investments in such
loans will gradually align themselves to reflect changes in market interest
rates. This causes the value of such investments to fluctuate less dramatically
in response to interest rate fluctuations than would investments in fixed rate
obligations.
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 REITs have been more volatile in price
than the larger capitalization stocks included in Standard & Poor's 500 Stock
Index (the "S&P 500").
Other Investment Companies
The fund may invest in the securities of other investment companies to the
extent that such investments are consistent with the fund's investment objective
and policies and permissible under the Investment Company Act of 1940, as
amended (the "1940 Act"). Under the 1940 Act, the fund may not acquire the
securities of other domestic or non-U.S. investment companies if, as a result,
(i) more than 10% of the fund's total assets would be invested in securities of
other investment companies, (ii) such purchase would result in more than 3% of
the total outstanding voting securities of any one investment company being held
by the fund, or (iii) more than 5% of the fund's total assets would be invested
in any one investment company. These limitations do not apply to the purchase of
shares of any investment company in connection with a merger, consolidation,
reorganization or acquisition of substantially all the assets of another
investment company. The fund will not invest in other investment companies for
which Pioneer or any of its affiliates act as an investment adviser or
distributor.
The fund, as a holder of the securities of other investment companies, will bear
its pro rata portion of the other investment companies' expenses, including
advisory fees. These expenses are in addition to the direct expenses of the
fund's own operations.
10
Repurchase Agreements
The fund may enter into repurchase agreements with broker-dealers, member banks
of the Federal Reserve System and other financial institutions. Repurchase
agreements are arrangements under which the fund purchases securities and the
seller agrees to repurchase the securities within a specific time and at a
specific price. The repurchase price is generally higher than the fund's
purchase price, with the difference being income to the fund. Under the
direction of the Board of Trustees, Pioneer reviews and monitors the
creditworthiness of any institution which enters into a repurchase agreement
with the fund. The counterparty's obligations under the repurchase agreement are
collateralized with U.S. Treasury and/or agency obligations with a market value
of not less than 100% of the obligations, valued daily. Collateral is 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 of commencement of
bankruptcy or insolvency proceedings with respect to the seller of the security
before repurchase of the security under a repurchase agreement, the fund may
encounter delay and incur costs before being able to sell the security. Such a
delay may involve loss of interest or a decline in price of the security. If the
court characterizes the transaction as a loan and the fund has not perfected a
security interest in the security, the fund may be required to return the
security to the seller's estate and be treated as an unsecured creditor of the
seller. As an unsecured creditor, the fund would be at risk of losing some or
all of the principal and interest involved in the transaction.
Asset Segregation
The 1940 Act requires that the fund segregate assets in connection with certain
types of transactions that may have the effect of leveraging the fund's
portfolio. If the fund enters into a transaction requiring segregation, such as
a forward commitment, the custodian or Pioneer will segregate liquid assets in
an amount required to comply with the 1940 Act. Such segregated assets will be
valued at market daily. If the aggregate value of such segregated assets
declines below the aggregate value required to satisfy the 1940 Act, additional
liquid assets will be segregated.
Portfolio Turnover
It is the policy of the fund not to engage in trading for short-term profits
although portfolio turnover rate is not considered a limiting factor in the
execution of investment decisions for the fund. See Appendix A for the fund's
annual portfolio turnover rate.
Foreign Currency Transactions
The fund may engage in foreign currency transactions. These transactions may be
conducted at the prevailing spot rate for purchasing or selling currency 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 invests as a hedge against possible variations in
the foreign exchange rates 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.
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 quoted 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
11
occur. The fund will not attempt to hedge all of its foreign portfolio positions
and will enter into such transactions only to the extent, if any, deemed
appropriate by Pioneer.
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 fund may also engage in cross-hedging by using forward contracts in one
currency to hedge against fluctuations in the value of securities denominated in
a different currency, if Pioneer 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 Pioneer determines that there is a pattern of correlation
between the proxy currency and the U.S. dollar.
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, differences in interest rates between the two currencies
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.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date on which the
contract is entered into and the date it matures. Using forward contracts to
protect the value of the fund's portfolio securities against a decline in the
value of a currency does not eliminate fluctuations in the underlying prices of
the securities. It simply establishes a rate of exchange which the fund can
achieve at some future point in time. The precise projection of short-term
currency market movements is not possible, and short-term hedging provides a
means of fixing the U.S. dollar value of only a portion of the fund's foreign
assets.
While the fund will enter into forward contracts to reduce currency exchange
rate risks, transactions in such contracts involve certain other risks. While
the fund may benefit from such transactions, unanticipated changes in currency
prices may result in a poorer overall performance for the fund than if it had
not engaged in any such transactions. Moreover, there may be imperfect
correlation between the fund's portfolio holdings of securities quoted or
denominated in a particular currency and forward contracts entered into by the
fund. Such imperfect correlation may cause the fund to sustain losses which will
prevent the fund from achieving a complete hedge or expose the fund to risk of
foreign exchange loss.
Over-the-counter markets for trading foreign forward currency contracts offer
less protection against defaults than is available when trading in currency
instruments on an exchange. Since a forward foreign currency exchange contract
is not guaranteed by an exchange or clearinghouse, a default on the contract
would deprive the fund of unrealized profits or force the fund to cover its
commitments for purchase or resale, if any, at the current market price.
If the fund enters into a forward contract to purchase foreign currency, the
custodian or Pioneer will segregate liquid assets. See "Asset Segregation."
12
Options on Foreign Currencies
The fund may purchase and write options on foreign currencies for hedging
purposes in a manner similar to that of transactions in forward contracts. For
example, a decline in the dollar value of a foreign currency in which portfolio
securities are quoted or denominated will reduce the dollar value of such
securities, even if their value in the foreign currency remains constant. In an
attempt to protect against such decreases in the value of portfolio securities,
the fund may purchase put options on the foreign currency. If the value of the
currency declines, the fund will have the right to sell such currency for a
fixed amount of dollars which exceeds the market value of such currency. This
would result in a gain that may offset, in whole or in part, the negative effect
of currency depreciation on the value of the fund's securities quoted or
denominated in that currency.
Conversely, if a rise in the dollar value of a currency is projected for those
securities to be acquired, thereby increasing the cost of such securities, the
fund may purchase call options on such currency. If the value of such currency
increases, the purchase of such call options would enable the fund to purchase
currency for a fixed amount of dollars which is less than the market value of
such currency. Such a purchase would result in a gain that may offset, at least
partially, the effect of any currency related increase in the price of
securities the fund intends to acquire. As in the case of other types of options
transactions, however, the benefit the fund derives from purchasing foreign
currency options will be reduced by the amount of the premium and related
transaction costs. In addition, if currency exchange rates do not move in the
direction or to the extent anticipated, the fund could sustain losses on
transactions in foreign currency options which would deprive it of a portion or
all of the benefits of advantageous changes in such rates.
The fund may also write options on foreign currencies for hedging purposes. For
example, if the fund anticipated a decline in the dollar value of securities
quoted or denominated in a foreign currency because of declining exchange rates,
it could, instead of purchasing a put option, write a covered call option on the
relevant currency. If the expected decline occurs, the option will most likely
not be exercised, and the decrease in value of portfolio securities will be
partially offset by the amount of the premium received by the fund.
Similarly, the fund could write a put option on the relevant currency, instead
of purchasing a call option, to hedge against an anticipated increase in the
dollar cost of securities to be acquired. If exchange rates move in the manner
projected, the put option will expire unexercised and allow the fund to offset
such increased cost up to the amount of the premium. However, as in the case of
other types of options transactions, the writing of a foreign currency option
will constitute only a partial hedge up to the amount of the premium, only if
rates move in the expected direction. If unanticipated exchange rate
fluctuations occur, the option may be exercised and the fund would be required
to purchase or sell the underlying currency at a loss which may not be fully
offset by the amount of the premium. As a result of writing options on foreign
currencies, the fund also may be required to forego all or a portion of the
benefits which might otherwise have been obtained from favorable movements in
currency exchange rates.
A call option written on foreign currency by the fund is "covered" if the fund
owns the underlying foreign currency subject to the call, or if it has an
absolute and immediate right to acquire that foreign currency without additional
cash consideration. A call option is also covered if the fund holds a call on
the same foreign currency for the same principal amount as the call written
where the exercise price of the call held is (a) equal to or less than the
exercise price of the call written or (b) greater than the exercise price of the
call written if the amount of the difference is maintained by the fund in cash
or liquid securities. See "Asset Segregation."
13
The fund may close out its position in a currency option by either selling the
option it has purchased or entering into an offsetting option. An
exchange-traded options position may be closed out only on an options exchange
which provides a secondary market for an option of the same series. Although the
fund will generally purchase or write only those options for which there appears
to be an active secondary market, there is no assurance that a liquid secondary
market on an exchange will exist for any particular option, or at any particular
time. For some options no secondary market on an exchange may exist. In such
event, it might not be possible to effect closing transactions in particular
options, with the result that the fund would have to exercise its options in
order to realize any profit and would incur transaction costs upon the sale of
underlying currencies pursuant to the exercise of put options. If the fund as a
covered call option writer is unable to effect a closing purchase transaction in
a secondary market, it will not be able to sell the underlying currency (or
security quoted or denominated in that currency) until the option expires or it
delivers the underlying currency upon exercise.
The fund may also use options on currencies to cross-hedge, which involves
writing or purchasing options on one currency to hedge against changes in
exchange rates of a different currency with a pattern of correlation. Cross
hedging may also include using a foreign currency as a proxy for the U.S.
dollar, if Pioneer determines that there is a pattern of correlation between
that currency and the U.S. dollar.
The fund may purchase and write over-the-counter options to the extent
consistent with its limitation on investments in illiquid securities. Trading in
over-the-counter options is subject to the risk that the other party will be
unable or unwilling to close out options purchased or written by the fund.
Options on Securities and Securities Indices
The fund may purchase put and call options on any security in which it may
invest or options on any securities index based on securities in which it may
invest. The fund would also be able to enter into closing sale transactions in
order to realize gains or minimize losses on options it has purchased.
Writing Call and Put Options on Securities. A call option written by the fund
obligates the fund to sell specified securities to the holder of the option at a
specified price if the option is exercised at any time before the expiration
date. All call options written by the fund are covered, which means that the
fund will own the securities subject to the options as long as the options are
outstanding, or the fund will use the other methods described below. The fund's
purpose in writing covered call options is to realize greater income than would
be realized on portfolio securities transactions alone. However, the fund may
forego the opportunity to profit from an increase in the market price of the
underlying security.
A put option written by the fund would obligate the fund to purchase specified
securities from the option holder at a specified price if the option is
exercised at any time before the expiration date. All put options written by the
fund would be covered, which means that the fund would have segregated assets
with a value at least equal to the exercise price of the put option. The purpose
of writing such options is to generate additional income for the fund. However,
in return for the option premium, the fund accepts the risk that it may be
required to purchase the underlying security at a price in excess of its market
value at the time of purchase.
Call and put options written by the fund will also be considered to be covered
to the extent that the fund's liabilities under such options are wholly or
partially offset by its rights under call and put options purchased by the fund.
In addition, a written call option or put may be covered by entering into an
offsetting forward contract and/or by purchasing an offsetting option or any
other option which, by virtue of its exercise price or otherwise, reduces the
fund's net exposure on its written option position.
14
Writing Call and Put Options on Securities Indices. The fund may also write
(sell) covered call and put options on any securities index composed of
securities in which it may invest. Options on securities indices are similar to
options on securities, except that the exercise of securities index options
requires cash payments and does not involve the actual purchase or sale of
securities. In addition, securities index options are designed to reflect price
fluctuations in a group of securities or segments of the securities market
rather than price fluctuations in a single security.
The fund may cover call options on a securities index by owning securities whose
price changes are expected to be similar to those of the underlying index, or by
having an absolute and immediate right to acquire such securities without
additional cash consideration (or for additional consideration if cash in such
amount is segregated) upon conversion or exchange of other securities in its
portfolio. The fund may cover call and put options on a securities index by
segregating assets with a value equal to the exercise price.
Purchasing Call and Put Options. The fund would normally purchase call options
in anticipation of an increase in the market value of securities of the type in
which it may invest. The purchase of a call option would entitle the fund, in
return for the premium paid, to purchase specified securities at a specified
price during the option period. The fund would ordinarily realize a gain if,
during the option period, the value of such securities exceeded the sum of the
exercise price, the premium paid and transaction costs; otherwise the fund would
realize either no gain or a loss on the purchase of the call option.
The fund would normally purchase put options in anticipation of a decline in the
market value of securities in its portfolio ("protective puts") or in securities
in which it may invest. The purchase of a put option would entitle the fund, in
exchange for the premium paid, to sell specified securities at a specified price
during the option period. The purchase of protective puts is designed to offset
or hedge against a decline in the market value of the fund's securities. Put
options may also be purchased by the fund for the purpose of affirmatively
benefiting from a decline in the price of securities which it does not own. The
fund would ordinarily realize a gain if, during the option period, the value of
the underlying securities decreased below the exercise price sufficiently to
more than cover the premium and transaction costs; otherwise the fund would
realize either no gain or a loss on the purchase of the put option. Gains and
losses on the purchase of protective put options would tend to be offset by
countervailing changes in the value of the underlying portfolio securities.
The fund may terminate its obligations under an exchange-traded call or put
option by purchasing an option identical to the one it has written. Obligations
under over-the-counter options may be terminated only by entering into an
offsetting transaction with the counterparty to such option. Such purchases are
referred to as "closing purchase transactions."
Risks of Trading Options. There is no assurance that a liquid secondary market
on an options exchange will exist for any particular exchange-traded option, or
at any particular time. If the fund is unable to effect a closing purchase
transaction with respect to covered options it has written, the fund will not be
able to sell the underlying securities or dispose of its segregated assets until
the options expire or are exercised. Similarly, if the fund is unable to effect
a closing sale transaction with respect to options it has purchased, it will
have to exercise the options in order to realize any profit and will incur
transaction costs upon the purchase or sale of underlying securities.
Reasons for the absence of a liquid secondary market on an exchange include the
following: (i) there may be insufficient trading interest in certain options;
(ii) restrictions may be imposed by an exchange on opening or closing
transactions or both; (iii) trading halts, suspensions or other restrictions may
be imposed with respect to particular classes or series of options; (iv) unusual
or unforeseen circumstances may interrupt normal operations on an exchange; (v)
the facilities of an exchange or the Options Clearing
15
Corporation (the "OCC") may not at all times be adequate to handle current
trading volume; or (vi) one or more exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the trading
of options (or a particular class or series of options), in which event the
secondary market on that exchange (or in that class or series of options) would
cease to exist, although outstanding options on that exchange, if any, that had
been issued by the OCC as a result of trades on that exchange would continue to
be exercisable in accordance with their terms.
The fund may purchase and sell both options that are traded on U.S. and non-U.S.
exchanges and options traded over-the-counter with broker-dealers who make
markets in these options. The ability to terminate over-the-counter options is
more limited than with exchange-traded options and may involve the risk that
broker-dealers participating in such transactions will not fulfill their
obligations. Until such time as the staff of the Securities and Exchange
Commission (the "SEC") changes its position, the fund will treat purchased
over-the-counter options and all assets used to cover written over-the-counter
options as illiquid securities, except that with respect to options written with
primary dealers in U.S. government securities pursuant to an agreement requiring
a closing purchase transaction at a formula price, the amount of illiquid
securities may be calculated with reference to the formula.
Transactions by the fund in options on securities and indices will be subject to
limitations established by each of the exchanges, boards of trade or other
trading facilities governing the maximum number of options in each class which
may be written or purchased by a single investor or group of investors acting in
concert. Thus, the number of options which the fund may write or purchase may be
affected by options written or purchased by other investment advisory clients of
Pioneer. An exchange, board of trade or other trading facility may order the
liquidations of positions found to be in excess of these limits, and it may
impose certain other sanctions.
The writing and purchase of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. The successful use of protective
puts for hedging purposes depends in part on Pioneer's ability to predict future
price fluctuations and the degree of correlation between the options and
securities markets.
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 movements
can take place in the underlying markets that cannot be reflected in the options
markets.
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 the price 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 or to
seek to increase total return, 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, non-U.S. 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 non-U.S. exchanges.
16
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 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 Pioneer, 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, Pioneer 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.
17
Options on Futures Contracts. The acquisition of put and call options on futures
contracts will give the fund the right (but not the obligation) for a specified
price to sell or to purchase, respectively, the underlying futures contract at
any time during the option period. As the purchaser of an option on a futures
contract, the fund obtains the benefit of the futures position if prices move in
a favorable direction but limits its risk of loss in the event of an unfavorable
price movement to the loss of the premium and transaction costs.
The writing of a call option on a futures contract generates a premium which may
partially offset a decline in the value of the fund's assets. By writing a call
option, the fund becomes obligated, in exchange for the premium, to sell a
futures contract (if the option is exercised), which may have a value higher
than the exercise price. Conversely, the writing of a put option on a futures
contract generates a premium which may partially offset an increase in the price
of securities that the fund intends to purchase. However, the fund becomes
obligated to purchase a futures contract (if the option is exercised) which may
have a value lower than the exercise price. Thus, the loss incurred by the fund
in writing options on futures is potentially unlimited and may exceed the amount
of the premium received. The fund will incur transaction costs in connection
with the writing of options on futures.
The holder or writer of an option on a futures contract may terminate its
position by selling or purchasing an offsetting option on the same series. There
is no guarantee that such closing transactions can be effected. The fund's
ability to establish and close out positions on such options will be subject to
the development and maintenance of a liquid market.
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 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.
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.
18
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 non-U.S.
securities because currency movements impact the value of different securities
in differing degrees.
Lending of Portfolio Securities
The fund may lend portfolio securities to member firms of the New York Stock
Exchange (the "Exchange") under agreements which 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 continues 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 and the detriment of any decrease 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 that 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 5% of the value of the fund's total assets.
Mortgage Dollar Rolls. The fund may enter into mortgage "dollar rolls" in which
the fund sells securities for delivery in the current month and simultaneously
contracts with the same counterparty to repurchase similar (same type, coupon
and maturity), but not identical securities on a specified future date. During
the roll period, the fund loses the right to receive principal and interest paid
on the securities sold. However, the fund would benefit to the extent of any
difference between the price received for the securities sold and the lower
forward price for the future purchase (often referred to as the "drop") or fee
income plus the interest earned on the cash proceeds of the securities sold
until the settlement date of the forward purchase. Unless such benefits exceed
the income, capital appreciation and gain or loss due to mortgage prepayments
that would have been realized on the securities sold as part of the mortgage
dollar roll, the use of this technique will diminish the investment performance
of the fund compared with what such performance would have been without the use
of mortgage dollar rolls. All cash proceeds will be invested in instruments that
are permissible investments for the fund. The fund will hold and maintain in a
segregated account until the settlement date cash or liquid securities in an
amount equal to its forward purchase price.
For financial reporting and tax purposes, the fund treats mortgage dollar rolls
as two separate transactions; one involving the purchase of a security and a
separate transaction involving a sale. The fund does not currently intend to
enter into mortgage dollar rolls that are accounted for as financings.
Mortgage dollar rolls involve certain risks including the following: if the
broker-dealer to whom the fund sells the security becomes insolvent, the fund's
right to purchase or repurchase the mortgage-related
19
securities subject to the mortgage dollar roll may be restricted and the
instrument which the fund is required to repurchase may be worth less than an
instrument which the fund originally held. Successful use of mortgage dollar
rolls will depend upon Pioneer's ability to manage its interest rate and
mortgage prepayments exposure. For these reasons, there is no assurance that
mortgage dollar rolls can be successfully employed.
Money Market Instruments. The fund may invest in short-term money market
instruments including commercial bank obligations and commercial paper. These
instruments may be denominated in both U.S. and, to a limited extent, foreign
currency. The fund's investment in commercial bank obligations include
certificates of deposit ("CDs"), time deposits ("TDs") and bankers' acceptances.
Obligations of non-U.S. branches of U.S. banks and of non-U.S. banks may be
general obligations of the parent bank in addition to the issuing bank, or may
be limited by the terms of a specific obligation and by government regulation.
As with investment in non-U.S. securities in general, investments in the
obligations of non-U.S. branches of U.S. banks and of non-U.S. banks may subject
the fund to investment risks that are different in some respects from those of
investments in obligations of domestic issuers.
The fund's investments in commercial paper consist of short-term (usually from 1
to 270 days) unsecured promissory notes issued by corporations in order to
finance their current operations. The fund may also invest in variable amount
master demand notes (which is a type of commercial paper) which represents a
direct borrowing arrangement involving periodically fluctuating rates of
interest under a letter agreement between a commercial paper issuer and an
institutional lender, pursuant to which the lender may determine to invest
varying amounts. Transfer of such notes is usually restricted by the issuer, and
there is no secondary trading market for such notes. To the extent the fund
invests in master demand notes, these investments will be included in the fund's
limitation on illiquid securities.
Investment Restrictions
With the exception of forward foreign currency exchange contracts, forward
commitments and repurchase agreements, the fund does not intend to invest more
than 5% of its assets during the current fiscal year in any of the investments
permitted by the exceptions set forth in paragraph (7) below.
Fundamental Investment Restrictions. The fund has adopted certain fundamental
investment restrictions which, along with the fund's investment objective, may
not be changed without the affirmative vote of the holders of a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of the fund. For
this purpose, a majority of the outstanding shares of the fund means the vote of
the lesser of:
(i) 67% or more of the shares represented at a meeting, if the holders of more
than 50% of the outstanding shares are present in person or by proxy, or
(ii) more than 50% of the outstanding shares of the fund.
The fund may not:
(1) Issue senior securities, except as permitted by paragraphs (2), (6) and (7)
below. For purposes of this restriction, the issuance of shares of beneficial
interest in multiple classes or series, the purchase or sale of options, futures
contracts and options on futures contracts, forward commitments, forward foreign
exchange contracts and 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.
20
(2) Borrow money, except from banks as a temporary measure for extraordinary
emergency purposes 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 exceed 5% of the fund's total assets.
(3) Pledge, mortgage, or hypothecate its assets, except to secure indebtedness
permitted by paragraph (2) above and then only if such pledging, mortgaging or
hypothecating does not exceed 33 1/3% of the fund's total assets taken at market
value.
(4) Act as an underwriter, except to the extent that, in connection with the
disposition of portfolio securities, the fund may be deemed to be an underwriter
for purposes of the 1933 Act.
(5) Purchase or sell real estate or any interest therein, except that the fund
may invest in securities secured by real estate or marketable interests therein
or securities issued by companies (other than real estate limited partnerships)
that invest in real estate or interests therein.
(6) Make loans, except that the fund may lend portfolio securities, enter into
repurchase agreements, and purchase bank certificates of deposit, a portion of
an issue of publicly distributed bonds, bank loan participation agreements,
bankers' acceptances, debentures and other securities, whether or not the
purchase is made upon the original issuance of the securities, in accordance
with its investment policies.
(7) Invest in commodities or commodity contracts or in puts, calls, or
combinations of both, except interest rate futures contracts, options on
securities, securities indices, currency and other financial instruments,
futures contracts on securities, securities indices, currency and other
financial instruments and options on such futures contracts, forward foreign
currency exchange contracts, forward commitments, securities index put or call
warrants and repurchase agreements entered into in accordance with the fund's
investment policies.
(8) 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. In the opinion of the SEC,
investments are concentrated in a particular industry if such investments
aggregate 25% or more of the fund's net assets. The fund's policy does not apply
to investments in U.S. government securities.
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:
(a) Purchase securities on margin or make short sales unless by virtue of its
ownership of other securities, the fund has the right to obtain securities
equivalent in kind and amount to the securities sold and, if the right is
conditional, the sale is made upon the same conditions, except that the fund may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities and in connection with transactions involving
forward foreign currency exchange transactions.
21
(b) Invest in companies for the purpose of exercising control or management.
3. MANAGEMENT OF THE FUND
The fund's Board of Trustees provides broad supervision over the affairs of the
fund. The officers of the fund are responsible for the fund's operations. The
Trustees and executive officers of the fund are listed below, together with
their principal occupations during the past five years. An asterisk indicates
those Trustees who are interested persons of the fund within the meaning of the
1940 Act.
JOHN F. COGAN, JR.*, Chairman of the Board, President and Trustee, DOB: June
1926
Director-Deputy Chairman of Pioneer Global Asset Management S.p.A. ("PGAM");
Non-Executive Chairman and a Director of Pioneer Investment Management USA Inc.
("PIM-USA"); Chairman and a Director of Pioneer and Pioneer Global Funds
Distributor, Ltd.; President and Director of Pioneer International Corporation
("PIntl"); Member of the Supervisory Board of Pioneer Fonds Marketing GmbH,
Pioneer First Polish Investment Fund Joint Stock Company ("Pioneer First
Polish"), Pioneer Czech Investment Company, a.s. ("Pioneer Czech") and Pioneer
Universal Pension Fund Company; Chairman, President and Trustee of all of the
Pioneer mutual funds; Director of Pioneer America Fund Plc, Pioneer Global
Equity Fund Plc, Pioneer Global Bond Fund Plc, Pioneer Euro Reserve Fund Plc,
Pioneer European Equity Fund Plc, Pioneer Emerging Europe Fund Plc, Pioneer
Greater Asia Fund Plc, Pioneer U.S. Growth Fund Plc, Pioneer U.S. High Yield
Fund Plc and Pioneer US Real Estate Fund Plc; and Of Counsel, Hale and Dorr LLP
(counsel to PIM-USA and the fund).
MARY K. BUSH, Trustee, DOB: April 1948
4201 Cathedral Avenue, NW, Washington, DC 20016
President, Bush & Co. (international financial advisory firm); Director and/or
Trustee of Mortgage Guaranty Insurance Corporation, Hoover Institution, March of
Dimes, Texaco, Inc., R.J. Reynolds Tobacco Holdings, Inc. and Brady Corporation
(industrial identification and specialty coated material products manufacturer);
Advisory Board Member, Washington Mutual Investors Fund (registered investment
company); and Trustee of all of the Pioneer mutual funds.
RICHARD H. EGDAHL, M.D., Trustee, DOB: December 1926
Boston University Healthcare Entrepreneurship Program, 53 Bay State Road,
Boston, MA 02215
Alexander Graham Bell Professor of Health Care Entrepreneurship, Boston
University; Professor of Management, Boston University School of Management;
Professor of Public Health, Boston University School of Public Health; Professor
of Surgery, Boston University School of Medicine; University Professor, Boston
University; Director, Boston University Health Policy Institute, University
Program for Health Care Entrepreneurship; Trustee, Boston Medical Center; and
Trustee of all of the Pioneer mutual funds.
MARGARET B.W. GRAHAM, Trustee, DOB: May 1947
The Keep, P.O. Box 110, Little Deer Isle, ME 04650
Founding Director, The Winthrop Group, Inc. (consulting firm); and Trustee of
all of the Pioneer mutual funds.
MARGUERITE A. PIRET, Trustee, DOB: May 1948
One Boston Place, 26th Floor, 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; Director, Organogenesis Inc. (tissue engineering company);
and Trustee of all of the Pioneer mutual funds.
DAVID D. TRIPPLE*, Trustee and Executive Vice President, DOB: February 1944
Chief Executive Officer-Pioneer US of PGAM; Director, Chief Executive Officer
and President of PIM-USA; Chairman and a Director of Pioneer Funds Distributor,
Inc. ("PFD"); President and a Director of
22
Pioneer; Director of Pioneer Investment Management Shareholder Services, Inc.
("PIMSS") and PIntl; Member of the Supervisory Board of Pioneer First Polish,
Pioneer Czech and Pioneer Asset Management, S.A.; and Executive Vice President
and Trustee of all of the Pioneer mutual funds.
STEPHEN K. WEST, Trustee, DOB: September 1928
125 Broad Street, New York, NY 10004
Of Counsel, Sullivan & Cromwell (law firm); Director, Dresdner RCM Global
Strategic Income Fund, Inc. since May 1997 and The Swiss Helvetia Fund, Inc.
since 1995 (investment companies), AMVESCAP PLC (investment managers) since 1997
and ING American Insurance Holdings, Inc.; and Trustee of all of the Pioneer
mutual funds.
JOHN WINTHROP, Trustee, DOB: June 1936
One North Adgers Wharf, Charleston, SC 29401
President, John Winthrop & Co., Inc. (private investment firm); Director of NUI
Corp. (energy sales, services and distribution); and Trustee of all of the
Pioneer mutual funds.
JOSEPH P. BARRI, Secretary, DOB: August 1946
Corporate Secretary of PIM-USA and most of its subsidiaries until October 2000;
Secretary of all of the Pioneer mutual funds; and Partner, Hale and Dorr LLP.
VINCENT NAVE, Treasurer, DOB: June 1945
Vice President-Fund Accounting and Custody Services of PIM-USA (Manager from
September 1996 to February 1999); and Treasurer of all of the Pioneer mutual
funds (Assistant Treasurer from June 1999 to November 2000).
LUIS I. PRESUTTI, Assistant Treasurer, DOB: April 1965
Assistant Vice President-Fund Accounting, Administration and Custody Services of
Pioneer (Fund Accounting Manager from 1994 to 1999); and Assistant Treasurer of
all of the Pioneer mutual funds since November 2000.
JOHN F. DALY III, Assistant Treasurer, DOB: August 1965
Global Custody and Settlement Division Manager of PIM-USA; and Assistant
Treasurer of all of the Pioneer mutual funds since November 2000.
DOROTHY E. BOURASSA, Assistant Secretary, DOB: January 1948
Senior Vice President-Legal and Secretary of PIM-USA and Secretary/Clerk of most
of its subsidiaries since October 2000; Assistant Secretary of all of the
Pioneer mutual funds since November 2000; Senior Counsel, Assistant Vice
President and Director of Compliance of PIM-USA from April 1998 through October
2000; Vice President and Assistant General Counsel, First Union Corporation from
December 1996 through March 1998; and Vice President and Counsel, Keystone
Investments, Inc. from March 1986 through November 1996.
The business address of all officers is 60 State Street, Boston, Massachusetts
02109.
All of the outstanding capital stock of PFD, Pioneer and PIMSS is indirectly
majority owned by UniCredito Italiano S.p.A. ("UniCredito Italiano"), one of the
largest banking groups in Italy. Pioneer, the fund's investment adviser,
provides investment management and financial services to mutual funds,
institutional and other clients.
23
The table below lists all of the U.S.-registered Pioneer mutual funds currently
offered to the public and the investment adviser and principal underwriter for
each fund.
Investment Adviser Principal
Fund Name Underwriter
Pioneer International Growth Fund Pioneer PFD
Pioneer Europe Fund Pioneer PFD
Pioneer Europe Select Fund Pioneer PFD
Pioneer Global Financials Fund Pioneer PFD
Pioneer Global Health Care Fund Pioneer PFD
Pioneer Global Telecoms Fund Pioneer PFD
Pioneer World Equity Fund Pioneer PFD
Pioneer Emerging Markets Fund Pioneer PFD
Pioneer Indo-Asia Fund Pioneer PFD
Pioneer Mid-Cap Value Fund Pioneer PFD
Pioneer Mid-Cap Fund Pioneer PFD
Pioneer Growth Shares Pioneer PFD
Pioneer Small Company Fund Pioneer PFD
Pioneer Independence Fund Pioneer Note 1
Pioneer Micro-Cap Fund Pioneer PFD
Pioneer Science and Technology Fund Pioneer PFD
Pioneer Balanced Fund Pioneer PFD
Pioneer Equity-Income Fund Pioneer PFD
Pioneer Fund Pioneer PFD
Pioneer II Pioneer PFD
Pioneer Real Estate Shares Pioneer PFD
Pioneer Limited Maturity Bond Fund Pioneer PFD
Pioneer America Income Trust Pioneer PFD
Pioneer Bond Fund Pioneer PFD
Pioneer Tax-Free Income Fund Pioneer PFD
Pioneer Cash Reserves Fund Pioneer PFD
Pioneer Strategic Income Fund Pioneer PFD
Pioneer Tax-Managed Fund Pioneer PFD
Pioneer High Yield Fund Pioneer PFD
Pioneer Interest Shares Pioneer Note 2
Pioneer Variable Contracts Trust Pioneer Note 3
Note 1 This fund is available to the general public only through Pioneer
Independence Plans, a systematic investment plan sponsored by PFD.
Note 2 This fund is a closed-end fund.
Note 3 This is a series of 16 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.
Share Ownership
See Appendix A for annual information on the ownership of fund shares by the
Trustees, the fund's officers and owners in excess of 5% of any class of shares
of the fund.
24
Compensation of Officers and Trustees
The fund pays no salaries or compensation to any of its officers. Effective
October 3, 2000, the Pioneer U.S. mutual funds compensate their Trustees as
follows:
o each fund with assets greater than $250 million pays each Trustee who is
not affiliated with PIM-USA, Pioneer, PFD, PIMSS or UniCredito Italiano
(i.e., independent trustees) an annual base fee calculated on the basis of
the fund's net assets.
o each fund with assets less than $250 million pays each independent Trustee
an annual fee of $1,000.
o each fund, regardless of its assets, pays each Trustee affiliated with
Pioneer an annual fee of $500 (Pioneer reimburses the fund for these fees).
o each fund with assets greater than $250 million pays each independent
Trustee who serves on each board committee an annual committee fee based
the fund's net assets (with additional compensation for chairpersons of
such committees).
Prior to October 3, 2000, the fund compensated each independent Trustee with a
base fee, a variable fee calculated on the basis of average net assets of the
fund, per meeting fees, and annual committee participation fees for each
committee member or chairperson that were based on percentages of his or her
aggregate annual fee. See the fee table in Appendix A.
4. INVESTMENT ADVISER
The fund has contracted with Pioneer to act as its investment adviser. Pioneer
is a majority owned subsidiary of UniCredito Italiano. Certain Trustees or
officers of the fund are also directors and/or officers of certain of UniCredito
Italiano's subsidiaries (see management biographies above).
As the fund's investment adviser, Pioneer provides the fund with investment
research, advice and supervision and furnishes an investment program for the
fund consistent with the fund's investment objective and policies, subject to
the supervision of the fund's Trustees. Pioneer determines what portfolio
securities will be purchased or sold, arranges for the placing of orders for the
purchase or sale of portfolio securities, selects brokers or dealers to place
those orders, maintains books and records with respect to the fund's securities
transactions, and reports to the Trustees on the fund's investments and
performance.
Under the terms of its management contract with the fund, Pioneer pays all the
operating expenses, including executive salaries and the rental of office space,
relating to its services for the fund, with the exception of the following,
which are to be paid by the fund: (a) charges and expenses for fund accounting,
pricing and appraisal services, including, to the extent such services are
performed by personnel of Pioneer, 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
25
to which the fund is a party; (e) insurance premiums, interest charges, dues and
fees for membership in trade associations and all taxes and corporate fees
payable by the fund to federal, state or other governmental agencies; (f) fees
and expenses involved in registering and maintaining registrations of the fund
and/or its shares with federal regulatory agencies, state or blue sky securities
agencies and foreign jurisdictions, including the preparation of prospectuses
and statements of additional information for filing with such regulatory
authorities; (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) any distribution
fees paid by the fund in accordance with Rule 12b-1 promulgated by the SEC
pursuant to the 1940 Act; (j) compensation of those Trustees of the fund who are
not affiliated with or interested persons of Pioneer, the fund (other than as
Trustees), PIM-USA or PFD; (k) the cost of preparing and printing share
certificates; and (l) interest on borrowed money, if any. In addition, 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. The
Trustees' approval of and the terms, continuance and termination of the
management contract are governed by the 1940 Act and the Investment Advisers Act
of 1940, as applicable. Pursuant to the management contract, Pioneer 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 Pioneer. Pioneer, 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 management contract.
Advisory Fee. As compensation for its management services and expenses incurred,
and certain expenses which Pioneer incurs on behalf of the fund, the fund pays
Pioneer an annual fee at the rate of 0.50% of the fund's average daily net
assets up to $100 million, 0.45% of the next $200 million, and 0.40% on assets
over $300 million. The fee is computed and accrued daily and paid monthly.
Expense Limit. Pioneer has agreed to waive all or part of its management fee or
to reimburse the fund for other expenses (other than extraordinary expenses) to
the extent the expenses of the fund's Class A shares exceed 0.85% per annum of
average daily net assets attributable to Class A shares. The portion of fund
expenses attributable to Class B shares and Class Y shares will be reduced only
to the extent such expenses were reduced for the fund's Class A shares.
See the table in Appendix A for management fees paid to Pioneer during recently
completed fiscal years.
Administration Agreement. The fund has entered into an administration agreement
with Pioneer pursuant to which certain accounting and legal services which are
expenses payable by the fund under the management contract are performed by
Pioneer and pursuant to which Pioneer is reimbursed for its costs of providing
such services. See Appendix A for fees the fund paid to Pioneer for
administration and related services.
Potential Conflict of Interest. The fund is managed by Pioneer which also serves
as investment adviser to other Pioneer mutual funds and private accounts with
investment objectives identical or similar to those of the fund. Securities
frequently meet the investment objectives of the fund, the other Pioneer mutual
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.
26
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 more than one of the Pioneer
mutual funds or a private account managed by Pioneer seeks to acquire the same
security at about the same time, the fund may not be able to acquire as large a
position in such security as it desires or it may have to pay a higher price for
the security. Similarly, the fund may not be able to obtain as large an
execution of an order to sell or as high a price for any particular portfolio
security if Pioneer 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. 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 account. Although the other Pioneer mutual funds
may have the same or similar investment objectives and policies as the fund,
their portfolios do not generally consist of the same investments as the fund or
each other, and their performance results are likely to differ from those of the
fund.
Personal Securities Transactions. The fund, Pioneer and PFD have adopted a code
of ethics under Rule 17j-1 of the 1940 Act which is applicable to officers,
trustees/directors and designated employees. The code permits such persons to
engage in personal securities transactions for their own accounts, including
securities that may be purchased or held by the fund, and is designed to
prescribe means reasonably necessary to prevent conflicts of interest from
arising in connection with personal securities transactions. The code is on
public file with and available from the SEC.
5. PRINCIPAL UNDERWRITER AND DISTRIBUTION PLANS
Principal Underwriter
PFD, 60 State Street, Boston, Massachusetts 02109, is the principal underwriter
for the fund in connection with the continuous offering of its shares. PFD is an
indirect wholly owned subsidiary of PIM-USA.
The fund entered into an underwriting agreement with PFD which 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
non-U.S. countries. Under the underwriting agreement, PFD will use its best
efforts in rendering services to the fund.
See "Class A Share Sales Charges" for the schedule of initial sales charge
reallowed to dealers as a percentage of the offering price of the fund's Class A
shares.
See the tables in Appendix A for commissions retained by PFD and reallowed to
dealers in connection with PFD's offering of the fund's Class A shares during
recently completed fiscal years.
27
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.
The redemption price of shares of beneficial interest of the fund may, at
Pioneer's discretion, be paid in cash or portfolio securities. The fund has,
however, elected to be governed by Rule 18f-1 under the 1940 Act pursuant to
which the fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the fund's net asset value during any 90-day period for any
one shareholder. Should the amount of redemptions by any shareholder exceed such
limitation, the fund will have the option of redeeming the excess in cash or
portfolio securities. In the latter case, the securities are taken at their
value employed in determining the fund's net asset value. A shareholder whose
shares are redeemed in-kind may incur brokerage charges in selling the
securities received in-kind. The selection of such securities will be made in
such manner as the Board of Trustees deems fair and reasonable.
Distribution Plans
The fund has adopted a plan of distribution pursuant to Rule 12b-1 under the
1940 Act with respect to its Class A shares (the "Class A Plan") and a plan of
distribution with respect to its Class B shares (the "Class B Plan") (together,
the "Plans"), pursuant to which certain distribution and service fees are paid
to PFD. Because of the Plans, long-term shareholders may pay more than the
economic equivalent of the maximum sales charge permitted by the National
Association of Securities Dealers, Inc. (the "NASD") regarding investment
companies.
Class A Plan. 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 Board of Trustees. The Board of Trustees has approved the following
categories of expenses that may be reimbursed under the Class A Plan: (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; 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. The expenses of the fund pursuant to the Class A Plan are
accrued daily at a rate which may not exceed the annual rate of 0.25% of the
fund's average daily net assets attributable to Class A shares. 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. The
limited carryover provision in the Class A Plan may result in an expense
invoiced to the fund in one fiscal year being paid in the subsequent fiscal year
and thus being treated for purposes of calculating the maximum expenditures of
the fund as having been incurred in the subsequent fiscal year. In the event of
termination or non-continuance of the Class A Plan, the fund has 12 months to
reimburse any expense which it incurs prior to such termination or
non-continuance, provided that payments by the fund during such 12-month period
shall not exceed 0.25% of the fund's average daily net assets attributable to
Class A shares during such period. See Appendix A for the amount, if any, of
carryover of distribution expenses as of the end of the most recent calendar
year.
28
Class B Plan. PFD pays the selling broker-dealer a commission on the sale of
Class B shares equal to 3.75% of the amount invested. This commission is paid at
the time of sale of the Class B Shares. In order to be entitled to a commission,
the selling broker-dealer must have entered into a sales agreements with PFD. At
the time of the sale of a Class B share, PFD may also advance to the
broker-dealer, from PFD's own assets, the first-year service fee payable under
the Class B Plan at a rate up to 0.25% of the purchase price of such shares. If
such an advance is made, the broker-dealer would not receive any further service
fee until the 13th month following the purchase of Class B shares. As
compensation for advancing the service fee, PFD may retain the service fee paid
by the fund with respect to such shares for the first year after purchase.
The Class B Plan provides that the fund shall pay to PFD, as the fund's
distributor for its Class B shares:
o a distribution fee equal on an annual basis to 0.75% of the fund's
average daily net assets attributable to Class B shares. The
distribution fee compensates PFD for its distribution services with
respect to Class B shares. PFD pays the commissions to broker-dealers
discussed above and also pays:
o the cost of printing prospectuses and reports used for sales
purposes and the preparation and printing of sales literature and
o other distribution-related expenses, including, without
limitation, the cost necessary to provide distribution-related
services, or personnel, travel, office expenses and equipment.
o a service fee equal to 0.25% of the fund's average daily net assets
attributable to Class B shares. PFD in turn pays the service fee to
broker-dealers at a rate of up to 0.25% of the fund's average daily
net assets attributable to Class B shares owned by shareholder for
whom that broker-dealer is the holder or dealer of record. This
service fee compensates the broker-dealer for providing personal
services and/or account maintenance services rendered by the
broker-dealer with respect to Class B shares. PFD may from time to
time require that dealers, in addition to providing these services,
meet certain criteria in order to receive service fees. PFD is
entitled to retain all service fees with respect to Class B shares for
which there is no dealer of record or with respect to which a dealer
is not otherwise entitled to a service fee. Such service fees are paid
to PFD for personal
29
services and/or account maintenance services that PFD or its
affiliates perform for shareholder accounts.
PFD also receives contingent deferred sales charges ("CDSCs") attributable to
Class B shares to compensate PFD for its distribution expenses. 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.
Since PFD pays commissions to broker-dealers at the time of the sale of Class B
shares but only receives compensation for such expenses over time through the
distribution fee and CDSC, the Class B Plan and underwriting agreement permit
PFD to finance the payment of commissions to broker-dealers. In order to
facilitate such financing, the fund has agreed that the distribution fee will
not be terminated or modified (including a modification in the rules relating to
the conversion of Class B shares into Class A shares) with respect to Class B
shares:
o issued prior to the date of any termination or modification;
o attributable to Class B shares issued through one or a series of
exchanges of shares of another investment company for which PFD acts
as principal underwriter which were initially issued prior to the date
of such termination or modification; or
o issued as a dividend or distribution upon Class B shares initially
issued or attributable to Class B shares issued prior to the date of
any such termination or modification.
The foregoing limitation does not apply to Class B shares issued after the
termination or modification. The foregoing limitation on terminating or
modifying the Class B Plan also does not apply to a termination or modification:
o if a change in the 1940 Act, the rules or regulations under the 1940
Act, the Conduct Rules of the NASD or an order of any court or
governmental agency requires such termination or modification (e.g. if
the Conduct Rules were amended to establish a lower limit on the
maximum aggregate sales charges that could be imposed on sales of fund
shares);
o if the fund (or any successor) terminates the Class B Plan and all
payments under the plan and neither the fund (nor any successor)
establishes another class of shares which has substantially similar
characteristics to the Class B Shares of the fund; or
o at any time by the Board of Trustees. However, the Board of Trustees
may terminate or modify the Class B Plan only if the fund and Pioneer
agree that none of the fund, PFD or any of their affiliates will pay,
after the date of termination or modification, a service fee with
respect to the fund's Class B shares and the termination or
modification of the distribution fee applies equally to all Class B
shares outstanding from time to time.
In the underwriting agreement, the fund agrees that subsequent to the issuance
of a Class B share, the fund will not waive or change any CDSC (including a
change in the rules applicable to conversion of Class B shares into another
class) in respect of such Class B share, except:
o as provided in the fund's prospectus or statement of additional
information; or
o as required by a change in the 1940 Act and the rules and regulations
thereunder, the Conduct Rules of the NASD or any order of any court or
governmental agency.
30
General
In accordance with the terms of each Plan, PFD provides to the fund for review
by the Trustees a quarterly written report of the amounts expended under the
Plan and the purposes 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,
UniCredito Italiano or in UniCredito's subsidiaries.
Each Plan's adoption, terms, continuance and termination are governed by Rule
12b-1 under the 1940 Act. The Board of Trustees believes that there is a
reasonable likelihood that the Plans will benefit the fund and its current and
future shareholders. 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 as provided in Rule 12b-1.
See Appendix A for fund expenses under the Class A Plan and Class B Plan and
CDSCs paid to PFD for the most recently completed fiscal year.
Upon redemption, Class A shares may be subject to a 0.5% CDSC and Class B shares
are subject to a CDSC at a rate declining from a maximum 4% of the lower of the
cost or market value of the shares.
6. SHAREHOLDER SERVICING/TRANSFER AGENT
The fund has contracted with PIMSS, 60 State Street, Boston, Massachusetts
02109, to act as shareholder servicing and transfer agent for the fund.
Under the terms of its contract with the fund, PIMSS 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 the fund's portfolio; and (iii) maintaining account records and
responding to shareholder inquiries.
PIMSS receives an annual fee of $33.00 for each Class A and Class B shareholder
account from the fund as compensation for the services described above. PIMSS is
also reimbursed by the fund for its cash out-of-pocket expenditures. The fund
may compensate entities which have agreed to provide certain sub-accounting
services such as specific transaction processing and recordkeeping services. Any
such payments by the fund would be in lieu of the per account fee which would
otherwise be paid by the fund to PIMSS.
7. CUSTODIAN
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts 02109, is
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.
31
8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, 225 Franklin Street, Boston, Massachusetts 02110, the
fund's independent public accountants, provides 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 Pioneer pursuant to authority contained in the fund's management
contract. Securities purchased and sold on behalf of the fund normally will be
traded in the over-the counter market on a net basis (i.e. without commission)
through dealers acting for their own account and not as brokers or otherwise
through transactions directly with the issuer of the instrument. The cost of
securities purchased from underwriters includes an underwriter's commission or
concession, and the prices at which securities are purchased and sold from and
to dealers include a dealer's markup or markdown. Pioneer normally seeks to deal
directly with the primary market makers unless, in its opinion, better prices
are available elsewhere. Some securities are purchased and sold on an exchange
or in over-the-counter transactions conducted on an agency basis involving a
commission. Pioneer seeks to obtain the best execution on portfolio trades. The
price of securities and any commission rate paid are always factors, but
frequently not the only factors, in judging best execution. In selecting brokers
or dealers, Pioneer considers 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. Transactions in non-U.S. equity securities are executed by
broker-dealers in non-U.S. countries in which commission rates may not be
negotiable (as such rates are in the U.S.).
Pioneer may select broker-dealers that provide brokerage and/or research
services to the fund and/or other investment companies or other accounts managed
by Pioneer. In addition, consistent with Section 28(e) of the Securities
Exchange Act of 1934, as amended, if Pioneer determines in good faith that the
amount of commissions charged by a broker-dealer is reasonable in relation to
the value of the brokerage and research services provided by such broker, the
fund may pay commissions to such broker-dealer in an amount greater than the
amount another firm may charge. Such services may include advice concerning the
value of securities; the advisability of investing in, purchasing or selling
securities; the availability of securities or the purchasers or sellers of
securities; providing stock quotation services, credit rating service
information and comparative fund statistics; furnishing analyses, electronic
information services, manuals and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy, and performance of
accounts and particular investment decisions; and effecting securities
transactions and performing functions incidental thereto (such as clearance and
settlement). Pioneer maintains a listing of broker-dealers who provide such
services on a regular basis. However, because many transactions on behalf of the
fund and other investment companies or accounts managed by Pioneer 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. Pioneer believes that no exact dollar value can be calculated for such
services.
The research received from broker-dealers may be useful to Pioneer in rendering
investment management services to the fund as well as other investment companies
or other accounts managed by Pioneer, 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 accounts may be
useful to Pioneer in carrying out its obligations to the fund. The receipt of
such research has not reduced
32
Pioneer's normal independent research activities; however, it enables Pioneer 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 managed by Pioneer.
This policy does not imply a commitment to execute all portfolio transactions
through all broker-dealers that sell shares of the fund.
The Pioneer funds have entered into third-party brokerage and/or expense offset
arrangements to reduce the funds' total operating expenses. Pursuant to
third-party brokerage arrangements, certain of the funds that invest primarily
in U.S. equity securities may incur lower custody fees by directing brokerage to
third-party broker-dealers. Pursuant to expense offset arrangements, the funds
incur lower transfer agency expenses by maintaining their cash balances with the
custodian. See "Financial highlights" in the prospectus.
See the table in Appendix A for aggregate brokerage and underwriting commissions
paid by the fund in connection with its portfolio transactions during recently
completed fiscal years. The Board of Trustees periodically reviews Pioneer's
performance of its responsibilities in connection with the placement of
portfolio transactions on behalf of the fund.
10. DESCRIPTION OF SHARES
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 next determined net asset value per share less
any applicable CDSC. See "Sales Charges." 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 share
certificates; certificates will not be issued for Class B or Class Y shares.
The fund's Agreement and Declaration of Trust, dated as of April 30, 1992 (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 Class A shares,
Class B shares and Class Y shares. Each share of a class of the fund represents
an equal proportionate interest in the assets of the fund allocable to that
class. Upon liquidation of the fund, shareholders of each class of the fund are
entitled to share pro rata in the fund's net assets allocable to such class
available for distribution to shareholders. The fund reserves the right to
create and issue additional series or classes of shares, in which case the
shares of each class of a series would participate equally in the earnings,
dividends and assets allocable to that class of the particular series.
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 and Class B shareholders have exclusive voting rights
with respect to the Rule 12b-1 Plans adopted by holders of those shares in
connection with the distribution of shares.
33
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 fund is not required, and does not intend, to hold annual
shareholder meetings although special meetings may be called for the purpose of
electing or removing Trustees, changing fundamental investment restrictions or
approving a management contract.
The shares of each series of the fund are entitled to vote separately to approve
investment advisory agreements or changes in investment restrictions, but
shareholders of all series vote together in the election and selection of
Trustees and accountants. Shares of all series of the fund vote together as a
class on matters that affect all series of the fund in substantially the same
manner. As to matters affecting a single series or class, shares of such series
or class will vote separately. No amendment adversely affecting the rights of
shareholders may be made to the Declaration without the affirmative vote of a
majority of the fund's shares. Shares have no preemptive or conversion rights,
except that under certain circumstances Class B shares may convert to Class A
shares.
As a Massachusetts business trust, the fund's operations are governed by the
Declaration. A copy of the Declaration, dated April 30, 1992, is on file with
the office of the Secretary of State of The Commonwealth of Massachusetts.
Shareholders of a Massachusetts business trust may, under certain circumstances,
be held personally liable for the obligations of the trust. However, the
Declaration contains an express disclaimer of shareholder liability for acts or
obligations of the fund or any series of the fund and provides that notice of
such disclaimer be given in each agreement, obligation or instrument entered
into or executed by the fund or its Trustees. Moreover, the Declaration 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. The
Declaration also 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
would be limited to circumstances in which the fund itself will be unable to
meet its obligations. In light of the nature of the fund's business and the
nature and amount of its assets, the possibility of the fund's liabilities
exceeding its assets, and therefore a shareholder's risk of personal liability,
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.
11. SALES CHARGES
The fund continuously offers three classes of shares designated as Class A,
Class B and Class Y as described in the prospectus.
Class A Share Sales Charges
You may buy Class A shares at the public offering price, including a sales
charge, as follows:
34
Sales Charge as a % of
----------------------
Offering Net Amount Dealer
Amount of Purchase Price Invested Reallowance
Less than $50,000 2.50 2.56 2.00
$50,000 but less than $100,000 2.00 2.04 1.75
$100,000 but less than $250,000 1.50 1.52 1.25
$250,000 but less than $1,000,000 1.00 1.01 1.00
$1,000,000 or more 0.00 0.00 see below
The schedule of sales charges above is applicable to purchases of Class A shares
of the fund by (i) an individual, (ii) an individual and his or her spouse and
children under the age of 21 and (iii) a trustee or other fiduciary of a trust
estate or fiduciary account or related trusts or accounts including pension,
profit-sharing and other employee benefit trusts qualified under Sections 401 or
408 of the Code although more than one beneficiary is involved. The sales
charges applicable to a current purchase of Class A shares of the fund by a
person listed above is determined by adding the value of shares to be purchased
to the aggregate value (at the then current offering price) of shares of any of
the other Pioneer mutual funds previously purchased and then owned, provided PFD
is notified by such person or his or her broker-dealer each time a purchase is
made which would qualify. Pioneer mutual funds include all mutual funds for
which PFD serves as principal underwriter. At the sole discretion of PFD,
holdings of funds domiciled outside the U.S., but which are managed by
affiliates of Pioneer, may be included for this purpose.
No sales charge is payable at the time of purchase on investments of $1 million
or more, or for purchases by participants in certain group plans described below
subject to a CDSC of 0.50% which may be imposed in the event of a redemption of
Class A shares within 12 months of purchase. PFD may, in its discretion, pay a
commission to broker-dealers who initiate and are responsible for such purchases
as follows: 0.50% on the first $5 million invested; and 0.10% on the excess over
$5 million invested. These commissions shall not be payable 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 commissions paid or a pro rata portion thereof if the retirement plan
redeems its shares within 12 months of purchase.
Letter of Intent ("LOI"). Reduced sales charges are available for purchases of
$100,000 or more of Class A shares (excluding any reinvestments of dividends and
capital gain distributions) made within a 13-month period pursuant to an 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
35
time. A purchase not made pursuant to an LOI may be included if the LOI is
submitted to PIMSS 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 PIMSS,
registered in your name, until the terms of the LOI are fulfilled. When you sign
the Account Application, you agree to irrevocably appoint PIMSS 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 amount specified in the LOI.
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.
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, PIMSS, after receiving instructions
from PFD, will redeem the appropriate number of shares held in escrow to realize
the difference and release any excess.
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 gain 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 after
September 30, 1998, all payments during a month will be aggregated and deemed to
have been made on the first day of that month. For the purpose of determining
the number of years from the time of any purchase made prior to October 1, 1998,
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:
CDSC as a % of Dollar
Year Since Purchase Amount Subject to CDSC
First 2.0
Second 2.0
Third 1.0
Fourth and thereafter 0.0
36
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
fund in connection with the sale of Class B shares, including the payment of
compensation to broker-dealers.
Class B shares will automatically convert into Class A shares at the beginning
of the calendar month (or the calendar quarter for purchases made prior to
October 1, 1998) that is five 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 U.S. federal income tax
purposes. The conversion of Class B shares to Class A shares will not occur if
such ruling or opinion is not available and, therefore, Class B shares would
continue to be subject to higher expenses than Class A shares for an
indeterminate period.
Additional Payments to Dealers
From time to time, PFD or its affiliates may elect to make payments to
broker-dealers in addition to the commissions described above. PFD may elect to
reallow the entire initial sales charge to participating dealers for all Class A
sales with respect to which orders are placed during a particular period.
Dealers to whom substantially the entire sales charge is reallowed may be deemed
to be underwriters under federal securities laws. 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. PFD will reallow to participating
broker/dealers the entire sales charge for all sales of Class A shares of the
above listed funds for orders placed for IRA accounts from January 2, 2001
through April 30, 2001. In addition, PFD or its affiliates may elect to pay
broker-dealers an additional commission based on the net asset value of all
shares sold by a dealer during a particular period. PFD has elected to pay
participating dealers an amount equal to 0.50% of the net asset value of the
fund's Class B shares sold to IRA accounts from January 2, 2001 through April
30, 2001. PFD has elected to pay participating dealers an amount equal to 0.50%
of the net asset value of the fund's Class C shares sold to IRA accounts from
January 2, 2001 through April 30, 2001. PFD may elect to pay, at its own
expense, additional cash or other incentives to dealers that sell or arrange for
the sale of shares of the fund. Such cash or other incentives may take the form
of payment for attendance at preapproved conferences or seminars, sales or
training programs for invited registered representatives and other employees,
payment for travel expenses, including lodging, incurred by registered
representatives and other employees for such seminars or training programs,
seminars for the public, advertising and preapproved sales campaigns or
dealer-sponsored events. PFD may also elect to make expense reimbursements for
special training of a dealer's registered representatives and other employees in
group meetings or to help pay the expenses of sales contests. PFD will offer
such cash and other incentives only to the extent permitted by applicable law or
by a self-regulatory agency such as the National Association of Securities
Dealers, Inc.
37
12. REDEEMING SHARES
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 for shareholders that are
subject to U.S. federal income tax. 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.
Systematic Withdrawal Plan(s) ("SWP") (Class A and Class B Shares). A SWP is
designed to provide a convenient method of receiving fixed payments at regular
intervals from fund share accounts having a total value of not less than
$10,000. You must also be reinvesting all dividends and capital gain
distributions to use the SWP option.
Periodic payments of $50 or more will be deposited monthly, quarterly,
semiannually or annually 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. Payments can be made either by check or electronic funds transfer
to a bank account designated by you. Class B accounts must meet the minimum
initial investment requirement prior to establishing a SWP. Withdrawals from
Class B share accounts are limited to 10% of the value of the account at the
time the SWP is established. See "Qualifying for a reduced sales charge" in the
prospectus. If you direct that withdrawal payments be paid to another person,
want to change the bank where payments are sent or designate an address that is
different from the account's address of record after you have opened your
account, a signature guarantee must accompany your instructions. Withdrawals
under the SWP are redemptions that may have tax consequences for you.
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. SWP redemptions reduce and may ultimately exhaust the number of
shares in your account. 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.
A SWP may be terminated at any time (1) by written notice to PIMSS or from PIMSS
to the shareholder; (2) upon receipt by PIMSS of appropriate evidence of the
shareholder's death; or (3) when all shares in the shareholder's account have
been redeemed.
You may obtain additional information by calling PIMSS at 1-800-225-6292.
Reinstatement Privilege (Class A and Class B Shares). Subject to the provisions
outlined in the prospectus, you may reinvest all or part of your sale proceeds
from Class A or Class B shares without a sales charge into Class A shares of a
Pioneer mutual fund. However, the distributor will not pay your investment firm
a commission on any reinvested amount.
38
13. TELEPHONE TRANSACTIONS
You may purchase, exchange or sell Class A or Class B shares by telephone. Class
Y shares may not be purchased by telephone. See the prospectus for more
information. For personal assistance, call 1-800-225-6292 between 8:00 a.m. and
9:00 p.m. Class Y account holders should contact Pioneer's Group Plans
Department at 1-888-294-4480 between 9:00 a.m. and 6:00 p.m. Eastern time on
weekdays. Computer-assisted transactions may be available to shareholders who
have prerecorded certain bank information (see "FactFone(SM)"). You are strongly
urged to consult with your investment professional prior to requesting any
telephone transaction.
To confirm that each transaction instruction received by telephone is genuine,
the fund will record each telephone transaction, require the caller to provide
the personal identification number ("PIN") for the account and send you a
written confirmation of each telephone transaction. Different procedures may
apply to accounts that are registered to non-U.S. citizens or that are held in
the name of an institution or in the name of an investment broker-dealer or
other third party. If reasonable procedures, such as those described above, are
not followed, the fund may be liable for any loss due to unauthorized or
fraudulent instructions. The fund may implement other procedures from time to
time. In all other cases, neither the fund, PIMSS 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 purchase, exchange or redemption. You should
communicate with the fund in writing if you are unable to reach the fund by
telephone.
FactFone(SM). FactFone(SM) is an automated inquiry and telephone transaction
system available to Pioneer mutual fund shareholders by dialing 1-800-225-4321.
FactFone(SM) allows shareholder access to current information on Pioneer mutual
fund accounts and to the prices and yields of all publicly available Pioneer
mutual funds. In addition, you may use FactFone(SM) to make computer-assisted
telephone purchases, exchanges or redemptions from your Pioneer mutual fund
accounts, access your account balances and last three transactions and order a
duplicate statement if you have activated your PIN. Telephone purchases or
redemptions require the establishment of a bank account of record.
Computer-assisted Class Y share telephone purchases, exchanges and redemptions
and certain other FactFone(SM) features for Class Y shareholders are not
currently available through FactFone(SM). You are strongly urged to consult with
your investment professional prior to requesting any telephone transaction.
Shareholders whose accounts are registered in the name of a broker-dealer or
other third party may not be able to use FactFone(SM). Call PIMSS for
assistance.
39
FactFone(SM) allows shareholders to hear the following recorded fund
information:
o net asset value prices for all Pioneer mutual funds;
o annualized 30-day yields on Pioneer's fixed income funds;
o annualized 7-day yields and 7-day effective (compound) yields for Pioneer's
money market fund; and
o dividends and capital gain distributions on all Pioneer mutual funds.
Yields are calculated in accordance with SEC mandated standard formulas.
All performance numbers communicated through FactFone(SM) represent past
performance, and figures 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 Y shares (except for Pioneer
Cash Reserves Fund, which seeks to maintain a stable $1.00 share price) will
also vary, and such shares may be worth more or less at redemption than their
original cost.
14. PRICING OF SHARES
The net asset value per share of each class of the fund is determined as of the
close of regular trading on the Exchange (normally 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 on 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 fund is not required to determine its net asset
value per share on any day on which no purchase orders in good order for fund
shares are received and no shares are tendered and accepted for redemption.
Ordinarily, investments in debt securities are valued on the basis of
information furnished by a pricing service which utilizes primarily a matrix
system (which reflects such factors as security prices, yields, maturities and
ratings), supplemented by dealer and exchange quotations. Securities are valued
at the last sale price on the principal exchange or market where they are
traded. Securities which have not traded on the date of valuation or securities
for which sales prices are not generally reported are valued at the mean between
the current bid and asked prices. Securities quoted in foreign currencies are
converted to U.S. dollars utilizing foreign exchange rates employed by the
fund's independent pricing services. Generally, trading in non-U.S. securities
is substantially completed each day at various times prior to the close of
regular trading on the Exchange. The values of such securities used in computing
the net asset value of the fund's shares are determined as of such times.
Foreign currency exchange rates are also generally determined prior to the close
of regular trading on the Exchange. Occasionally, events which affect the values
of such securities and such exchange rates may occur between the times at which
they are determined and the close of regular trading on the Exchange and will
therefore not be reflected in the computation of the fund's net asset value. If
events materially affecting the value of such securities occur during such
period, then these securities may be valued at their fair value as determined in
good faith by the Trustees. All assets of the fund for which there is no other
readily available valuation method are valued at their fair value as determined
in good faith by the Trustees, although the actual computations may be made by
persons acting pursuant to the direction of the Board of Trustees.
40
The net asset value per share of each class of the fund is computed by taking
the value of all of the fund's assets attributable to a class, less the fund's
liabilities attributable to that class, and dividing the result by the number of
outstanding shares of that class. For purposes of determining net asset value,
expenses of the classes of the fund are accrued daily and taken into account.
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 and Class
Y shares are offered at net asset value without the imposition of an initial
sales charge (Class B shares may be subject to a CDSC).
15. TAX STATUS
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 U.S. federal income tax on income and capital gains distributed
to shareholders. If the fund did not qualify as a regulated investment company,
it would be treated as a U.S. corporation subject to U.S. federal income tax.
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 declares a dividend from any net investment income each business day.
The fund generally pays dividends from any net investment income or
distributions of net short-term capital gains on the last business day of the
month or shortly thereafter. The fund distributes any net long-term capital
gains in November. Dividends from income and/or capital gains may also be paid
at such other times as may be necessary for the fund to avoid U.S. federal
income or excise tax.
In order to qualify as a regulated investment company under Subchapter M of the
Code, the fund must, among other things, derive at least 90% of its gross income
for each taxable year from dividends, interest, payments with respect to
securities loans, gains from the sale or other disposition of stock, securities
or foreign currencies, or other income (including gains from options, futures
and forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "90% income test") and satisfy certain
annual distribution and quarterly diversification requirements. For purposes of
the 90% income test, the character of income earned by certain entities in which
the fund invests that are not treated as corporations (e.g., partnerships or
trusts) for U.S. federal income tax purposes will generally pass through to the
fund. Consequently, the fund may be required to limit its equity investments in
such entities that earn fee income, rental income or other nonqualifying income.
Unless shareholders specify otherwise, all distributions will be automatically
reinvested in additional full and fractional shares of the fund. For U.S.
federal income tax purposes, all dividends are taxable whether a shareholder
takes them in cash or reinvests them in additional shares of the fund. 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. Dividends from net
long-term capital gain in excess of net short-term capital loss ("net capital
gain"), if any, are taxable as long-term capital gains for U.S. federal income
tax purposes without regard to the length of time the shareholder has held
shares of the fund. The U.S. federal income tax status of all distributions will
be reported to shareholders annually.
Any dividend declared by the fund as of a record date in October, November or
December and paid during the following January will be treated for U.S. federal
income tax purposes as received by shareholders on December 31 of the calendar
year in which it is declared.
41
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 contracts or futures contracts with respect to stock or securities) may
have 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 future Treasury 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 that hold
at least 50% of their assets in investments producing such passive income
("passive foreign investment companies"), the fund could be subject to U.S.
federal income tax and additional interest charges on "excess distributions"
received from such companies or on 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 limit its tax liability or maximize its
return from these investments.
The fund may invest to a limited extent in debt obligations that are in the
lowest rating categories or are unrated, including debt obligations of issuers
not currently paying interest or who are in default. Investments in debt
obligations that are at risk of or in default present special tax issues for the
fund. Tax rules are not entirely clear about issues such as when the fund may
cease to accrue interest, original issue discount or market discount, when and
to what extent deductions may be taken for bad debts or worthless securities,
how payments received on obligations in default should be allocated between
principal and income and whether exchanges of debt obligations in a workout
context are taxable. These and other issues will be addressed by the fund, in
the event it invests in such securities, in order to seek to ensure that it
distributes sufficient income to preserve its status as a regulated investment
company and does not become subject to U.S. federal income or excise tax.
If the fund invests in certain pay-in-kind securities, zero coupon securities,
deferred interest securities or, in general, any other securities with original
issue discount (or with market discount if the fund elects to include market
discount in income currently), the fund must accrue income on such investments
for each taxable year, which generally will be prior to the receipt of the
corresponding cash payments. However, the fund must distribute, at least
annually, all or substantially all of its net income, including such accrued
income, to shareholders to qualify as a regulated investment company under the
Code and avoid U.S. 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.
Effective for 2001, the fund is eligible to make a federal tax election with
respect to certain stocks and securities it owns and that it intends to continue
to hold for more than five years. If the fund makes such
42
an election, the applicable federal capital gains rate would be reduced on the
sale of the stock or securities when they are eventually sold by the fund on or
after January 3, 2006. Any such reduction in the capital gains rate would be
passed on to the shareholders at that time. However, if the fund makes such an
election, it will be treated for U.S. federal income tax purposes as if it had
sold such stocks or securities on January 2, 2001 and reacquired them on the
same date. As a result, the fund would be required to recognize current capital
gains (if any) (but not losses) on such stock or securities without the
concurrent receipt of any cash which may cause the fund to have difficulty
obtaining cash to satisfy its distribution requirements. The fund will carefully
consider these factors in determining whether to make any such election and will
attempt to minimize the fund's tax liability and to maximize its return from
these investments.
For U.S. 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 U.S. federal income
tax liability to the fund and are not expected to be distributed as such to
shareholders. See Appendix A for the fund's available 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 with respect to these shares from such appreciation or
income may be taxable to such investor even if the net asset value of the
investor's shares is, as a result of the distributions, reduced below the
investor's cost for such shares and the distributions economically represent a
return of a portion of the investment.
Redemptions and exchanges are taxable events for shareholders that are subject
to tax. Shareholders should consult their own tax advisers with reference to
their individual circumstances to determine whether any particular transaction
in fund shares is properly treated as a sale for tax purposes, as the following
discussion assumes, and the tax treatment of any gains or losses recognized in
such transactions. Any loss realized by a shareholder upon the redemption,
exchange or other disposition of shares with a tax holding period of six months
or less will be treated as a long-term capital loss to the extent of any amounts
treated as distributions of long-term capital gain with respect to such shares.
For taxable year 2001, certain shareholders that are individuals or pass-through
entities (but not corporate shareholders) who purchased fund shares prior to
January 1, 2001 and who hold fund shares as capital assets may be eligible to
make an irrevocable U.S. federal income tax election relating to certain fund
shares that would reduce the applicable federal capital gains rate that would be
applied to such shares on the future redemption or other disposition of the
shares from 20% to 18%, provided that the shareholder does not redeem or
otherwise dispose of such shares for more than five years from the effective
date of the election. However, if a shareholder makes this election, the
shareholder will be treated as if such shares were sold by the shareholder on
January 2, 2001 for a selling price equal to the closing market price of such
fund shares on such date and will be required to recognize any capital gains
(but not losses) on such shares in taxable year 2001 (without receiving any
additional proceeds from the fund) at the current federal applicable capital
gains rate. Electing shareholders will receive a new basis in such shares equal
to the closing market price of such fund shares on January 2, 2001.
43
In addition, if Class A or Class B shares that have been held for less than 91
days are redeemed and the proceeds are reinvested in Class A shares of the fund
or in Class A shares of another mutual fund at net asset value pursuant to the
reinstatement privilege, or if Class A shares in the fund that have been held
for less than 91 days are exchanged for Class A shares in another fund at net
asset value pursuant to the exchange privilege, all or a portion of the sales
charge paid on the shares that are redeemed or exchanged will not be included in
the tax basis of such shares under the Code to the extent a sales charge that
would otherwise apply to the shares received is reduced pursuant to the
reinstatement or 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 generally would be included in the U.S. 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 forward
foreign currency contracts, may cause the fund to recognize gains or losses from
marking-to-market even though such options may not have lapsed, been closed out,
or exercised, or such futures or forward contracts may not have been performed
or closed out. The tax rules applicable to these contracts may affect the
characterization of some capital gains and losses realized by the fund as
long-term or short-term. Certain options, futures and forward contracts relating
to foreign currency may be subject to Section 988 of the Code, as described
above, and accordingly may produce ordinary income or loss. Additionally, the
fund may be required to recognize gain if an option, futures contract, forward
contract, short sale 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 the fund may receive no corresponding cash amounts, 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, forward contracts and straddles may affect the
amount, timing and character of the fund's income and gains or losses and hence
of its distributions to shareholders.
The fund anticipates that no material portion of the dividends it pays to
shareholders will generally qualify for the dividends-received deduction that
might otherwise by available for certain dividends received by shareholders that
are corporations. The fund's capital gain distributions do not qualify for this
deduction.
44
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, which would, if imposed, reduce the yield
on or return from those investments. 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. The fund, however, generally may deduct any foreign taxes that are not
passed through to its shareholders in computing its income available for
distribution to shareholders to satisfy applicable tax distribution
requirements.
A state income (and possibly local income and/or intangible property) tax
exemption is generally available to the extent the fund's distributions are
derived from interest on (or, in the case of intangible property taxes, the
value of its assets is attributable to) certain U.S. government obligations,
provided, in some states, that certain thresholds for holdings of such
obligations and/or reporting requirements are satisfied. The fund will not seek
to satisfy any threshold or reporting requirements that may apply in particular
taxing jurisdictions, although the fund may in its sole discretion provide
relevant information to shareholders.
Different tax treatment, including penalties on certain excess contributions and
deferrals, certain pre-retirement and post-retirement distributions and certain
prohibited transactions, is accorded to accounts maintained as qualified
retirement plans. Shareholders should consult their tax advisers for more
information.
Federal law requires that the fund withhold (as "backup withholding") 31% of
reportable payments, including dividends, capital gain distributions and the
proceeds of redemptions and exchanges or repurchases of fund shares, paid 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.
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 non-resident alien U.S. withholding tax at the rate of 30% or at a
lower treaty rate on amounts treated as ordinary dividends from the fund and,
unless an effective IRS Form W-8BEN, or other authorized withholding certificate
is on file, to backup withholding at the rate of 31% 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.
45
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 averages or rankings prepared by Lipper, Inc., a
widely recognized independent service which monitors mutual fund performance;
the Lehman Brothers Government/Credit Bond Index - Intermediate, a composite
index of the U.S. bond market that represents only securities with one to ten
years to maturity; the Merrill Lynch 1-3 Year Treasury Index, an index of
short-term treasury securities; 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 any other
appropriate index.
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. The fund may also include
securities industry or comparative performance information generally and in
advertising or materials marketing the fund's shares. 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, Ibbotson
Associates, Investment Company Data, Inc., Johnson's Charts, Kanon Bloch Carre
and Co., Lipper, 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
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.
Standardized Yield Quotations
The yield of a class is computed by dividing the class' net investment income
per share during a base period of 30 days, or one month, by the maximum offering
price per share of the class on the last day of such base period in accordance
with the following formula:
a-b (6)
YIELD = 2[( ----- +1) -1]
cd
46
Where:
a = interest earned during the period
b = net expenses accrued for the period
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of
the period
For purposes of calculating interest earned on debt obligations as provided in
item "a" above:
(i) The yield to maturity of each obligation held by the fund is
computed based on the market value of the obligation (including actual accrued
interest, if any) at the close of business each day during the 30-day base
period, or, with respect to obligations purchased during the month, the purchase
price (plus actual accrued interest, if any) on settlement date, and with
respect to obligations sold during the month the sale price (plus actual accrued
interest, if any) between the trade and settlement dates.
(ii) The yield to maturity of each obligation is then divided by 360
and the resulting quotient is multiplied by the market value of the obligation
(including actual accrued interest, if any) to determine the interest income on
the obligation for each day. The yield to maturity calculation has been made on
each obligation during the 30 day base period.
(iii) Interest earned on all debt obligations during the 30-day or one
month period is then totaled.
(iv) The maturity of an obligation with a call provision(s) is the next
call date on which the obligation reasonably may be expected to be called or, if
none, the maturity date.
With respect to the treatment of discount and premium on mortgage- or other
receivables-backed obligations which are expected to be subject to monthly
payments of principal and interest ("pay downs"), the fund accounts for gain or
loss attributable to actual monthly pay downs as an increase or decrease to
interest income during the period. In addition, the fund may elect (i) to
amortize the discount or premium remaining on a security, based on the cost of
the security, to the weighted average maturity date, if such information is
available, or to the remaining term of the security, if the weighted average
maturity date is not available, or (ii) not to amortize the remaining discount
or premium on a security.
For purposes of computing yield, interest income is recognized by accruing 1/360
of the stated interest rate of each obligation in the fund's portfolio each day
that the obligation is in the portfolio. Expenses of Class A and Class B accrued
during any base period, if any, pursuant to the respective Distribution Plans
are included among the expenses accrued during the base period.
See Appendix A for the yield quotations for each class of fund shares for the 30
days ended November 30, 2000.
Standardized Average Annual Total Return Quotations
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
47
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 gain 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 fund's prospectus, this statement of
additional information or in advertising are calculated by standard methods
prescribed by the SEC.
Average annual total return quotations for each class of shares are computed by
finding the average annual compounded rates of return that would cause a
hypothetical investment in the class made on the first day of a designated
period (assuming all dividends and distributions are reinvested) to equal the
ending redeemable value of such hypothetical investment on the last day of the
designated period in accordance with the following formula:
(n)
P(1+T) = ERV
Where:
P = a hypothetical initial payment of $1,000, less the
maximum sales load of $57.50 for Class A shares or
the deduction of the CDSC for Class B shares at the
end of the period; for Class Y shares, no sales load
or CDSC applies
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000 initial
payment made at the beginning of the designated period (or
fractional portion thereof)
For purposes of the above computation, it is assumed that 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'
mean account size.
See Appendix A for the annual total returns for each class of fund shares as of
the most recently completed fiscal year.
17. FINANCIAL STATEMENTS
The fund's audited financial statements for the fiscal year ended November 30,
2000 from the fund's annual report filed with the SEC on January 16, 2001
(Accession No. 0000887228-01-
48
0000011) are incorporated by reference into this statement of additional
information. Those financial statements, including the financial highlights in
the prospectus, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect to the financial
statements and are included in reliance upon the authority of Arthur Andersen
LLP as experts in accounting and auditing in giving their report.
The fund's annual report includes the financial statements referenced above and
is available without charge upon request by calling Shareholder Services at
1-800-225-6292.
49
18. APPENDIX A - ANNUAL FEE, EXPENSE AND OTHER INFORMATION
Portfolio Turnover
The fund's annual portfolio turnover rate was 43% for the fiscal year ended
November 30, 2000.
Share Ownership
As of February 28, 2001, the Trustees and officers of the fund owned
beneficially in the aggregate less than 1% of the outstanding shares of the
fund. The following is a list of the holders of 5% or more of any class of the
fund's outstanding shares as of February 28, 2001:
Record Holder Share Class Number of Shares % of Class
MLPF&S for the Sole Benefit of Class A 436,083 5.50%
Its Customers
Mutual Fund Administration 97398
4800 Deer lake Drive East 2nd Floor
Jacksonville, FL 32246-6484
MLPF&S for the Sole Benefit of Its Customers Class B 230,494 13.09%
Mutual Fund Administration 97DT8
4800 Deer lake Drive East 2nd Floor
Jacksonville, FL 32246-6484
First Command Bank Trust Department Class Y 51,886 53.43%
Box 901041
Fort Worth, TX 76101-2041
US Trust Company of the Pacific Class Y 14,205 14.62%
Northwest, Trustee
Pioneer Retirement Benefit Plan
4380 SW Macadam Avenue, Suite 450
Portland, OR 97201-6407
First Command Bank Trust Department Class Y 10,374 10.68%
Box 901041
Fort Worth, TX 76101-2041
US Trust Company of the Pacific Class Y 10,157 10.46%
Northwest, Trustee
Pioneer Savings and Investment Plan
4380 SW Macadam Avenue, Suite 450
Portland, OR 97201-6407
John F. Cogan Jr. PC Class Y 10,011 10.31%
c/o Hale & Dorr
60 State Street 29th Floor
Boston, MA 021098-1803
50
Compensation of Officers and Trustees
The following table sets forth certain information with respect to the
compensation of each Trustee of the fund.
Pension or Retirement Total Compensation from
Aggregate Benefits Accrued as the Fund and Other
Compensation Part of Fund Expenses Pioneer Mutual Funds**
Name of Trustee from Fund*
John F. Cogan, Jr.*** $ 583.33 $0 $ 21,000.00
Mary K. Bush 2,505.75 0 108,499.00
Richard H. Egdahl, M.D. 2,454.00 0 106,312.00
Margaret B.W. Graham 2,284.08 0 110,625.00
John W. Kendrick**** 1,330.08 0 37,425.00
Marguerite A. Piret 2,623.50 0 130,750.00
David D. Tripple*** 583,33 0 20,500.00
Stephen K. West 2,457.58 0 118,949.00
John Winthrop 2,549.92 0 116,999.00
$17,371.58 $0 $771,057.00
* For the fiscal year ended November 30, 2000.
** For the calendar year ended December 31, 2000. In addition to the fund,
there are 45 other funds in the Pioneer family of funds.
*** Under the management contract, Pioneer reimburses the fund for any Trustee
fees paid by the fund.
**** Mr. Kendrick resigned as Trustee effective May 8, 2000.
Approximate Management Fees the Fund Paid or Owed Pioneer
For the Fiscal Years Ended November 30,
2000 1999 1998
$0* $42,900* $32,098*
*An expense limitation was in effect during the years ended November 30, 2000,
1999 and 1998. In the absence of the expense limitation, the fund would have
paid $217,745, $301,311 and $257,307 in management fees for such periods.
Fees the Fund Paid to Pioneer under the Administration Agreement effective
October 9, 1998
For the Fiscal Years Ended November 30,
2000 1999
$29,982 $29,591
Carryover of Distribution Plan Expenses
51
As of December 31, 2000 there was a carryover of distribution expenses under the
Class A Plan in the amount of $45,152.
Approximate Net Underwriting Commissions Retained by PFD
For the Fiscal Years Ended November 30,
2000 1999 1998
$1,791 $13,563 $15,236
Approximate Commissions Reallowed to Dealers
For the Fiscal Years Ended November 30,
2000 1999 1998
$80,901 $91,852 $93,678
Approximate Brokerage and Underwriting Commissions (Portfolio Transactions)
For the Fiscal Years Ended November 30,
2000 1999
$0 $0
Fund Expenses under the Distribution Plans
For the Fiscal Year Ended November 30, 2000
Class A Plan Class B Plan
$90,674 $70,181
CDSCs
During the fiscal year ended November 30, 2000, CDSCs in the amount of $32,408
were paid to PFD.
Capital Loss Carryforwards as of November 30, 2000
At the end of its most recent taxable year, the fund had a capital loss
carryforward of $5,890,696 which will expire between 2000 and 2008 if not
utilized.
Average Annual Total Returns (November 30, 2000)
Average Annual Total Return (%)
Since Inception
Class of Shares One Year Five Years Ten Years Inception Date
Class A Shares 2.63 4.21 N/A 4.56 8/10/92
Class B Shares 2.46 3.89 N/A 4.20 4/4/94
Class Y Shares 5.60 N/A N/A 4.37 4/9/98
52
Standardized 30-Day Yield (November 30, 2000)
Class of Shares 30-Day Yield
Class A 6.67%
Class B 7.20%
Class Y 10.03%
53
19. APPENDIX B - DESCRIPTION OF SHORT-TERM DEBT, CORPORATE BOND AND PREFERRED
STOCK RATINGS(1)
- ----------------
(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.
Moody's Investors Service, Inc. ("Moody's") Prime Rating System
Moody's short-term issuer ratings are opinions of the ability of issuers to
honor senior financial obligations and contracts. These obligations have an
original maturity not exceeding one year, unless explicitly noted.
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:
Prime-1: Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
Leading market positions in well-established industries.
High rates of return on funds employed.
Conservative capitalization structure with moderate reliance on debt and ample
asset protection.
54
Broad margins in earnings coverage of fixed financial charges and high internal
cash generation. Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Prime-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3: Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
Not Prime: Issuers rated Not Prime do not fall within any of the Prime rating
categories.
If an issuer represents to Moody's that its short-term debt obligations are
supported by the credit of another entity or entities, then the name or names of
such supporting entity or entities are listed within the parenthesis beneath the
name of the issuer, or there is a footnote referring the reader to another page
for the name or names of the supporting entity or entities. In assigning ratings
to such issuers, Moody's evaluates the financial strength of the affiliated
corporations, commercial banks, insurance companies, foreign governments or
other entities, but only as one factor in the total rating assessment. Moody's
makes no representation and gives no opinion on the legal validity or
enforceability of any support arrangements.
Moody's Debt Ratings
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." 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 risk appear somewhat larger than the Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
55
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.
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.
Issues that are secured by escrowed funds held in trust, reinvested in direct,
non-callable US government obligations or noncallable obligations
unconditionally guaranteed by the US Government or Resolution Funding
Corporation are identified with a # (hatchmark) symbol, e.g., #Aaa.
Con. (...): Bonds for which the security depends on the completion of some act
or the fulfillment of some condition are rated conditionally. These are bonds
secured by a) earnings of projects under construction, b) earnings of projects
unseasoned in operation experience, c) rentals which begin when facilities are
completed, or d) payments to which some other limiting condition attaches. The
parenthetical rating denotes probable credit stature upon completion of
construction or elimination of the basis of the condition
Moody's assigns ratings to individual long-term debt securities issued from
medium-term note (MTN) programs, in addition to indicating ratings to MTN
programs themselves. Notes issued under MTN programs with such indicated ratings
are rated at issuance at the rating applicable to all pari passu notes issued
under the same program, at the program's relevant indicated rating, provided
such notes do not exhibit any of the characteristics listed below. For notes
with any of the following characteristics, the rating of the individual note may
differ from the indicated rating of the program:
1) Notes containing features which link the cash flow and/or market value to the
credit performance of any third party or parties.
2) Notes allowing for negative coupons, or negative principal.
3) Notes containing any provision which could obligate the investor to make any
additional payments.
Market participants must determine whether any particular note is rated, and if
so, at what rating level.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicates that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.
56
Moody's Preferred Stock Ratings
Because of the fundamental differences between preferred stocks and bonds,
Moody's employs a variation of Moody's familiar bond rating symbols in the
quality ranking of preferred stock. These symbols, presented below, are designed
to avoid comparison with bond quality in absolute terms. It should always be
borne in mind that preferred stock occupies a junior position to bonds within a
particular capital structure and that these securities are rated within the
universe of preferred stocks.
aaa: An issue rated aaa is considered to be a top-quality preferred stock. This
rating indicates good asset protection and the least risk of dividend impairment
within the universe of preferred stocks.
aa: An issue rated aa is considered a high-grade preferred stock. This rating
indicates that there is a reasonable assurance the earnings and asset protection
will remain relatively well maintained in the foreseeable future.
a: An issue rated a is considered to be an upper-medium-grade preferred stock.
While risks are judged to be somewhat greater than in the aaa and aa
classifications, earnings and asset protection are, nevertheless, expected to be
maintained at adequate levels.
baa: An issue rated baa is considered to be a medium-grade preferred stock,
neither highly protected nor poorly secured. Earnings and asset protection
appear adequate at present but may be questionable over any great length of
time.
ba: An issue rated ba is considered to have speculative elements. Its future
cannot be considered well assured. Earnings and asset protection may be very
moderate and not well safeguarded during adverse periods. Uncertainty of
position characterizes preferred stocks in this class.
b: An issue rated b generally lacks the characteristics of a desirable
investment. Assurance of dividend payments and maintenance of other terms of the
issue over any long period of time may be small.
caa: An issue rated caa is likely to be in arrears on dividend payments. This
rating designation does not purport to indicate the future status of payments.
ca: An issue rated ca is speculative in a high degree and is likely to be in
arrears on dividends with little likelihood of eventual payments.
c: This is the lowest-rated class of preferred or preference stock. Issues so
rated can thus be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Note: As in the case of bond ratings, Moody's applies to preferred stock ratings
the numerical modifiers 1, 2, and 3 in rating classifications aa through b. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
Standard & Poor's Short-Term Issue Credit Ratings
A-1: A short-term obligation rated A-1 is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity to
meet its financial commitment on these obligations is extremely strong.
57
A-2: A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.
A-3: A short-term obligation rated A-3 exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
B: A short-term obligation rated B is regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
C: A short-term obligation rated C is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.
D: A short-term obligation rated D is in payment default. The D rating category
is used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
Standard & Poor's Long-Term Issue Credit Ratings
Issue credit ratings are based, in varying degrees, on the following
considerations:
Likelihood of payment-capacity and willingness of the obligor to meet its
financial commitment on an obligation in accordance with the terms of the
obligation;
Nature of and provisions of the obligation;
Protection afforded by, and relative position of, the obligation in the event of
bankruptcy, reorganization, or other arrangement under the laws of bankruptcy
and other laws affecting creditors' rights.
The issue rating definitions are expressed in terms of default risk. As such,
they pertain to senior obligations of an entity. Junior obligations are
typically rated lower than senior obligations, to reflect the lower priority in
bankruptcy, as noted above. (Such differentiation applies when an entity has
both senior and subordinated obligations, secured and unsecured obligations, or
operating company and holding company obligations.) Accordingly, in the case of
junior debt, the rating may not conform exactly with the category definition.
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
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.
58
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 inadequate capacity to meet its financial commitment on the
obligation.
B: An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.
CCC: An obligation rated CCC is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.
CC: An obligation rated CC is currently highly vulnerable to nonpayment.
C: A subordinated debt or preferred stock obligation rated C is currently highly
vulnerable to nonpayment. The C rating may be used to cover a situation where a
bankruptcy petition has been filed or similar action taken, but payments on this
obligation are being continued. A C also will be assigned to a preferred stock
issue in arrears on dividends or sinking fund payments but that is currently
paying.
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 on an obligation are jeopardized.
Plus (+) or minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating 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.
N.R.: This indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular obligation as a matter of policy.
Local Currency and Foreign Currency Risks
59
Country risk considerations are a standard part of Standard & Poor's analysis
for credit ratings on any issuer or issue. Currency of repayment is a key factor
in this analysis. An obligor's capacity to repay foreign currency obligations
may be lower than its capacity to repay obligations in its local currency due to
the sovereign government's own relatively lower capacity to repay external
versus domestic debt. These sovereign risk considerations are incorporated in
the debt ratings assigned to specific issues. Foreign currency issuer ratings
are also distinguished from local currency issuer ratings to identify those
instances where sovereign risks make them different for the same issuer.
60
20. APPENDIX C - PERFORMANCE STATISTICS
Pioneer Limited Maturity Bond Fund
Class A Shares
Net Asset Initial
Initial Offering Sales Charge Shares Value Per Net Asset
Date Investment Price Included Purchased Share Value
8/10/92 $10,000 $4.10 2.50% 2,439.024 $4.00 $9,750
Value of Shares
(Dividends and Capital Gains Reinvested)
From Capital From
From Gains Dividends Total
Date Investment Reinvested Reinvested Value
12/31/92 $9,659 $0 $256 $9,915
12/31/93 $9,634 $0 $863 $10,497
12/31/94 $9,122 $0 $1,395 $10,517
12/31/95 $9,390 $0 $2,190 $11,580
12/31/96 $9,195 $0 $2,893 $12,088
12/31/97 $9,196 $0 $3,643 $12,839
12/31/98 $9,219 $0 $4,420 $13,639
12/31/99 $8,756 $0 $4,975 $13,731
12/31/00 $8,830 $0 $5,897 $14,727
Class B Shares
Net Asset Initial Net
Initial Offering Sales Charge Shares Value Per Asset
Date Investment Price Included Purchased Share Value
4/4/94 $10,000 $3.89 0.00% 2,570.694 $3.89 $10,000
Value of Shares
(Dividends and Capital Gains Reinvested)
From From
From Capital Gains Dividends CDSC if Total
Date Investment Reinvested Reinvested Redeemed Value CDSC %
12/31/94 $9,589 $0 $385 $192 $9,782 2.00
12/31/95 $9,897 $0 $1,021 $198 $10,720 2.00
12/31/96 $9,666 $0 $1,640 $97 $11,209 1.00
12/31/97 $9,692 $0 $2,251 $0 $11,943 0.00
12/31/98 $9,692 $0 $2,837 $0 $12,529 0.00
12/31/99 $9,255 $0 $3.326 $0 $12,581 0.00
12/31/00 $9,306 $0 $4,065 $0 $13,371 0.00
Past performance does not guarantee future results. Return and share price
fluctuate and your shares when redeemed may be worth more or less than your
original cost.
61
Pioneer Limited Maturity Bond Fund
Class Y Shares
Net Asset
Initial Offering Sales Charge Shares Value Per Initial Net
Date Investment Price Included Purchased Share Asset Value
4/9/98 $10,000.00 $3.77 0.00% 2652.520 $3.77 $10,000.00
Value of Shares
(Dividends and Capital Gains Reinvested)
From From
From Capital Gains Dividends Total
Date Investment Reinvested Reinvested Value
12/31/98 $10,027 $0 $431 $10,458
12/31/99 $9,549 $0 $1,056 $10,605
12/31/00 $9,655 $0 $1,763 $11,418
Past performance does not guarantee future results. Return and share price
fluctuate and your shares when redeemed may be worth more or less than your
original cost.
62
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
63
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 1,980 stocks ranging in market capitalization from $50 million to
$125 million. Index returns are calculated monthly.
Merrill Lynch High Yield Master II Index. This index is a market capitalization
weighted total return index covering U.S. dollar-denominated high-yield bonds.
Qualifying bonds must have at least $100 million par amount outstanding, a
remaining term to maturity greater than or equal to one year, and a credit
rating less than BBB3 but not in default (based on the composite of Moody's and
Standard & Poor's). The index includes deferred interest and pay-in-kind bonds,
but excludes structured notes, floating rate notes and other variable coupon
securities. The index also excludes emerging markets debt (issuers domiciled in
below investment grade rated countries). Index constituents are rebalanced
monthly on the last calendar day of the month. Index values are calculated
daily.
Merrill Lynch Index of Convertible Bonds (Speculative Quality). This is a market
capitalization weighted index including all mandatory and non-mandatory domestic
corporate convertible securities with at least an original par of $50 million or
a $50 million market value; securities dropping below a market value of $40
million are excluded. Returns are calculated weekly based on Thursday's closing
prices and are linked monthly. All securities must be convertible to common
stock only. Quality range is D3-BB1 based on composite Moody's and Standard &
Poor's ratings.
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.
64
Morgan Stanley Capital International ("MSCI") Indices. These indices are in U.S.
dollar terms with or without dividends reinvested and measure the performance of
developed and emerging stock markets in individual countries and regions around
the world. MSCI All Country indices represent both the developed and the
emerging markets for a particular region. The Free indices exclude shares which
are not readily purchased by non-local investors. These indices are unmanaged.
MSCI covers thousands of securities in 51 stock markets around the world.
Several Pioneer mutual funds that invest in international securities compare
their performance to various MSCI indices.
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.
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.
Lehman Brothers Government/Credit Bond Index - Intermediate. This index is
comprised of securities with one to ten years to maturity. It includes Treasury
and government agency securities, investment-grade corporate bonds and Yankee
bonds.
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.
65
Russell U.S. Equity Indexes. The Russell 3000(R) Index (the "Russell 3000") is
comprised of the 3,000 largest U.S. companies as determined by market
capitalization representing approximately 98% of the U.S. equity market. The
average market capitalization is approximately $5.1 billion. The Russell 2500TM
Index measures performance of the 2,500 smallest companies in the Russell 3000.
The average market capitalization is approximately $958.8 million, and the
largest company in the index has an approximate market capitalization of $4
billion. The Russell 2000(R) Index measures performance of the 2,000 smallest
stocks in the Russell 3000; the largest company in the index has a market
capitalization of approximately $1.5 billion. The Russell 1000(R) Index (the
"Russell 1000") measures the performance of the 1,000 largest companies in the
Russell 3000. The average market capitalization is approximately $14.1 billion.
The smallest company in the index has an approximate market capitalization of
$1.6 billion. The Russell Midcap(R) Index measures performance of the 800
smallest companies in the Russell 1000. The largest company in the index has an
approximate market capitalization of $13 billion. The Russell 1000(R) Growth
Index measures the performance of those Russell 1000 companies with higher
price-to-book ratios and higher forecasted growth values. The Russell 1000(R)
Value Index measures the performance of those Russell 1000 companies with lower
price-to-book ratios and lower forecasted growth values.
The Russell indexes are reconstituted annually as of June 30, based on May 31
market capitalizations.
Wilshire Real Estate Securities Index. The Wilshire Real Estate Securities Index
is a broad measure of the performance of publicly traded real estate securities,
such as REITs and real estate operating companies ("REOCs"). The index is
capitalization-weighted. As of July 31, 2000, 112 companies were included in the
index, with a total market cap of $133.753 illion. At December 31, 2000, the
companies in the index were 92.92% equity and hybrid REITs and 7.08% 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 Indexes. These indexes represent equally weighted performance, adjusted
for capital gain distributions and income dividends, of mutual funds that are
considered peers of the Pioneer mutual funds. Lipper, Inc. is an independent
firm that tracks mutual fund performance.
Lehman Brothers Aggregate Bond Index. The Lehman Brothers Aggregate Bond Index
is composed of the Lehman Brothers Government/Credit Index, the Lehman Brothers
Mortgage-Backed Securities Index, the Lehman Brothers Asset-Backed Securities
Index and the Lehman Brothers Commercial Mortgage-Backed Securities Index. The
index is a recognized measure of the performance of the U.S. investment grade
fixed rate bond market.
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.
Nasdaq Composite Index. The Nasdaq Composite Index measures all Nasdaq domestic
and non-U.S. based common stocks listed on The Nasdaq Stock Market. The index is
market-value weighted. The Nasdaq Composite includes over 5,000 companies and is
one of the most widely followed and quoted major market indices because it is so
broad-based.
Sources: Ibbotson Associates, Towers Data Systems, Lipper, Inc. and PIM-USA
66
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Dow S&P/ S&P/ Merrill
Jones U.S. Small BARRA BARRA Lynch
S&P Industrial Stock U.S. 500 500 Micro-Cap
500 Average Index Inflation Growth Value Index
- -------------------------------------------------------------------------------------------------------
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 N/A N/A 0.28 -1.49 N/A N/A N/A
Dec 1927 N/A N/A 22.10 -2.08 N/A N/A N/A
Dec 1928 43.60 N/A 39.69 -0.97 N/A N/A N/A
Dec 1929 -8.55 N/A -51.36 0.20 N/A N/A N/A
Dec 1930 -24.78 N/A -38.15 -6.03 N/A N/A N/A
Dec 1931 -43.13 N/A -49.75 -9.52 N/A N/A N/A
Dec 1932 -8.26 N/A -5.39 -10.30 N/A N/A N/A
Dec 1933 54.20 N/A 142.87 0.51 N/A N/A N/A
Dec 1934 -1.52 N/A 24.22 2.03 N/A N/A N/A
Dec 1935 47.61 N/A 40.19 2.99 N/A N/A N/A
Dec 1936 33.74 N/A 64.80 1.21 N/A N/A N/A
Dec 1937 -34.73 N/A -58.01 3.10 N/A N/A N/A
Dec 1938 30.76 N/A 32.80 -2.78 N/A N/A N/A
Dec 1939 -0.38 N/A 0.35 -0.48 N/A N/A N/A
Dec 1940 -9.77 N/A -5.16 0.96 N/A N/A N/A
Dec 1941 -11.59 N/A -9.00 9.72 N/A N/A N/A
Dec 1942 20.15 N/A 44.51 9.29 N/A N/A N/A
Dec 1943 25.63 N/A 88.37 3.16 N/A N/A N/A
Dec 1944 19.53 N/A 53.72 2.11 N/A N/A N/A
Dec 1945 36.31 N/A 73.61 2.25 N/A N/A N/A
Dec 1946 -8.02 N/A -11.63 18.16 N/A N/A N/A
Dec 1947 5.63 N/A 0.92 9.01 N/A N/A N/A
Dec 1948 5.37 N/A -2.11 2.71 N/A N/A N/A
Dec 1949 18.60 N/A 19.75 -1.80 N/A N/A N/A
Dec 1950 31.46 N/A 38.75 5.79 N/A N/A N/A
Dec 1951 23.97 N/A 7.80 5.87 N/A N/A N/A
Dec 1952 18.16 N/A 3.03 0.88 N/A N/A N/A
Dec 1953 -0.94 N/A -6.49 0.62 N/A N/A N/A
Dec 1954 52.27 N/A 60.58 -0.50 N/A N/A N/A
Dec 1955 31.41 N/A 20.44 0.37 N/A N/A N/A
Dec 1956 6.48 N/A 4.28 2.86 N/A N/A N/A
Dec 1957 -10.72 N/A -14.57 3.02 N/A N/A N/A
Dec 1958 43.15 N/A 64.89 1.76 N/A N/A N/A
Dec 1959 11.95 N/A 16.40 1.50 N/A N/A N/A
Dec 1960 0.45 -6.12 -3.29 1.48 N/A N/A N/A
Dec 1961 26.88 22.64 32.09 0.67 N/A N/A N/A
Dec 1962 -8.66 -7.46 -11.90 1.22 N/A N/A N/A
Dec 1963 22.76 20.86 23.57 1.65 N/A N/A N/A
67
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Dow S&P/ S&P/ Merrill
Jones U.S. Small BARRA BARRA Lynch
S&P Industrial Stock U.S. 500 500 Micro-Cap
500 Average Index Inflation Growth Value Index
- -------------------------------------------------------------------------------------------------------
Dec 1964 16.43 18.92 23.52 1.19 N/A N/A N/A
Dec 1965 12.46 14.39 41.75 1.92 N/A N/A N/A
Dec 1966 -10.02 -15.85 -7.01 3.35 N/A N/A N/A
Dec 1967 23.89 19.22 83.57 3.04 N/A N/A N/A
Dec 1968 11.04 7.94 35.97 4.72 N/A N/A N/A
Dec 1969 -8.40 -11.84 -25.05 6.11 N/A N/A N/A
Dec 1970 3.89 9.28 -17.43 5.49 N/A N/A N/A
Dec 1971 14.22 9.89 16.50 3.36 N/A N/A N/A
Dec 1972 18.96 18.52 4.43 3.41 N/A N/A N/A
Dec 1973 -14.67 -13.29 -30.90 8.80 N/A N/A N/A
Dec 1974 -26.31 -23.73 -19.95 12.20 N/A N/A N/A
Dec 1975 37.14 44.87 52.82 7.01 31.72 43.38 N/A
Dec 1976 23.81 22.93 57.38 4.81 13.84 34.93 N/A
Dec 1977 -7.19 -12.84 25.38 6.77 -11.82 -2.57 N/A
Dec 1978 6.52 2.81 23.46 9.03 6.78 6.16 27.76
Dec 1979 18.45 10.68 43.46 13.31 15.72 21.16 43.18
Dec 1980 32.45 22.13 39.88 12.40 39.40 23.59 32.32
Dec 1981 -4.88 -3.65 13.88 8.94 -9.81 0.02 9.18
Dec 1982 21.50 27.20 28.01 3.87 22.03 21.04 33.62
Dec 1983 22.46 26.05 39.67 3.80 16.24 28.89 42.44
Dec 1984 6.22 1.35 -6.67 3.95 2.33 10.52 -14.97
Dec 1985 31.64 33.62 24.66 3.77 33.31 29.68 22.89
Dec 1986 18.62 27.25 6.85 1.13 14.50 21.67 3.45
Dec 1987 5.18 5.55 -9.30 4.41 6.50 3.68 -13.84
Dec 1988 16.50 16.21 22.87 4.42 11.95 21.67 22.76
Dec 1989 31.59 32.24 10.18 4.65 36.40 26.13 8.06
Dec 1990 -3.11 -0.54 -21.56 6.11 0.20 -6.85 -29.55
Dec 1991 30.34 24.25 44.63 3.06 38.37 22.56 57.44
Dec 1992 7.61 7.40 23.35 2.90 5.07 10.53 36.62
Dec 1993 10.03 16.97 20.98 2.75 1.68 18.60 31.32
Dec 1994 1.36 5.02 3.11 2.67 3.13 -0.63 1.81
Dec 1995 37.44 36.94 34.46 2.54 38.13 37.00 30.70
Dec 1996 22.90 28.91 17.62 3.32 23.98 21.99 13.88
Dec 1997 33.32 24.91 22.78 1.70 36.38 29.99 24.61
Dec 1998 28.52 18.16 -7.31 1.61 42.15 14.68 -6.15
Dec 1999 21.01 27.29 29.79 2.81 28.25 12.72 40.04
Dec 2000 -9.11 -4.69 -3.59 3.86 -22.08 6.08 -6.13
68
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Long- Intermediate- MSCI Long- Lehman
Term Term U.S. EAFE 6- Term U.S. Bros. U.S.
U.S. Gov't Government (Net of Month Corporate Gov't/Credit T-Bill
Bonds Bonds Taxes) CDs Bonds Intermediate (30-Day)
- -----------------------------------------------------------------------------------------------------------------
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 7.77 5.38 N/A N/A 7.37 N/A 3.27
Dec 1927 8.93 4.52 N/A N/A 7.44 N/A 3.12
Dec 1928 0.10 0.92 N/A N/A 2.84 N/A 3.56
Dec 1929 3.42 6.01 N/A N/A 3.27 N/A 4.75
Dec 1930 4.66 6.72 N/A N/A 7.98 N/A 2.41
Dec 1931 -5.31 -2.32 N/A N/A -1.85 N/A 1.07
Dec 1932 16.84 8.81 N/A N/A 10.82 N/A 0.96
Dec 1933 -0.07 1.83 N/A N/A 10.38 N/A 0.30
Dec 1934 10.03 9.00 N/A N/A 13.84 N/A 0.16
Dec 1935 4.98 7.01 N/A N/A 9.61 N/A 0.17
Dec 1936 7.52 3.06 N/A N/A 6.74 N/A 0.18
Dec 1937 0.23 1.56 N/A N/A 2.75 N/A 0.31
Dec 1938 5.53 6.23 N/A N/A 6.13 N/A -0.02
Dec 1939 5.94 4.52 N/A N/A 3.97 N/A 0.02
Dec 1940 6.09 2.96 N/A N/A 3.39 N/A 0.00
Dec 1941 0.93 0.50 N/A N/A 2.73 N/A 0.06
Dec 1942 3.22 1.94 N/A N/A 2.60 N/A 0.27
Dec 1943 2.08 2.81 N/A N/A 2.83 N/A 0.35
Dec 1944 2.81 1.80 N/A N/A 4.73 N/A 0.33
Dec 1945 10.73 2.22 N/A N/A 4.08 N/A 0.33
Dec 1946 -0.10 1.00 N/A N/A 1.72 N/A 0.35
Dec 1947 -2.62 0.91 N/A N/A -2.34 N/A 0.50
Dec 1948 3.40 1.85 N/A N/A 4.14 N/A 0.81
Dec 1949 6.45 2.32 N/A N/A 3.31 N/A 1.10
Dec 1950 0.06 0.70 N/A N/A 2.12 N/A 1.20
Dec 1951 -3.93 0.36 N/A N/A -2.69 N/A 1.49
Dec 1952 1.16 1.63 N/A N/A 3.52 N/A 1.66
Dec 1953 3.64 3.23 N/A N/A 3.41 N/A 1.82
Dec 1954 7.19 2.68 N/A N/A 5.39 N/A 0.86
Dec 1955 -1.29 -0.65 N/A N/A 0.48 N/A 1.57
Dec 1956 -5.59 -0.42 N/A N/A -6.81 N/A 2.46
Dec 1957 7.46 7.84 N/A N/A 8.71 N/A 3.14
Dec 1958 -6.09 -1.29 N/A N/A -2.22 N/A 1.54
Dec 1959 -2.26 -0.39 N/A N/A -0.97 N/A 2.95
Dec 1960 13.78 11.76 N/A N/A 9.07 N/A 2.66
69
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Long- Intermediate- MSCI Long- Lehman
Term Term U.S. EAFE 6- Term U.S. Bros. U.S.
U.S. Gov't Government (Net of Month Corporate Gov't/Credit T-Bill
Bonds Bonds Taxes) CDs Bonds Intermediate (30-Day)
- -----------------------------------------------------------------------------------------------------------------
Dec 1961 0.97 1.85 N/A N/A 4.82 N/A 2.13
Dec 1962 6.89 5.56 N/A N/A 7.95 N/A 2.73
Dec 1963 1.21 1.64 N/A N/A 2.19 N/A 3.12
Dec 1964 3.51 4.04 N/A 4.17 4.77 N/A 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 N/A 3.93
Dec 1966 3.65 4.69 N/A 5.76 0.20 N/A 4.76
Dec 1967 -9.18 1.01 N/A 5.47 -4.95 N/A 4.21
Dec 1968 -0.26 4.54 N/A 6.45 2.57 N/A 5.21
Dec 1969 -5.07 -0.74 N/A 8.70 -8.09 N/A 6.58
Dec 1970 12.11 16.86 -11.66 7.06 18.37 N/A 6.52
Dec 1971 13.23 8.72 29.59 5.36 11.01 N/A 4.39
Dec 1972 5.69 5.16 36.35 5.39 7.26 N/A 3.84
Dec 1973 -1.11 4.61 -14.92 8.60 1.14 3.34 6.93
Dec 1974 4.35 5.69 -23.16 10.20 -3.06 5.86 8.00
Dec 1975 9.20 7.83 35.39 6.51 14.64 9.49 5.80
Dec 1976 16.75 12.87 2.54 5.22 18.65 12.33 5.08
Dec 1977 -0.69 1.41 18.06 6.11 1.71 3.31 5.12
Dec 1978 -1.18 3.49 32.62 10.21 -0.07 2.12 7.18
Dec 1979 -1.23 4.09 4.75 11.90 -4.18 5.99 10.38
Dec 1980 -3.95 3.91 22.58 12.33 -2.76 6.42 11.24
Dec 1981 1.86 9.45 -2.28 15.50 -1.24 10.51 14.71
Dec 1982 40.36 29.10 -1.86 12.18 42.56 26.11 10.54
Dec 1983 0.65 7.41 23.69 9.65 6.26 8.60 8.80
Dec 1984 15.48 14.02 7.38 10.65 16.86 14.37 9.85
Dec 1985 30.97 20.33 56.16 7.82 30.09 18.06 7.72
Dec 1986 24.53 15.14 69.44 6.30 19.85 13.13 6.16
Dec 1987 -2.71 2.90 24.63 6.59 -0.27 3.66 5.47
Dec 1988 9.67 6.10 28.27 8.15 10.70 6.67 6.35
Dec 1989 18.11 13.29 10.54 8.27 16.23 12.77 8.37
Dec 1990 6.18 9.73 -23.45 7.85 6.78 9.16 7.81
Dec 1991 19.30 15.46 12.13 4.95 19.89 14.62 5.60
Dec 1992 8.05 7.19 -12.17 3.27 9.39 7.17 3.51
Dec 1993 18.24 11.24 32.56 2.88 13.19 8.79 2.90
Dec 1994 -7.77 -5.14 7.78 5.40 -5.76 -1.93 3.90
Dec 1995 31.67 16.80 11.21 5.21 27.20 15.33 5.60
Dec 1996 -0.93 2.10 6.05 5.21 1.40 4.05 5.21
Dec 1997 15.85 8.38 1.78 5.71 12.95 7.87 5.26
Dec 1998 13.06 10.21 20.00 5.34 10.76 8.44 4.86
Dec 1999 -8.96 -1.77 26.96 5.43 -7.45 0.39 4.68
Dec 2000 21.48 12.59 -14.17 6.64 12.87 10.12 5.89
70
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
NAREIT Wilshire Lipper MSCI
Equity Russell Real Estate Balanced Emerging Bank
REIT 2000(R) Securities S&P Fund Markets Savings
Index Index Index 400 Index Free Index Account
- -------------------------------------------------------------------------------------------------------
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
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
NAREIT Wilshire Lipper MSCI
Equity Russell Real Estate Balanced Emerging Bank
REIT 2000(R) Securities S&P Fund Markets Savings
Index Index Index 400 Index Free Index Account
- ------------------------------------------------------------------------------------------------------
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 43.07 70.81 N/A 14.67 N/A 7.29
Dec 1980 24.37 38.60 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 22.69 30.63 N/A 11.19
Dec 1983 30.64 29.13 27.61 26.08 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 20.14 35.59 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 -8.80 -7.86 -2.04 4.13 N/A 6.92
Dec 1988 13.49 25.02 24.18 20.87 11.18 40.43 7.20
Dec 1989 8.84 16.26 2.37 35.55 19.70 64.96 7.91
Dec 1990 -15.35 -19.48 -33.46 -5.12 0.66 -10.55 7.80
Dec 1991 35.70 46.04 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 18.88 15.24 13.95 11.95 74.83 2.73
Dec 1994 3.17 -1.82 1.64 -3.58 -2.05 -7.32 4.96
Dec 1995 15.27 28.45 13.65 30.95 24.89 -5.21 5.24
Dec 1996 35.26 16.50 36.87 19.20 13.05 6.03 4.95
Dec 1997 20.29 22.36 19.80 32.25 20.30 -11.59 5.17
Dec 1998 -17.51 -2.55 -17.43 19.11 15.09 -25.34 4.63
Dec 1999 -4.62 21.26 14.72 14.72 8.98 66.41 5.29
Dec 2000 25.77 -3.02 30.74 17.50 2.39 -30.61 3.71
71
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Merrill
MSCI MSCI All Lynch
All Country Merrill Index of Lipper
Country (AC) Asia Lehman Lynch Convertible Lipper Growth &
(AC) Asia Pacific Brothers High Yield Bonds Russell Growth Income
Free Free Aggregate Master II (Speculative 1000(R) Fund Fund
ex Japan ex Japan Bond Index Index Quality) Index Index Index
- --------------------------------------------------------------------------------------------------------------------
Dec 1925 N/A 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 N/A
Dec 1927 N/A 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 N/A
Dec 1929 N/A 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 N/A N/A
Dec 1931 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1932 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1933 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1934 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1935 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1936 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1937 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1938 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1939 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1940 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1941 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1942 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1943 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1944 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1945 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1946 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1947 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1948 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1949 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1950 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1951 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1952 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1953 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1954 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1955 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1956 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1957 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1958 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1959 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1960 N/A N/A N/A N/A N/A N/A 6.36 3.04
Dec 1961 N/A N/A N/A N/A N/A N/A 30.16 26.00
72
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Merrill
MSCI MSCI All Lynch
All Country Merrill Index of Lipper
Country (AC) Asia Lehman Lynch Convertible Lipper Growth &
(AC) Asia Pacific Brothers High Yield Bonds Russell Growth Income
Free Free Aggregate Master II (Speculative 1000(R) Fund Fund
ex Japan ex Japan Bond Index Index Quality) Index Index Index
- --------------------------------------------------------------------------------------------------------------------
Dec 1962 N/A N/A N/A N/A N/A N/A -16.84 -11.87
Dec 1963 N/A N/A N/A N/A N/A N/A 22.43 19.10
Dec 1964 N/A N/A N/A N/A N/A N/A 14.99 15.23
Dec 1965 N/A N/A N/A N/A N/A N/A 26.61 19.00
Dec 1966 N/A N/A N/A N/A N/A N/A -1.80 -6.04
Dec 1967 N/A N/A N/A N/A N/A N/A 45.31 27.59
Dec 1968 N/A N/A N/A N/A N/A N/A 15.34 15.29
Dec 1969 N/A N/A N/A N/A N/A N/A -10.62 -11.80
Dec 1970 N/A N/A N/A N/A N/A N/A -8.57 1.10
Dec 1971 N/A N/A N/A N/A N/A N/A 26.17 13.77
Dec 1972 N/A N/A N/A N/A N/A N/A 18.08 12.87
Dec 1973 N/A N/A N/A N/A N/A N/A -24.75 -14.27
Dec 1974 N/A N/A N/A N/A N/A N/A -30.73 -20.85
Dec 1975 N/A N/A N/A N/A N/A N/A 32.83 34.62
Dec 1976 N/A N/A 15.60 N/A N/A N/A 20.07 25.66
Dec 1977 N/A N/A 3.04 N/A N/A N/A -2.62 -3.64
Dec 1978 N/A N/A 1.39 N/A N/A N/A 12.53 7.99
Dec 1979 N/A N/A 1.93 N/A N/A 22.31 29.29 23.87
Dec 1980 N/A N/A 2.71 N/A N/A 31.88 38.67 28.27
Dec 1981 N/A N/A 6.25 N/A N/A -5.10 -6.82 -1.39
Dec 1982 N/A N/A 32.62 N/A N/A 20.30 24.04 24.17
Dec 1983 N/A N/A 8.36 N/A N/A 22.13 21.35 22.76
Dec 1984 N/A N/A 15.15 N/A N/A 4.75 -3.60 4.29
Dec 1985 N/A N/A 22.10 N/A N/A 32.27 30.14 28.55
Dec 1986 N/A N/A 15.26 N/A N/A 17.87 15.59 17.63
Dec 1987 N/A N/A 2.76 4.47 N/A 2.94 3.25 2.64
Dec 1988 30.00 30.45 7.89 13.36 16.19 17.23 14.13 18.35
Dec 1989 32.13 21.43 14.53 2.31 9.82 30.42 27.47 23.73
Dec 1990 -6.54 -11.86 8.96 -4.36 -8.61 -4.16 -5.41 -5.99
Dec 1991 30.98 32.40 16.00 39.17 37.53 33.03 36.33 27.75
Dec 1992 21.81 9.88 7.40 17.44 24.06 9.04 7.63 9.63
Dec 1993 103.39 84.94 9.75 16.69 19.37 10.15 11.98 14.62
Dec 1994 -16.94 -12.59 -2.92 -1.03 -6.91 0.38 -1.57 -0.41
Dec 1995 4.00 10.00 18.47 20.46 25.14 37.77 32.65 31.14
Dec 1996 10.05 8.08 3.63 11.27 15.29 22.45 17.53 20.67
Dec 1997 -40.31 -34.20 9.65 13.27 16.76 32.85 28.03 26.88
Dec 1998 -7.79 -4.42 8.69 2.95 12.62 27.02 25.69 13.58
Dec 1999 64.67 49.83 -0.82 2.51 38.91 20.91 27.96 11.86
Dec 2000 -35.22 -29.97 11.63 -5.12 18.86 -7.79 -10.88 0.39
73
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
MSCI All
Country Russell Russell
MSCI MSCI World Free 1000(R) 1000(R) Nasdaq
Europe World ex U.S. Growth Value Composite
Index Index Index Index Index Index
- -------------------------------------------------------------------------------------------------
Dec 1925 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
Dec 1927 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
Dec 1929 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
Dec 1931 N/A N/A N/A N/A N/A N/A
Dec 1932 N/A N/A N/A N/A N/A N/A
Dec 1933 N/A N/A N/A N/A N/A N/A
Dec 1934 N/A N/A N/A N/A N/A N/A
Dec 1935 N/A N/A N/A N/A N/A N/A
Dec 1936 N/A N/A N/A N/A N/A N/A
Dec 1937 N/A N/A N/A N/A N/A N/A
Dec 1938 N/A N/A N/A N/A N/A N/A
Dec 1939 N/A N/A N/A N/A N/A N/A
Dec 1940 N/A N/A N/A N/A N/A N/A
Dec 1941 N/A N/A N/A N/A N/A N/A
Dec 1942 N/A N/A N/A N/A N/A N/A
Dec 1943 N/A N/A N/A N/A N/A N/A
Dec 1944 N/A N/A N/A N/A N/A N/A
Dec 1945 N/A N/A N/A N/A N/A N/A
Dec 1946 N/A N/A N/A N/A N/A N/A
Dec 1947 N/A N/A N/A N/A N/A N/A
Dec 1948 N/A N/A N/A N/A N/A N/A
Dec 1949 N/A N/A N/A N/A N/A N/A
Dec 1950 N/A N/A N/A N/A N/A N/A
Dec 1951 N/A N/A N/A N/A N/A N/A
Dec 1952 N/A N/A N/A N/A N/A N/A
Dec 1953 N/A N/A N/A N/A N/A N/A
Dec 1954 N/A N/A N/A N/A N/A N/A
Dec 1955 N/A N/A N/A N/A N/A N/A
Dec 1956 N/A N/A N/A N/A N/A N/A
Dec 1957 N/A N/A N/A N/A N/A N/A
Dec 1958 N/A N/A N/A N/A N/A N/A
Dec 1959 N/A N/A N/A N/A N/A N/A
Dec 1960 N/A N/A N/A N/A N/A N/A
Dec 1961 N/A N/A N/A N/A N/A N/A
74
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
MSCI All
Country Russell Russell
MSCI MSCI World Free 1000(R) 1000(R) Nasdaq
Europe World ex U.S. Growth Value Composite
Index Index Index Index Index Index
- -------------------------------------------------------------------------------------------------
Dec 1962 N/A N/A N/A N/A N/A N/A
Dec 1963 N/A N/A N/A N/A N/A N/A
Dec 1964 N/A N/A N/A N/A N/A N/A
Dec 1965 N/A N/A N/A N/A N/A N/A
Dec 1966 N/A N/A N/A N/A N/A N/A
Dec 1967 N/A N/A N/A N/A N/A N/A
Dec 1968 N/A N/A N/A N/A N/A N/A
Dec 1969 N/A N/A N/A N/A N/A N/A
Dec 1970 -10.64 -3.09 N/A N/A N/A N/A
Dec 1971 26.33 18.36 N/A N/A N/A N/A
Dec 1972 14.40 22.48 N/A N/A N/A 17.18
Dec 1973 -8.77 -15.24 N/A N/A N/A -31.06
Dec 1974 -24.07 -25.47 N/A N/A N/A -35.11
Dec 1975 41.45 32.80 N/A N/A N/A 29.76
Dec 1976 -7.80 13.40 N/A N/A N/A 26.10
Dec 1977 21.90 0.68 N/A N/A N/A 7.33
Dec 1978 21.88 16.52 N/A N/A N/A 12.31
Dec 1979 12.31 10.95 N/A 23.91 20.55 28.11
Dec 1980 11.90 25.67 N/A 39.57 24.41 33.88
Dec 1981 -12.46 -4.79 N/A -11.31 1.26 -3.21
Dec 1982 3.97 9.71 N/A 20.46 20.04 18.67
Dec 1983 20.96 21.93 N/A 15.98 28.28 19.87
Dec 1984 0.62 4.72 N/A -0.95 10.10 -11.22
Dec 1985 78.93 40.56 N/A 32.85 31.51 31.36
Dec 1986 43.85 41.89 N/A 15.36 19.98 7.36
Dec 1987 3.66 16.16 N/A 5.31 0.50 -5.26
Dec 1988 15.81 23.29 27.90 11.27 23.16 15.41
Dec 1989 28.51 16.61 12.03 35.92 25.19 19.26
Dec 1990 -3.85 -17.02 -22.74 -0.26 -8.08 -17.80
Dec 1991 13.11 18.28 13.96 41.16 24.61 56.84
Dec 1992 -4.71 -5.23 -10.97 5.00 13.81 15.45
Dec 1993 29.28 22.50 34.90 2.90 18.12 14.75
Dec 1994 2.28 5.08 6.63 2.66 -1.99 -3.20
Dec 1995 21.62 20.72 9.94 37.19 38.35 39.92
Dec 1996 21.09 13.48 6.68 23.12 21.64 22.71
Dec 1997 23.80 15.76 2.04 30.49 35.18 21.64
Dec 1998 28.53 24.34 14.46 38.71 15.63 39.63
Dec 1999 15.89 24.93 30.91 33.16 7.35 85.59
Dec 2000 -8.39 -13.18 -15.09 -22.42 7.01 -39.29
75
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
MSCI MSCI
MSCI World World
World Health Telecommunication
Financials Care Services
Index Index Index
- -----------------------------------------------------------
Dec 1925 N/A N/A N/A
Dec 1926 N/A N/A N/A
Dec 1927 N/A N/A N/A
Dec 1928 N/A N/A N/A
Dec 1929 N/A N/A N/A
Dec 1930 N/A N/A N/A
Dec 1931 N/A N/A N/A
Dec 1932 N/A N/A N/A
Dec 1933 N/A N/A N/A
Dec 1934 N/A N/A N/A
Dec 1935 N/A N/A N/A
Dec 1936 N/A N/A N/A
Dec 1937 N/A N/A N/A
Dec 1938 N/A N/A N/A
Dec 1939 N/A N/A N/A
Dec 1940 N/A N/A N/A
Dec 1941 N/A N/A N/A
Dec 1942 N/A N/A N/A
Dec 1943 N/A N/A N/A
Dec 1944 N/A N/A N/A
Dec 1945 N/A N/A N/A
Dec 1946 N/A N/A N/A
Dec 1947 N/A N/A N/A
Dec 1948 N/A N/A N/A
Dec 1949 N/A N/A N/A
Dec 1950 N/A N/A N/A
Dec 1951 N/A N/A N/A
Dec 1952 N/A N/A N/A
Dec 1953 N/A N/A N/A
Dec 1954 N/A N/A N/A
Dec 1955 N/A N/A N/A
Dec 1956 N/A N/A N/A
Dec 1957 N/A N/A N/A
Dec 1958 N/A N/A N/A
Dec 1959 N/A N/A N/A
Dec 1960 N/A N/A N/A
Dec 1961 N/A N/A N/A
76
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
MSCI MSCI
MSCI World World
World Health Telecommunication
Financials Care Services
Index Index Index
- ------------------------------------------------------------
Dec 1962 N/A N/A N/A
Dec 1963 N/A N/A N/A
Dec 1964 N/A N/A N/A
Dec 1965 N/A N/A N/A
Dec 1966 N/A N/A N/A
Dec 1967 N/A N/A N/A
Dec 1968 N/A N/A N/A
Dec 1969 N/A N/A N/A
Dec 1970 N/A N/A N/A
Dec 1971 N/A N/A N/A
Dec 1972 N/A N/A N/A
Dec 1973 N/A N/A N/A
Dec 1974 N/A N/A N/A
Dec 1975 N/A N/A N/A
Dec 1976 N/A N/A N/A
Dec 1977 N/A N/A N/A
Dec 1978 N/A N/A N/A
Dec 1979 N/A N/A N/A
Dec 1980 N/A N/A N/A
Dec 1981 N/A N/A N/A
Dec 1982 N/A N/A N/A
Dec 1983 N/A N/A N/A
Dec 1984 N/A N/A N/A
Dec 1985 N/A N/A N/A
Dec 1986 N/A N/A N/A
Dec 1987 N/A N/A N/A
Dec 1988 N/A N/A N/A
Dec 1989 N/A N/A N/A
Dec 1990 N/A N/A N/A
Dec 1991 N/A N/A N/A
Dec 1992 N/A N/A N/A
Dec 1993 N/A N/A N/A
Dec 1994 N/A N/A N/A
Dec 1995 N/A N/A N/A
Dec 1996 N/A N/A N/A
Dec 1997 N/A N/A N/A
Dec 1998 N/A N/A N/A
Dec 1999 8.57 -10.08 44.66
Dec 2000 10.62 26.96 -42.49
Source: Lipper, Inc., Ibbotson Associates and The Wall Street Journal
77
21. APPENDIX D - 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 U.S.
As of December 31, 2000, Pioneer and its investment management affiliates
employed a professional investment staff of approximately 150.
Total assets of all Pioneer's U.S. mutual funds at December 31, 2000, were over
$21 billion representing 1,345,985 shareholder accounts, including 830,459
non-retirement accounts and 515,526 retirement accounts.
EXHIBIT B
January 2, 2001
(SUPERSEDES APPLICABLE SUPPLEMENTS DATED AUGUST 31, 2000)
SUPPLEMENT TO THE STATEMENT OF ADDITIONAL INFORMATION
(AS SUPPLEMENTED NOVEMBER 22, 2000)
FOR
FUND DATED
Pioneer II January 28, 2000
Pioneer Mid-Cap Fund January 28, 2000
Pioneer Strategic Income Fund January 28, 2000
Pioneer High Yield Fund February 25, 2000
Pioneer Europe Fund February 28, 2000
Pioneer Indo-Asia Fund February 28, 2000
Pioneer Mid-Cap Value Fund February 28, 2000
Pioneer Equity-Income Fund February 28, 2000
Pioneer Small Company Fund February 28, 2000
Pioneer Limited Maturity Bond Fund March 29, 2000
Pioneer Emerging Markets Fund March 29, 2000
Pioneer International Growth Fund March 29, 2000
Pioneer Micro-Cap Fund March 29, 2000
Pioneer Science & Technology Fund March 31, 2000
Pioneer Fund May 1, 2000
Pioneer Cash Reserves Fund May 1, 2000 (as revised May 15, 2000)
Pioneer America Income Trust May 1, 2000
Pioneer Real Estate Shares May 1, 2000
Pioneer Growth Shares May 1, 2000
Pioneer Balanced Fund May 1, 2000
Pioneer Tax-Free Income Fund May 1, 2000
Pioneer World Equity Fund July 31, 2000
Pioneer Bond Fund September 29, 2000
Pioneer Tax-Managed Fund November 18, 1999
ADDITIONAL PAYMENTS TO DEALERS
From time to time, PFD or its affiliates may elect to make payments to
broker-dealers in addition to the commissions described in the funds' statements
of additional information. With respect to the above listed funds, PFD will
reallow to participating broker/dealers the entire sales charge for all sales of
Class A shares of the above listed funds for orders placed for IRA accounts from
January 2, 2001 through April 30, 2001. In addition, PFD or its affiliates may
elect to pay broker-dealers an additional commission based on the net asset
value of all shares sold by a dealer during a particular period. With respect to
each of the above listed funds, PFD has elected to pay participating dealers an
amount equal to 0.50% of the net asset value of the fund's Class B shares sold
to IRA accounts from January 2, 2001 through April 30, 2001. With respect to
each of the above listed funds, PFD has elected to pay participating dealers an
amount equal to 0.50% of the net asset value of the fund's Class C shares sold
to IRA accounts from January 2, 2001 through April 30, 2001. In addition, PFD
may elect to pay, at its own expense, additional cash or other incentives to
dealers that sell or arrange for the sale of shares of the fund. Such cash or
other incentives may take the form of payment for attendance at preapproved
conferences or seminars, sales or training programs for invited registered
representatives and other employees, payment for travel expenses, including
lodging, incurred by registered representatives and other employees for such
seminars or training programs, seminars for the public, advertising and
preapproved sales campaigns or dealer-sponsored events. PFD may also elect to
make expense reimbursements for special training of a dealer's registered
representatives and other employees in group meetings or to help pay the
expenses of sales contests. PFD will offer such cash and other incentives only
to the extent permitted by applicable law or by a self-regulatory agency such as
the National Association of Securities Dealers, Inc.
November 22, 2000
SUPPLEMENT TO THE STATEMENT OF ADDITIONAL INFORMATION FOR
(SUPERSEDES SUPPLEMENT DATED OCTOBER 25, 2000)
FUND DATED
Pioneer II January 28, 2000
Pioneer Mid-Cap Fund January 28, 2000
Pioneer Strategic Income Fund January 28, 2000
Pioneer High Yield Fund February 25, 2000
Pioneer Europe Fund February 28, 2000
Pioneer Indo-Asia Fund February 28, 2000
Pioneer Mid-Cap Value Fund February 28, 2000
Pioneer Equity-Income Fund February 28, 2000
Pioneer Small Company Fund February 28, 2000
Pioneer Limited Maturity Bond Fund March 29, 2000
Pioneer Emerging Markets Fund March 29, 2000
Pioneer International Growth Fund March 29, 2000
Pioneer Micro-Cap Fund March 29, 2000
Pioneer Science & Technology Fund March 31, 2000
Pioneer Fund May 1, 2000
Pioneer Cash Reserves Fund May 1, 2000 (as revised
May 15, 2000)
Pioneer America Income Trust May 1, 2000
Pioneer Real Estate Shares May 1, 2000
Pioneer Growth Shares May 1, 2000
Pioneer Balanced Fund May 1, 2000
Pioneer Tax-Free Income Fund May 1, 2000
Pioneer Independence Fund May 1, 2000
Pioneer Variable Contracts Trust May 1, 2000 (as revised
October 5, 2000)
Pioneer World Equity Fund July 31, 2000
Pioneer Bond Fund September 29, 2000
Pioneer Tax-Managed Fund November 18, 1999
The following supplements the information presented in the statement of
additional information (SAI). All references in the supplemented SAI to The
Pioneer Group, Inc. are changed to Pioneer Investment Management USA Inc.
Pioneer is part of Pioneer Global Asset Management, the asset management
subsidiary of UniCredito Italiano S.p.A. ("UniCredito Italiano"), one of the
largest banking groups in Italy. Pioneer Global Asset Management provides
investment management and financial services to mutual funds, institutional and
other clients. As of October 25, 2000, Pioneer Global Asset Management has over
$100 billion in assets under management worldwide, including over $23 billion in
assets under management by Pioneer.
MANAGEMENT OF THE FUND
JOHN F. COGAN, JR.*, CHAIRMAN OF THE BOARD, PRESIDENT AND TRUSTEE,
DOB: JUNE 1926
Deputy Chairman of Pioneer Global Asset Management S.p.A.; Non-Executive
Chairman and a Director of Pioneer Investment Management USA Inc. ("PIM-USA");
Chairman and a Director of Pioneer and Pioneer Global Funds Distributor, Ltd.;
Director of Pioneer Management (Ireland) Limited ("PMIL"); President and
Director of Pioneer International Corporation ("PIntl"); Member of the
Supervisory Board of Pioneer Fonds Marketing GmbH, Pioneer First Polish
Investment Fund Joint Stock Company
("Pioneer First Polish"), Pioneer Czech Investment Company, a.s. ("Pioneer
Czech") and Pioneer Universal Pension Fund Company; Chairman, President and
Trustee of all of the Pioneer mutual funds; Director of Pioneer America Fund
Plc, Pioneer Global Equity Fund Plc, Pioneer Global Bond Fund Plc, Pioneer Euro
Reserve Fund Plc, Pioneer European Equity Fund Plc, Pioneer Emerging Europe Fund
Plc, Pioneer Greater Asia Fund Plc, Pioneer U.S. Growth Fund Plc, Pioneer U.S.
High Yield Fund Plc and Pioneer US Real Estate Fund Plc, (collectively, the
"Irish Funds"); and Of Counsel, Hale and Dorr LLP (counsel to PIM-USA and the
fund).
MARY K. BUSH, TRUSTEE, DOB: APRIL 1948
4201 CATHEDRAL AVENUE, NW, WASHINGTON, DC 20016
President, Bush & Co. (international financial advisory firm); Director
and/or Trustee of Mortgage Guaranty Insurance Corporation, Hoover Institution,
March of Dimes, Texaco, Inc., R.J. Reynolds Tobacco Holdings, Inc. and Brady
Corporation (international identification solutions provider); Advisory Board
Member, Washington Mutual Investors Fund (registered investment company); and
Trustee of all of the Pioneer mutual funds.
RICHARD H. EGDAHL, M.D., TRUSTEE, DOB: DECEMBER 1926
BOSTON UNIVERSITY HEALTHCARE ENTREPRENEURSHIP PROGRAM, 53 BAY STATE ROAD,
BOSTON, MA 02215 Alexander Graham Bell Professor of Health Care
Entrepreneurship, Boston University; Professor of Management, Boston University
School of Management; Professor of Public Health, Boston University School of
Public Health; Professor of Surgery, Boston University School of Medicine;
University Professor, Boston University; Director, Boston University Health
Policy Institute, University Program for Health Care Entrepreneurship; Trustee,
Boston Medical Center; and Trustee of all of the Pioneer mutual funds.
MARGARET B.W. GRAHAM, TRUSTEE, DOB: MAY 1947
THE KEEP, P.O. BOX 110, LITTLE DEER ISLE, ME 04650
Founding Director, The Winthrop Group, Inc. (consulting firm); and Trustee of
all of the Pioneer mutual funds.
MARGUERITE A. PIRET, TRUSTEE, DOB: MAY 1948
ONE BOSTON PLACE, 26TH FLOOR, 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; Director, Organogenesis Inc. (tissue engineering company);
and Trustee of all of the Pioneer mutual funds.
DAVID D. TRIPPLE*, TRUSTEE AND EXECUTIVE VICE PRESIDENT, DOB: FEBRUARY 1944
Director, Chief Executive Officer and President of PIM-USA; Chairman and a
Director of Pioneer Funds Distributor, Inc. ("PFD"); President and a Director of
Pioneer; Director of Pioneering Services Corporation ("PSC"), PIntl, PMIL and
the Irish Funds; Member of the Supervisory Board of Pioneer First Polish,
Pioneer Czech and Pioneer Asset Management, S.A.; and Executive Vice President
and Trustee of all of the Pioneer mutual funds.
STEPHEN K. WEST, TRUSTEE, DOB: SEPTEMBER 1928
125 BROAD STREET, NEW YORK, NY 10004
Of Counsel, Sullivan & Cromwell (law firm); Director, Dresdner RCM Global
Strategic Income Fund, Inc. since May 1997 and The Swiss Helvetia Fund, Inc.
since 1995 (investment companies), AMVESCAP PLC (investment managers) since 1997
and ING American Insurance Holdings, Inc.; and Trustee of all of the Pioneer
mutual funds.
JOHN WINTHROP, TRUSTEE, DOB: JUNE 1936
ONE NORTH ADGERS WHARF, CHARLESTON, SC 29401
President, John Winthrop & Co., Inc. (private investment firm); Director of NUI
Corp. (energy sales, services and distribution); and Trustee of all of the
Pioneer mutual funds.
JOSEPH P. BARRI, SECRETARY, DOB: AUGUST 1946
Corporate Secretary of PIM-USA and most of its subsidiaries until October 2000;
Secretary of all of the Pioneer mutual funds; and Partner, Hale and Dorr LLP.
VINCENT NAVE, TREASURER, DOB: JUNE 1945
Vice President-Fund Accounting and Custody Services of PIM-USA (Manager from
September 1996 to February 1999); and Treasurer of all of the Pioneer mutual
funds (Assistant Treasurer from June 1999 to November 2000).
LUIS I. PRESUTTI, ASSISTANT TREASURER, DOB: APRIL 1965
Assistant Vice President-Fund Accounting, Administration and Custody Services of
Pioneer (Fund Accounting Manager from 1994 to 1999); and Assistant Treasurer of
all of the Pioneer mutual funds since November 2000.
JOHN F. DALY III, ASSISTANT TREASURER, DOB: AUGUST 1965
Global Custody and Settlement Division Manager of PIM-USA; and Assistant
Treasurer of all of the Pioneer mutual funds since November 2000.
DOROTHY E. BOURASSA, ASSISTANT SECRETARY, DOB: JANUARY 1948
Senior Vice President-Legal and Secretary of PIM-USA and Secretary/Clerk of most
of its subsidiaries since October 2000; Assistant Secretary of all of the
Pioneer mutual funds since November 2000; Senior Counsel, Assistant Vice
President and Director of Compliance of PIM-USA from April 1998 through October
2000; Vice President and Assistant General Counsel, First Union Corporation from
December 1996 through March 1998; and Vice President and Counsel, Keystone
Investments, Inc. from March 1986 through November 1996.
All of the outstanding capital stock of PFD, Pioneer and PSC is indirectly owned
by UniCredito Italiano, one of the largest banking groups in Italy. Pioneer, the
fund's investment adviser, provides investment management and financial services
to mutual funds, institutional and other clients.
COMPENSATION OF OFFICERS AND TRUSTEES
The fund pays no salaries or compensation to any of its officers. The fund
compensates each Trustee who is not affiliated with PIM-USA, Pioneer, PFD, PSC
or UniCredito Italiano with a base fee, a variable fee calculated on the basis
of average net assets of the fund, per meeting fees, and annual committee
participation fees for each committee member or chairperson that are based on
percentages of his or her aggregate annual fee. See the fee table in Appendix A.
INVESTMENT ADVISER
The fund has contracted with Pioneer to act as its investment adviser. Pioneer
is a wholly owned subsidiary of UniCredito Italiano. Certain Trustees or
officers of the fund are also directors and/or officers of UniCredito Italiano
and its subsidiaries (see management biographies above).
PRINCIPAL UNDERWRITER AND DISTRIBUTION PLANS (GENERAL/CLASS II 12B-1 PLAN)
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,
UniCredito Italiano.
PIONEER BOND FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
CLASS A, CLASS B AND CLASS C SHARES
SEPTEMBER 29, 2000
This statement of additional information is not a prospectus. It should be read
in conjunction with the fund's Class A, Class B and Class C shares prospectus,
dated September 29, 2000, as supplemented or revised from time to time. A copy
of the prospectus can be obtained free of charge by calling Shareholder Services
at 1-800-225-6292 or by written request to the fund at 60 State Street, Boston,
Massachusetts 02109. You can also obtain a copy of the fund's prospectus from
our website at: www.pioneerfunds.com. The fund's financial statements for the
fiscal year ended June 30, 2000 are incorporated into this statement of
additional information by reference. The most recent annual report to
shareholders is attached to this statement of additional information.
TABLE OF CONTENTS
PAGE
1. Fund History......................................................2
2. Investment Policies, Risks and Restrictions.......................2
3. Management of the Fund...........................................23
4. Investment Adviser...............................................26
5. Principal Underwriter and Distribution Plans.....................28
6. Shareholder Servicing/Transfer Agent.............................32
7. Custodian........................................................33
8. Independent Public Accountants...................................33
9. Portfolio Transactions...........................................33
10. Description of Shares............................................34
11. Sales Charges....................................................36
12. Redeeming Shares.................................................39
13. Telephone Transactions...........................................40
14. Pricing of Shares................................................41
15. Tax Status.......................................................42
16. Investment Results...............................................46
17. Financial Statements.............................................49
18. Appendix A - Annual Fee, Expense and Other Information...........50
19. Appendix B - Description of Short-Term Debt, Corporate
Bond and Preferred Stock Ratings.................................53
20. Appendix C - Performance Statistics..............................59
21. Appendix D - Other Pioneer Information...........................73
1. FUND HISTORY
The fund is a diversified open-end management investment company. The fund was
originally organized as a Massachusetts corporation on August 16, 1978,
reorganized as a Massachusetts business trust on December 31, 1985 and
reorganized as a Delaware business trust on May 17, 1999.
2. INVESTMENT POLICIES, RISKS AND RESTRICTIONS
The prospectus presents the investment objective and the principal investment
strategies and risks of the fund. This section supplements the disclosure in the
fund's prospectus and provides additional information on the fund's investment
policies or restrictions. Restrictions or policies stated as a maximum
percentage of the fund's assets are only applied immediately after a portfolio
investment to which the policy or restriction is applicable (other than the
limitations on borrowing and illiquid securities). 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 restrictions and policies.
PRIMARY INVESTMENTS
Under normal circumstances, at least 80% of the fund's total assets must be
invested in (a) debt securities issued or guaranteed by the U.S. government or
its agencies or instrumentalities, (b) debt securities, including convertible
securities, of corporate and other issuers rated at least investment grade at
the time of investment, and comparably rated commercial paper and (c) cash and
cash equivalents, such as certificates of deposit, repurchase agreements
maturing in one week or less and bankers' acceptances.
DEBT SECURITIES RATING CRITERIA
Investment grade debt securities are those rated "BBB" or higher by Standard &
Poor's Ratings Group ("Standard & Poor's") or the equivalent rating of other
nationally recognized securities rating organizations. Debt securities rated BBB
are considered medium grade obligations with speculative characteristics, and
adverse economic conditions or changing circumstances may weaken the issuer's
ability to pay interest and repay principal. If the rating of an investment
grade debt security falls below investment grade, Pioneer will consider if any
action is appropriate in light of the fund's investment objective and policies.
The fund may invest up to 20% of its total assets in below investment grade debt
securities. Below investment grade debt securities are those rated "BB" and
below by Standard & Poor's or the equivalent rating of other nationally
recognized securities rating organizations. See Appendix B for a description of
rating categories.
Below investment grade debt securities or comparable unrated securities are
commonly referred to as "junk bonds" and are considered predominantly
speculative and may be questionable as to principal and interest payments.
Changes in economic conditions are more likely to lead to a weakened capacity to
make principal payments and interest payments. The amount of junk bond
securities outstanding has proliferated as an increasing number of issuers have
used junk bonds for corporate financing. An economic downturn could severely
affect the ability of highly leveraged issuers to service their debt obligations
or to repay their obligations upon maturity. Factors having an adverse impact on
the market value of lower quality securities will have an adverse effect on the
fund's net asset value to the extent that it invests in such securities. In
addition, the fund may incur additional expenses to the extent it is required to
seek recovery upon a default in payment of principal or interest on its
portfolio holdings.
The secondary market for junk bond securities may not be as liquid as the
secondary market for more highly rated securities, a factor which may have an
adverse effect on the fund's ability to dispose of a particular security when
necessary to meet its liquidity needs. Under adverse market or economic
conditions, the secondary market for junk bond securities could contract
further, independent of any specific adverse changes in the condition of a
particular issuer. As a result, the fund could find it more difficult to sell
these securities or may be able to sell the securities only at prices lower than
if such securities were widely traded. Prices realized upon the sale of such
lower rated or unrated securities, under these circumstances, may be less than
the prices used in calculating the fund's net asset value.
Since investors generally perceive that there are greater risks associated with
lower quality debt securities of the type in which the fund may invest a portion
of its assets, the yields and prices of such securities may tend to fluctuate
more than those for higher rated securities. In the lower quality segments of
the debt securities market, changes in perceptions of issuers' creditworthiness
tend to occur more frequently and in a more pronounced manner than do changes in
higher quality segments of the debt securities market, resulting in greater
yield and price volatility.
Lower rated and comparable unrated debt securities tend to offer higher yields
than higher rated securities with the same maturities because the historical
financial condition of the issuers of such securities may not have been as
strong as that of other issuers. However, lower rated securities generally
involve greater risks of loss of income and principal than higher rated
securities. Pioneer Investment Management, Inc. ("Pioneer"), the fund's
investment adviser, will attempt to reduce these risks through portfolio
diversification and by analysis of each issuer and its ability to make timely
payments of income and principal, as well as broad economic trends and corporate
developments.
U.S. GOVERNMENT SECURITIES
U.S. government securities in which the fund invests include debt obligations of
varying maturities issued by the U.S. Treasury or issued or guaranteed by an
agency or instrumentality of the U.S. government, including the Federal Housing
Administration, Federal Financing Bank, Farmers Home Administration,
Export-Import Bank of the U.S., Small Business Administration, Government
National Mortgage Association ("GNMA"), General Services Administration, Central
Bank for Cooperatives, Federal Farm Credit Banks, Federal Home Loan Banks,
Federal Home Loan Mortgage Corporation ("FHLMC"), Federal National Mortgage
Association ("FNMA"), Maritime Administration, Tennessee Valley Authority,
District of Columbia Armory Board, Student Loan Marketing Association,
Resolution Trust Corporation and various institutions that previously were or
currently are part of the Farm Credit System (which has been undergoing
reorganization since 1987). Some U.S. government securities, such as U.S.
Treasury bills, Treasury notes and Treasury bonds, which differ only in their
interest rates, maturities and times of issuance, are supported by the full
faith and credit of the United States. Others are supported by: (i) the right of
the issuer to borrow from the U.S. Treasury, such as securities of the Federal
Home Loan Banks; (ii) the discretionary authority of the U.S. government to
purchase the agency's obligations, such as securities of the FNMA; or (iii) only
the credit of the issuer, such as securities of the Student Loan Marketing
Association. No assurance can be given that the U.S. government will provide
financial support in the future to U.S. government agencies, authorities or
instrumentalities that are not supported by the full faith and credit of the
United States. Securities guaranteed as to principal and interest by the U.S.
government, its agencies, authorities or instrumentalities include: (i)
securities for which the payment of principal and interest is backed by an
irrevocable letter of credit issued by the U.S. government or any of its
agencies, authorities or instrumentalities; and (ii) participations in loans
made to non-U.S. governments or other entities that are so guaranteed. The
secondary market for certain of these participations is limited and, therefore,
may be regarded as illiquid.
U.S. government securities may include zero coupon securities that may be
purchased when yields are attractive and/or to enhance portfolio liquidity. Zero
coupon U.S. government securities are debt obligations that are issued or
purchased at a significant discount from face value. The discount approximates
the total amount of interest the security will accrue and compound over the
period until maturity or the particular interest payment date at a rate of
interest reflecting the market rate of the security at the time of issuance.
Zero coupon U.S. government securities do not require the periodic payment of
interest. These investments benefit the issuer by mitigating its need for cash
to meet debt service, but also require a higher rate of return to attract
investors who are willing to defer receipt of cash. These investments may
experience greater volatility in market value than U.S. government securities
that make regular payments of interest. The fund accrues income on these
investments for tax and accounting purposes, which is distributable to
shareholders and which, because no cash is received at the time of accrual, may
require the liquidation of other portfolio securities to satisfy the fund's
distribution obligations, in which case the fund will forego the purchase of
additional income producing assets with these funds. Zero coupon U.S. government
securities include STRIPS and CUBES, which are issued by the U.S. Treasury as
component parts of U.S. Treasury bonds and represent scheduled interest and
principal payments on the bonds.
MUNICIPAL OBLIGATIONS
The term "municipal obligations" generally is understood to include debt
obligations issued by municipalities to obtain funds for various public
purposes, the interest on which is, in the opinion of bond counsel to the
issuer, excluded from gross income for federal income tax purposes. In addition,
if the proceeds from private activity bonds are used for the construction,
repair or improvement of privately operated industrial or commercial facilities,
the interest paid on such bonds may be excluded from gross income for federal
income tax purposes, although current federal tax laws place substantial
limitations on the size of these issues. The fund's distributions of any
interest it earns on municipal obligations will be taxable to shareholders as
ordinary income.
The two principal classifications of municipal obligations are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its faith, credit, and taxing power for the payment of
principal and interest. Revenue bonds are payable from the revenues derived from
a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue source, but not from the
general taxing power. Sizable investments in these obligations could involve an
increased risk to the fund should any of the related facilities experience
financial difficulties. Private activity bonds are in most cases revenue bonds
and do not generally carry the pledge of the credit of the issuing municipality.
There are, of course, variations in the security of municipal obligations, both
within a particular classification and between classifications.
MORTGAGE-BACKED SECURITIES
The fund may invest in mortgage pass-through certificates and multiple-class
pass-through securities, such as real estate mortgage investment conduits
("REMIC") pass-through certificates, collateralized mortgage obligations
("CMOs") and stripped mortgage-backed securities ("SMBS"), and other types of
mortgage-backed securities that may be available in the future. A
mortgage-backed security is an obligation of the issuer backed by a mortgage or
pool of mortgages or a direct interest in an underlying pool of mortgages. Some
mortgage-backed securities, such as CMOs, make payments of both principal and
interest at a variety of intervals; others make semiannual interest payments at
a predetermined rate and repay principal at maturity (like a typical bond).
Mortgage-backed securities are based on different types of mortgages including
those on commercial real estate or residential properties. Mortgage-backed
securities often have stated maturities of up to thirty years when they are
issued, depending upon the length of the mortgages underlying the securities. In
practice, however, unscheduled or early payments of principal and interest on
the underlying mortgages may make the securities' effective maturity shorter
than this, and the prevailing interest rates may be higher or lower than the
current yield of the fund's portfolio at the time the fund receives the payments
for reinvestment. Mortgage-backed securities may have less potential for capital
appreciation than comparable fixed income securities, due to the likelihood of
increased prepayments of mortgages as interest rates decline. If the fund buys
mortgage-backed securities at a premium, mortgage foreclosures and prepayments
of principal by mortgagors (which may be made at any time without penalty) may
result in some loss of the fund's principal investment to the extent of the
premium paid.
The value of mortgage-backed securities may also change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities markets as a whole. Non-governmental
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
governmental issues.
GUARANTEED MORTGAGE PASS-THROUGH SECURITIES. Guaranteed mortgage pass-through
securities represent participation interests in pools of residential mortgage
loans and are issued by U.S. governmental or private lenders and guaranteed by
the U.S. government or one of its agencies or instrumentalities, including but
not limited to GNMA, FNMA and FHLMC. GNMA certificates are guaranteed by the
full faith and credit of the U.S. government for timely payment of principal and
interest on the certificates. FNMA certificates are guaranteed by FNMA, a
federally chartered and privately owned corporation, for full and timely payment
of principal and interest on the certificates. FHLMC certificates are guaranteed
by FHLMC, a corporate instrumentality of the U.S. government, for timely payment
of interest and the ultimate collection of all principal of the related mortgage
loans.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of conventional residential mortgage loans. Such issuers may,
in addition, be the originators and/or servicers of the underlying mortgage
loans as well as the guarantors of the mortgage-related securities. Because
there are no direct or indirect government or agency guarantees of payments in
pools created by such non-governmental issuers, they generally offer a higher
rate of interest than government and government-related pools. Timely payment of
interest and principal of these pools may be supported by insurance or
guarantees, including individual loan, title, pool and hazard insurance and
letters of credit. The insurance and guarantees are issued by governmental
entities, private insurers and the mortgage poolers. There can be no assurance
that the private insurers or guarantors can meet their obligations under the
insurance policies or guarantee arrangements.
Mortgage-related securities without insurance or guarantees may be purchased if
Pioneer determines that the securities meet the fund's quality standards.
Mortgage-related securities issued by certain private organizations may not be
readily marketable.
MULTIPLE-CLASS PASS-THROUGH SECURITIES AND COLLATERALIZED MORTGAGE OBLIGATIONS.
CMOs and REMIC pass-through or participation certificates may be issued by,
among others, U.S. government agencies and instrumentalities as well as private
issuers. REMICs are CMO vehicles that qualify for special tax treatment under
the Internal Revenue Code of 1986, as amended (the "Code") and invest in
mortgages principally secured by interests in real property and other
investments permitted by the Code. CMOs and REMIC certificates are issued in
multiple classes and the principal of and interest on the mortgage assets may be
allocated among the several classes of CMOs or REMIC certificates in various
ways. Each class of CMO or REMIC certificate, often referred to as a "tranche,"
is issued at a specific adjustable or fixed interest rate and must be fully
retired no later than its final distribution date. Generally, interest is paid
or accrues on all classes of CMOs or REMIC certificates on a monthly basis.
Typically, CMOs are collateralized by GNMA, FNMA or FHLMC certificates but also
may be collateralized by other mortgage assets such as whole loans or private
mortgage pass-through securities. Debt service on CMOs is provided from payments
of principal and interest on collateral of mortgaged assets and any reinvestment
income thereon.
STRIPPED MORTGAGE-BACKED SECURITIES. SMBS are multiple-class mortgage-backed
securities that are created when a U.S. government agency or a financial
institution separates the interest and principal components of a mortgage-backed
security and sells them as individual securities. The fund invests in SMBS that
are usually structured with two classes that receive different proportions of
interest and principal distributions on a pool of mortgage assets. A typical
SMBS will have one class receiving some of the interest and most of the
principal, while the other class will receive most of the interest and the
remaining principal. The holder of the "principal-only" security (PO) receives
the principal payments made by the underlying mortgage-backed security, while
the holder of the "interest-only" security (IO) receives interest payments from
the same underlying security. The prices of stripped mortgage-backed securities
may be particularly affected by changes in interest rates. As interest rates
fall, prepayment rates tend to increase, which tends to reduce prices of IOs and
increase prices of POs. Rising interest rates can have the opposite effect.
Although the market for these securities is increasingly liquid, Pioneer may
determine that certain stripped mortgage-backed securities issued by the U.S.
government, its agencies or instrumentalities are not readily marketable. If so,
these securities, together with privately-issued stripped mortgage-backed
securities, will be considered illiquid for purposes of the fund's limitation on
investments in illiquid securities. The yields and market risk of interest-only
and principal-only SMBS, respectively, may be more volatile than those of other
fixed income securities.
The fund also may invest in planned amortization class ("PAC") and target
amortization class ("TAC") CMO bonds which involve less exposure to prepayment,
extension and interest rate risks than other mortgage-backed securities,
provided that prepayment rates remain within expected prepayment ranges or
"collars." To the extent that the prepayment rates remain within these
prepayment ranges, the residual or support tranches of PAC and TAC CMOs assume
the extra prepayment, extension and interest rate risks associated with the
underlying mortgage assets.
RISK FACTORS ASSOCIATED WITH MORTGAGE-BACKED SECURITIES. Investing in
mortgage-backed securities involves certain risks, including the failure of a
counterparty to meet its commitments, adverse interest rate changes and the
effects of prepayments on mortgage cash flows. In addition, investing in the
lowest tranche of CMOs and REMIC certificates involves risks similar to those
associated with investing in equity securities. However, due to adverse tax
consequences under current tax laws, the fund does not intend to acquire
"residual" interests in REMICs. Further, the yield characteristics of
mortgage-backed securities differ from those of traditional fixed income
securities. The major differences typically include more frequent interest and
principal payments (usually monthly), the adjustability of interest rates of the
underlying instrument, and the possibility that prepayments of principal may be
made substantially earlier than their final distribution dates.
Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social and other factors and cannot be
predicted with certainty. Both adjustable rate mortgage loans and fixed rate
mortgage loans may be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of principal
prepayments in an increasing interest rate environment. Under certain interest
rate and prepayment rate scenarios, the fund may fail to recoup fully its
investment in mortgage-backed securities notwithstanding any direct or indirect
governmental, agency or other guarantee. When the fund reinvests amounts
representing payments and unscheduled prepayments of principal, it may obtain a
rate of interest that is lower than the rate on existing adjustable rate
mortgage pass-through securities. Thus, mortgage-backed securities, and
adjustable rate mortgage pass-through securities in particular, may be less
effective than other types of U.S. government securities as a means of "locking
in" interest rates.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
The fund may purchase securities, including U.S. government securities, on a
when-issued basis or may purchase or sell securities for delayed delivery. In
such transactions, delivery of the securities occurs beyond the normal
settlement period, but no payment or delivery is made by the fund prior to the
actual delivery or payment by the other party to the transaction. The fund will
not earn income on these securities until delivered. The purchase of securities
on a when-issued or delayed delivery basis involves the risk that the value of
the securities purchased will decline prior to the settlement date. The sale of
securities for delayed delivery involves the risk that the prices available in
the market on the delivery date may be greater than those obtained in the sale
transaction. When-issued and delayed delivery transactions will be fully
collateralized by segregating liquid assets. See "Asset Segregation."
WARRANTS
The fund may invest in warrants, which are securities permitting, but not
obligating, their holder to subscribe for other securities. Warrants do not
carry with them the right to dividends or voting rights with respect to the
securities that they entitle their holders to purchase, and they do not
represent any rights in the assets of the issuer. As a result, an investment in
warrants may be considered more speculative than certain other types of
investments. In addition, the value of a warrant does not necessarily change
with the value of the underlying securities, and a warrant expires worthless if
it is not exercised on or prior to its expiration date.
INVESTMENTS IN EQUITY SECURITIES
The fund may invest up to 5% of its total assets in equity securities. Equity
securities, such as common stock, generally represent an ownership interest in a
company. While equity securities have historically generated higher average
returns than fixed income securities, equity securities have also experienced
significantly more volatility in those returns. An adverse event, such as an
unfavorable earnings report, may depress the value of a particular equity
security held by the fund. Also, the price of equity securities, particularly
common stocks, are sensitive to general movements in the stock market. A drop in
the stock market may depress the price of equity securities held by the fund.
PREFERRED SHARES
The fund may invest in preferred shares of beneficial interest of trust
instruments. Preferred shares are equity securities, but they have many
characteristics of fixed income securities, such as a fixed dividend payment
rate and/or a liquidity preference over the issuer's common shares. However,
because preferred shares are equity securities, they may be more susceptible to
risks traditionally associated with equity investments than the fund's fixed
income securities.
ILLIQUID SECURITIES
The fund will not invest more than 15% of its net assets in illiquid and other
securities that are not readily marketable. Repurchase agreements maturing in
more than seven days will be included for purposes of the foregoing limit.
Securities subject to restrictions on resale under the Securities Act of 1933,
as amended (the "1933 Act"), are considered illiquid unless they are eligible
for resale pursuant to Rule 144A or another exemption from the registration
requirements of the 1933 Act and are determined to be liquid by Pioneer. Pioneer
determines the liquidity of Rule 144A and other restricted securities according
to procedures adopted by the Board of Trustees. The Board of Trustees monitors
Pioneer's application of these guidelines and procedures. The inability of the
fund to dispose of illiquid investments readily or at reasonable prices could
impair the fund's ability to raise cash for redemptions or other purposes. If
the fund sold restricted securities other than pursuant to an exception from
registration under the 1933 Act such as Rule 144A, it may be deemed to be acting
as an underwriter and subject to liability under the 1933 Act.
REAL ESTATE INVESTMENT TRUSTS ("REITS") AND ASSOCIATED RISK FACTORS
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. REITs are
not taxed on income distributed to shareholders provided they comply with the
applicable requirements of the Code. Debt securities issued by REITs, for the
most part, are general and unsecured obligations and are subject to risks
associated with REITs.
Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. An equity REIT
may be affected by changes in the value of the underlying properties owned by
the REIT. A mortgage REIT may be affected by changes in interest rates and the
ability of the issuers of its portfolio mortgages to repay their obligations.
REITs are dependent upon the skills of their managers and are not diversified.
REITs are generally dependent upon maintaining cash flows to repay borrowings
and to make distributions to shareholders and are subject to the risk of default
by lessees or borrowers. REITs whose underlying assets are concentrated in
properties used by a particular industry, such as health care, are also subject
to risks associated with such 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. If the REIT invests in adjustable rate mortgage loans the interest
rates on which are reset periodically, yields on a REIT's investments in such
loans will gradually align themselves to reflect changes in market interest
rates. This causes the value of such investments to fluctuate less dramatically
in response to interest rate fluctuations than would investments in fixed rate
obligations.
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 REITs have been more volatile in price
than the larger capitalization stocks included in Standard & Poor's 500 Stock
Index (the "S&P 500").
OTHER INVESTMENT COMPANIES
The fund may invest in the securities of other investment companies to the
extent that such investments are consistent with the fund's investment objective
and policies and permissible under the Investment Company Act of 1940, as
amended (the "1940 Act"). Under the 1940 Act, the fund may not acquire the
securities of other domestic or non-U.S. investment companies if, as a result,
(i) more than 10% of the fund's total assets would be invested in securities of
other investment companies, (ii) such purchase would result in more than 3% of
the total outstanding voting securities of any one investment company being held
by the fund, or (iii) more than 5% of the fund's total assets would be invested
in any one investment company. These limitations do not apply to the purchase of
shares of any investment company in connection with a merger, consolidation,
reorganization or acquisition of substantially all the assets of another
investment company. The fund will not invest in other investment companies for
which Pioneer or any of its affiliates act as an investment adviser or
distributor.
The fund, as a holder of the securities of other investment companies, will bear
its pro rata portion of the other investment companies' expenses, including
advisory fees. These expenses are in addition to the direct expenses of the
fund's own operations.
REPURCHASE AGREEMENTS
The fund may enter into repurchase agreements with broker-dealers, member banks
of the Federal Reserve System and other financial institutions. Repurchase
agreements are arrangements under which the fund purchases securities and the
seller agrees to repurchase the securities within a specific time and at a
specific price. The repurchase price is generally higher than the fund's
purchase price, with the difference being income to the fund. The Board of
Trustees reviews and monitors the creditworthiness of any institution which
enters into a repurchase agreement with the fund. The counterparty's obligations
under the repurchase agreement are collateralized with U.S. Treasury and/or
agency obligations with a market value of not less than 100% of the obligations,
valued daily. Collateral is 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 of commencement of bankruptcy or insolvency proceedings with
respect to the seller of the security before repurchase of the security under a
repurchase agreement, the fund may encounter delay and incur costs before being
able to sell the security. Such a delay may involve loss of interest or a
decline in price of the security. If the court characterizes the transaction as
a loan and the fund has not perfected a security interest in the security, the
fund may be required to return the security to the seller's estate and be
treated as an unsecured creditor of the seller. As an unsecured creditor, the
fund would be at risk of losing some or all of the principal and interest
involved in the transaction.
DEBT OBLIGATIONS OF FOREIGN GOVERNMENTS
An investment in debt obligations of foreign governments and their political
subdivisions (sovereign debt) involve special risks that are not present in
corporate debt obligations. The foreign issuer of the sovereign debt or the
foreign governmental authorities that control the repayment of the debt may be
unable or unwilling to repay principal or interest when due, and a fund may have
limited recourse in the event of a default. During periods of economic
uncertainty, the market prices of sovereign debt may be more volatile than
prices of debt obligations of U.S. issues. In the past, certain foreign
countries have encountered difficulties in servicing their debt obligations,
withheld payments of principal and interest and declared moratoria on the
payment of principal and interest on their sovereign debt.
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign currency reserves, the availability of
sufficient foreign exchange, the relative size of the debt service burden, the
sovereign debtor's policy toward its principal international lenders and local
political constraints. Sovereign debtors may also be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
to reduce principal and interest arrearages on their debt. The failure of a
sovereign debtor to implement economic reforms, achieve specified levels of
economic performance or repay principal or interest when due may result in the
cancellation of third-party commitments to lend funds to the sovereign debtor,
which may further impair such debtor's ability or willingness to service its
debts.
EURODOLLAR INSTRUMENTS AND SAMURAI AND YANKEE BONDS. The fund may invest in
Eurodollar instruments and Samurai and Yankee bonds. Eurodollar instruments are
bonds of corporate and government issuers that pay interest and principal in
U.S. dollars but are issued in markets outside the United States, primarily in
Europe. Samurai bonds are yen-denominated bonds sold in Japan by non-Japanese
issuers. Yankee bonds are U.S. dollar denominated bonds typically issued in the
U.S. by foreign governments and their agencies and foreign banks and
corporations. The fund may also invest in Eurodollar Certificates of Deposit
("ECDs"), Eurodollar Time Deposits ("ETDs") and Yankee Certificates of Deposit
("Yankee CDs"). ECDs are U.S. dollar-denominated certificates of deposit issued
by foreign branches of domestic banks; ETDs are U.S. dollar-denominated deposits
in a foreign branch of a U.S. bank or in a foreign bank; and Yankee CDs are U.S.
dollar-denominated certificates of deposit issued by a U.S. branch of a foreign
bank and held in the U.S. These investments involve risks that are different
from investments in securities issued by U.S. issuers, including potential
unfavorable political and economic developments, foreign withholding or other
taxes, seizure of foreign deposits, currency controls, interest limitations or
other governmental restrictions which might affect payment of principal or
interest.
RISKS OF NON-U.S. INVESTMENTS
To the extent that the fund invests in securities of non-U.S. issuers, those
investments involve considerations and risks not typically associated with
investing in the securities of issuers in the U.S. These risks are heightened
with respect to investments in countries with emerging markets and economies.
The risks of investing in securities of non-U.S. issuers or issuers with
significant exposure to non-U.S. markets may be related, among other things, to
(i) differences in size, liquidity and volatility of, and the degree and manner
of regulation of, the securities markets of certain non-U.S. markets compared to
the securities markets in the U.S.; (ii) economic, political and social factors;
and (iii) foreign exchange matters, such as restrictions on the repatriation of
capital, fluctuations in exchange rates between the U.S. dollar and the
currencies in which the fund's portfolio securities are quoted or denominated,
exchange control regulations and costs associated with currency exchange. The
political and economic structures in certain countries, particularly emerging
markets, are expected to undergo significant evolution and rapid development,
and such countries may lack the social, political and economic stability
characteristic of more developed countries. Unanticipated political or social
developments may affect the values of the fund's investments in such countries.
The economies and securities and currency markets of many emerging markets have
experienced significant disruption and declines. There can be no assurances that
these economic and market disruptions will not continue.
NON-U.S. SECURITIES MARKETS AND REGULATIONS. There may be less publicly
available information about non-U.S. markets and issuers than is available with
respect to U.S. securities and issuers. Non-U.S. companies generally are not
subject to accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to U.S. companies. The trading
markets for most non-U.S. securities are generally less liquid and subject to
greater price volatility than the markets for comparable securities in the U.S.
The markets for securities in certain emerging markets are in the earliest
stages of their development. Even the markets for relatively widely traded
securities in certain non-U.S. markets, including emerging market countries, may
not be able to absorb, without price disruptions, a significant increase in
trading volume or trades of a size customarily undertaken by institutional
investors in the U.S. Additionally, market making and arbitrage activities are
generally less extensive in such markets, which may contribute to increased
volatility and reduced liquidity. The less liquid a market, the more difficult
it may be for the fund to accurately price its portfolio securities or to
dispose of such securities at the times determined by Pioneer to be appropriate.
The risks associated with reduced liquidity may be particularly acute in
situations in which the fund's operations require cash, such as in order to meet
redemptions and to pay its expenses.
ECONOMIC, POLITICAL AND SOCIAL FACTORS. Certain countries, including emerging
markets, may be subject to a greater degree of economic, political and social
instability than is the case in the U.S. and Western European countries. Such
instability may result from, among other things: (i) authoritarian governments
or military involvement in political and economic decision making; (ii) popular
unrest associated with demands for improved economic, political and social
conditions; (iii) internal insurgencies; (iv) hostile relations with neighboring
countries; and (v) ethnic, religious and racial disaffection and conflict. Such
economic, political and social instability could significantly disrupt the
financial markets in such countries and the ability of the issuers in such
countries to repay their obligations. Investing in emerging market countries
also involves the risk of expropriation, nationalization, confiscation of assets
and property or the imposition of restrictions on foreign investments and on
repatriation of capital invested. In the event of such expropriation,
nationalization or other confiscation in any emerging country, the fund could
lose its entire investment in that country.
Certain emerging market countries restrict or control foreign investment in
their securities markets to varying degrees. These restrictions may limit the
fund's investment in those markets and may increase the expenses of the fund. In
addition, the repatriation of both investment income and capital from certain
markets in the region is subject to restrictions such as the need for certain
governmental consents. Even where there is no outright restriction on
repatriation of capital, the mechanics of repatriation may affect certain
aspects of the fund's operation.
Economies in individual countries may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross domestic product, rates of
inflation, currency valuation, capital reinvestment, resource self-sufficiency
and balance of payments positions. Many countries have experienced substantial,
and in some cases extremely high, rates of inflation for many years. Inflation
and rapid fluctuations in inflation rates have had, and may continue to have,
very negative effects on the economies and securities markets of certain
emerging countries.
Economies in emerging market countries generally are dependent heavily upon
international trade and, accordingly, have been and may continue to be affected
adversely by trade barriers, exchange controls, managed adjustments in relative
currency values and other protectionist measures imposed or negotiated by the
countries with which they trade. These economies also have been, and may
continue to be, affected adversely by economic conditions in the countries with
which they trade.
CURRENCY RISKS. The value of the securities quoted or denominated in non-U.S.
currencies may be adversely affected by fluctuations in the relative currency
exchange rates and by exchange control regulations. The fund's investment
performance may be negatively affected by a devaluation of a currency in which
the fund's investments are quoted or denominated. Further, the fund's investment
performance may be significantly affected, either positively or negatively, by
currency exchange rates because the U.S. dollar value of securities quoted or
denominated in another currency will increase or decrease in response to changes
in the value of such currency in relation to the U.S. dollar.
CUSTODIAN SERVICES AND RELATED INVESTMENT COSTS. Custodial services and other
costs relating to investment in international securities markets generally are
more expensive than in the U.S. Such markets have settlement and clearance
procedures that differ from those in the U.S. In certain markets there have been
times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the fund to make intended securities purchases due to settlement
problems could cause the fund to miss attractive investment opportunities.
Inability to dispose of a portfolio security caused by settlement problems could
result either in losses to the fund due to a subsequent decline in value of the
portfolio security or could result in possible liability to the fund. In
addition, security settlement and clearance procedures in some emerging
countries may not fully protect the fund against loss or theft of its assets.
WITHHOLDING AND OTHER TAXES. The fund will be subject to taxes, including
withholding taxes, on income (possibly including, in some cases, capital gains)
that are or may be imposed by certain countries with respect to the fund's
investments in such countries. These taxes will reduce the return achieved by
the fund. Treaties between the U.S. and such countries may not be available to
reduce the otherwise applicable tax rates.
ECONOMIC MONETARY UNION (EMU). On January 1, 1999, 11 European countries adopted
a single currency - the Euro. The conversion to the Euro is being phased in over
a three-year period. During this time, valuation, systems and other operational
problems may occur in connection with the fund's investments quoted in the Euro.
For participating countries, EMU will mean sharing a single currency and single
official interest rate and adhering to agreed upon limits on government
borrowing. Budgetary decisions will remain in the hands of each participating
country but will be subject to each country's commitment to avoid "excessive
deficits" and other more specific budgetary criteria. A European Central Bank is
responsible for setting the official interest rate to maintain price stability
within the Euro zone.
EMU is driven by the expectation of a number of economic benefits, including
lower transaction cost, reduced exchange risk, greater competition, and a
broadening and depending of European financial markets. However, there are a
number of significant risks associated with EMU. Monetary and economic union on
this scale has never been attempted before. There is a significant degree of
uncertainty as to whether participating countries will remain committed to EMU
in the face of changing economic conditions. This uncertainty may increase the
volatility of European markets.
OPTIONS ON SECURITIES AND SECURITIES INDICES
The fund may purchase put and call options on any security in which it may
invest or options on any securities index based on securities in which it may
invest. The fund would also be able to enter into closing sale transactions in
order to realize gains or minimize losses on options it has purchased.
WRITING CALL AND PUT OPTIONS ON SECURITIES. A call option written by the fund
obligates the fund to sell specified securities to the holder of the option at a
specified price if the option is exercised at any time before the expiration
date. All call options written by the fund are covered, which means that the
fund will own the securities subject to the options as long as the options are
outstanding, or the fund will use the other methods described below. The fund's
purpose in writing covered call options is to realize greater income than would
be realized on portfolio securities transactions alone. However, the fund may
forego the opportunity to profit from an increase in the market price of the
underlying security.
A put option written by the fund would obligate the fund to purchase specified
securities from the option holder at a specified price if the option is
exercised at any time before the expiration date. All put options written by the
fund would be covered, which means that the fund would have segregated assets
with a value at least equal to the exercise price of the put option. The purpose
of writing such options is to generate additional income for the fund. However,
in return for the option premium, the fund accepts the risk that it may be
required to purchase the underlying security at a price in excess of its market
value at the time of purchase.
Call and put options written by the fund will also be considered to be covered
to the extent that the fund's liabilities under such options are wholly or
partially offset by its rights under call and put options purchased by the fund.
In addition, a written call option or put may be covered by entering into an
offsetting forward contract and/or by purchasing an offsetting option or any
other option which, by virtue of its exercise price or otherwise, reduces the
fund's net exposure on its written option position.
WRITING CALL AND PUT OPTIONS ON SECURITIES INDICES. The fund may also write
(sell) covered call and put options on any securities index composed of
securities in which it may invest. Options on securities indices are similar to
options on securities, except that the exercise of securities index options
requires cash payments and does not involve the actual purchase or sale of
securities. In addition, securities index options are designed to reflect price
fluctuations in a group of securities or segments of the securities market
rather than price fluctuations in a single security.
The fund may cover call options on a securities index by owning securities whose
price changes are expected to be similar to those of the underlying index, or by
having an absolute and immediate right to acquire such securities without
additional cash consideration (or for additional consideration if cash in such
amount is segregated) upon conversion or exchange of other securities in its
portfolio. The fund may cover call and put options on a securities index by
segregating assets with a value equal to the exercise price.
PURCHASING CALL AND PUT OPTIONS. The fund would normally purchase call options
in anticipation of an increase in the market value of securities of the type in
which it may invest. The purchase of a call option would entitle the fund, in
return for the premium paid, to purchase specified securities at a specified
price during the option period. The fund would ordinarily realize a gain if,
during the option period, the value of such securities exceeded the sum of the
exercise price, the premium paid and transaction costs; otherwise the fund would
realize either no gain or a loss on the purchase of the call option.
The fund would normally purchase put options in anticipation of a decline in the
market value of securities in its portfolio ("protective puts") or in securities
in which it may invest. The purchase of a put option would entitle the fund, in
exchange for the premium paid, to sell specified securities at a specified price
during the option period. The purchase of protective puts is designed to offset
or hedge against a decline in the market value of the fund's securities. Put
options may also be purchased by the fund for the purpose of affirmatively
benefiting from a decline in the price of securities which it does not own. The
fund would ordinarily realize a gain if, during the option period, the value of
the underlying securities decreased below the exercise price sufficiently to
more than cover the premium and transaction costs; otherwise the fund would
realize either no gain or a loss on the purchase of the put option. Gains and
losses on the purchase of protective put options would tend to be offset by
countervailing changes in the value of the underlying portfolio securities.
The fund may terminate its obligations under an exchange-traded call or put
option by purchasing an option identical to the one it has written. Obligations
under over-the-counter options may be terminated only by entering into an
offsetting transaction with the counterparty to such option. Such purchases are
referred to as "closing purchase transactions."
RISKS OF TRADING OPTIONS. There is no assurance that a liquid secondary market
on an options exchange will exist for any particular exchange-traded option, or
at any particular time. If the fund is unable to effect a closing purchase
transaction with respect to covered options it has written, the fund will not be
able to sell the underlying securities or dispose of its segregated assets until
the options expire or are exercised. Similarly, if the fund is unable to effect
a closing sale transaction with respect to options it has purchased, it will
have to exercise the options in order to realize any profit and will incur
transaction costs upon the purchase or sale of underlying securities.
Reasons for the absence of a liquid secondary market on an exchange include the
following: (i) there may be insufficient trading interest in certain options;
(ii) restrictions may be imposed by an exchange on opening or closing
transactions or both; (iii) trading halts, suspensions or other restrictions may
be imposed with respect to particular classes or series of options; (iv) unusual
or unforeseen circumstances may interrupt normal operations on an exchange; (v)
the facilities of an exchange or the Options Clearing Corporation (the "OCC")
may not at all times be adequate to handle current trading volume; or (vi) one
or more exchanges could, for economic or other reasons, decide or be compelled
at some future date to discontinue the trading of options (or a particular class
or series of options), in which event the secondary market on that exchange (or
in that class or series of options) would cease to exist, although outstanding
options on that exchange, if any, that had been issued by the OCC as a result of
trades on that exchange would continue to be exercisable in accordance with
their terms.
The fund may purchase and sell both options that are traded on U.S. and non-U.S.
exchanges and options traded over the counter with broker-dealers who make
markets in these options. The ability to terminate over-the-counter options is
more limited than with exchange-traded options and may involve the risk that
broker-dealers participating in such transactions will not fulfill their
obligations. Until such time as the staff of the Securities and Exchange
Commission (the "SEC") changes its position, the fund will treat purchased
over-the-counter options and all assets used to cover written over-the-counter
options as illiquid securities, except that with respect to options written with
primary dealers in U.S. government securities pursuant to an agreement requiring
a closing purchase transaction at a formula price, the amount of illiquid
securities may be calculated with reference to the formula.
Transactions by the fund in options on securities and indices will be subject to
limitations established by each of the exchanges, boards of trade or other
trading facilities governing the maximum number of options in each class which
may be written or purchased by a single investor or group of investors acting in
concert. Thus, the number of options which the fund may write or purchase may be
affected by options written or purchased by other investment advisory clients of
Pioneer. An exchange, board of trade or other trading facility may order the
liquidations of positions found to be in excess of these limits, and it may
impose certain other sanctions.
The writing and purchase of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. The successful use of protective
puts for hedging purposes depends in part on Pioneer's ability to predict future
price fluctuations and the degree of correlation between the options and
securities markets.
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 movements
can take place in the underlying markets that cannot be reflected in the options
markets.
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 the price 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 or to
seek to increase total return, 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, non-U.S. 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 non-U.S. 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 non-U.S. currency to establish the price in U.S.
dollars of a security denominated in such currency that the fund has acquired or
expects to acquire.
Positions taken in the futures markets are not normally held to maturity but are
instead liquidated through offsetting transactions which may result in a profit
or a loss. While futures contracts on securities or currency will usually be
liquidated in this manner, the fund may instead make, or take, delivery of the
underlying securities or currency whenever it appears economically advantageous
to do so. A clearing corporation associated with the exchange on which futures
on securities or currency are traded guarantees that, if still open, the sale or
purchase will be performed on the settlement date.
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 non-U.S. 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
non-U.S. 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 Pioneer, 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, Pioneer 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 (if the option is exercised), which may have a value higher
than the exercise price. Conversely, the writing of a put option on a futures
contract generates a premium which may partially offset an increase in the price
of securities that the fund intends to purchase. However, the fund becomes
obligated to purchase a futures contract (if the option is exercised) which may
have a value lower than the exercise price. Thus, the loss incurred by the fund
in writing options on futures is potentially unlimited and may exceed the amount
of the premium received. The fund will incur transaction costs in connection
with the writing of options on futures.
The holder or writer of an option on a futures contract may terminate its
position by selling or purchasing an offsetting option on the same series. There
is no guarantee that such closing transactions can be effected. The fund's
ability to establish and close out positions on such options will be subject to
the development and maintenance of a liquid market.
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 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.
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 non-U.S.
securities because currency movements impact the value of different securities
in differing degrees.
FOREIGN CURRENCY TRANSACTIONS
The fund may engage in foreign currency transactions. These transactions may be
conducted at the prevailing spot rate for purchasing or selling currency 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 invests as a hedge against possible variations in
the foreign exchange rates 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.
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 quoted 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 all of its foreign portfolio positions and will enter into such
transactions only to the extent, if any, deemed appropriate by Pioneer.
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 fund may also engage in cross-hedging by using forward contracts in one
currency to hedge against fluctuations in the value of securities denominated in
a different currency, if Pioneer 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 Pioneer determines that there is a pattern of correlation
between the proxy currency and the U.S. dollar.
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, differences in interest rates between the two currencies
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.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date on which the
contract is entered into and the date it matures. Using forward contracts to
protect the value of the fund's portfolio securities against a decline in the
value of a currency does not eliminate fluctuations in the underlying prices of
the securities. It simply establishes a rate of exchange which the fund can
achieve at some future point in time. The precise projection of short-term
currency market movements is not possible, and short-term hedging provides a
means of fixing the U.S. dollar value of only a portion of the fund's foreign
assets.
While the fund will enter into forward contracts to reduce currency exchange
rate risks, transactions in such contracts involve certain other risks. While
the fund may benefit from such transactions, unanticipated changes in currency
prices may result in a poorer overall performance for the fund than if it had
not engaged in any such transactions. Moreover, there may be imperfect
correlation between the fund's portfolio holdings of securities quoted or
denominated in a particular currency and forward contracts entered into by the
fund. Such imperfect correlation may cause the fund to sustain losses which will
prevent the fund from achieving a complete hedge or expose the fund to risk of
foreign exchange loss.
Over-the-counter markets for trading foreign forward currency contracts offer
less protection against defaults than is available when trading in currency
instruments on an exchange. Since a forward foreign currency exchange contract
is not guaranteed by an exchange or clearinghouse, a default on the contract
would deprive the fund of unrealized profits or force the fund to cover its
commitments for purchase or resale, if any, at the current market price.
If the fund enters into a forward contract to purchase foreign currency, the
custodian or Pioneer will segregate liquid assets. See "Asset Segregation."
OPTIONS ON FOREIGN CURRENCIES
The fund may purchase and write options on foreign currencies for hedging
purposes in a manner similar to that of transactions in forward contracts. For
example, a decline in the dollar value of a foreign currency in which portfolio
securities are quoted or denominated will reduce the dollar value of such
securities, even if their value in the foreign currency remains constant. In an
attempt to protect against such decreases in the value of portfolio securities,
the fund may purchase put options on the foreign currency. If the value of the
currency declines, the fund will have the right to sell such currency for a
fixed amount of dollars which exceeds the market value of such currency. This
would result in a gain that may offset, in whole or in part, the negative effect
of currency depreciation on the value of the fund's securities quoted or
denominated in that currency.
Conversely, if a rise in the dollar value of a currency is projected for those
securities to be acquired, thereby increasing the cost of such securities, the
fund may purchase call options on such currency. If the value of such currency
increases, the purchase of such call options would enable the fund to purchase
currency for a fixed amount of dollars which is less than the market value of
such currency. Such a purchase would result in a gain that may offset, at least
partially, the effect of any currency related increase in the price of
securities the fund intends to acquire. As in the case of other types of options
transactions, however, the benefit the fund derives from purchasing foreign
currency options will be reduced by the amount of the premium and related
transaction costs. In addition, if currency exchange rates do not move in the
direction or to the extent anticipated, the fund could sustain losses on
transactions in foreign currency options which would deprive it of a portion or
all of the benefits of advantageous changes in such rates.
The fund may also write options on foreign currencies for hedging purposes. For
example, if the fund anticipated a decline in the dollar value of securities
quoted or denominated in a foreign currency because of declining exchange rates,
it could, instead of purchasing a put option, write a covered call option on the
relevant currency. If the expected decline occurs, the option will most likely
not be exercised, and the decrease in value of portfolio securities will be
partially offset by the amount of the premium received by the fund.
Similarly, the fund could write a put option on the relevant currency, instead
of purchasing a call option, to hedge against an anticipated increase in the
dollar cost of securities to be acquired. If exchange rates move in the manner
projected, the put option will expire unexercised and allow the fund to offset
such increased cost up to the amount of the premium. However, as in the case of
other types of options transactions, the writing of a foreign currency option
will constitute only a partial hedge up to the amount of the premium, only if
rates move in the expected direction. If unanticipated exchange rate
fluctuations occur, the option may be exercised and the fund would be required
to purchase or sell the underlying currency at a loss which may not be fully
offset by the amount of the premium. As a result of writing options on foreign
currencies, the fund also may be required to forego all or a portion of the
benefits which might otherwise have been obtained from favorable movements in
currency exchange rates.
A call option written on foreign currency by the fund is "covered" if the fund
owns the underlying foreign currency subject to the call, or if it has an
absolute and immediate right to acquire that foreign currency without additional
cash consideration. A call option is also covered if the fund holds a call on
the same foreign currency for the same principal amount as the call written
where the exercise price of the call held is (a) equal to or less than the
exercise price of the call written or (b) greater than the exercise price of the
call written if the amount of the difference is maintained by the fund in cash
or liquid securities. See "Asset Segregation."
The fund may close out its position in a currency option by either selling the
option it has purchased or entering into an offsetting option. An
exchange-traded options position may be closed out only on an options exchange
which provides a secondary market for an option of the same series. Although the
fund will generally purchase or write only those options for which there appears
to be an active secondary market, there is no assurance that a liquid secondary
market on an exchange will exist for any particular option, or at any particular
time. For some options no secondary market on an exchange may exist. In such
event, it might not be possible to effect closing transactions in particular
options, with the result that the fund would have to exercise its options in
order to realize any profit and would incur transaction costs upon the sale of
underlying currencies pursuant to the exercise of put options. If the fund as a
covered call option writer is unable to effect a closing purchase transaction in
a secondary market, it will not be able to sell the underlying currency (or
security quoted or denominated in that currency) until the option expires or it
delivers the underlying currency upon exercise.
The fund may also use options on currencies to cross-hedge, which involves
writing or purchasing options on one currency to hedge against changes in
exchange rates of a different currency with a pattern of correlation. Cross
hedging may also include using a foreign currency as a proxy for the U.S.
dollar, if Pioneer determines that there is a pattern of correlation between
that currency and the U.S. dollar.
The fund may purchase and write over-the-counter options to the extent
consistent with its limitation on investments in illiquid securities. Trading in
over-the-counter options is subject to the risk that the other party will be
unable or unwilling to close out options purchased or written by the fund.
LENDING OF PORTFOLIO SECURITIES
The fund may lend portfolio securities to member firms of the New York Stock
Exchange (the "Exchange") under agreements which 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 continues 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 and the detriment of any decrease 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 that 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.
MONEY MARKET INSTRUMENTS. The fund may invest in short-term money market
instruments including commercial bank obligations and commercial paper. These
instruments may be denominated in both U.S. and, to a limited extent, non-U.S.
currency. The fund's investment in commercial bank obligations include
certificates of deposit ("CDs"), time deposits ("TDs") and bankers' acceptances.
Obligations of foreign branches of U.S. banks and of foreign banks may be
general obligations of the parent bank in addition to the issuing bank, or may
be limited by the terms of a specific obligation and by government regulation.
As with investment in non-U.S. securities in general, investments in the
obligations of foreign branches of U.S. banks and of foreign banks may subject
the fund to investment risks that are different in some respects from those of
investments in obligations of domestic issuers.
The fund's investments in commercial paper consist of short-term (usually from 1
to 270 days) unsecured promissory notes issued by corporations in order to
finance their current operations. The fund may also invest in variable amount
master demand notes (which is a type of commercial paper) which represents a
direct borrowing arrangement involving periodically fluctuating rates of
interest under a letter agreement between a commercial paper issuer and an
institutional lender, pursuant to which the lender may determine to invest
varying amounts. Transfer of such notes is usually restricted by the issuer, and
there is no secondary trading market for such notes. To the extent the fund
invests in master demand notes, these investments will be included in the fund's
limitation on illiquid securities.
ASSET SEGREGATION
The 1940 Act requires that the fund segregate assets in connection with certain
types of transactions that may have the effect of leveraging the fund's
portfolio. If the fund enters into a transaction requiring segregation, such as
a forward commitment, the custodian or Pioneer will segregate liquid assets in
an amount required to comply with the 1940 Act. Such segregated assets will be
valued at market daily. If the aggregate value of such segregated assets
declines below the aggregate value required to satisfy the 1940 Act, additional
liquid assets will be segregated.
PORTFOLIO TURNOVER
It is the policy of the fund not to engage in trading for short-term profits
although portfolio turnover rate is not considered a limiting factor in the
execution of investment decisions for the fund.
INVESTMENT RESTRICTIONS
FUNDAMENTAL INVESTMENT RESTRICTIONS. The fund has adopted certain fundamental
investment restrictions which, along with the fund's investment objective, may
not be changed without the affirmative vote of the holders of a majority of the
fund's outstanding voting securities. As used in the prospectus and this SAI,
such approval means the approval of the lesser of (i) the holders of 67% or more
of the shares represented at a meeting if the holders of more than 50% of the
outstanding shares are present in person or by proxy, or (ii) the holders of
more than 50% of the outstanding shares.
The fund may not:
(1) Make any investment inconsistent with the fund's status as a diversified
investment company under the 1940 Act.
(2) Invest 25% or more of its total assets in the securities of one or more
issuers (excluding the U.S. government or its agencies or instrumentalities)
conducting their principal business activities in the same industry. For
purposes of this restriction the electric utility, natural gas utility, and
telephone industries shall be considered separate industries.
(3) Invest in real estate, except that the fund may invest in securities of
issuers that invest in real estate or interests therein, securities that are
secured by real estate or interests therein, securities of real estate
investment trusts and mortgage-backed securities.
(4) Invest in commodities or commodity contracts, except that the fund may
invest in currency instruments and contracts and financial instruments and
contracts that might be deemed to be commodities and commodity contracts.
(5) Act as an underwriter, except as it may be deemed to be an underwriter in a
sale of restricted securities held in its portfolio.
(6) Make loans, except by the purchase of debt obligations, by entering into
repurchase agreements or through the lending of portfolio securities.
(7) Borrow money, except the fund may: (a) borrow from banks or through reverse
repurchase agreements in an amount up to 33 1/3% of the fund's total assets
(including the amount borrowed); (b) to the extent permitted by applicable law,
borrow up to an additional 5% of the fund's assets for temporary purposes; (c)
obtain such short-term credits as are necessary for the clearance of portfolio
transactions; (d) purchase securities on margin to the extent permitted by
applicable law; and (e) engage in transactions in mortgage dollar rolls that are
accounted for as financings.
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:
(a) Invest in companies for the purpose of exercising control or management;
(b) Purchase securities while borrowings are in excess of 5% of total assets;
(c) Sell securities short, except to the extent that the fund
contemporaneously owns or has the right to acquire at no additional
cost securities identical to those sold short; or
(d) Purchase securities on margin.
3. MANAGEMENT OF THE FUND
The fund's Board of Trustees provides broad supervision over the affairs of the
fund. The officers of the fund are responsible for the fund's operations. The
Trustees and executive officers of the fund are listed below, together with
their principal occupations during the past five years. An asterisk indicates
those Trustees who are interested persons of the fund within the meaning of the
1940 Act.
JOHN F. COGAN, JR.*, CHAIRMAN OF THE BOARD, PRESIDENT AND TRUSTEE, DOB:JUNE 1926
President, Chief Executive Officer and a Director of The Pioneer Group, Inc.
("PGI"); Chairman and a Director of Pioneer, Closed Joint-Stock Company
"Forest-Starma" and Pioneer Global Funds Distributor, Ltd.; Director of Pioneer
Real Estate Advisors, Inc. ("PREA"), Pioneer Forest, Inc., Pioneer Management
(Ireland) Limited ("PMIL"), Pioneer First Investment Fund and PIOGlobal
Corporation ("PIOGlobal"); President and Director of Pioneer International
Corporation ("PIntl"), Pioneer First Russia, Inc. ("PFR") and Pioneer Omega,
Inc. ("Pioneer Omega"); Member of the Supervisory Board of Pioneer Fonds
Marketing GmbH, Pioneer First Polish Investment Fund Joint Stock Company
("Pioneer First Polish"), Pioneer Czech Investment Company, a.s. ("Pioneer
Czech") and Pioneer Universal Pension Fund Company; Chairman, President and
Trustee of all of the Pioneer mutual funds; Director of Pioneer America Fund
Plc, Pioneer Global Equity Fund Plc, Pioneer Global Bond Fund Plc, Pioneer Euro
Reserve Fund Plc, Pioneer European Equity Fund Plc, Pioneer Emerging Europe Fund
Plc, Pioneer Greater Asia Fund Plc, Pioneer U.S. Growth Fund Plc, Pioneer U.S.
High Yield Fund Plc and Pioneer US Real Estate Fund Plc, (collectively, the
"Irish Funds"); and Of Counsel, Hale and Dorr LLP (counsel to PGI and the fund).
MARY K. BUSH, TRUSTEE, DOB: APRIL 1948
4201 CATHEDRAL AVENUE, NW, WASHINGTON, DC 20016
President, Bush & Co. (international financial advisory firm); Director and/or
Trustee of Mortgage Guaranty Insurance Corporation, Hoover Institution, March of
Dimes, Texaco, Inc., R.J. Reynolds Tobacco Holdings, Inc. and Brady Corporation;
Advisory Board Member, Washington Mutual Investors Fund (registered investment
company); and Trustee of all of the Pioneer mutual funds.
RICHARD H. EGDAHL, M.D., TRUSTEE, DOB: DECEMBER 1926
BOSTON UNIVERSITY HEALTHCARE ENTREPRENEURSHIP PROGRAM, 53 BAY STATE ROAD,
BOSTON, MA 02215 Alexander Graham Bell Professor of Health Care
Entrepreneurship, Boston University; Professor of Management, Boston University
School of Management; Professor of Public Health, Boston University School of
Public Health; Professor of Surgery, Boston University School of Medicine;
University Professor, Boston University; Director, Boston University Health
Policy Institute, University Program for Health Care Entrepreneurship; Trustee,
Boston Medical Center; and Trustee of all of the Pioneer mutual funds.
MARGARET B.W. GRAHAM, TRUSTEE, DOB: MAY 1947 THE KEEP, P.O. BOX 110, LITTLE DEER
ISLE, ME 04650 Founding Director, The Winthrop Group, Inc. (consulting firm);
and Trustee of all of the Pioneer mutual funds.
MARGUERITE A. PIRET, TRUSTEE, DOB: MAY 1948
ONE BOSTON PLACE, 26TH FLOOR, 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; Director, Organogenesis Inc. (tissue engineering company);
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; Chairman and a Director of
Pioneer Funds Distributor, Inc. ("PFD"); President and a Director of Pioneer;
Director of Pioneering Services Corporation ("PSC"), PIntl, PIOGlobal, Pioneer
Omega, PMIL and the Irish Funds; Member of the Supervisory Board of Pioneer
First Polish, Pioneer Czech and Pioneer Asset Management, S.A.; and Executive
Vice President and Trustee of all of the Pioneer mutual funds.
STEPHEN K. WEST, TRUSTEE, DOB: SEPTEMBER 1928
125 BROAD STREET, NEW YORK, NY 10004
Of Counsel, Sullivan & Cromwell (law firm); Director, Dresdner RCM Global
Strategic Income Fund, Inc. since May 1997 and The Swiss Helvetia Fund, Inc.
since 1995 (investment companies), AMVESCAP PLC (investment managers) since 1997
and ING American Insurance Holdings, Inc.; and Trustee of all of the Pioneer
mutual funds.
JOHN WINTHROP, TRUSTEE, DOB: JUNE 1936
ONE NORTH ADGERS WHARF, CHARLESTON, SC 29401
President, John Winthrop & Co., Inc. (private investment firm); Director of NUI
Corp. (energy sales, services and distribution); and Trustee of all of the
Pioneer mutual funds.
ERIC W. RECKARD, TREASURER, DOB: JUNE 1956
Executive Vice President, Chief Financial Officer and Treasurer of PGI since
June 1999; Treasurer of Pioneer, PFD, PSC, PIntl, PREA, PFR and Pioneer Omega
since June 1999; Vice President-Corporate Finance of PGI from February 1999 to
June 1999; Manager of Fund Accounting, Business Planning and Internal Audit of
PGI since September 1996; Manager of Fund Accounting and Compliance of PGI from
May 1995 to September 1996; and Treasurer of all of the Pioneer mutual funds
(Assistant Treasurer prior to June 1999).
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.
VINCENT NAVE, ASSISTANT TREASURER, DOB: JUNE 1945
Vice President-Fund Accounting, Administration and Custody Services of Pioneer
(Manager from September 1996 to February 1999); and Assistant Treasurer of all
of the Pioneer mutual funds since June 1999.
ROBERT P. NAULT, ASSISTANT SECRETARY, DOB: MARCH 1964
Senior Vice President of PGI since 1998; General Counsel and Assistant Secretary
of PGI; Assistant Secretary of Pioneer, certain other PGI subsidiaries and all
of the Pioneer mutual funds; and Assistant Clerk of PFD and PSC.
SHERMAN B. RUSS, VICE PRESIDENT, DOB: JULY 1937
Senior Vice President of Pioneer; Vice President of Pioneer Money Market Trust,
Pioneer America Income Trust and Pioneer Interest Shares.
The business address of all officers is 60 State Street, Boston, Massachusetts
02109.
All of the outstanding capital stock of PFD, Pioneer and PSC is owned, directly
or indirectly, by PGI, a publicly owned Delaware corporation. Pioneer, the
fund's investment adviser, serves as the investment adviser for the Pioneer
mutual funds and manages the investments of certain institutional accounts.
The table below lists all of the U.S.-registered Pioneer mutual funds currently
offered to the public and the investment adviser and principal underwriter for
each fund.
INVESTMENT ADVISER PRINCIPAL
FUND NAME UNDERWRITER
Pioneer International Growth Fund Pioneer PFD
Pioneer Europe Fund Pioneer PFD
Pioneer World Equity Fund Pioneer PFD
Pioneer Emerging Markets Fund Pioneer PFD
Pioneer Indo-Asia Fund Pioneer PFD
Pioneer Mid-Cap Fund Pioneer PFD
Pioneer Mid-Cap Value Fund Pioneer PFD
Pioneer Growth Shares Pioneer PFD
Pioneer Small Company Fund Pioneer PFD
Pioneer Independence Fund Pioneer Note 1
Pioneer Micro-Cap Fund Pioneer PFD
Pioneer Balanced Fund Pioneer PFD
Pioneer Equity-Income Fund Pioneer PFD
Pioneer Fund Pioneer PFD
Pioneer II Pioneer PFD
Pioneer Real Estate Shares Pioneer PFD
Pioneer Limited Maturity Bond Fund Pioneer PFD
Pioneer America Income Trust Pioneer PFD
Pioneer Bond Fund Pioneer PFD
Pioneer Tax-Free Income Fund Pioneer PFD
Pioneer Cash Reserves Fund Pioneer PFD
Pioneer Tax-Managed Fund Pioneer PFD
Pioneer Science & Technology Fund Pioneer PFD
Pioneer High Yield Fund Pioneer PFD
Pioneer Strategic Income Fund Pioneer PFD
Pioneer Interest Shares Pioneer Note 2
Pioneer Variable Contracts Trust Pioneer Note 3
Note 1 This fund is available to the general public only through Pioneer
Independence Plans, a systematic investment plan sponsored by PFD.
Note 2 This fund is a closed-end fund.
Note 3 This is a series of 15 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.
SHARE OWNERSHIP
See Appendix A for annual information on the ownership of fund shares by the
Trustees, the fund's officers and owners in excess of 5% of any class of shares
of the fund.
COMPENSATION OF OFFICERS AND TRUSTEES
The fund pays no salaries or compensation to any of its officers. The fund
compensates each Trustee who is not affiliated with PGI, Pioneer, PFD or PSC
with a base fee, a variable fee calculated on the basis of average net assets of
the fund, per meeting fees, and annual committee participation fees for each
committee member or chairperson that are based on percentages of his or her
aggregate annual fee. See the fee table in Appendix A.
SALES LOADS. Current and former Trustees and officers of the fund and other
qualifying persons may purchase the fund's Class A shares without an initial
sales charge.
4. INVESTMENT ADVISER
The fund has contracted with Pioneer to act as its investment adviser. Pioneer
is a wholly owned subsidiary of PGI. PGI is engaged in the financial services
business in the U.S. and other countries. Certain Trustees or officers of the
fund are also directors and/or officers of PGI and its subsidiaries (see
management biographies above).
As the fund's investment adviser, Pioneer provides the fund with investment
research, advice and supervision and furnishes an investment program for the
fund consistent with the fund's investment objective and policies, subject to
the supervision of the fund's Trustees. Pioneer determines what portfolio
securities will be purchased or sold, arranges for the placing of orders for the
purchase or sale of portfolio securities, selects brokers or dealers to place
those orders, maintains books and records with respect to the fund's securities
transactions, and reports to the Trustees on the fund's investments and
performance.
Under the terms of its contract with the fund, Pioneer pays all the operating
expenses, including executive salaries and the rental of office space, relating
to its services for the fund, with the exception of the following, which are to
be paid by the fund: (a) charges and expenses for fund accounting, pricing and
appraisal services and related overhead, including, to the extent such services
are performed by personnel of Pioneer, or its affiliates, office space and
facilities and personnel compensation, training and benefits; (b) the charges
and expenses of auditors; (c) the charges and expenses of any custodian,
transfer agent, plan agent, dividend disbursing agent and registrar appointed by
the fund; (d) issue and transfer taxes, chargeable to the fund in connection
with securities transactions to which the fund is a party; (e) insurance
premiums, interest charges, dues and fees for membership in trade associations
and all taxes and corporate fees payable by the fund to federal, state or other
governmental agencies; (f) fees and expenses involved in registering and
maintaining registrations of the fund and/or its shares with the SEC, state or
blue sky securities agencies and foreign countries, including the preparation of
prospectuses and statements of additional information for filing with the SEC;
(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) any distribution fees paid by
the fund in accordance with Rule 12b-1 promulgated by the SEC pursuant to the
1940 Act; (j) compensation of those Trustees of the fund who are not affiliated
with or interested persons of Pioneer, 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, 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. The Trustees' approval of and the
terms, continuance and termination of the management contract are governed by
the 1940 Act and the Investment Advisers Act of 1940, as applicable. Pursuant to
the management contract, Pioneer 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 Pioneer. Pioneer, 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 management contract.
ADVISORY FEE. As compensation for its management services, the fund pays Pioneer
at the annual rate of 0.50% of the fund's average daily net assets. This fee is
computed and accrued daily and paid monthly.
See the table in Appendix A for management fee paid to Pioneer during recently
completed fiscal years.
ADMINISTRATION AGREEMENT. The fund has entered into an administration agreement
with Pioneer pursuant to which certain accounting and legal services which are
expenses payable by the fund under the management contract are performed by
Pioneer and pursuant to which Pioneer is reimbursed for its costs of providing
such services. See Appendix A for fees the fund paid to Pioneer for
administration and related services.
POTENTIAL CONFLICT OF INTEREST. The fund is managed by Pioneer which also serves
as investment adviser to other Pioneer mutual funds and private accounts with
investment objectives identical or similar to those of the fund. Securities
frequently meet the investment objectives of the fund, the other Pioneer mutual
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 more than one of the Pioneer
mutual funds or a private account managed by Pioneer seeks to acquire the same
security at about the same time, the fund may not be able to acquire as large a
position in such security as it desires or it may have to pay a higher price for
the security. Similarly, the fund may not be able to obtain as large an
execution of an order to sell or as high a price for any particular portfolio
security if Pioneer 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. 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 account. Although the other Pioneer mutual funds
may have the same or similar investment objectives and policies as the fund,
their portfolios do not generally consist of the same investments as the fund or
each other, and their performance results are likely to differ from those of the
fund.
PERSONAL SECURITIES TRANSACTIONS. The fund, Pioneer and PFD have adopted a code
of ethics under Rule 17j-1 of the 1940 Act which is applicable to officers,
trustees/directors and designated employees. The code permits such persons to
engage in personal securities transactions for their own accounts, including
securities that may be purchased or held by the fund, and is designed to
prescribe means reasonably necessary to prevent conflicts of interest from
arising in connection with personal securities transactions. The code is on
public file with and available from the SEC.
5. PRINCIPAL UNDERWRITER AND DISTRIBUTION PLANS
PRINCIPAL UNDERWRITER
PFD, 60 State Street, Boston, Massachusetts 02109, is the principal underwriter
for the fund in connection with the continuous offering of its shares. PFD is an
indirect wholly owned subsidiary of PGI.
The fund entered into an underwriting agreement with PFD which 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
non-U.S. countries. Under the underwriting agreement, PFD will use its best
efforts in rendering services to the fund.
See "Class A Share Sales Charges" for the schedule of initial sales charge
reallowed to dealers as a percentage of the offering price of the fund's Class A
shares.
See the tables in Appendix A for commissions retained by PFD and reallowed to
dealers in connection with PFD's offering of the fund's Class A shares during
recently completed fiscal years.
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.
The redemption price of shares of beneficial interest of the fund may, at
Pioneer's discretion, be paid in cash or portfolio securities. The fund has,
however, elected to be governed by Rule 18f-1 under the 1940 Act pursuant to
which the fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the fund's net asset value during any 90-day period for any
one shareholder. Should the amount of redemptions by any shareholder exceed such
limitation, the fund will have the option of redeeming the excess in cash or
portfolio securities. In the latter case, the securities are taken at their
value employed in determining the fund's net asset value. A shareholder whose
shares are redeemed in-kind may incur brokerage charges in selling the
securities received in-kind. The selection of such securities will be made in
such manner as the Board of Trustees deems fair and reasonable.
DISTRIBUTION PLANS
The fund has adopted a plan of distribution pursuant to Rule 12b-1 under the
1940 Act with respect to its Class A shares (the "Class A Plan") and a plan of
distribution with respect to its Class B shares (the "Class B Plan") and a plan
of distribution with respect to its Class C shares (the "Class C Plan")
(together, the "Plans"), pursuant to which certain distribution and service fees
are paid to PFD. Because of the Plans, long-term shareholders may pay more than
the economic equivalent of the maximum sales charge permitted by the National
Association of Securities Dealers, Inc. (the "NASD") regarding investment
companies.
CLASS A PLAN. 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 Board of Trustees. The Board of Trustees has approved the following
categories of expenses that may be reimbursed under the Class A Plan: (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; 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. The expenses of the fund pursuant to the Class A Plan are
accrued daily at a rate which may not exceed the annual rate of 0.25% of the
fund's average daily net assets attributable to Class A shares. 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. The
limited carryover provision in the Class A Plan may result in an expense
invoiced to the fund in one fiscal year being paid in the subsequent fiscal year
and thus being treated for purposes of calculating the maximum expenditures of
the fund as having been incurred in the subsequent fiscal year. In the event of
termination or non-continuance of the Class A Plan, the fund has 12 months to
reimburse any expense which it incurs prior to such termination or
non-continuance, provided that payments by the fund during such 12-month period
shall not exceed 0.25% of the fund's average daily net assets attributable to
Class A shares during such period. See Appendix A for the amount, if any, of
carryover of distribution expenses as of the end of the most recent calendar
year.
CLASS B PLAN. Commissions on the sale of Class B shares equal to 3.75% of the
amount invested are paid to broker-dealers who have sales agreements with PFD.
PFD may also advance to dealers the first-year service fee payable under the
Class B Plan at a rate up to 0.25% of the purchase price of such shares. As
compensation for such advance of the service fee, PFD may retain the service fee
paid by the fund with respect to such shares for the first year after purchase.
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. Commencing in the 13th month following the purchase of Class B shares,
dealers will become eligible for additional annual service fees of up to 0.25%
of the net asset value of 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 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. 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.
The Class B Plan and underwriting agreement were amended effective September 30,
1998 to permit PFD to sell its right to receive distribution fees under the
Class B Plan and CDSCs to third parties. PFD enters into such transactions to
finance the payment of commissions to brokers at the time of sale and other
distribution-related expenses. In connection with such amendments, the fund has
agreed that the distribution fee will not be terminated or modified (including a
modification by change in the rules relating to the conversion of Class B shares
into Class A shares) with respect to Class B shares (a) issued prior to the date
of any termination or modification or (b) attributable to Class B shares issued
through one or a series of exchanges of shares of another investment company for
which PFD acts as principal underwriter which were initially issued prior to the
date of such termination or modification or (c) issued as a dividend or
distribution upon Class B shares initially issued or attributable to Class B
shares issued prior to the date of any such termination or modification except:
(i) to the extent required by a change in the 1940 Act, the rules or
regulations under the 1940 Act, the Conduct Rules of the NASD or an order of any
court or governmental agency; in each case enacted, issued or promulgated after
September 30, 1998;
(ii) in connection with a Complete Termination (as defined in the
Class B Plan); or
(iii) on a basis, determined by the Board of Trustees acting in good
faith, so long as from and after the effective date of such modification or
termination: neither the fund, the adviser nor certain affiliates pay, directly
or indirectly, a fee to any person for the provision of personal and account
maintenance services (as such terms are used in the Conduct Rules of the NASD)
to the holders of Class B shares of the fund and the termination or modification
of the distribution fee applies with equal effect to all Class B shares
outstanding from time to time.
The Class B Plan also provides that PFD shall be deemed to have performed all
services required to be performed in order to be entitled to receive the
distribution fee, if any, payable with respect to Class B shares sold through
PFD upon the settlement date of the sale of such Class B shares or in the case
of Class B shares issued through one or a series of exchanges of shares of
another investment company for which PFD acts as principal underwriter or issued
as a dividend or distribution upon Class B shares, on the settlement date of the
first sale on a commission basis of a Class B share from which such Class B
share was derived.
In the amendments to the underwriting agreement, the fund agreed that subsequent
to the issuance of a Class B share, it would not take any action to waive or
change any CDSC (including a change in the rules applicable to conversion of
Class B shares into another class) in respect of such Class B shares, except (i)
as provided in the fund's prospectus or statement of additional information in
effect on September 30, 1998, or (ii) as required by a change in the 1940 Act
and the rules and regulations thereunder, the Conduct Rules of the NASD or any
order of any court or governmental agency enacted, issued or promulgated after
September 30, 1998.
CLASS C PLAN. Commissions on the sale of Class C shares of up to 0.75% of the
amount invested in Class C shares are paid to broker-dealers who have sales
agreements with PFD. PFD may also advance to dealers the first-year service fee
payable under the Class C Plan at a rate up to 0.25% of the purchase price of
such shares. As compensation for such advance of the service fee, PFD may retain
the service fee paid by the fund with respect to such shares for the first year
after purchase.
The Class C Plan provides that the fund will pay PFD, as the fund's distributor
for its Class C shares, a distribution fee accrued daily and paid quarterly,
equal on an annual basis to 0.75% of the fund's average daily net assets
attributable to Class C shares and will pay PFD a service fee equal to 0.25% of
the fund's average daily net assets attributable to Class C shares. PFD will in
turn pay to securities dealers which enter into a sales agreement with PFD a
distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the fund's average daily net assets attributable to Class C
shares owned by investors for whom that securities dealer is the holder or
dealer of record. The service fee is intended to be in consideration of personal
services and/or account maintenance services rendered by the dealer with respect
to Class C shares. PFD will advance to dealers the first-year service fee at a
rate equal to 0.25% of the amount invested. As compensation therefor, PFD may
retain the service fee paid by the fund with respect to such shares for the
first year after purchase. Commencing in the 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. 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 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. When a broker-dealer sells Class C shares and
elects, with PFD's approval, to waive its right to receive the commission
normally paid at the time of the sale, PFD may cause all or a portion of the
distribution fees described above to be paid to the broker-dealer.
GENERAL
In accordance with the terms of each Plan, PFD provides to the fund for review
by the Trustees a quarterly written report of the amounts expended under the
Plan and the purposes 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.
Each Plan's adoption, terms, continuance and termination are governed by Rule
12b-1 under the 1940 Act. The Board of Trustees believes that there is a
reasonable likelihood that the Plans will benefit the fund and its current and
future shareholders. 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 as provided in Rule 12b-1.
See Appendix A for fund expenses under the Class A Plan, Class B Plan and Class
C Plan and CDSCs paid to PFD for the most recently completed fiscal year.
Upon redemption, Class A shares may be subject to a 1% CDSC, Class B shares are
subject to a CDSC at a rate declining from a maximum 4% of the lower of the cost
or market value of the shares and Class C shares may be subject to a 1% CDSC.
6. 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.
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 the fund's portfolio; and (iii) maintaining account records and
responding to shareholder inquiries.
PSC receives an annual fee of $33.00 for each Class A, Class B and Class C
shareholder account from the fund as compensation for the services described
above. PSC is also reimbursed by the fund for its cash out-of-pocket
expenditures. The fund may compensate entities which have agreed to provide
certain sub-accounting services such as specific transaction processing and
recordkeeping services. Any such payments by the fund would be in lieu of the
per account fee which would otherwise be paid by the fund to PSC.
7. CUSTODIAN
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts 02109, is
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.
8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, 225 Franklin Street, Boston, Massachusetts 02110, the
fund's independent public accountants, provides 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 Pioneer pursuant to authority contained in the fund's management
contract. Securities purchased and sold on behalf of the fund normally will be
traded in the over-the counter market on a net basis (I.E. without commission)
through dealers acting for their own account and not as brokers or otherwise
through transactions directly with the issuer of the instrument. The cost of
securities purchased from underwriters includes an underwriter's commission or
concession, and the prices at which securities are purchased and sold from and
to dealers include a dealer's markup or markdown. Pioneer normally seeks to deal
directly with the primary market makers unless, in its opinion, better prices
are available elsewhere. Pioneer seeks to obtain the best execution on portfolio
trades. The price of securities and any commission rate paid are always factors,
but frequently not the only factors, in judging best execution. In selecting
brokers or dealers, Pioneer considers 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. Transactions in non-U.S. equity securities
are executed by broker-dealers in non-U.S. countries in which commission rates
may not be negotiable (as such rates are in the U.S.).
Pioneer may select broker-dealers that provide brokerage and/or research
services to the fund and/or other investment companies or other accounts managed
by Pioneer. In addition, consistent with Section 28(e) of the Securities
Exchange Act of 1934, as amended, if Pioneer determines in good faith that the
amount of commissions charged by a broker-dealer is reasonable in relation to
the value of the brokerage and research services provided by such broker, the
fund may pay commissions to such broker-dealer in an amount greater than the
amount another firm may charge. Such services may include advice concerning the
value of securities; the advisability of investing in, purchasing or selling
securities; the availability of securities or the purchasers or sellers of
securities; providing stock quotation services, credit rating service
information and comparative fund statistics; furnishing analyses, electronic
information services, manuals and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy, and performance of
accounts and particular investment decisions; and effecting securities
transactions and performing functions incidental thereto (such as clearance and
settlement). Pioneer maintains a listing of broker-dealers who provide such
services on a regular basis. However, because many transactions on behalf of the
fund and other investment companies or accounts managed by Pioneer 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. Pioneer believes that no exact dollar value can be calculated for such
services.
The research received from broker-dealers may be useful to Pioneer in rendering
investment management services to the fund as well as other investment companies
or other accounts managed by Pioneer, 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 accounts may be
useful to Pioneer in carrying out its obligations to the fund. The receipt of
such research has not reduced Pioneer's normal independent research activities;
however, it enables Pioneer 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 managed by Pioneer.
This policy does not imply a commitment to execute all portfolio transactions
through all broker-dealers that sell shares of the fund.
The Pioneer funds have entered into third-party brokerage and/or expense offset
arrangements to reduce the funds' total operating expenses. Pursuant to
third-party brokerage arrangements, certain of the funds that invest primarily
in U.S. equity securities may incur lower custody fees by directing brokerage to
third-party broker-dealers. Pursuant to expense offset arrangements, the funds
incur lower transfer agency expenses by maintaining their cash balances with the
custodian. See "Financial highlights" in the prospectus.
See the table in Appendix A for aggregate brokerage and underwriting commissions
paid by the fund in connection with its portfolio transactions during recently
completed fiscal years. The Board of Trustees periodically reviews Pioneer's
performance of its responsibilities in connection with the placement of
portfolio transactions on behalf of the fund.
10. DESCRIPTION OF SHARES
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 next determined net asset value per share less
any applicable CDSC. See "Sales Charges." 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 share
certificates; certificates will not be issued for Class B or Class C shares.
The fund's Agreement and Declaration of Trust, dated as of January 5, 1999 (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 four classes of
shares of the fund, designated as Class A shares, Class B shares, Class C shares
and Class Y shares. Class Y shares have not been issued as of the date of this
SAI. 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.
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 Plans adopted by holders of those
shares in connection with the distribution of shares.
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 fund is not required, and does not intend, to hold annual
shareholder meetings although special meetings may be called for the purpose of
electing or removing Trustees, changing fundamental investment restrictions or
approving a management contract.
The shares of each series of the fund are entitled to vote separately to approve
investment advisory agreements or changes in investment restrictions, but
shareholders of all series vote together in the election and selection of
Trustees and accountants. Shares of all series of the fund vote together as a
class on matters that affect all series of the fund in substantially the same
manner. As to matters affecting a single series or class, shares of such series
or class will vote separately. No amendment adversely affecting the rights of
shareholders may be made to the Declaration without the affirmative vote of a
majority of the fund's shares. Shares have no preemptive or conversion rights,
except that under certain circumstances Class B shares may convert to Class A
shares.
As a Delaware business trust, the fund's operations are governed by the
Declaration. 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. There is nevertheless a
possibility 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 fund'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.
In addition to the requirements under Delaware law, the Declaration 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.
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.
The Declaration provides that any Trustee who is not an "interested person" of
Pioneer shall be considered to be independent for purposes of Delaware law
notwithstanding the fact that such Trustee receives compensation for serving as
a trustee of the fund or other investment companies for which Pioneer acts as
investment adviser.
11. SALES CHARGES
The fund continuously offers three classes of shares designated as Class A,
Class B, and Class C as described in the prospectus.
CLASS A SHARE SALES CHARGES
You may buy Class A shares at the public offering price, including a sales
charge, as follows:
SALES CHARGE AS A % OF
OFFERING NET AMOUNT DEALER
AMOUNT OF PURCHASE PRICE INVESTED REALLOWANCE
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 0.00 0.00 see below
The schedule of sales charges above is applicable to purchases of Class A shares
of the fund by (i) an individual, (ii) an individual and his or her spouse and
children under the age of 21 and (iii) a trustee or other fiduciary of a trust
estate or fiduciary account or related trusts or accounts including pension,
profit-sharing and other employee benefit trusts qualified under Sections 401 or
408 of the Code although more than one beneficiary is involved. The sales
charges applicable to a current purchase of Class A shares of the fund by a
person listed above is determined by adding the value of shares to be purchased
to the aggregate value (at the then current offering price) of shares of any of
the other Pioneer mutual funds previously purchased and then owned, provided PFD
is notified by such person or his or her broker-dealer each time a purchase is
made which would qualify. Pioneer mutual funds include all mutual funds for
which PFD serves as principal underwriter. At the sole discretion of PFD,
holdings of funds domiciled outside the U.S., but which are managed by
affiliates of Pioneer, may be included for this purpose.
No sales charge is payable at the time of purchase on investments of $1 million
or more, or for purchases by participants in certain group plans described below
subject to a CDSC of 1% which may be imposed in the event of a redemption of
Class A shares within 12 months of purchase. 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
invested; and 0.25% on the excess over $50 million invested. These commissions
shall not be payable 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 commissions paid or a pro
rata portion thereof if the retirement plan redeems its shares within 12 months
of purchase.
LETTER OF INTENT ("LOI"). Reduced sales charges are available for purchases of
$100,000 or more of Class A shares (excluding any reinvestments of dividends and
capital gain distributions) made within a 13-month period pursuant to an 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. 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
amount specified in the LOI.
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.
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.
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 gain 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 after
September 30, 1998, all payments during a month will be aggregated and deemed to
have been made on the first day of that month. For the purpose of determining
the number of years from the time of any purchase made prior to October 1, 1998,
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:
CDSC AS A % OF DOLLAR
YEAR SINCE PURCHASE AMOUNT SUBJECT TO CDSC
First 4.0
Second 4.0
Third 3.0
Fourth 3.0
Fifth 2.0
Sixth 1.0
Seventh and thereafter 0.0
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
fund in connection with the sale of Class B shares, including the payment of
compensation to broker-dealers.
Class B shares will automatically convert into Class A shares at the beginning
of the calendar month (or the calendar quarter for purchases made prior to
October 1, 1998) 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 U.S. federal income tax
purposes. The conversion of Class B shares to Class A shares will not occur if
such ruling or opinion is not available and, therefore, Class B shares would
continue to be subject to higher expenses than Class A shares for an
indeterminate period.
CLASS C SHARES
You may buy Class C shares at 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 after September 30,
1998, all payments during a month will be aggregated and deemed to have been
made on the first day of that month. For the purpose of determining the time of
any purchase made prior to October 1, 1998, all payments made during a calendar
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.
ADDITIONAL PAYMENTS TO DEALERS
From time to time, PFD or its affiliates may elect to make payments to dealers
in addition to the commissions described above. PFD may elect to reallow the
entire initial sales charge to participating dealers for all Class A sales with
respect to which orders are placed during a particular period. Dealers to whom
substantially the entire sales charge is reallowed may be deemed to be
underwriters under the federal securities laws. 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. PFD will reallow to participating broker/dealers
the entire sales charge for all sales of the fund's Class A shares if the order
is placed from March 1, 2000 through September 30, 2000. PFD or its affiliates
may elect to pay dealers an additional commission based on the net asset value
of all of the fund's Class B shares sold by a dealer during a particular period.
PFD has elected to pay dealers an amount equal to 0.50% of the net asset value
of the fund's Class B shares sold from April 1, 2000 through September 30, 2000.
In addition, at its own expense, PFD may elect to pay additional cash or other
incentives to dealers that sell or arrange for the sale of shares of the fund.
Such cash or other incentives may take the form of payment for attendance at
preapproved conferences or seminars, sales or training programs for invited
registered representatives and other employees, payment for travel expenses,
including lodging, incurred by registered representatives and other employees
for such seminars or training programs, seminars for the public, advertising and
preapproved sales campaigns or dealer-sponsored events. PFD may also elect to
make expense reimbursements for special training of a dealer's registered
representatives and other employees in group meetings or to help pay the
expenses of sales contests. PFD will offer such cash and other incentives only
to the extent permitted by applicable law or by a self-regulatory agency such as
the National Association of Securities Dealers, Inc.
12. REDEEMING SHARES
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 for shareholders that are
subject to U.S. federal income tax. 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.
SYSTEMATIC WITHDRAWAL PLAN(S) ("SWP"). A SWP is designed to provide a convenient
method of receiving fixed payments at regular intervals from fund share accounts
having a total value of not less than $10,000. You must also be reinvesting all
dividends and capital gains distributions to use the SWP option.
Periodic payments of $50 or more will be deposited monthly, quarterly,
semiannually or annually 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. Payments can be made either by check or electronic funds transfer
to a bank account designated by you. 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 "Qualifying for a reduced sales
charge" in the prospectus. If you direct that withdrawal payments be paid to
another person, want to change the bank where payments are sent or designate an
address that is different from the account's address of record after you have
opened your account, a signature guarantee must accompany your instructions.
Withdrawals under the SWP are redemptions that may have tax consequences for
you.
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. SWP redemptions reduce and may ultimately exhaust the number of
shares in your account. 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.
A 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 in the shareholder's account have
been redeemed.
You may obtain additional information by calling PSC at 1-800-225-6292.
REINSTATEMENT PRIVILEGE (CLASS A SHARES). 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 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. For example, 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 in the prospectus, 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.
13. TELEPHONE TRANSACTIONS
You may purchase, exchange or sell Class A, Class B or Class C shares by
telephone. See the prospectus for more information. For personal assistance,
call 1-800-225-6292 between 8:00 a.m. and 9:00 p.m. Eastern time on weekdays.
Computer-assisted transactions may be available to shareholders who have
prerecorded certain bank information (see "FactFoneSM"). YOU ARE STRONGLY URGED
TO CONSULT WITH YOUR INVESTMENT PROFESSIONAL PRIOR TO REQUESTING ANY TELEPHONE
TRANSACTION.
To confirm that each transaction instruction received by telephone is genuine,
the fund will record each telephone transaction, require the caller to provide
the personal identification number ("PIN") for the account and send you a
written confirmation of each telephone transaction. Different procedures may
apply to accounts that are registered to non-U.S. citizens or that are held in
the name of an institution or in the name of an investment broker-dealer or
other third party. If reasonable procedures, such as those described above, are
not followed, the fund may be liable for any loss due to unauthorized or
fraudulent instructions. 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 purchase, exchange or redemption. 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 shareholder access to current information on Pioneer mutual
fund accounts and to the prices and yields of all publicly available Pioneer
mutual funds. In addition, you may use FactFoneSM to make computer-assisted
telephone purchases, exchanges or redemptions from your Pioneer mutual fund
accounts, access your account balances and last three transactions and order a
duplicate statement if you have activated your PIN. Telephone purchases or
redemptions require the establishment of a bank account of record.
Computer-assisted Class Y share telephone purchases, exchanges and redemptions
and certain other FactFoneSM features for Class Y shareholders are not currently
available through FactFoneSM. YOU ARE STRONGLY URGED TO CONSULT WITH YOUR
INVESTMENT PROFESSIONAL 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. Call PSC for assistance.
FactFoneSM allows shareholders to hear the following recorded fund information:
o net asset value prices for all Pioneer mutual funds;
o annualized 30-day yields on Pioneer's fixed income funds;
o annualized 7-day yields and 7-day effective (compound) yields
for Pioneer's money market fund;
and
o dividends and capital gains distributions on all Pioneer
mutual funds.
Yields are calculated in accordance with SEC mandated standard formulas.
All performance numbers communicated through FactFoneSM represent past
performance, and figures include the maximum applicable sales charge. A
shareholder's actual yield and total return will vary with changing market
conditions. The value of Class A, Class B, Class C and Class Y shares (except
for Pioneer Cash Reserves Fund, which seeks to maintain a stable $1.00 share
price) will also vary, and such shares may be worth more or less at redemption
than their original cost.
14. PRICING OF SHARES
The net asset value per share of each class of the fund is determined as of the
close of regular trading on the Exchange (normally 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 on 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 fund is not required to determine its net asset
value per share on any day on which no purchase orders in good order for fund
shares are received and no shares are tendered and accepted for redemption.
Ordinarily, investments in debt securities are valued on the basis of
information furnished by a pricing service which utilizes primarily a matrix
system (which reflects such factors as security prices, yields, maturities and
ratings), supplemented by dealer and exchange quotations. Other securities are
valued at the last sale price on the principal exchange or market where they are
traded.
Securities which have not traded on the date of valuation or securities for
which sales prices are not generally reported are valued at the mean between the
current bid and asked prices. Securities quoted in non-U.S. currencies are
converted to U.S. dollars utilizing non-U.S. exchange rates employed by the
fund's independent pricing services. Generally, trading in non U.S. securities
is substantially completed each day at various times prior to the close of
regular trading on the Exchange. The values of such securities used in computing
the net asset value of the fund's shares are determined as of such times.
Foreign currency exchange rates are also generally determined prior to the close
of regular trading on the Exchange. Occasionally, events which affect the values
of such securities and such exchange rates may occur between the times at which
they are determined and the close of regular trading on the Exchange and will
therefore not be reflected in the computation of the fund's net asset value. If
events materially affecting the value of such securities occur during such
period, then these securities may be valued at their fair value as determined in
good faith by the Trustees. All assets of the fund for which there is no other
readily available valuation method are valued at their fair value as determined
in good faith by the Trustees, although the actual computations may be made by
persons acting pursuant to the direction of the Board of Trustees.
The net asset value per share of each class of the fund is computed by taking
the value of all of the fund's assets attributable to a class, less the fund's
liabilities attributable to that class, and dividing the result by the number of
outstanding shares of that class. For purposes of determining net asset value,
expenses of the classes of the fund are accrued daily and taken into account.
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, and
Class C shares are offered at net asset value without the imposition of an
initial sales charge (Class B and Class C shares may be subject to a CDSC).
15. TAX STATUS
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 U.S. federal income tax on income and capital gains distributed
to shareholders. If the fund did not qualify as a regulated investment company,
it would be treated as a U.S. corporation subject to U.S. federal income tax.
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 declares a dividend from any net investment income each business day.
The fund generally pays dividends from any net investment income or
distributions of net short-term capital gains on the last business day of the
month or shortly thereafter. The fund generally pays distributions of net
long-term capital gains in November. Dividends from income and/or capital gains
may also be paid at such other times as may be necessary for the fund to avoid
U.S. federal income or excise 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 gross income for each
taxable year from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of stock, securities or foreign
currencies, or other income (including gains from options, futures and forward
contracts) derived with respect to its business of investing in such stock,
securities or currencies (the "90% income test") and satisfy certain annual
distribution and quarterly diversification requirements. For purposes of the 90%
income test, the character of income earned by certain entities in which the
fund invests that are not treated as corporations (e.g., partnerships or trusts)
for U.S. tax purposes will generally pass through to the fund. Consequently, the
fund may be required to limit its equity investments in such entities that earn
fee income, rental income or other nonqualifying income.
Unless shareholders specify otherwise, all distributions will be automatically
reinvested in additional full and fractional shares of the fund. For U.S.
federal income tax purposes, all dividends are taxable whether a shareholder
takes them in cash or reinvests them in additional shares of the fund. 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. Dividends from net
long-term capital gain in excess of net short-term capital loss ("net capital
gain"), if any, are taxable to the fund's shareholders as long-term capital
gains for U.S. federal income tax purposes without regard to the length of time
the shareholder has held shares of the fund. The U.S. federal income tax status
of all distributions will be reported to shareholders annually.
Any dividend declared by the fund as of a record date in October, November or
December and paid during the following January will be treated for U.S. 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 contracts or futures contracts with respect to stock or securities) may
have 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 future 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 that hold at least 50% of
their assets in investments producing such passive income ("passive foreign
investment companies"), the fund could be subject to U.S. federal income tax and
additional interest charges on "excess distributions" received from such
companies or on 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 limit its tax liability or maximize its return
from these investments.
The fund may invest a portion of its assets in debt obligations that are in the
lowest rating categories or are unrated, including debt obligations of issuers
not currently paying interest or who are in default. Investments in debt
obligations that are at risk of or in default present special tax issues for the
fund. Tax rules are not entirely clear about issues such as when the fund may
cease to accrue interest, original issue discount or market discount, when and
to what extent deductions may be taken for bad debts or worthless securities,
how payments received on obligations in default should be allocated between
principal and income and whether exchanges of debt obligations in a workout
context are taxable. These and other issues will be addressed by the fund, in
the event it invests in such securities, in order to seek to ensure that it
distributes sufficient income to preserve its status as a regulated investment
company and does not become subject to U.S. federal income or excise tax.
If the fund invests in certain pay-in-kind securities, zero coupon securities,
deferred interest securities or, in general, any other securities with original
issue discount (or with market discount if the fund elects to include market
discount in income currently), the fund must accrue income on such investments
for each taxable year, which generally will be prior to the receipt of the
corresponding cash payments. However, the fund must distribute, at least
annually, all or substantially all of its net income, including such accrued
income, to shareholders to qualify as a regulated investment company under the
Code and avoid U.S. 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 U.S. 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 U.S. federal income
tax liability to the fund and are not expected to be distributed as such to
shareholders. See Appendix A for the fund's available 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 with respect to these shares from such appreciation or
income may be taxable to such investor even if the net asset value of the
investor's shares is, as a result of the distributions, reduced below the
investor's cost for such shares and the distributions economically represent a
return of a portion of the investment.
Redemptions and exchanges are taxable events for shareholders that are subject
to tax. Shareholders should consult their own tax advisers with reference to
their individual circumstances to determine whether any particular transaction
in fund shares is properly treated as a sale for tax purposes, as the following
discussion assumes, and the tax treatment of any gains or losses recognized in
such transactions. Any loss realized by a shareholder upon the redemption,
exchange or other disposition of shares with a tax holding period of six months
or less will be treated as a long-term capital loss to the extent of any amounts
treated as distributions of long-term capital gain with respect to such shares.
In addition, if Class A shares redeemed or exchanged have been held for less
than 91 days, (1) in the case of a reinvestment in the fund or another mutual
fund at net asset value pursuant to the reinstatement privilege, or (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
reinstatement or 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 generally 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 forward
foreign currency contracts, may cause the fund to recognize gains or losses from
marking-to-market even though such options may not have lapsed, been closed out,
or exercised, or such futures or forward contracts may not have been performed
or closed out. The tax rules applicable to these contracts may affect the
characterization of some capital gains and losses realized by the fund as
long-term or short-term. Certain options, futures and forward contracts relating
to foreign currency may be subject to Section 988, as described above, and
accordingly may produce ordinary income or loss. Additionally, the fund may be
required to recognize gain if an option, futures contract, forward contract,
short sale 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 the fund may receive no
corresponding cash amounts, 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, forward contracts and straddles may affect the amount,
timing and character of the fund's income and capital gains or losses and hence
of its distributions to shareholders.
The fund's distributions to its corporate shareholders would potentially
qualify in their hands for the corporate dividends-received deduction, subject
to certain holding period requirements and limitations on debt financing under
the Code, only to the extent the fund earned dividend income from stock
investments in U.S. domestic corporations and certain other requirements are
satisfied. The fund is permitted to acquire stocks of U.S. domestic
corporations, and it is therefore possible that a small portion of the fund's
distributions, from the dividends attributable to such stocks, may qualify for
the dividends-received deduction. Such qualifying portion, if any, may affect a
corporate shareholder's liability for alternative minimum tax and/or result in
basis reductions and other consequences in certain circumstances.
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, which would, if imposed, reduce the yield
on or return from those investments. 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.
A state income (and possibly local income and/or intangible property) tax
exemption is generally available to the extent the fund's distributions are
derived from interest on (or, in the case of intangible property taxes, the
value of its assets is attributable to) certain U.S. government obligations,
provided in some states that certain thresholds for holdings of such obligations
and/or reporting requirements are satisfied. The fund will not seek to satisfy
any threshold or reporting requirements that may apply in particular taxing
jurisdictions, although the fund may in its sole discretion provide relevant
information to shareholders.
Different tax treatment, including penalties on certain excess contributions and
deferrals, certain pre-retirement and post-retirement distributions and certain
prohibited transactions, is accorded to accounts maintained as qualified
retirement plans. Shareholders should consult their tax advisers for more
information.
Federal law requires that the fund withhold (as "backup withholding") 31% of
reportable payments, including dividends, capital gain distributions and the
proceeds of redemptions and exchanges or repurchases of fund shares, paid 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 non-resident alien U.S. withholding tax at the rate of 30% (or at a
lower treaty rate) on amounts treated as ordinary dividends from the fund and,
unless an effective IRS Form W-8, Form W-8BEN or other authorized withholding
certificate 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.
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, the fund may compare a class'
yield and/or total return to the Lehman Brothers Government/Corporate Bond
Index, U.S. government bond rates, or other comparable indices or investment
vehicles.
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. The fund may also include
securities industry or comparative performance information generally and in
advertising or materials marketing the fund's shares. 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, Ibbotson
Associates, Investment Company Data, Inc., Johnson's Charts, Kanon Bloch Carre
and Co., Lipper, 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
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.
STANDARDIZED YIELD QUOTATIONS
The yield of a class is computed by dividing the class' net investment income
per share during a base period of 30 days, or one month, by the maximum offering
price per share of the class on the last day of such base period in accordance
with the following formula:
a-b
YIELD = 2[ ( ----- +1)6-1]
cd
Where:
a = interest earned during the period
b = net expenses accrued for the period
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends
d = the maximum offering price per share on the last
day of the period
For purposes of calculating interest earned on debt obligations as provided in
item "a" above:
(i) The yield to maturity of each obligation held by the fund is
computed based on the market value of the obligation (including actual accrued
interest, if any) at the close of business each day during the 30-day base
period, or, with respect to obligations purchased during the month, the purchase
price (plus actual accrued interest, if any) on settlement date, and with
respect to obligations sold during the month the sale price (plus actual accrued
interest, if any) between the trade and settlement dates.
(ii) The yield to maturity of each obligation is then divided by 360
and the resulting quotient is multiplied by the market value of the obligation
(including actual accrued interest, if any) to determine the interest income on
the obligation for each day. The yield to maturity calculation has been made on
each obligation during the 30 day base period.
(iii) Interest earned on all debt obligations during the 30-day or one
month period is then totaled.
(iv) The maturity of an obligation with a call provision(s) is the next
call date on which the obligation reasonably may be expected to be called or, if
none, the maturity date.
With respect to the treatment of discount and premium on mortgage- or other
receivables-backed obligations which are expected to be subject to monthly
payments of principal and interest ("pay downs"), the fund accounts for gain or
loss attributable to actual monthly pay downs as an increase or decrease to
interest income during the period. In addition, the fund may elect (i) to
amortize the discount or premium remaining on a security, based on the cost of
the security, to the weighted average maturity date, if such information is
available, or to the remaining term of the security, if the weighted average
maturity date is not available, or (ii) not to amortize the remaining discount
or premium on a security.
For purposes of computing yield, interest income is recognized by accruing 1/360
of the stated interest rate of each obligation in the fund's portfolio each day
that the obligation is in the portfolio. Expenses of Class A and Class B accrued
during any base period, if any, pursuant to the respective Distribution Plans
are included among the expenses accrued during the base period.
See Appendix A for the 30-day yield for each class of fund shares as of the most
recently completed semiannual period.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS
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
gain 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 fund's prospectus, this statement of
additional information or in advertising are calculated by standard methods
prescribed by the SEC.
Average annual total return quotations for each class of shares are computed by
finding the average annual compounded rates of return that would cause a
hypothetical investment in the class made on the first day of a designated
period (assuming all dividends and distributions are reinvested) to equal the
ending redeemable value of such hypothetical investment on the last day of the
designated period in accordance with the following formula:
P(1+T)n = ERV
Where:
P = a hypothetical initial payment of $1,000, less the
maximum sales load of $57.50 for Class A shares or
the deduction of the CDSC for Class B and Class C
shares at the end of the period; for Class Y shares,
no sales load or CDSC applies
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000
initial payment made at the beginning of the
designated period (or fractional portion thereof)
For purposes of the above computation, it is assumed that 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'
mean account size.
See Appendix A for the annual total returns for each class of fund shares as of
the most recently completed fiscal year.
17. FINANCIAL STATEMENTS
The fund's audited financial statements for the fiscal year ended June 30, 2000
from the fund's annual report, filed with the SEC on August 21, 2000 (Accession
No. 0000276776-00-000006), are incorporated by reference into this statement of
additional information. Those financial statements, including the financial
highlights in the prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect to the
financial statements, and are included in reliance upon the authority of Arthur
Andersen LLP as experts in accounting and auditing in giving their report.
The fund's annual report includes the financial statements referenced above and
is available without charge upon request by calling Shareholder Services at
1-800-225-6292.
18. APPENDIX A - ANNUAL FEE, EXPENSE AND OTHER INFORMATION
PORTFOLIO TURNOVER
The fund's annual portfolio turnover rate was 60% for the fiscal year ended June
30, 2000.
SHARE OWNERSHIP
As of September 30, 2000, the Trustees and officers of the fund owned
beneficially in the aggregate less than 1.26% of the outstanding shares of the
fund. The following is a list of the holders of 5% or more of any class of the
fund's outstanding shares as of August 31, 2000:
RECORD HOLDER SHARE CLASS NUMBER OF SHARES % OF CLASS
MLPF&S for the Sole Benefit B 496,252.568 11.83
of its Customers
Mutual Fund Administration C 94,811.529 12.34
97DT9
4800 Deer Lake Drive East 2nd floor
Jacksonville, FL 32246-6484
COMPENSATION OF OFFICERS AND TRUSTEES
The following table sets forth certain information with respect to the
compensation of each Trustee of the fund.
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 FUND*
John F. Cogan, Jr.*** $ 750.00 $0 $ 18,000.00
Mary K. Bush 2,979.25 0 93,500.00
Richard H. Egdahl, M.D. 2,951.25 0 95,500.00
Margaret B.W. Graham 3,011.50 0 102,000
John W. Kendrick**** 2,264.75 0 82,500.00
Marguerite A. Piret 3,229.75 0 116,750.00
David D. Tripple*** 750.00 0 18,000.00
Stephen K. West 3,011.75 0 108,250.00
John Winthrop 2,979.25 0 98,400.00
- -----------
$21,927.50 $0 $651,857.00
* For the fiscal year ended June 30, 2000.
** For the calendar year ended December 31, 1999.
*** Under the management contract, Pioneer reimburses the fund for
any Trustees fees paid by the fund.
**** Mr. Kendrick resigned as Trustee effective May 8, 2000.
APPROXIMATE MANAGEMENT FEES THE FUND PAID OR OWED PIONEER
FOR THE FISCAL YEARS ENDED JUNE 30,
2000 1999 1998
$ 844,331 $818,959 $696,789
FEES THE FUND PAID TO PIONEER UNDER THE ADMINISTRATION AGREEMENT EFFECTIVE
OCTOBER 9, 1998
FOR THE FISCAL YEAR ENDED JUNE 30,
2000
$44,975
CARRYOVER OF DISTRIBUTION EXPENSES
As of December 31, 1999 there was a carryover of distribution expenses in the
amount of $71,515 under the Class A Plan.
APPROXIMATE NET UNDERWRITING COMMISSIONS RETAINED BY PFD
FOR THE FISCAL YEARS ENDED JUNE 30,
2000 1999 1998
$21,000 $66,000 $38,000
APPROXIMATE COMMISSIONS REALLOWED TO DEALERS
FOR THE FISCAL YEARS ENDED JUNE 30,
2000 1999 1998
$276,000 $575,000 $305,000
FUND EXPENSES UNDER THE DISTRIBUTION PLANS
FOR THE FISCAL YEAR ENDED JUNE 30, 2000
CLASS A PLAN CLASS B PLAN CLASS C PLAN
292,375 433,236 85,925
CDSCS
During the fiscal year ended June 30, 2000, CDSCs in the amount of $323,507 were
paid to PFD.
APPROXIMATE BROKERAGE AND UNDERWRITING COMMISSIONS (PORTFOLIO TRANSACTIONS)
Because most of the fund's securities transactions are affected on a principal
basis involving a "spread" or "dealer mark-up", the fund has not paid any
brokerage commissions during the past three years.
CAPITAL LOSS CARRYFORWARDS AS OF JUNE 30, 2000
At June 30, 2000, the fund had a net capital loss carryforward of $6,644,799
which will expire between 2003 and 2008 if not utilized..
AVERAGE ANNUAL TOTAL RETURNS AS OF JUNE 30, 2000
AVERAGE ANNUAL TOTAL RETURN (%)
FIVE YEARS TEN YEARS SINCE INCEPTION
CLASS OF SHARES ONE YEAR INCEPTION DATE
Class A Shares -3.25 3.75 6.38 8.14 10/31/78
Class B Shares -3.31 3.72 N/A 4.64 4/4/94
Class C Shares 0.36 N/A N/A 2.89 1/31/96
STANDARDIZED 30-DAY YIELD (JUNE 30, 2000)
CLASS OF SHARES 30-DAY YIELD
Class A 6.83%
Class B 6.09%
Class C 6.50%
19. APPENDIX B - DESCRIPTION OF SHORT-TERM DEBT, CORPORATE BOND AND
PREFERRED STOCK RATINGS1
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S") SHORT-TERM PRIME RATING SYSTEM
Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually senior debt obligations. These obligations have an original maturity
not exceeding one year, unless explicitly noted.
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:
Prime-1: Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
Leading market positions in well-established industries.
High rates of return on funds employed.
Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Prime-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3: Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
Not Prime: Issuers rated Not Prime do not fall within any of the Prime rating
categories.
Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating on
a bank's ability to repay senior obligations extends only to branches located in
countries which carry a Moody's Sovereign Rating for Bank Deposits. Such branch
obligations are rated at the lower of the bank's rating or Moody's Sovereign
Rating for Bank Deposits for the country in which the branch is located.
1The 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.
When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings do
not incorporate an opinion as to whether payment of the obligation will be
affected by actions of the government controlling the currency of denomination.
In addition, risks associated with bilateral conflicts between an investor's
home country and either the issuer's home country or the country where an
issuer's branch is located are not incorporated into Moody's short-term debt
ratings.
If an issuer represents to Moody's that its short-term debt obligations are
supported by the credit of another entity or entities, then the name or names of
such supporting entity or entities are listed within the parenthesis beneath the
name of the issuer, or there is a footnote referring the reader to another page
for the name or names of the supporting entity or entities. In assigning ratings
to such issuers, Moody's evaluates the financial strength of the affiliated
corporations, commercial banks, insurance companies, foreign governments or
other entities, but only as one factor in the total rating assessment.
MOODY'S DEBT RATINGS
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." 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 risk appear somewhat larger than the Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal o
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.
Moody's bond ratings, where specified, are applicable to financial contracts,
senior bank obligations and insurance company senior policyholder and claims
obligations with an original maturity in excess of one year. Obligations relying
upon support mechanisms such as letters-of-credit and bonds of indemnity are
excluded unless explicitly rated. Obligations of a branch of a bank are
considered to be domiciled in the country in which the branch is located.
Unless noted as an exception, Moody's rating on a bank's ability to repay senior
obligations extends only to branches located in countries which carry a Moody's
Sovereign Rating for Bank Deposits. Such branch obligations are rated at the
lower of the bank's rating or Moody's Sovereign Rating for the Bank Deposits for
the country in which the branch is located. When the currency in which an
obligation is denominated is not the same as the currency of the country in
which the obligation is domiciled, Moody's ratings do not incorporate an opinion
as to whether payment of the obligation will be affected by the actions of the
government controlling the currency of denomination. In addition, risk
associated with bilateral conflicts between an investor's home country and
either the issuer's home country or the country where an issuer branch is
located are not incorporated into Moody's ratings.
Moody's makes no representation that rated bank obligations or insurance company
obligations are exempt from registration under the 1933 Act or issued in
conformity with any other applicable law or regulation. Nor does Moody's
represent any specific bank or insurance company obligation is legally
enforceable or a valid senior obligation of a rated issuer.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicates that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.
MOODY'S PREFERRED STOCK RATINGS
Because of the fundamental differences between preferred stocks and bonds, a
variation of Moody's familiar bond rating symbols is used in the quality ranking
of preferred stock. The symbols, presented below, are designed to avoid
comparison with bond quality in absolute terms. It should always be borne in
mind that preferred stock occupies a junior position to bonds within a
particular capital structure and that these securities are rated within the
universe of preferred stocks.
aaa: An issue which is rated aaa is considered to be a top-quality preferred
stock. This rating indicates good asset protection and the least risk of
dividend impairment within the universe of preferred stocks.
aa: An issue which is rated aa is considered a high-grade preferred stock. This
rating indicates that there is a reasonable assurance the earnings and asset
protection will remain relatively well maintained in the foreseeable future.
a: An issue which is rated a is considered to be an upper-medium grade preferred
stock. While risks are judged to be somewhat greater then in the aaa and aa
classification, earnings and asset protection are, nevertheless, expected to be
maintained at adequate levels.
baa: An issue which is rated baa is considered to be a medium-grade preferred
stock, neither highly protected nor poorly secured. Earnings and asset
protection appear adequate at present but may be questionable over any great
length of time.
ba: An issue which is rated ba is considered to have speculative elements and
its future cannot be considered well assured. Earnings and asset protection may
be very moderate and not well safeguarded during adverse periods. Uncertainty of
position characterizes preferred stocks in this class.
b: An issue which is rated b generally lacks the characteristics of a desirable
investment. Assurance of dividend payments and maintenance of other terms of the
issue over any long period of time may be small.
caa: An issue which is rated caa is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the future status
of payments.
ca: An issue which is rated ca is speculative in a high degree and is likely to
be in arrears on dividends with little likelihood of eventual payments.
c: This is the lowest rated class of preferred or preference stock. Issues so
rated can thus 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 rating
classification: the modifier 1 indicates that the security ranks in the higher
end of its generic rating category; the modifier 2 indicates a mid-range ranking
and the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
STANDARD & POOR'S SHORT-TERM ISSUE CREDIT RATINGS
A-1: A short-term obligation rated A-1 is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity to
meet its financial commitment on these obligations is extremely strong.
A-2: A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.
A-3: A short-term obligation rated A-3 exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
B: A short-term obligation rated B is regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
C: A short-term obligation rated C is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.
D: A short-term obligation rated D is in payment default. The D rating category
is used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
STANDARD & POOR'S LONG-TERM ISSUE CREDIT RATINGS
Issue credit ratings are based, in varying degrees, on the following
considerations:
Likelihood of payment-capacity and willingness of the obligor to meet
its financial commitment on an obligation in accordance with the terms
of the obligation;
Nature of and provisions of the obligation;
Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization, or other arrangement under the
laws of bankruptcy and other laws affecting creditors' rights.
The issue rating definitions are expressed in terms of default risk. As such,
they pertain to senior obligations of an entity. Junior obligations are
typically rated lower than senior obligations, to reflect the lower priority in
bankruptcy, as noted above. (Such differentiation applies when an entity has
both senior and subordinated obligations, secured and unsecured obligations, or
operating company and holding company obligations.) Accordingly, in the case of
junior debt, the rating may not conform exactly with the category definition.
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
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 inadequate capacity to meet its financial commitment on the
obligation.
B: An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.
CCC: An obligation rated CCC is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.
CC: An obligation rated CC is currently highly vulnerable to nonpayment.
C: A subordinated debt or preferred stock obligation rated C is CURRENTLY HIGHLY
VULNERABLE to nonpayment. The C rating may be used to cover a situation where a
bankruptcy petition has been filed or similar action taken, but payments on this
obligation are being continued. A C also will be assigned to a preferred stock
issue in arrears on dividends or sinking fund payments but that is currently
paying.
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 on an obligation 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 rating
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.
N.R.: This indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular obligation as a matter of policy.
LOCAL CURRENCY AND FOREIGN CURRENCY RISKS
Country risk considerations are a standard part of Standard & Poor's analysis
for credit ratings on any issuer or issue. Currency of repayment is a key factor
in this analysis. An obligor's capacity to repay foreign currency obligations
may be lower than its capacity to repay obligations in its local currency due to
the sovereign government's own relatively lower capacity to repay external
versus domestic debt. These sovereign risk considerations are incorporated in
the debt ratings assigned to specific issues. Foreign currency issuer ratings
are also distinguished from local currency issuer ratings to identify those
instances where sovereign risks make them different for the same issuer.
20. APPENDIX C - PERFORMANCE STATISTICS
PIONEER BOND FUND
CLASS A SHARES
SALES CHARGE INITIAL NET
INITIAL OFFERING PRICE INCLUDED SHARES NET ASSET ASSET VALUE
DATE INVESTMENT PURCHASED VALUE
10/31/78 $10,000 $10.47 4.50% 955.110 $10.22 $9,550
VALUE OF SHARES
(DIVIDENDS AND CAPITAL GAINS REINVESTED)
FROM CAPITAL GAINS
FROM INVESTMENT REINVESTED FROM DIVIDENDS
DATE REINVESTED TOTAL VALUE
6/30/90 $8,519 $0 $19,548 $28,067
6/30/91 $8,586 $0 $22,324 $30,910
6/30/92 $8,950 $0 $25,988 $34,938
6/30/93 $9,369 $0 $29,994 $39,363
6/30/94 $8,635 $0 $30,234 $38,869
6/30/95 $8,930 $0 $34,403 $43,333
6/30/96 $8,672 $0 $36,401 $45,073
6/30/97 $8,662 $0 $39,606 $48,268
6/30/98 $8,950 $0 $44,165 $53,115
6/30/99 $8,538 $0 $45,293 $53,831
6/30/00 $8,089 $0 $46,440 $54,529
Past performance does not guarantee future results. Return and share price
fluctuate and your shares when redeemed may be worth more or less than your
original cost.
PIONEER BOND FUND
CLASS B SHARES
SALES CHARGE INITIAL NET
INITIAL OFFERING PRICE INCLUDED SHARES NET ASSET ASSET VALUE
DATE INVESTMENT PURCHASED VALUE
4/4/94 $10,000 $9.21 0.00% 1085.776 $9.21 $10,000
VALUE OF SHARES
(DIVIDENDS AND CAPITAL GAINS REINVESTED)
FROM CAPITAL FROM CONTINGENT
FROM INVESTMENT GAINS REINVESTED DIVIDENDS DEFERRED SALES TOTAL VALUE
DATE REINVESTED CHARGE CDSC %
6/30/94 $9,773 $0 $154 $391 $9,536 4.00%
6/30/95 $10,087 $0 $889 $400 $10,576 4.00%
6/30/96 $9,772 $0 $1,549 $293 $11,028 3.00%
6/30/97 $9,783 $0 $2,245 $293 $11,735 3.00%
6/30/98 $10,108 $0 $3,028 $200 $12,936 2.00%
6/30/99 $9,653 $0 $3,558 $96 $13,115 1.00%
6/30/00 $9,144 $0 $4,131 $0 $13,275 0.00%
CLASS C SHARES
SALES CHARGE INITIAL NET
INITIAL OFFERING PRICE INCLUDED SHARES NET ASSET ASSET VALUE
DATE INVESTMENT PURCHASED VALUE
1/31/96 $10,000 $9.54 0.00% 1048.218 $9.54 $10,000
VALUE OF SHARES
(DIVIDENDS AND CAPITAL GAINS REINVESTED)
FROM CAPITAL FROM CONTINGENT
FROM INVESTMENT GAINS REINVESTED DIVIDENDS DEFERRED SALES TOTAL VALUE
DATE REINVESTED CHARGE CDSC %
6/30/96 $9,455 $0 $245 $100 $9,600 1.00%
6/30/97 $9,455 $0 $839 $0 $10,294 0.00%
6/30/98 $9,759 $0 $1,474 $0 $11,233 0.00%
6/30/99 $9,319 $0 $1,981 $0 $11,300 0.00%
6/30/00 $8,868 $0 $2,473 $0 $11,341 0.00%
Past performance does not guarantee future results. Return and share price
fluctuate and your shares when redeemed may be worth more or less than your
original cost.
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 1,980 stocks ranging in market capitalization from $50 million to
$125 million. Index returns are calculated monthly.
MERRILL LYNCH HIGH YIELD MASTER II INDEX. This index is a market capitalization
weighted total return index covering U.S. dollar-denominated high-yield bonds.
Qualifying bonds must have at least $100 million par amount outstanding, a
remaining term to maturity greater than or equal to one year, and a credit
rating less than BBB3 but not in default (based on the composite of Moody's and
Standard & Poor's). The index includes deferred interest and pay-in-kind bonds,
but excludes structured notes, floating rate notes and other variable coupon
securities. The index also excludes emerging markets debt (issuers domiciled in
below investment grade rated countries). Index constituents are rebalanced
monthly on the last calendar day of the month. Index values are calculated
daily.
MERRILL LYNCH INDEX OF CONVERTIBLE BONDS (SPECULATIVE QUALITY). This is a market
capitalization weighted index including all mandatory and non-mandatory domestic
corporate convertible securities with at least an original par of $50 million or
a $50 million market value; securities dropping below a market value of $40
million are excluded. Returns are calculated weekly based on Thursday's closing
prices and are linked monthly. All securities must be convertible to common
stock only. Quality range is D3-BB1 based on composite Moody's and Standard
&Poor's ratings.
LONG-TERM U.S. GOVERNMENT BONDS. The total returns on long-term government bonds
after 1977 are constructed with data from The Wall Street Journal and are
calculated as the change in the flat price or and-interest price. From 1926 to
1976, data are obtained from the government bond file at the Center for Research
in Security Prices (CRSP), Graduate School of Business, University of Chicago.
Each year, a one-bond portfolio with a term of approximately 20 years and a
reasonably current coupon was used and whose returns did not reflect potential
tax benefits, impaired negotiability or special redemption or call privileges.
Where callable bonds had to be used, the term of the bond was assumed to be a
simple average of the maturity and first call dates minus the current date. The
bond was "held" for the calendar year and returns were computed.
INTERMEDIATE-TERM U.S. GOVERNMENT BONDS. Total returns of intermediate-term
government bonds after 1987 are calculated from The Wall Street Journal prices,
using the change in flat price. Returns from 1934 to 1986 are obtained from the
CRSP government bond file.
Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than five years, and this bond is
"held" for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934 to 1942, almost all bonds
with maturities near five years were partially or fully tax-exempt and were
selected using the rules described above. Personal tax rates were generally low
in that period, so that yields on tax-exempt bonds were similar to yields on
taxable bonds. From 1926 to 1933, there are few bonds suitable for construction
of a series with a five-year maturity. For this period, five-year bond yield
estimates are used.
MORGAN STANLEY CAPITAL INTERNATIONAL ("MSCI"). These indices are in U.S. dollar
terms with gross dividends reinvested and measure the performance of developed
and emerging stock markets around the world. MSCI All Country indices represent
both the developed and the emerging markets for a particular region. These
indices are unmanaged. The free indices exclude shares which are not readily
purchased by non-local investors. MSCI covers over 1,500 securities in 28
emerging markets and 2,300 securities in 23 developed markets, totaling over $20
trillion in market capitalization. Several Pioneer mutual funds that invest in
international securities compare their performance to various MSCI indices.
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.
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.
LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX - INTERMEDIATE. This index is
comprised of securities with one to ten years to maturity. It includes Treasury
and government agency securities, investment-grade corporate bonds and Yankee
bonds.
U.S. (30-DAY) TREASURY BILLS. For the U.S. Treasury Bill Index, data from The
Wall Street Journal are used after 1977; the CRSP government bond file is the
source until 1976. Each month a one-bill portfolio containing the shortest-term
bill having not less than one month to maturity is constructed. (The bill's
original term to maturity is not relevant.) To measure holding period returns
for the one-bill portfolio, the bill is priced as of the last trading day of the
previous month-end and as of the last trading day of the current month.
NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT TRUSTS ("NAREIT") EQUITY REIT
INDEX. All of the data are based upon the last closing price of the month for
all tax-qualified REITs listed on the NYSE, AMEX and NASDAQ. The data are
market-value-weighted. Prior to 1987 REITs were added to the index the January
following their listing. Since 1987 newly formed or listed REITs are added to
the total shares outstanding figure in the month that the shares are issued.
Only common shares issued by the REIT are included in the index. The total
return calculation is based upon the weighting at the beginning of the period.
Only those REITs listed for the entire period are used in the total return
calculation. Dividends are included in the month based upon their payment date.
There is no smoothing of income. Liquidating dividends, whether full or partial,
are treated as income.
RUSSELL U.S. EQUITY INDEXES. The Russell 3000(R) Index (the "Russell 3000") is
comprised of the 3,000 largest U.S. companies as determined by market
capitalization representing approximately 98% of the U.S. equity market. The
average market capitalization is approximately $5.1 billion. The Russell 2500TM
Index measures performance of the 2,500 smallest companies in the Russell 3000.
The average market capitalization is approximately $958.8 million, and the
largest company in the index has an approximate market capitalization of $4
billion. The Russell 2000(R) Index measures performance of the 2,000 smallest
stocks in the Russell 3000; the largest company in the index has a market
capitalization of approximately $1.5 billion. The Russell 1000(R) Index (the
"Russell 1000") measures the performance of the 1,000 largest companies in the
Russell 3000. The average market capitalization is approximately $14.1 billion.
The smallest company in the index has an approximate market capitalization of
$1.6 billion. The Russell Midcap(R) Index measures performance of the 800
smallest companies in the Russell 1000. The largest company in the index has an
approximate market capitalization of $13 billion. The Russell 1000(R) Growth
Index measures the performance of those Russell 1000 companies with higher
price-to-book ratios and higher forecasted growth values. The Russell 1000(R)
Value Index measures the performance of those Russell 1000 companies with lower
price-to-book ratios and lower forecasted growth values.
The Russell indexes are reconstituted annually as of June 30, based on May 31
market capitalizations.
WILSHIRE REAL ESTATE SECURITIES INDEX. The Wilshire Real Estate Securities Index
is a broad measure of the performance of publicly traded real estate securities,
such as REITs and real estate operating companies ("REOCs"). The index is
capitalization-weighted. As of March 31, 1999, 119 companies were included in
the index, with a total market cap of $116.97 billion. At September 30, 1999,
the companies in the index were 92.31% equity and hybrid REITs and 7.69% 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 INDEXES. These indexes represent equally weighted performance, adjusted
for capital gain distributions and income dividends, of mutual funds that are
considered peers of the Pioneer mutual funds. Lipper, Inc. is an independent
firm that tracks mutual fund performance.
LEHMAN BROTHERS AGGREGATE BOND INDEX. The Lehman Brothers Aggregate Bond Index
is composed of the Lehman Brothers Government/Corporate Index, the Lehman
Brothers Mortgage-Backed Securities Index and the Lehman Brothers Asset-Backed
Securities Index. The index includes fixed rate debt issues rated investment
grade or higher by Moody's Investors Service, Standard & Poor's Corporation or
Fitch Investors Service, in that order. All issues have at least one year to
maturity with intermediate indices including bonds with maturities up to ten
years and long-term indices composed of bonds with maturities longer than ten
years. All returns are market value weighted inclusive of accrued interest.
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.
NASDAQ COMPOSITE INDEX. The Nasdaq Composite Index measures all Nasdaq domestic
and non-U.S. based common stocks listed on The Nasdaq Stock Market. The index is
market-value weighted. The Nasdaq Composite includes over 5,000 companies and is
one of the most widely followed and quoted major market indices because it is so
broad-based.
Sources: Ibbotson Associates, Towers Data Systems, Lipper, Inc. and PGI
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
DOW S&P/ S&P/ MERRILL LYNCH
JONES U.S. SMALL BARRA BARRA MICRO-CAP
S&P INDUSTRIAL STOCK U.S. 500 500 INDEX
500 AVERAGE INDEX INFLATION GROWTH VALUE
- --------------------------------------------------------------------------------------------------------
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 11.62 N/A 0.28 -1.49 N/A N/A N/A
Dec 1927 37.49 N/A 22.10 -2.08 N/A N/A N/A
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A N/A
Dec 1931 -43.34 -49.02 -49.75 -9.52 N/A N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A N/A
Dec 1933 53.99 73.72 142.87 0.51 N/A N/A N/A
Dec 1934 -1.44 8.08 24.22 2.03 N/A N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A N/A
Dec 1942 20.34 14.13 44.51 9.29 N/A N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A N/A
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
DOW S&P/ S&P/ MERRILL LYNCH
JONES U.S. SMALL BARRA BARRA MICRO-CAP
S&P INDUSTRIAL STOCK U.S. 500 500 INDEX
500 AVERAGE INDEX INFLATION GROWTH VALUE
- --------------------------------------------------------------------------------------------------------
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 1.70 36.52 29.98 24.61
Dec 1998 28.58 18.14 -7.31 1.61 42.16 14.67 -6.15
Dec 1999 21.04 27.22 29.79 2.81 28.25 12.72 40.04
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
LONG- INTERMEDIATE- MSCI LONG- LEHMAN
TERM TERM U.S. EAFE 6- TERM U.S. BROS. U.S.
U.S. GOV'T GOVERNMENT (NET OF MONTH CORPORATE GOV'T/CORP T-BILL
BONDS BONDS TAXES) CDS BONDS INTERMEDIATE (30-DAY)
- ------------------------------------------------------------------------------------------------------------------
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 7.77 5.38 N/A N/A 7.37 N/A 3.27
Dec 1927 8.93 4.52 N/A N/A 7.44 N/A 3.12
Dec 1928 0.10 0.92 N/A N/A 2.84 N/A 3.56
Dec 1929 3.42 6.01 N/A N/A 3.27 N/A 4.75
Dec 1930 4.66 6.72 N/A N/A 7.98 N/A 2.41
Dec 1931 -5.31 -2.32 N/A N/A -1.85 N/A 1.07
Dec 1932 16.84 8.81 N/A N/A 10.82 N/A 0.96
Dec 1933 -0.07 1.83 N/A N/A 10.38 N/A 0.30
Dec 1934 10.03 9.00 N/A N/A 13.84 N/A 0.16
Dec 1935 4.98 7.01 N/A N/A 9.61 N/A 0.17
Dec 1936 7.52 3.06 N/A N/A 6.74 N/A 0.18
Dec 1937 0.23 1.56 N/A N/A 2.75 N/A 0.31
Dec 1938 5.53 6.23 N/A N/A 6.13 N/A -0.02
Dec 1939 5.94 4.52 N/A N/A 3.97 N/A 0.02
Dec 1940 6.09 2.96 N/A N/A 3.39 N/A 0.00
Dec 1941 0.93 0.50 N/A N/A 2.73 N/A 0.06
Dec 1942 3.22 1.94 N/A N/A 2.60 N/A 0.27
Dec 1943 2.08 2.81 N/A N/A 2.83 N/A 0.35
Dec 1944 2.81 1.80 N/A N/A 4.73 N/A 0.33
Dec 1945 10.73 2.22 N/A N/A 4.08 N/A 0.33
Dec 1946 -0.10 1.00 N/A N/A 1.72 N/A 0.35
Dec 1947 -2.62 0.91 N/A N/A -2.34 N/A 0.50
Dec 1948 3.40 1.85 N/A N/A 4.14 N/A 0.81
Dec 1949 6.45 2.32 N/A N/A 3.31 N/A 1.10
Dec 1950 0.06 0.70 N/A N/A 2.12 N/A 1.20
Dec 1951 -3.93 0.36 N/A N/A -2.69 N/A 1.49
Dec 1952 1.16 1.63 N/A N/A 3.52 N/A 1.66
Dec 1953 3.64 3.23 N/A N/A 3.41 N/A 1.82
Dec 1954 7.19 2.68 N/A N/A 5.39 N/A 0.86
Dec 1955 -1.29 -0.65 N/A N/A 0.48 N/A 1.57
Dec 1956 -5.59 -0.42 N/A N/A -6.81 N/A 2.46
Dec 1957 7.46 7.84 N/A N/A 8.71 N/A 3.14
Dec 1958 -6.09 -1.29 N/A N/A -2.22 N/A 1.54
Dec 1959 -2.26 -0.39 N/A N/A -0.97 N/A 2.95
Dec 1960 13.78 11.76 N/A N/A 9.07 N/A 2.66
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
LONG- INTERMEDIATE- MSCI LONG- LEHMAN
TERM TERM U.S. EAFE 6- TERM U.S. BROS. U.S.
U.S. GOV'T GOVERNMENT (NET OF MONTH CORPORATE GOV'T/CORP T-BILL
BONDS BONDS TAXES) CDS BONDS INTERMEDIATE (30-DAY)
- ------------------------------------------------------------------------------------------------------------------
Dec 1961 0.97 1.85 N/A N/A 4.82 N/A 2.13
Dec 1962 6.89 5.56 N/A N/A 7.95 N/A 2.73
Dec 1963 1.21 1.64 N/A N/A 2.19 N/A 3.12
Dec 1964 3.51 4.04 N/A 4.17 4.77 N/A 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 N/A 3.93
Dec 1966 3.65 4.69 N/A 5.76 0.20 N/A 4.76
Dec 1967 -9.18 1.01 N/A 5.47 -4.95 N/A 4.21
Dec 1968 -0.26 4.54 N/A 6.45 2.57 N/A 5.21
Dec 1969 -5.07 -0.74 N/A 8.70 -8.09 N/A 6.58
Dec 1970 12.11 16.86 -11.66 7.06 18.37 N/A 6.52
Dec 1971 13.23 8.72 29.59 5.36 11.01 N/A 4.39
Dec 1972 5.69 5.16 36.35 5.39 7.26 N/A 3.84
Dec 1973 -1.11 4.61 -14.92 8.60 1.14 3.34 6.93
Dec 1974 4.35 5.69 -23.16 10.20 -3.06 5.88 8.00
Dec 1975 9.20 7.83 35.39 6.51 14.64 9.50 5.80
Dec 1976 16.75 12.87 2.54 5.22 18.65 12.34 5.08
Dec 1977 -0.69 1.41 18.06 6.11 1.71 3.31 5.12
Dec 1978 -1.18 3.49 32.62 10.21 -0.07 2.13 7.18
Dec 1979 -1.23 4.09 4.75 11.90 -4.18 6.00 10.38
Dec 1980 -3.95 3.91 22.58 12.33 -2.76 6.41 11.24
Dec 1981 1.86 9.45 -2.28 15.50 -1.24 10.50 14.71
Dec 1982 40.36 29.10 -1.86 12.18 42.56 26.10 10.54
Dec 1983 0.65 7.41 23.69 9.65 6.26 8.61 8.80
Dec 1984 15.48 14.02 7.38 10.65 16.86 14.38 9.85
Dec 1985 30.97 20.33 56.16 7.82 30.09 18.05 7.72
Dec 1986 24.53 15.14 69.44 6.30 19.85 13.12 6.16
Dec 1987 -2.71 2.90 24.63 6.59 -0.27 3.67 5.47
Dec 1988 9.67 6.10 28.27 8.15 10.70 6.78 6.35
Dec 1989 18.11 13.29 10.54 8.27 16.23 12.76 8.37
Dec 1990 6.18 9.73 -23.45 7.85 6.78 9.17 7.81
Dec 1991 19.30 15.46 12.13 4.95 19.89 14.63 5.60
Dec 1992 8.05 7.19 -12.17 3.27 9.39 7.17 3.51
Dec 1993 18.24 11.24 32.56 2.88 13.19 8.73 2.90
Dec 1994 -7.77 -5.14 7.78 5.40 -5.76 -1.95 3.90
Dec 1995 31.67 16.80 11.21 5.21 27.20 15.31 5.60
Dec 1996 -0.93 2.10 6.05 5.21 1.40 4.06 5.21
Dec 1997 15.85 8.38 1.78 5.71 12.95 7.87 5.26
Dec 1998 13.06 10.21 20.00 5.34 10.76 8.42 4.86
Dec 1999 -8.96 -1.77 26.96 5.43 -7.45 0.39 4.68
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
NAREIT WILSHIRE LIPPER MSCI
EQUITY RUSSELL REAL ESTATE BALANCED EMERGING BANK
REIT 2000(R) SECURITIES S&P FUND MARKETS SAVINGS
INDEX INDEX INDEX 400 INDEX FREE INDEX ACCOUNT
- -------------------------------------------------------------------------------------------------------
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
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
NAREIT WILSHIRE LIPPER MSCI
EQUITY RUSSELL REAL ESTATE BALANCED EMERGING BANK
REIT 2000(R) SECURITIES S&P FUND MARKETS SAVINGS
INDEX INDEX INDEX 400 INDEX FREE INDEX ACCOUNT
- -------------------------------------------------------------------------------------------------------
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 20.14 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 13.05 6.03 4.95
Dec 1997 20.29 22.36 19.80 32.26 20.30 -11.59 5.17
Dec 1998 -17.51 -2.55 -17.43 19.12 15.09 -25.34 4.63
Dec 1999 -4.62 21.26 14.72 14.72 8.98 66.41 5.29
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
MSCI ALL MERRILL LYNCH
MSCI COUNTRY (AC) MERRILL INDEX OF
ALL ASIA LYNCH CONVERTIBLE LIPPER
COUNTRY PACIFIC LEHMAN HIGH YIELD BONDS LIPPER GROWTH &
(AC) ASIA FREE BROTHERS MASTER II (SPECULATIVE RUSSELL GROWTH INCOME
FREE EX JAPAN AGGREGATE INDEX QUALITY) 1000(R) FUND FUND
EX JAPAN BOND INDEX INDEX INDEX INDEX
- ---------------------------------------------------------------------------------------------------------------------
Dec 1925 N/A 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 N/A
Dec 1927 N/A 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 N/A
Dec 1929 N/A 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 N/A N/A
Dec 1931 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1932 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1933 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1934 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1935 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1936 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1937 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1938 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1939 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1940 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1941 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1942 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1943 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1944 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1945 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1946 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1947 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1948 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1949 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1950 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1951 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1952 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1953 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1954 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1955 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1956 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1957 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1958 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1959 N/A N/A N/A N/A N/A N/A N/A N/A
Dec 1960 N/A N/A N/A N/A N/A N/A 6.36 3.04
Dec 1961 N/A N/A N/A N/A N/A N/A 30.16 26.00
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
MSCI ALL MERRILL LYNCH
MSCI COUNTRY (AC) MERRILL INDEX OF
ALL ASIA LYNCH CONVERTIBLE LIPPER
COUNTRY PACIFIC LEHMAN HIGH YIELD BONDS LIPPER GROWTH &
(AC) ASIA FREE BROTHERS MASTER II (SPECULATIVE RUSSELL GROWTH INCOME
FREE EX JAPAN AGGREGATE INDEX QUALITY) 1000(R) FUND FUND
EX JAPAN BOND INDEX INDEX INDEX INDEX
- ---------------------------------------------------------------------------------------------------------------------
Dec 1962 N/A N/A N/A N/A N/A N/A -16.84 -11.87
Dec 1963 N/A N/A N/A N/A N/A N/A 22.43 19.10
Dec 1964 N/A N/A N/A N/A N/A N/A 14.99 15.23
Dec 1965 N/A N/A N/A N/A N/A N/A 26.61 19.00
Dec 1966 N/A N/A N/A N/A N/A N/A -1.80 -6.04
Dec 1967 N/A N/A N/A N/A N/A N/A 45.31 27.59
Dec 1968 N/A N/A N/A N/A N/A N/A 15.34 15.29
Dec 1969 N/A N/A N/A N/A N/A N/A -10.62 -11.80
Dec 1970 N/A N/A N/A N/A N/A N/A -8.57 1.10
Dec 1971 N/A N/A N/A N/A N/A N/A 26.17 13.77
Dec 1972 N/A N/A N/A N/A N/A N/A 18.08 12.87
Dec 1973 N/A N/A N/A N/A N/A N/A -24.75 -14.27
Dec 1974 N/A N/A N/A N/A N/A N/A -30.73 -20.85
Dec 1975 N/A N/A N/A N/A N/A N/A 32.83 34.62
Dec 1976 N/A N/A 15.60 N/A N/A N/A 20.07 25.66
Dec 1977 N/A N/A 3.04 N/A N/A N/A -2.62 -3.64
Dec 1978 N/A N/A 1.39 N/A N/A N/A 12.53 7.99
Dec 1979 N/A N/A 1.93 N/A N/A 22.31 29.29 23.87
Dec 1980 N/A N/A 2.71 N/A N/A 31.88 38.67 28.27
Dec 1981 N/A N/A 6.25 N/A N/A -5.10 -6.82 -1.39
Dec 1982 N/A N/A 32.62 N/A N/A 20.30 24.04 24.17
Dec 1983 N/A N/A 8.36 N/A N/A 22.13 21.35 22.76
Dec 1984 N/A N/A 15.15 N/A N/A 4.75 -3.60 4.29
Dec 1985 N/A N/A 22.10 N/A N/A 32.27 30.14 28.55
Dec 1986 N/A N/A 15.26 N/A N/A 17.87 15.59 17.63
Dec 1987 N/A N/A 2.76 4.47 N/A 2.94 3.25 2.64
Dec 1988 30.00 30.45 7.89 13.36 16.19 17.23 14.13 18.35
Dec 1989 32.13 21.43 14.53 2.31 9.82 30.42 27.47 23.73
Dec 1990 -6.54 -11.86 8.96 -4.36 -8.61 -4.16 -5.41 -5.99
Dec 1991 30.98 32.40 16.00 39.17 37.53 33.03 36.33 27.75
Dec 1992 21.81 9.88 7.40 17.44 24.06 9.04 7.63 9.63
Dec 1993 103.39 84.94 9.75 16.69 19.37 10.15 11.98 14.62
Dec 1994 -16.94 -12.59 -2.92 -1.03 -6.91 0.38 -1.57 -0.41
Dec 1995 4.00 10.00 18.47 20.46 25.14 37.77 32.65 31.14
Dec 1996 10.05 8.08 3.63 11.27 15.29 22.45 17.53 20.67
Dec 1997 -40.31 -34.20 9.65 13.27 16.76 32.85 28.03 26.88
Dec 1998 -7.79 -4.42 8.69 2.95 12.62 27.02 25.69 13.58
Dec 1999 64.67 49.83 -0.82 2.51 38.91 20.91 27.96 11.86
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
MSCI ALL
COUNTRY WORLD RUSSELL RUSSELL LIPPER
MSCI MSCI WORLD FREE EX U.S. 1000(R) 1000(R)VALUE SCIENCE AND NASDAQ
EUROPE INDEX INDEX INDEX GROWTH INDEX INDEX TECHNOLOGY COMPOSITE
FUND INDEX INDEX
- -----------------------------------------------------------------------------------------------------------------
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 N/A
Dec 1931 N/A N/A N/A N/A N/A N/A N/A
Dec 1932 N/A N/A N/A N/A N/A N/A N/A
Dec 1933 N/A N/A N/A N/A N/A N/A N/A
Dec 1934 N/A N/A N/A N/A N/A N/A N/A
Dec 1935 N/A N/A N/A N/A N/A N/A N/A
Dec 1936 N/A N/A N/A N/A N/A N/A N/A
Dec 1937 N/A N/A N/A N/A N/A N/A N/A
Dec 1938 N/A N/A N/A N/A N/A N/A N/A
Dec 1939 N/A N/A N/A N/A N/A N/A N/A
Dec 1940 N/A N/A N/A N/A N/A N/A N/A
Dec 1941 N/A N/A N/A N/A N/A N/A N/A
Dec 1942 N/A N/A N/A N/A N/A N/A N/A
Dec 1943 N/A N/A N/A N/A N/A N/A N/A
Dec 1944 N/A N/A N/A N/A N/A N/A N/A
Dec 1945 N/A N/A N/A N/A N/A N/A N/A
Dec 1946 N/A N/A N/A N/A N/A N/A N/A
Dec 1947 N/A N/A N/A N/A N/A N/A N/A
Dec 1948 N/A N/A N/A N/A N/A N/A N/A
Dec 1949 N/A N/A N/A N/A N/A N/A N/A
Dec 1950 N/A N/A N/A N/A N/A N/A N/A
Dec 1951 N/A N/A N/A N/A N/A N/A N/A
Dec 1952 N/A N/A N/A N/A N/A N/A N/A
Dec 1953 N/A N/A N/A N/A N/A N/A N/A
Dec 1954 N/A N/A N/A N/A N/A N/A N/A
Dec 1955 N/A N/A N/A N/A N/A N/A N/A
Dec 1956 N/A N/A N/A N/A N/A N/A N/A
Dec 1957 N/A N/A N/A N/A N/A N/A N/A
Dec 1958 N/A N/A N/A N/A N/A N/A N/A
Dec 1959 N/A N/A N/A N/A N/A N/A N/A
Dec 1960 N/A N/A N/A N/A N/A N/A N/A
Dec 1961 N/A N/A N/A N/A N/A 20.30 N/A
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
MSCI ALL
COUNTRY WORLD RUSSELL RUSSELL LIPPER
MSCI MSCI WORLD FREE EX U.S. 1000(R) 1000(R)VALUE SCIENCE AND NASDAQ
EUROPE INDEX INDEX INDEX GROWTH INDEX INDEX TECHNOLOGY COMPOSITE
FUND INDEX INDEX
- -----------------------------------------------------------------------------------------------------------------
Dec 1962 N/A N/A N/A N/A N/A -17.43 N/A
Dec 1963 N/A N/A N/A N/A N/A 17.69 N/A
Dec 1964 N/A N/A N/A N/A N/A 11.08 N/A
Dec 1965 N/A N/A N/A N/A N/A 33.54 N/A
Dec 1966 N/A N/A N/A N/A N/A -6.70 N/A
Dec 1967 N/A N/A N/A N/A N/A 32.26 N/A
Dec 1968 N/A N/A N/A N/A N/A 20.26 N/A
Dec 1969 N/A N/A N/A N/A N/A -15.96 N/A
Dec 1970 -10.64 -3.09 N/A N/A N/A -9.81 N/A
Dec 1971 26.33 18.36 N/A N/A N/A 19.72 N/A
Dec 1972 14.40 22.48 N/A N/A N/A 9.94 17.18
Dec 1973 -8.77 -15.24 N/A N/A N/A -24.53 -31.06
Dec 1974 -24.07 -25.47 N/A N/A N/A -28.16 -35.11
Dec 1975 41.45 32.80 N/A N/A N/A 32.45 29.76
Dec 1976 -7.80 13.40 N/A N/A N/A 18.85 26.10
Dec 1977 21.90 0.68 N/A N/A N/A 0.01 7.33
Dec 1978 21.88 16.52 N/A N/A N/A 17.80 12.31
Dec 1979 12.31 10.95 N/A 23.91 20.55 29.47 28.11
Dec 1980 11.90 25.67 N/A 39.57 24.41 42.48 33.88
Dec 1981 -12.46 -4.79 N/A -11.31 1.26 -11.08 -3.21
Dec 1982 3.97 9.71 N/A 20.46 20.04 34.46 18.67
Dec 1983 20.96 21.93 N/A 15.98 28.28 34.25 19.87
Dec 1984 0.62 4.72 N/A -0.95 10.10 -10.13 -11.22
Dec 1985 78.93 40.56 N/A 32.85 31.51 22.20 31.36
Dec 1986 43.85 41.89 N/A 15.36 19.98 6.44 7.36
Dec 1987 3.66 16.16 N/A 5.31 0.50 4.05 -5.26
Dec 1988 15.81 23.29 27.90 11.27 23.16 4.87 15.41
Dec 1989 28.51 16.61 12.03 35.92 25.19 20.70 19.26
Dec 1990 -3.85 -17.02 -22.74 -0.26 -8.08 0.87 -17.80
Dec 1991 13.11 18.28 13.96 41.16 24.61 50.18 56.84
Dec 1992 -4.71 -5.23 -10.97 5.00 13.81 14.31 15.45
Dec 1993 29.28 22.50 34.90 2.90 18.12 25.58 14.75
Dec 1994 2.28 5.08 6.63 2.66 -1.99 13.04 -3.20
Dec 1995 21.62 20.72 9.94 37.19 38.35 42.38 39.92
Dec 1996 21.09 13.48 6.68 23.12 21.64 19.92 22.71
Dec 1997 23.80 15.76 2.04 30.49 35.18 10.90 21.64
Dec 1998 28.53 24.34 14.46 38.71 15.63 52.66 39.63
Dec 1999 15.89 24.93 30.91 33.16 7.35 134.99 85.59
Source: Lipper, Inc.
21. APPENDIX D - 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 U.S.
As of December 31, 1999, Pioneer employed a professional investment staff of 82.
Total assets of all Pioneer mutual funds at December 31, 1999, were
approximately $23 billion representing 1,392,828 shareholder accounts, including
881,091 non-retirement accounts and 511,737 retirement accounts.
EXHIBIT C
PIONEER
[LOGO] INVESTMENTS-REGISTERED TRADEMARK-
PIONEER
LIMITED MATURITY
BOND FUND
ANNUAL REPORT 11/30/00
TABLE OF CONTENTS
- ---------------------------------------------------------------------------
Letter from the President 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 6
Schedule of Investments 9
Financial Statements 15
Notes to Financial Statements 21
Report of Independent Public Accountants 25
Results of Shareowner Meeting 26
Trustees, Officers and Service Providers 27
The Pioneer Family of Mutual Funds 28
PIONEER LIMITED MATURITY BOND FUND
LETTER FROM THE PRESIDENT 11/30/00
DEAR SHAREOWNER,
- --------------------------------------------------------------------------------
The year 2000, the last year of the old millenium, is ending on an historically
unsettling note. The bewildering final days of the presidential election have
come on top of a period of increased market volatility, leaving us all feeling
unsettled. We at Pioneer are convinced that the market's volatility has its
roots not in politics but in the signs of a slowing economy and in the sudden
realization by investors that some market valuations, notably technology, had
become irrational. As the new millenium unfolds we expect investors to get back
to work assessing the policies of the new administration, evaluating the
prospects for a growing economy and identifying undervalued companies.
As seasoned investors we treat periods of turmoil as periods of opportunity,
looking for the few significant facts and trends that hide well behind the
clutter of daily events. I think that you should do the same thing. This is a
good year, and a good time of year, to evaluate your retirement program
contributions, to compare a Roth IRA with a traditional IRA and to reassess your
investment allocations in light of current market conditions. A successful
investment program requires not only money, but time and planning. Your
investment professional is your best guide to making these important decisions.
AN IMPORTANT ANNOUNCEMENT FROM PIONEER
I'm very happy to report that, on October 24, 2000, Pioneer Investment
Management, Inc. became a wholly owned subsidiary of UniCredito Italiano
S.p.A., one of Italy's largest and most successful banking groups. Early in
2001, all of UniCredito's investment operations will be combined to form
Pioneer Global Asset Management S.p.A., which will manage over $110 billion
for global individual and institutional clients under the name Pioneer
Investments-Registered Trademark-. The new Pioneer Global will bring to
Pioneer greater analytical resources that complement our broad set of
investment skills, reinforcing Pioneer's tradition of fundamental investment
analysis and sound long-term portfolio management. We believe fund
shareholders will benefit from this merger.
All of us at Pioneer appreciate your decision to invest with us and look forward
to helping you reach your financial goals.
Sincerely,
/s/ David Tripple
David Tripple
Pioneer Investment Management, Inc.
1
PIONEER LIMITED MATURITY BOND FUND
PORTFOLIO SUMMARY 11/30/00
PORTFOLIO DIVERSIFICATION
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[PIE CHART]
Corporate Bonds 51%
U.S. Government Agency Obligations 39%
U.S. Government Obligations 10%
PORTFOLIO QUALITY
- --------------------------------------------------------------------------------
(As a percentage of long-term holdings)
[PIE CHART]
Treasury/Agency 48%
AAA 12%
A 12%
BBB 18%
Below BBB 9%
Commercial Paper 1%
10 LARGEST HOLDINGS
- --------------------------------------------------------------------------------
(As a percentage of debt holdings)
1. U.S. Treasury Notes, 6.5%, 5/15/05 3.18%
2. U.S. Treasury Bond, 7.875%, 11/15/07 3.02
3. Government National Mortgage Association, 7.0%, 4/15/29 2.68
4. Government National Mortgage Association II, 7.5%, 8/20/27 2.64
5. Government National Mortgage Association II, 7.0%, 1/20/29 2.49
6. U.S. Treasury Notes, 6.625%, 5/15/07 2.47
7. Spieker Properties L.P., 6.8%, 12/15/01 2.31
8. Federal National Mortgage Association, 8.0%, 7/1/30 2.22
9. Deutsche Telekom International Finance, 7.75%, 6/15/05 2.07
10. Government National Mortgage Association II, 7.5%, 8/20/28 1.96
Fund holdings will vary for other periods.
2
PIONEER LIMITED MATURITY BOND FUND
PERFORMANCE UPDATE 11/30/00 CLASS A SHARES
SHARE PRICES AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
NET ASSET VALUE
PER SHARE 11/30/00 11/30/99
$3.58 $3.62
DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM
(11/30/99-11/30/00) DIVIDENDS CAPITAL GAINS CAPITAL GAINS
$0.221 - -
INVESTMENT RETURNS
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Limited Maturity Bond Fund at public offering price, compared to the
growth of the Merrill Lynch 1-3 Year Treasury Index and the Lehman Brothers
Government/Corporate Bond Index-Intermediate.
- -----------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(As of November 30, 2000)
NET ASSET PUBLIC OFFERING
PERIOD VALUE PRICE*
Life-of-Fund 4.88% 4.56%
(8/10/92)
5 Years 4.74 4.21
1 Year 5.18 2.63
- -----------------------------------------
* Reflects deduction of the maximum 2.5% sales charge at the beginning of the
period and assumes reinvestment of distributions at net asset value.
[CHART]
GROWTH OF $10,000+
Pioneer Limited Maturity Merrill Lynch 1-3 Year Lehman Brothers Government/
Bond Fund* Treasury Index Corporate Bond Index-Intermediate
8/92 $9,750 $10,000 $10,000
11/92 $9,809 $10,018 $9,969
$10,204 $10,372 $10,562
$10,425 $10,623 $10,938
$10,466 $10,586 $10,700
11/94 $10,457 $10,697 $10,739
$11,122 $11,375 $11,732
$11,466 $11,810 $12,297
$11,606 $11,975 $12,270
11/96 $12,062 $12,494 $13,013
$12,332 $12,766 $13,175
$12,743 $13,235 $13,835
$13,094 $13,657 $14,337
11/98 $13,543 $14,207 $15,059
$13,633 $14,380 $15,022
$13,743 $14,674 $15,228
$13,820 $14,978 $15,394
11/00 $14,455 $15,684 $16,410
+ Index comparison begins 8/31/92. The Merrill Lynch 1-3 Year Treasury Index is
an unmanaged, composite index of debt obligations of the U.S. Treasury and
U.S. government agencies (excluding mortgage-backed securities). All issues
have a maturity of at least one year and no more than three years. The Lehman
Brothers Government/Corporate Bond Index-Intermediate is an unmanaged,
composite index of the U.S. bond market and represents only securities with
one to ten years to maturity. Index returns are calculated monthly, assume
reinvestment of dividends and, unlike Fund returns, do not reflect any fees,
expenses or sales charges. You cannot invest directly in the Indices.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than
their original cost.
3
PIONEER LIMITED MATURITY BOND FUND
PERFORMANCE UPDATE 11/30/00 CLASS B SHARES
SHARE PRICES AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
NET ASSET VALUE
PER SHARE 11/30/00 11/30/99
$3.58 $3.62
DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM
(11/30/99-11/30/00) DIVIDENDS CAPITAL GAINS CAPITAL GAINS
$0.195 - -
INVESTMENT RETURNS
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Limited Maturity Bond Fund, compared to the growth of the Merrill Lynch
1-3 Year Treasury Index and the Lehman Brothers Government/Corporate Bond
Index-Intermediate.
- -----------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(As of November 30, 2000)
IF IF
PERIOD HELD REDEEMED*
Life-of-Fund 4.20% 4.20%
(4/4/94)
5 Years 3.89 3.89
1 Year 4.44 2.46
- -----------------------------------------
* Reflects deduction of the maximum applicable contingent deferred sales charge
(CDSC) at the end of the period and assumes reinvestment of distributions. The
maximum CDSC of 2% declines over three years.
[CHART]
GROWTH OF $10,000+
Pioneer Limited Maturity Merrill Lynch 1-3 Year Lehman Brothers Government/
Bond Fund* Treasury Index Corporate Bond Index-Intermediate
4/94 $10,000 $10,000 $10,000
$9,987 $10,014 $10,007
$9,961 $10,119 $10,043
$10,539 $10,761 $10,972
11/95 $10,850 $11,172 $11,501
$10,910 $11,328 $11,475
$11,325 $11,819 $12,170
$11,521 $12,077 $12,322
$11,845 $12,520 $12,939
5/98 $12,107 $12,919 $13,409
$12,496 $13,440 $14,084
$12,521 $13,603 $14,049
$12,576 $13,881 $14,242
$12,603 $14,169 $14,397
11/00 $13,135 $14,837 $15,347
+ Index comparison begins 4/30/94. The Merrill Lynch 1-3 Year Treasury Index is
an unmanaged, composite index of debt obligations of the U.S. Treasury and
U.S. government agencies (excluding mortgage-backed securities). All issues
have a maturity of at least one year and no more than three years. The Lehman
Brothers Government/Corporate Bond Index-Intermediate is an unmanaged,
composite index of the U.S. bond market and represents only securities with
one to ten years to maturity. Index returns are calculated monthly, assume
reinvestment of dividends and, unlike Fund returns, do not reflect any fees,
expenses or sales charges. You cannot invest directly in the Indices.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than
their original cost.
4
PIONEER LIMITED MATURITY BOND FUND
PERFORMANCE UPDATE 11/30/00 CLASS Y SHARES
SHARE PRICES AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
NET ASSET VALUE
PER SHARE 11/30/00 11/30/99
$3.59 $3.62
DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM
(11/30/99-11/30/00) DIVIDENDS CAPITAL GAINS CAPITAL GAINS
$0.225 - -
INVESTMENT RETURNS
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Limited Maturity Bond Fund, compared to the growth of the Merrill Lynch
1-3 Year Treasury Index and the Lehman Brothers Government/Corporate Bond
Index-Intermediate.
- -----------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
(As of November 30, 2000)
IF IF
PERIOD HELD REDEEMED
Life-of-Fund 4.37% 4.37%
(4/9/98)
1 Year 5.60% 5.60%
- -----------------------------------------
* Assumes reinvestment of distributions.
[CHART]
GROWTH OF $10,000+
Pioneer Limited Maturity Merrill Lynch 1-3 Year Lehman Brothers Government/
Bond Fund* Treasury Index Corporate Bond Index-Intermediate
4/98 $10,000 $10,000 $10,000
$10,050 $10,053 $10,073
$10,255 $10,281 $10,333
11/98 $10,432 $10,458 $10,580
$10,444 $10,485 $10,524
$10,518 $10,585 $10,554
$10,488 $10,682 $10,560
11/99 $10,602 $10,801 $10,699
$10,631 $10,885 $10,711
$10,678 $11,026 $10,815
$11,014 $11,295 $11,220
11/00 $11,196 $11,545 $11,529
+ Index comparison begins 4/30/98. The Merrill Lynch 1-3 Year Treasury Index is
an unmanaged, composite index of debt obligations of the U.S. Treasury and
U.S. government agencies (excluding mortgage-backed securities). All issues
have a maturity of at least one year and no more than three years. The Lehman
Brothers Government/Corporate Bond Index-Intermediate is an unmanaged,
composite index of the U.S. bond market and represents only securities with
one to ten years to maturity. Index returns are calculated monthly, assume
reinvestment of dividends and, unlike Fund returns, do not reflect any fees,
expenses or sales charges. You cannot invest directly in the Indices.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than
their original cost.
5
PIONEER LIMITED MATURITY BOND FUND
PORTFOLIO MANAGEMENT DISCUSSION 11/30/00
Treasury securities, particularly long-term bonds, outperformed the overall
fixed income market during the 12-month period ended November 30, 2000. In the
following discussion, Richard Schlanger, a key member of the team responsible
for the management of Pioneer Limited Maturity Bond Fund, provides an update on
the Fund, the economic environment and the investment strategies that influenced
performance during the fiscal year.
Q: HOW DID PIONEER LIMITED MATURITY BOND FUND PERFORM OVER THE 12-MONTH
PERIOD?
A: For the 12 months ended November 30, the Fund's Class A shares and Class B
shares returned 5.18% and 4.44%, respectively, at net asset value. In
comparison, the average return of funds in the short-intermediate
investment-grade debt category of Lipper, Inc. was 6.55%. (Lipper is an
independent firm that tracks mutual fund performance.) For the year ended
November 30, 2000, the Merrill Lynch 1-3 Year Treasury Index and the Lehman
Brothers Government/Corporate Bond Index returned 6.87% and 7.77%,
respectively.
Throughout the 12-month period, the Fund delivered a consistent level of
income. The 30-day SEC yield of Class A shares, for example, was 6.67% on
November 30, 2000 compared to 6.83% six months ago, despite nearly a 0.70%
drop in 5-year Treasury note yields.
On a total return basis, performance improved markedly during the second
half of the year as we encountered fewer credit problems. Fund performance
was helped by our decisions to increase Treasuries and to decrease
finance-related securities because of their credit risks. We sold
NationsBank Corp. when it was acquired by Citigroup, and also liquidated
Citicorp and Bank One. We chose to sell premium mortgage securities and
instead buy current coupon mortgages to lessen prepayment risks.
Q: WHAT WAS THE INVESTMENT ENVIRONMENT LIKE?
A: It was a year of contrasts, with interest rates rising and bond prices
falling during the first half, while rates fell and bond prices rose
during the second six months. Throughout the 12-month period,
long-term Treasuries, in
6
PIONEER LIMITED MATURITY BOND FUND
which the Fund cannot invest, led the fixed income market's performance.
The performance of Treasuries was helped by several technical factors that
shifted the supply/demand relationship. Strong tax receipts helped increase
the federal government's budget surplus, and the Treasury Department
continued to pay down debt. Faced with a diminishing supply of Treasuries,
investors flocked to Treasuries with longer maturities, which were in
particularly limited supply.
Elsewhere in the fixed income markets, the differences or spreads between
the yields of Treasuries and other securities grew larger - or widened -
with non-Treasury securities underperforming Treasuries. Faced with the
possibility of slowing economic growth, investors tended to de-emphasize
debt securities with credit risk and migrated to solid corporate credits.
Just as with stocks, if there were a problem within a sector, the
securities of companies in the entire sector became victims of guilt by
association and most names suffered. Particularly hard hit were
lower-quality, high yield bonds, whose prices fell even as Treasury
securities increased in price. Examples of Fund holdings affected by this
trend included J.C. Penny and Shopko stores.
Q: WHAT WERE YOUR PRINCIPAL STRATEGIES DURING THE PERIOD?
A: During the first half of the year, the Fund's Treasury weighting declined.
These securities were the most liquid - or easily traded - instruments
during a time when investors moved away from most types of corporate
securities. In the final six months of the period, however, we added to our
Treasury position, while reducing our bank and finance exposure. We
believed we were late in this period of economic expansion, and banks could
begin to experience problems with non-performing loans. We also reduced
premium - or high-coupon - mortgage securities because we thought that, as
interest rates declined, homeowners could refinance their mortgages at
lower interest rates. If prepayments were to increase, the prices of
mortgage-backed securities, especially those with premium coupons, could
decline. At the same time that we lowered the Fund's premium mortgage
holdings, we increased exposure to other mortgages with more pre-payment
protection, as well as to energy industry-related securities, which we
thought would perform well in a period of stable, high
7
PIONEER LIMITED MATURITY BOND FUND
PORTFOLIO MANAGEMENT DISCUSSION 11/30/00 (CONTINUED)
energy prices. We added VALERO ENERGY and NISOURCE FINANCE CORP. to the
portfolio over the period.
During the final six months of the fiscal year, we raised the Fund's
weightings in Treasury and government-agency securities, in mortgage
pass-through securities and in industrial sector bonds. Treasuries and
agencies rose from 8.0% at May 31, 2000 to 12.5% of net assets,
mortgage-pass through securities climbed from 19.8% to 22.9% of net assets
and industrial issues rose from 20.4% to 23.9% of net assets. In the same
six-month period, bank and finance bonds were reduced from 16.2% of net
assets to 7.0%, collateralized mortgage obligations (CMOs) declined from
14.2% to 13.8% of net assets and asset-backed securities declined from
13.9% to 12.3% of net assets.
In the final six months of the fiscal year, we did not dramatically shorten
or extend the Fund's duration. At November 30, 2000, the Fund's duration
(or measurement of risk) was 2.84 years. Average credit quality of the
portfolio has remained relatively high, at AA. (Ratings apply to underlying
portfolio securities, not Fund shares.)
Q: WHAT IS YOUR OUTLOOK?
A: We believe economic growth is beginning to slow, and that the Federal
Reserve will lower short-term interest rates. We have already begun to see
signs that the spreads between the yields of corporate securities and
Treasuries may narrow, which should support the performance of corporate
securities. We believe short-term rates may decline more than long-term
rates, which already have fallen substantially since the beginning of the
year.
Given this view, we are optimistic about the market for investment grade,
limited maturity bonds and think the Fund is well positioned to provide
shareowners with an attractive total return.
8
PIONEER LIMITED MATURITY BOND FUND
SCHEDULE OF INVESTMENTS 11/30/00
S&P/MOODY'S
PRINCIPAL RATINGS
AMOUNT (UNAUDITED) VALUE
CORPORATE BONDS - 51.4%
ASSET-BACKED - 12.5%
$ 188,364 AAA/Aaa Advanta Mortgage Loan Trust, Series
93-4A, 5.55%, 3/25/10 $ 184,067
400,000 AAA/Aaa Americredit Automobile Receivables Trust,
Series 1999-B A4, 5.96%, 3/5/06 396,888
250,000 AAA/Aaa Boston Edison Company, 1999-1 A4,
6.91%, 9/15/09 253,588
500,000 AAA/Aaa California Infrastructure SCE-1, Series
1997-1, 6.28%, 9/25/05 498,915
254,515 AAA/Aaa Carco Auto Loan Master Trust, Series
1997-1A, 6.689%, 8/15/04 254,548
350,000 AAA/Aaa Citibank Credit Card Master Trust I, Series
1999-5A, 6.1%, 5/15/08 341,320
250,000 AAA/Aaa Comed Transitional Funding Trust, Series
1997- RA1, 5.34%, 3/25/04 246,965
398,576 A-/Baa1 Continental Airlines, Series 1998-3 Pass
Through Trust, C-1, 7.08%, 11/1/04 395,136
282,804 AAA/Aaa CoreStates Home Equity Trust, Series
1994-1, 6.65%, 5/15/09 280,660
500,000 AAA/Aaa Discover Card Master Trust, Series
1998-7A, 5.6%, 5/15/06 488,750
403,540 AAA/Aaa Discover Card Master Trust, Series
1997-2, 6.792%, 4/16/10 412,810
500,000 AAA/Aaa Greenpoint Manufactured Housing, Series
1999-1A2, 6.01%, 8/15/15 495,545
56,711 AAA/Aaa Premier Auto Trust, Series 1997-1A4,
6.35%, 4/6/02 56,348
------------
$ 4,305,540
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.3%
57,276 AAA/Aaa Mortgage Capital Funding Inc., 1995-MCI
Class A1B, 7.6%, 5/25/27 $ 57,849
410,564 AAA/Aaa National Realty Finance 1999-A2,
6.074%, 1/15/08 399,659
------------
$ 457,508
------------
The accompanying notes are an integral part of these financial statements.
9
PIONEER LIMITED MATURITY BOND FUND
SCHEDULE OF INVESTMENTS 11/30/00 (CONTINUED)
S&P/MOODY'S
PRINCIPAL RATINGS
AMOUNT (UNAUDITED) VALUE
CORPORATE BONDS - (CONTINUED)
BASIC MATERIALS - 1.5%
$ 500,000 BBB/Baa1 USX Corp., 7.2%, 2/15/04 $ 501,715
------------
$ 501,715
------------
CAPITAL GOODS - 0.9%
325,000 BBB/Ba1 USA Waste Services, 6.5%, 12/15/02 $ 314,411
------------
$ 314,411
------------
COMMUNICATION SERVICES - 2.7%
700,000 A-/A2 Deutsche Telekom International Finance,
7.75%, 6/15/05 $ 712,131
150,000 B/B2 Nextlink Communications Inc., 10.75%, 6/1/09 101,250
100,000 BBB-/Baa3 Union Pacific Corp., 6.125%, 1/15/04 96,717
------------
$ 910,098
------------
CONSUMER CYCLICALS - 6.5%
500,000 BBB-/Baa3 A. H. Belo Corp., 6.875%, 6/1/02 $ 491,195
500,000 BBB/Baa2 Delphi Auto Systems, 6.125%, 5/1/04 476,855
500,000 A/A2 General Motors Acceptance Corp., 7.5%, 7/15/05 506,850
200,000 BBB-/Baa3 Penny (J.C.) & Co., Inc., 6.5%, 6/15/02 166,356
1,000,000 BBB-/Baa3 Shopko Stores, 6.5%, 8/15/03 602,500
------------
$ 2,243,756
------------
CONSUMER STAPLES - 6.5%
350,000 B+/B2 Charter Communications Holdings LLC.,
8.25%, 4/1/07 $ 303,625
700,000 B+/B1 Echostar DBS Corp., 9.25%, 2/1/06 637,000
500,000 B/B2 Playtex Family Products Corp., 9.0%, 12/15/03 460,000
500,000 B-/B3 Premier Parks, Inc., 9.75%, 6/15/07 467,500
350,000 BBB+/Baa2 SUPERVALU Inc., 9.75%, 6/15/04 369,964
------------
$ 2,238,089
------------
ENERGY - 5.9%
500,000 A-/A3 Conoco Inc., 5.9%, 4/15/04 $ 489,070
500,000 BB+/Ba1 Gulf Canada Resources Ltd., 9.625%, 7/1/05 523,780
500,000 A-/A3 Nabors Industries, 6.8%, 4/15/04 497,730
300,000 A-/Baa2 Santa Fe Snyder Corp., 8.05%, 6/15/04 309,957
200,000 BBB-/Baa3 Valero Energy Corp., 7.375%, 3/15/06 201,366
------------
$ 2,021,903
------------
The accompanying notes are an integral part of these financial statements.
10
PIONEER LIMITED MATURITY BOND FUND
S&P/MOODY'S
PRINCIPAL RATINGS
AMOUNT (UNAUDITED) VALUE
CORPORATE BONDS - (CONTINUED)
FINANCIAL - 6.5%
$ 500,000 BB+/Baa3 Capital One Financial Corp., 7.125%, 8/1/08 $ 437,480
300,000 A/A2 Ford Motor Credit Corp., 6.7%, 7/16/04 294,540
200,000 A+/A1 Goldman Sachs Group, 7.35%, 10/1/09 197,384
500,000 BBB-/Baa2 The Rouse Co., 8.05%, 3/23/01 499,090
800,000 BBB/Baa2 Spieker Properties L.P., 6.8%, 12/15/01 793,200
------------
$ 2,221,694
------------
HEALTHCARE - 1.4%
500,000 A-/Baa1 Guidant Corp., 6.15%, 2/15/06 $ 469,315
------------
$ 469,315
------------
TECHNOLOGY - 1.7%
325,000 A/A2 Computer Sciences Corp., 7.5%, 8/8/05 $ 330,138
250,000 BBB+/Baa1 Sun Microsytems Inc., 7.35%, 8/15/04 253,098
------------
$ 583,236
------------
TRANSPORTATION - 1.4%
500,000 BB/Ba2 Northwest Airlines Corp., 8.52%, 4/7/04 $ 486,555
------------
$ 486,555
------------
UTILITIES - 2.6%
250,000 BBB-/Baa3 Great Lakes Power Inc., 8.3%, 3/1/05 $ 253,660
500,000 BBB-/Baa2 KN Energy Inc., 6.45%, 11/30/01 495,630
150,000 BBB/Baa2 NiSource Finance Corp., 7.875%, 11/15/10
(144A) 152,795
------------
$ 902,085
------------
TOTAL CORPORATE BONDS
(Cost $18,454,830) $ 17,655,905
------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 48.6%
300,000 Federal Home Loan Mortgage Corp.,
6.22%, 6/24/08 $ 287,961
498,283 Federal Home Loan Mortgage Corp.,
7.5%, 7/1/30 502,309
The accompanying notes are an integral part of these financial statements.
11
PIONEER LIMITED MATURITY BOND FUND
SCHEDULE OF INVESTMENTS 11/30/00 (CONTINUED)
PRINCIPAL
AMOUNT VALUE
U.S. GOVERNMENT AGENCY
OBLIGATIONS - (CONTINUED)
$ 26,240 Federal Home Loan Mortgage Corp., REMIC
Series 1132I, 8.0%, 5/15/06 $ 26,226
31,493 Federal Home Loan Mortgage Corp., REMIC
Series 1181H, 7.0% 7/15/06 31,427
301,011 Federal Home Loan Mortgage Corp., REMIC
Series 1145G, 8.0%, 9/15/06 308,594
84,363 Federal Home Loan Mortgage Corp., REMIC
Series 1564J, 6.5%, 7/15/08 83,972
500,000 Federal Home Loan Mortgage Corp., REMIC
Series 1848PB, 7.0%, 2/15/20 502,975
128,788 Federal Home Loan Mortgage Corp., REMIC
Series 1206H, 7.0%, 3/15/21 128,909
344,402 Federal Home Loan Mortgage Corp., REMIC
Series 1987PM, 6.5%, 10/15/21 343,965
661 Federal Home Loan Mortgage Corp., REMIC
Series 1590K, 6.5%, 10/15/23 661
471,727 Federal Home Loan Mortgage Corp., REMIC
Series 2043G, 6.5%, 4/15/28 454,962
641,333 Federal National Mortgage Association,
7.5%, 8/1/20 - 4/1/30 647,230
747,908 Federal National Mortgage Association,
8.0%, 7/1/30 762,702
350,000 Federal National Mortgage Association,
Medium Term Note, 5.9%, 6/19/03 346,167
250,000 Federal National Mortgage Association,
Medium Term Note, 6.16%, 3/2/09 237,720
258,583 Federal National Mortgage Association, REMIC
Series 1992-145, 7.15%, 7/25/03 258,423
302,837 Federal National Mortgage Association, REMIC
Series 1995-23D, 7.0%, 10/25/07 308,536
474,565 Federal National Mortgage Association, REMIC
Series 1993-129KB, 6.5%, 4/25/08 475,400
The accompanying notes are an integral part of these financial statements.
12
PIONEER LIMITED MATURITY BOND FUND
PRINCIPAL
AMOUNT VALUE
U.S. GOVERNMENT AGENCY
OBLIGATIONS - (CONTINUED)
$ 18,754 Federal National Mortgage Association, REMIC
Series 1988-26C, 7.5%, 7/25/18 $ 18,680
46,549 Federal National Mortgage Association, REMIC
Series 1993-17PE, 6.75%, 6/25/19 46,314
453,573 Federal National Mortgage Association, REMIC
Series 1993-23PJ, 6.7%, 7/25/19 451,541
528,872 Federal National Mortgage Association, REMIC
Series 1998-50EN, 6.5%, 9/25/28 515,560
500,000 Government National Mortgage Association,
7.0%, TBA 497,865
268,572 Government National Mortgage Association,
6.5%,. 2/15/29 262,166
924,768 Government National Mortgage Association,
7.0%, 4/15/29 920,820
768,638 Government National Mortgage Association,
7.5%, 2/15/26 - 10/15/29 778,246
472,433 Government National Mortgage Association,
7.75%, 2/15/30 480,578
397,257 Government National Mortgage Association,
REMIC Series 1998-24A, 6.5%, 11/20/24 397,476
2,003,368 Government National Mortgage Association II,
7.5%, 3/20/26 - 8/20/28 2,019,215
862,862 Government National Mortgage Association II,
7.0%, 1/20/29 856,210
276,797 Government National Mortgage Association II,
6.5%, 2/20/29 - 3/20/29 269,243
1,050,000 U.S. Treasury Notes, 6.5%, 5/15/05 1,091,916
800,000 U.S. Treasury Notes, 6.625%, 5/15/07 848,704
The accompanying notes are an integral part of these financial statements.
13
PIONEER LIMITED MATURITY BOND FUND
SCHEDULE OF INVESTMENTS 11/30/00 (CONTINUED)
PRINCIPAL
AMOUNT VALUE
U.S. GOVERNMENT AGENCY
OBLIGATIONS - (CONTINUED)
$1,000,000 U.S. Treasury Bond, 7.875%, 11/15/07 $ 1,037,870
500,000 U.S. Treasury Notes, 6.0%, 8/15/09 516,710
------------
TOTAL U.S. GOVERNMENT AND AGENCY
OBLIGATIONS
(Cost $16,676,760) $16,717,253
------------
TOTAL INVESTMENT IN
SECURITIES - 100.0%
(Cost $35,131,590) (a)(b) $34,373,158
------------
------------
144A Security is exempt from registration under Rule 144A of the Securities Act
of 1933. Such securities may be resold normally to qualified institutional
buyers in a transaction exempt from registration. At November 30, 2000, the
value of these securities amounted to $152,795 or 0.4% of total net assets.
(a) At November 30, 2000, the net unrealized loss on investments based on cost
for federal income tax purposes of $35,131,590 was as follows:
Aggregate gross unrealized gain for all investments in
which there is an excess of value over tax cost $ 252,525
------------
Aggregate gross unrealized loss for all investments in
which there is an excess of tax cost over value (1,010,957)
------------
Net unrealized loss $ (758,432)
------------
------------
b) At November 30, 2001, the Fund had a net capital loss carryforward of
$5,890,696 which will expire between 2000 and 2008 if not utilized.
Purchases and sales of securities (excluding temporary cash investment) for the
year ended November 30, 2000 were as follows:
Purchases Sales
----------- -----------
Long-term U.S. Government $14,901,868 $17,028,561
Other Long-term Securities 3,700,103 23,293,351
The accompanying notes are an integral part of these financial statements.
14
PIONEER LIMITED MATURITY BOND FUND
BALANCE SHEET 11/30/00
ASSETS:
Investment in securities, at value (cost $35,131,590) $34,373,158
Receivables -
Investment securities sold 1,014,477
Fund shares sold 488,271
Interest 461,055
Due from Pioneer Investment Management, Inc. 51,534
Other 3,801
-----------
Total assets $36,392,296
-----------
LIABILITIES:
Payables -
Investment securities purchased $ 1,016,713
Fund shares repurchased 10,930
Dividends 36,254
Due to Bank 51,851
Due to affiliates 39,241
Accrued expenses 68,510
-----------
Total liabilities $ 1,223,499
-----------
NET ASSETS:
Paid-in capital $41,813,221
Accumulated undistributed net investment income 15,884
Accumulated net realized loss on investments (5,901,876)
Net unrealized loss on investments (758,432)
-----------
Total net assets $35,168,797
-----------
-----------
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $28,684,008/8,022,492 shares) $ 3.58
-----------
-----------
Class B (based on $6,215,165/1,737,284 shares) $ 3.58
-----------
-----------
Class Y (based on $269,624/75,068 shares) $ 3.59
-----------
-----------
MAXIMUM OFFERING PRICE:
Class A $ 3.67
-----------
-----------
The accompanying notes are an integral part of these financial statements.
15
PIONEER LIMITED MATURITY BOND FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED 11/30/00
INVESTMENT INCOME:
Interest $ 3,041,253
-----------
EXPENSES:
Management fees $217,745
Transfer agent fees
Class A 150,373
Class B 20,708
Class Y 476
Distribution fees
Class A 90,674
Class B 70,181
Administrative fees 29,982
Custodian fees 22,032
Registration fees 45,751
Professional fees 34,812
Printing 19,988
Fees and expenses of nonaffiliated trustees 17,742
Miscellaneous 8,702
-----------
Total expenses $ 729,166
Less management fees waived
and expenses reimbursed by Pioneer
Investment Management, Inc. (301,415)
Less fees paid indirectly (13,986)
-----------
Net expenses $ 413,765
-----------
Net investment income $ 2,627,488
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments $(1,641,766)
Change in net unrealized loss on investments 916,623
-----------
Net loss on investments $ (725,143)
-----------
Net increase in net assets resulting from operations $ 1,902,345
-----------
The accompanying notes are an integral part of these financial statements.
16
PIONEER LIMITED MATURITY BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED 11/30/00 AND 11/30/99
YEAR ENDED YEAR ENDED
FROM OPERATIONS: 11/30/00 11/30/99
Net investment income $ 2,627,488 $ 3,408,183
Net realized loss on investments (1,641,766) (592,766)
Change in net unrealized loss on investments 916,623 (2,082,562)
-------------- --------------
Net increase in net assets resulting from operations $ 1,902,345 $ 732,855
-------------- --------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.22 and $0.21 per share, respectively) $ (2,241,137) $ (2,844,985)
Class B ($0.20 and $0.18 per share, respectively) (384,880) (516,835)
Class Y ($0.23 and $0.23 per share, respectively) (16,757) (23,908)
-------------- --------------
Total distributions to shareowners $ (2,642,774) $ (3,385,728)
-------------- --------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 23,507,726 $ 49,295,514
Reinvestment of distributions 2,098,267 2,647,588
Cost of shares repurchased (47,887,120) (50,875,886)
-------------- --------------
Net increase (decrease) in net assets resulting
from fund share transactions $ (22,281,127) $ 1,067,216
-------------- --------------
Net decrease in net assets $ (23,021,556) $ (1,585,657)
NET ASSETS:
Beginning of year 58,190,353 59,776,010
-------------- --------------
End of year (including accumulated undistributed
net investment income of
$15,884 and $25,459, respectively). $ 35,168,797 $ 58,190,353
-------------- --------------
-------------- --------------
CLASS A '00 SHARES '00 AMOUNT '99 SHARES '99 AMOUNT
Shares sold 5,818,637 $ 20,735,697 10,232,153 $ 38,074,896
Reinvestment of distributions 510,975 1,825,177 621,135 2,294,085
Less shares repurchased (11,507,189) (41,052,424) (10,637,046) (39,466,164)
------------- -------------- ------------- --------------
Net increase (decrease) (5,177,577) $ (18,491,550) 216,242 $ 902,817
------------- -------------- ------------- --------------
------------- -------------- ------------- --------------
CLASS B
Shares sold 716,408 $ 2,566,047 3,002,539 $ 11,109,190
Reinvestment of distributions 71,840 256,632 89,263 329,597
Less shares repurchased (1,817,940) (6,494,846) (3,041,290) (11,242,752)
------------- -------------- ------------- --------------
Net increase (decrease) (1,029,692) $ (3,672,167) 50,512 $ 196,035
------------- -------------- ------------- --------------
------------- -------------- ------------- --------------
CLASS Y
Shares sold 57,327 $ 205,982 29,860 $ 111,428
Reinvestment of distributions 4,605 16,458 6,463 23,906
Less shares repurchased (94,790) (339,850) (44,458) (166,970)
------------- -------------- ------------- --------------
Net decrease (32,858) $ (117,410) (8,135) $ (31,636)
------------- -------------- ------------- --------------
------------- -------------- ------------- --------------
The accompanying notes are an integral part of these financial statements.
17
PIONEER LIMITED MATURITY BOND FUND
FINANCIAL HIGHLIGHTS 11/30/00
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
11/30/00 11/30/99 11/30/98 11/30/97 11/30/96
CLASS A
Net asset value, beginning of year $ 3.62 $ 3.78 $ 3.77 $ 3.79 $ 3.84
------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.22 $ 0.21 $ 0.22 $ 0.21 $ 0.24
Net realized and unrealized gain (loss) on investments (0.04) (0.16) 0.01 - (0.05)
------- ------- ------- ------- -------
Net increase from investment operations $ 0.18 $ 0.05 $ 0.23 $ 0.21 $ 0.19
Distributions to shareowners:
Net investment income (0.22) (0.21) (0.22) (0.23) (0.24)
------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ (0.04) $ (0.16) $ 0.01 $ (0.02) $ (0.05)
------- ------- ------- ------- -------
Net asset value, end of year $ 3.58 $ 3.62 $ 3.78 $ 3.77 $ 3.79
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Total return* 5.18% 1.47% 6.28% 5.64% 5.20%
Ratio of net expenses to average net assets+ 0.88% 0.88% 0.85% 0.87% 0.87%
Ratio of net investment income to average net assets+ 6.11% 5.75% 5.78% 6.10% 6.25%
Portfolio turnover rate 43% 86% 70% 31% 65%
Net assets, end of year (in thousands) $28,684 $47,781 $49,072 $42,058 $54,637
Ratios assuming no waiver of management fees and
assumption of expenses
by PIM and no reduction for fees paid indirectly:
Net expenses 1.58% 1.31% 1.30% 1.44% 1.33%
Net investment income 5.41% 5.32% 5.33% 5.53% 5.79%
Ratios assuming waiver of management fees and
assumption of expenses
by PIM and reduction for fees paid indirectly:
Net expenses 0.85% 0.85% 0.85% 0.85% 0.85%
Net investment income 6.14% 5.78% 5.78% 6.12% 6.27%
* Assumes initial investment at net asset value at the beginning of each
year, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each year, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
+ Ratios assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
18
PIONEER LIMITED MATURITY BOND FUND
FINANCIAL HIGHLIGHTS 11/30/00
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
11/30/00 11/30/99 11/30/98 11/30/97 11/30/96
CLASS B
Net asset value, beginning of year $ 3.62 $ 3.78 $ 3.76 $ 3.79 $ 3.85
------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.20 $ 0.18 $ 0.19 $ 0.20 $ 0.21
Net realized and unrealized gain (loss) on investments (0.04) (0.16) 0.01 (0.03) (0.05)
------- ------- ------- ------- -------
Net increase from investment operations $ 0.16 $ 0.02 $ 0.20 $ 0.17 $ 0.16
Distributions to shareowners:
Net investment income (0.20) (0.18) (0.18) (0.20) (0.21)
In excess of net investment income - - - - (0.01)
------- ------- ------- ------- -------
NET INCREASE (DECREASE) IN NET ASSET VALUE $ (0.04) $ (0.16) $ 0.02 $ (0.03) $ (0.06)
------- ------- ------- ------- -------
Net asset value, end of year $ 3.58 $ 3.62 $ 3.78 $ 3.76 $ 3.79
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Total return* 4.44% 0.64% 5.49% 4.60% 4.37%
Ratio of net expenses to average net assets+ 1.52% 1.62% 1.63% 1.67% 1.69%
Ratio of net investment income to average net assets+ 5.49% 5.04% 5.00% 5.29% 5.40%
Portfolio turnover rate 43% 86% 70% 31% 65%
Net assets, end of year (in thousands) $ 6,215 $10,018 $10,264 $ 5,187 $ 4,969
Ratios assuming no waiver of management fees and
assumption of expenses by PIM and no reduction for fees
paid indirectly:
Net expenses 2.21% 2.05% 1.99% 2.25% 2.15%
Net investment income 4.80% 4.61% 4.64% 4.71% 4.94%
Ratios assuming waiver of management fees and assumption
of expenses by PIM and
reduction for fees paid indirectly:
Net expenses 1.49% 1.61% 1.62% 1.66% 1.67%
Net investment income 5.52% 5.05% 5.01% 5.30% 5.42%
* Assumes initial investment at net asset value at the beginning of each
year, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each year, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
+ Ratios assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
19
PIONEER LIMITED MATURITY BOND FUND
FINANCIAL HIGHLIGHTS 11/30/00
YEAR ENDED YEAR ENDED 4/9/98 TO
11/30/00 11/30/99 11/30/98
CLASS Y
Net asset value, beginning of period $ 3.62 $ 3.79 $ 3.77
------ ------ ------
Increase (decrease) from investment operations:
Net investment income $ 0.23 $ 0.23 $ 0.14
Net realized and unrealized gain
(loss) on investments (0.03) (0.17) 0.02
------ ------ ------
Net increase from investment
operations $ 0.20 $ 0.06 $ 0.16
------ ------ ------
Distributions to shareowners:
Net investment income (0.23) (0.23) (0.14)
------ ------ ------
Net increase (decrease) in net asset
value $(0.03) $(0.17) $ 0.02
------ ------ ------
Net asset value, end of period $ 3.59 $ 3.62 $ 3.79
------ ------ ------
Total return* 5.60% 1.64% 4.35%
Ratio of net expenses to average net
assets+ 0.40% 0.48% 0.55%**
Ratio of net investment income to
average net assets+ 6.62% 6.18% 5.99%**
Portfolio turnover rate 43% 86% 70%
Net assets, end of period
(in thousands) $ 270 $ 391 $ 440
Ratios assuming no waiver of
management fees and assumption
of expenses by PIM and no
reduction for fees paid indirectly:
Net expenses 1.09% 0.90% 0.74%**
Net investment income 5.93% 5.76% 5.80%**
Ratios assuming waiver of management fees and
assumption of expenses by PIM and
reduction for fees paid indirectly:
Net expenses 0.35% 0.46% 0.55%**
Net investment income 6.67% 6.20% 5.99%**
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges.
** Annualized.
+ Ratios assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
20
PIONEER LIMITED MATURITY BOND FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 11/30/001.
- -------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Pioneer Limited Maturity Bond Fund (The Fund) is a Massachusetts business trust
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The Fund's investment objective is to seek a high
level of current income consistent with a high level of principal stability.
The Fund offers three classes of shares - Class A, Class B and Class Y shares.
Each class of shares represents an interest in the same portfolio of investments
of the Fund and has equal rights to voting, redemptions, dividends and
liquidation, except that the level of transfer agent and distribution fees may
differ among classes. Class A and Class B shareowners have exclusive voting
rights with respect to the distribution plan for each class. There is no
distribution plan for Class Y shares.
The Fund's financial statements have been prepared in conformity with accounting
principles generally accepted in the United States that require the management
of the Fund to, among other things, make estimates and assumptions that affect
the reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting periods. Actual results
could differ from those estimates. The following is a summary of significant
accounting policies consistently followed by the Fund, which are in conformity
with those generally accepted in the investment company industry.
A. SECURITY VALUATION
Security transactions are recorded as of trade date. Securities are valued
at prices supplied by independent pricing services, which consider such
factors as Treasury spreads, yields, maturities and ratings. Valuations may
be supplemented by other sources, as required. Principal amounts of
mortgage-backed securities are adjusted for monthly paydowns. Premium and
discount related to certain mortgage-backed securities are amortized or
accreted in proportion to the underlying monthly paydowns. Interest income,
including interest on income bearing cash accounts, is recorded on the
accrual basis. Temporary cash investments are valued at amortized cost. Gains
and losses on sales of investments are calculated on the identified cost
method for both financial reporting and federal income tax purposes.
As required, effective December 1, 2001, the Fund will adopt the provisions
of the AICPA Audit & Accounting Guide for Investment Companies and will
amortize discount or premium for all debt securities.
21
PIONEER LIMITED MATURITY BOND FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 11/30/00 (CONTINUED)
- -------------------------------------------------------------------------------
This change will have no impact on the Fund's total net assets and is
expected to result in an immaterial increase or reduction in the cost of
securities and a corresponding change in net unrealized appreciation
(depreciation).
B. FEDERAL INCOME TAXES
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The characterization of distributions to shareowners for financial reporting
purposes is determined in accordance with federal income tax rules.
Therefore, the source of the Fund's distributions may be shown in the
accompanying financial statements as either from or in excess of net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
At November 30, 2000, the Fund reclassified $5,711 and $57,666 from paid-in
capital to accumulated undistributed net investment income and accumulated
net realized loss on investments, respectively. The reclassification has
no impact on the net asset value of the Fund and is designed to present
the Fund's capital accounts on a tax basis.
C. FUND SHARES
The Fund records sales and repurchases of its shares as of trade date.
Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the
Fund and a wholly owned subsidiary of UniCredito Italiano S.p.A.
(UniCredito Italiano), earned $1,792 in underwriting commissions on the
sale of fund shares during the year ended November 30, 2000.
D. CLASS ALLOCATIONS
Distribution fees are calculated based on the average daily net assets
attributable to Class A and Class B shares of the Fund, respectively.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneering Services Corporation (PSC), for their services, which
are allocated based on the number of accounts in each class and the
ratable allocation of related out-of-pocket expense (see Note 3). Income,
common expenses and realized and unrealized gains and losses are
calculated at the Fund level and allocated daily to each class of shares
based on its respective percentage of adjusted net assets at the beginning
of the day.
22
PIONEER LIMITED MATURITY BOND FUND
- -------------------------------------------------------------------------------
The Fund declares as daily dividends substantially all of its net investment
income. All dividends are paid on a monthly basis. Short-term capital gain
distributions, if any, may be declared with the daily dividends.
Distributions to shareowners are recorded as of the ex-dividend date.
Distributions paid by the Fund with respect to each class of shares are
calculated in the same manner, at the same time, and in the same amount,
except that Class A, Class B, and Class Y shares can bear different
transfer agent and distribution fees.
E. REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, the value of
the underlying securities (collateral), including accrued interest
received from counter parties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Fund's custodian, or subcustodians. The
Fund's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. MANAGEMENT AGREEMENT
PIM manages the Fund's portfolio and is a wholly owned subsidiary of
UniCredito Italiano. Management fees are calculated daily at the annual rate
of 0.50% of the Fund's average daily net assets up to $100 million; 0.45% of
the next $200 million; and 0.40% of the excess over $300 million.
PIM has agreed not to impose a portion of its management fee and to assume
other operating expenses of the Fund to the extent necessary to limit Class A
expenses to 0.85% of the average daily net assets attributable to Class A
shares; the portion of the Fund-wide expenses attributable to Class B and
Class Y shares will be reduced only to the extent that such expenses are
reduced for Class A shares. PIM's agreement is voluntary and temporary and
may be revised or terminated at any time.
In addition, under the management and administration agreements, certain
other services and costs, including accounting, regulatory reporting and
insurance premiums, are paid by the Fund.
3. TRANSFER AGENT
PSC, a wholly owned subsidiary of UniCredito Italiano, provides substantially
all transfer agent and shareholder services to the Fund at negotiated rates.
Included in due to affiliates is $23,222 in transfer agent fees payable to PSC
at November 30, 2000.
23
PIONEER LIMITED MATURITY BOND FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 11/30/00 (CONTINUED)
- -------------------------------------------------------------------------------
4. DISTRIBUTION PLANS
The Fund adopted a Plan of Distribution with respect to Class A and Class B
shares (Class A Plan and Class B Plan) in accordance with Rule 12b-1 of the
Investment Company Act of 1940. Pursuant to the Class A Plan, the Fund pays
PFD a service fee of up to 0.25% of the average daily net assets attributable
to Class A Shares in reimbursement of its actual expenditures to finance
activities primarily intended to result in the sale of Class A shares.
Pursuant to the Class B Plan, the Fund pays PFD 1.00% of the average daily
net assets attributable to the Class B shares. The fee consists of a 0.25%
service fee and a 0.75% distribution fee paid as compensation for personal
services and/or account maintenance services or distribution services with
regard to Class B shares. Included in due to affiliates is $16,019 in
distribution fees payable to PFD at November 30, 2000.
In addition, redemptions of each class of shares (except Class Y shares) may
be subject to a contingent deferred sales charge (CDSC). A CDSC of 0.50% may
be imposed on redemptions of certain net asset value purchases of Class A
shares within one year of purchase. Class B shares that are redeemed within
three years of purchase are subject to a CDSC at declining rates beginning at
2.00%, based on the lower of cost or market value of shares being redeemed.
Proceeds from the CDSCs are paid to PFD. For the year ended November 30,
2000, CDSCs in the amount of $32,408 were paid to PFD.
5. EXPENSE OFFSETS
The Fund has entered into certain expense offset arrangements resulting in a
reduction in the Fund's total expenses. For the year ended November 30, 2000
the Fund's expenses were reduced by $13,986 under such arrangements.
6. LINE OF CREDIT FACILITY
The Fund, along with certain other funds in the Pioneer Family of Funds (the
Funds), collectively participate in a $50 million committed, unsecured
revolving line of credit facility. Borrowings are used solely for temporary
or emergency purposes. The Fund may borrow up to the lesser of $50 million or
the limits set by its prospectus for borrowings. Interest on collective
borrowings of up to $25 million is payable at the Federal Funds Rate plus
3/8% on an annualized basis, or at the Federal Funds Rate plus 1/2% if the
borrowing exceeds $25 million at any one time. The Funds pay an annual
commitment fee for this facility. The commitment fee is allocated among such
Funds based on their respective borrowing limits. For the year ended November
30, 2000, the Fund had no borrowings under this agreement.
24
PIONEER LIMITED MATURITY BOND FUND
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- -------------------------------------------------------------------------------
TO THE SHAREOWNERS AND THE BOARD OF TRUSTEES OF PIONEER LIMITED MATURITY
BOND FUND:
We have audited the accompanying balance sheet, including the schedule of
investments, of Pioneer Limited Maturity Bond Fund (the Fund), as of November
30, 2000, and the related statement of operations, statements of changes in
net assets and the financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of November 30, 2000 by correspondence
with the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer Limited Maturity Bond Fund as of November 30, 2000, the results of
its operations, the changes in its net assets and the financial highlights
for the periods presented, in conformity with accounting principles generally
accepted in the United States.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 8, 2001
25
PIONEER LIMITED MATURITY BOND FUND
- -------------------------------------------------------------------------------
RESULTS OF SHAREOWNER MEETING
- -------------------------------------------------------------------------------
On September 11, 2000, Pioneer Limited Maturity Bond Fund held a special
meeting of shareowners to approve a new management contract between the Fund
and Pioneer Investment Management, Inc., the Fund's investment adviser.
Shareowners also voted to elect trustees. Both proposals passed by shareowner
vote. The new management contract took effect when UniCredito Italiano S.p.A.
completed its acquisition of The Pioneer Group, Inc. on October 24, 2000.
Here are the detailed results of the votes.
PROPOSAL 1 -- TO APPROVE A NEW MANAGEMENT CONTRACT.
AFFIRMATIVE AGAINST ABSTAIN
6,753,779.973 108,400.246 164,231.666
PROPOSAL 2 -- TO ELECT TRUSTEES.
NOMINEE AFFIRMATIVE WITHHELD
M.K. Bush 6,903,375.940 123,035.945
J.F. Cogan, Jr. 6,925,333.912 101,077.973
Dr. R. H. Egdahl 6,923,093.756 103,318.129
M.B.W. Graham 6,913,322.912 113,088.973
M.A. Piret 6,915,034.685 111,377.200
D.D. Tripple 6,925,333.912 101,077.973
S.K. West 6,915,034.685 111,377.200
J. Winthrop 6,919,857.890 106,553.995
26
PIONEER LIMITED MATURITY BOND FUND
- -------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- -------------------------------------------------------------------------------
TRUSTEES
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Marguerite A. Piret
David D. Tripple
Stephen K. West
John Winthrop
INVESTMENT ADVISER
Pioneer Investment Management, Inc.
CUSTODIAN
Brown Brothers Harriman & Co.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
PRINCIPAL UNDERWRITER
Pioneer Funds Distributor, Inc.
LEGAL COUNSEL
Hale and Dorr LLP
SHAREOWNER SERVICES AND TRANSFER AGENT
Pioneering Services Corporation
OFFICERS
John F. Cogan, Jr., President
David D. Tripple, Executive Vice President
Vincent Nave, Treasurer
Joseph P. Barri, Secretary
27
- -------------------------------------------------------------------------------
THE PIONEER FAMILY OF MUTUAL FUNDS
- -------------------------------------------------------------------------------
For information about any Pioneer mutual fund, please contact your investment
representative, or call Pioneer at 1-800-225-6292. Ask for a free fund
information kit, which includes a fund prospectus. Please read the prospectus
carefully before you invest or send money.
GROWTH FUNDS
UNITED STATES
Pioneer Growth Shares
Pioneer Micro-Cap Fund
Pioneer Mid-Cap Fund
Pioneer Mid-Cap Value Fund
Pioneer Small Company Fund
Pioneer Science & Technology Fund
Pioneer Tax-Managed Fund
INTERNATIONAL/GLOBAL
Pioneer Emerging Markets Fund
Pioneer Europe Fund
Pioneer Indo-Asia Fund
Pioneer International Growth Fund
Pioneer World Equity Fund
GROWTH AND INCOME FUNDS
Pioneer Fund
Pioneer II
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Real Estate Shares
INCOME FUNDS
TAXABLE
Pioneer America Income Trust
Pioneer Bond Fund
Pioneer High Yield Fund
Pioneer Limited Maturity Bond Fund
Pioneer Strategic Income Fund
TAX-FREE
Pioneer Tax-Free Income Fund
MONEY MARKET FUND
Pioneer Cash Reserves Fund*
*An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks
to preserve the value of your investment at $1 per share, it is possible to
lose money by investing in the Fund.
28
- -------------------------------------------------------------------------------
RETIREMENT PLANS FROM PIONEER
- -------------------------------------------------------------------------------
Pioneer offers retirement plans suited to the individual investor and
businesses of all sizes. For information, contact your investment
professional, or call Pioneer at 1-800-622-0176.
INDIVIDUAL PLANS
INDIVIDUAL RETIREMENT ACCOUNT (IRA) The $2,000 maximum annual contribution may
be tax-deductible; earnings are tax-deferred.
ROTH IRA The $2,000 maximum annual contribution is not tax-deductible; earnings
are tax-free for qualified withdrawals.
PLANS FOR SMALL BUSINESSES OR THE SELF-EMPLOYED
SIMPLE (SAVINGS INCENTIVE MATCH PLAN FOR EMPLOYEES) IRA For firms with 100 or
fewer employees. Employees can make pre-tax contributions, and an employer
contribution is required.
SIMPLIFIED EMPLOYEE PENSION PLAN (SEP) Self-employed individuals and
small-business owners can make tax-deductible contributions of up to 15% of
their income. Employer must also contribute for any eligible employees.
EMPLOYER-SPONSORED PLANS
401(K) PLAN Allows employees to make pre-tax contributions. Also allows for
employer contributions.
403(B) PLAN Lets employees of public schools, nonprofit hospitals and certain
other tax-exempt organizations set aside part of their salary, before taxes,
through payroll deduction.
PROFIT SHARING PLAN Employers contribute on a discretionary basis, usually based
on profits.
AGE-WEIGHTED PROFIT SHARING PLAN Employer makes discretionary contributions
based on employees' age and salary.
MONEY PURCHASE PENSION PLAN (MPP) Employers contribute based on a fixed formula.
Most retirement plan withdrawals must meet specific conditions to avoid
penalties.
29
- -------------------------------------------------------------------------------
HOW TO CONTACT PIONEER
- -------------------------------------------------------------------------------
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
CALL US FOR:
ACCOUNT INFORMATION, including existing accounts, new accounts,
prospectuses, applications and service forms 1-800-225-6292
FACTFONE-SM- for automated fund yields, prices,
account information and transactions 1-800-225-4321
RETIREMENT PLANS INFORMATION 1-800-622-0176
TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD) 1-800-225-1997
WRITE TO US AT:
Pioneering Services Corporation
60 State Street
Boston, Massachusetts 02109
OUR TOLL-FREE FAX 1-800-225-4240
OUR INTERNET E-MAIL ADDRESS ASK.PIONEER@PIOG.COM
(for general questions about Pioneer only)
VISIT OUR WEB SITE: WWW.PIONEERFUNDS.COM
THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT FUND PROSPECTUS.
PIONEER INVESTMENT MANAGEMENT, INC.
[LOGO] 60 STATE STREET 9499-00-0101
BOSTON, MASSACHUSETTS 02109 -C- PIONEER FUNDS DISTRIBUTOR, INC.
WWW.PIONEERFUNDS.COM PRINTED ON RECYCLED PAPER
[Limited Maturity Bond Fund's May 31, 2001 Semiannual Report will be provided
when it becomes available in late July]
EXHIBIT D
[PIONEER LOGO]
Pioneer Bond
Fund
- ---------------------
ANNUAL REPORT 6/30/00
- ---------------------
Table of Contents
- --------------------------------------------------------------------------------
Letter from the Chairman 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 6
Schedule of Investments 9
Financial Statements 17
Notes to Financial Statements 23
Report of Independent Public Accountants 27
Trustees, Officers and Service Providers 28
Pioneer Family of Mutual Funds 29
Pioneer Bond Fund
- --------------------------------------------------------------------------------
LETTER FROM THE CHAIRMAN 6/30/00
- --------------------------------------------------------------------------------
Dear Shareowner,
- --------------------------------------------------------------------------------
For over a year, the Federal Reserve has been trying to suppress inflationary
pressures and restrain economic growth in the U.S. by raising short-term
interest rates. Because they represent increased costs, higher interest rates
cut into corporate profits.
With the possibility of a slowing economy and an uncertain profit outlook
overhanging the stock market, investors shifted from sector to sector in the
first half of 2000 looking for attractive opportunities. Heightened stock market
volatility was the result. Bonds also lost luster, because existing,
lower-paying issues could not compete with the higher rates that now prevail. By
summer, we began to see evidence that the Fed's tactics were having some impact,
as key statistics hinted at a contraction of the economy's growth rate.
Volatile markets should not sidetrack your plans for dealing with your essential
financial goals. Whatever your long-range needs may be - money for a child's
education, funding a comfortable retirement, or some other cherished objective -
those needs remain in place no matter what the market may do this week or next
month. For that reason, it makes sense to focus your investment strategy beyond
interim ups and downs.
Mid-year is a good time to talk to your financial representative to review what
has been happening and to make sure your strategy is intact. Part of that
discussion should be devoted to your portfolio's diversification. Do you have a
blend of stocks and bonds that you are comfortable with and that can help you
meet your goals? Or is it time to make adjustments? Be sure to include your IRAs
and other retirement vehicles when you evaluate your overall portfolio.
I hope you will take time to read the following discussion with Kenneth J.
Taubes, co-head of Pioneer's fixed-income team. It's an excellent way to
understand Pioneer Bond Fund's performance during the last year and to learn
about expectations for the months ahead. If you have questions or would like
more information about your fund, visit our web site at www.pioneerfunds.com.
Respectfully,
/s/ John F. Cogan, Jr.
- ----------------------
John F. Cogan, Jr.
Chairman and President
1
Pioneer Bond Fund
- --------------------------------------------------------------------------------
PORTFOLIO SUMMARY 6/30/00
- --------------------------------------------------------------------------------
Portfolio Quality
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[PIE CHART PLOT POINTS]
U.S. Government and Agency 29.1%
AAA 2.3%
AA 9.3%
A 24.0%
BBB 17.6%
BB 7.5%
B and lower 10.0%
Other 0.2%
[END PLOT POINTS]
Portfolio Maturity
- --------------------------------------------------------------------------------
(Effective life as a percentage of total investment portfolio)
[PIE CHART PLOT POINTS]
0-1 Years 0.3%
1-3 Years 14.1%
3-4 Years 15.7%
4-6 Years 39.9%
6-8 Years 16.4%
8+ Years 13.6%
[END PLOT POINTS]
10 Largest Holdings
- --------------------------------------------------------------------------------
(As a percentage of debt holdings)
1. Government National Mortgage Association, 7.0%, 1/15/30 3.91%
2. U.S. Treasury Bonds, 8.0%, 11/15/21 2.53
3. U.S. Treasury Bonds, 7.5%, 11/15/16 2.36
4. Government National Mortgage Association, 7.5%, 2/15/30 2.35
5. Ford Capital BV, 9.5%, 6/1/10 2.33
6. Government National Mortgage Association, 7.0%, 8/15/29 2.29
7. Government National Mortgage Association, 8.0%, 11/15/29 2.06
8. Government National Mortgage Association, 7.0%, 7/15/29 1.82
9. American General Finance Corp., 8.125%, 8/15/09 1.76
10. Government National Mortgage Association I, 8.0%, 5/15/30 1.68
Fund holdings will vary for other periods.
2
Pioneer Bond Fund
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/00 CLASS A SHARES
- --------------------------------------------------------------------------------
Share Prices and Distributions
- --------------------------------------------------------------------------------
Net Asset Value
per Share 6/30/00 6/30/99
$8.47 $8.94
Distributions per Share Income Short-Term Long-Term
(6/30/99 - 6/30/00) Dividends Capital Gains Capital Gains
$0.577 - -
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Bond Fund at public offering price, compared to the growth of the Lehman
Brothers Government/Corporate Bond Index.
Average Annual Total Returns
(As of June 30, 2000)
Net Asset Public Offering
Period Value Price*
10 Years 6.87% 6.38%
5 Years 4.70 3.75
1 Year 1.30 -3.25
* Reflects deduction of the maximum 4.5% sales charge at the beginning of the
period and assumes reinvestment of distributions at net asset value.
[BAR CHART PLOT POINTS]
Growth of $10,000
Lehman Brothers
Pioneer Government/Corporate
Bond Fund* Bond Index
6/90 9550 10000
6/91 10518 11020
11888 12580
13394 14235
6/94 13226 14028
14745 15820
15337 16555
6/97 16424 17836
18073 19849
17317 20386
6/00 18555 21263
[END PLOT POINTS]
The Lehman Brothers Government/Corporate Bond Index is an unmanaged, composite
index of the U.S. bond market. It contains over 5,000 issues, including Treasury
and government agency securities, investment-grade corporate bonds and Yankee
bonds. Index returns are calculated monthly, assume reinvestment of dividends
and, unlike Fund returns, do not reflect any fees, expenses or sales charges.
You cannot invest directly in the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
3
Pioneer Bond Fund
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/00 CLASS B SHARES
- --------------------------------------------------------------------------------
Share Prices and Distributions
- --------------------------------------------------------------------------------
Net Asset Value
per Share 6/30/00 6/30/99
$8.44 $8.91
Distributions per Share Income Short-Term Long-Term
(6/30/99 - 6/30/00) Dividends Capital Gains Capital Gains
$0.507 - -
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Bond Fund, compared to the growth of the Lehman Brothers
Government/Corporate Bond Index.
Average Annual Total Returns
(As of June 30, 2000)
If If
Period Held Redeemed*
Life-of-Fund 4.64% 4.64%
(4/4/94)
5 Years 3.88 3.72
1 Year 0.48 -3.31
* Reflects deduction of the maximum applicable contingent deferred sales
charge (CDSC) at the end of the period and assumes reinvestment of
distributions. The maximum CDSC of 4% declines over six years.
[BAR CHART PLOT POINTS]
Growth of $10,000+
Lehman Brothers
Pioneer Government/Corporate
Bond Fund* Bond Index
4/94 10000 10000
6/94 9896 9958
9906 10044
10942 11229
11600 11977
6/96 11286 11752
11729 12325
11990 12663
12713 13527
6/98 13095 14091
13579 14809
13170 14471
13056 14491
6/00 13233 15096
[END PLOT POINTS]
+ Index comparison begins 4/30/94. The Lehman Brothers Government/Corporate
Bond Index is an unmanaged, composite index of the U.S. bond market. It
contains over 5,000 issues, including Treasury and government agency
securities, investment-grade corporate bonds and Yankee bonds. Index
returns are calculated monthly, assume reinvestment of dividends and,
unlike Fund returns, do not reflect any fees, expenses or sales charges.
You cannot invest directly in the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than
their original cost.
4
Pioneer Bond Fund
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/00 CLASS C SHARES
- --------------------------------------------------------------------------------
Share Prices and Distributions
- --------------------------------------------------------------------------------
Net Asset Value
per Share 6/30/00 6/30/99
$8.46 $8.89
Distributions per Share Income Short-Term Long-Term
(6/30/99 - 6/30/00) Dividends Capital Gains Capital Gains
$0.457 - -
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Bond Fund, compared to the growth of the Lehman Brothers
Government/Corporate Bond Index.
Average Annual Total Returns
(As of June 30, 2000)
If If
Period Held Redeemed*
Life-of-Fund 2.89% 2.87%
(1/31/96)
1 Year 0.36 0.36
* Assumes reinvestment of distributions. A 1% contingent deferred sales
charge (CDSC) applies to redemptions made within one year of purchase.
[BAR CHART PLOT POINTS]
Growth of $10,000
Lehman Brothers
Pioneer Government/Corporate
Bond Fund* Bond Index
1/96 10000 10000
9679 9706
9700 9750
9831 9922
10081 10225
9971 10137
6/97 10294 10505
10607 10873
10904 11222
11024 11393
11233 11691
11700 12269
12/98 11653 12286
11515 12139
11300 12007
11277 12071
11179 12022
11246 12345
6/00 11341 12523
[END PLOT POINTS]
The Lehman Brothers Government/Corporate Bond Index is an unmanaged, composite
index of the U.S. bond market. It contains over 5,000 issues, including Treasury
and government agency securities, investment-grade corporate bonds and Yankee
bonds. Index returns are calculated monthly, assume reinvestment of dividends
and, unlike Fund returns, do not reflect any fees, expenses or sales charges.
You cannot invest directly in the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
5
Pioneer Bond Fund
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/00
- --------------------------------------------------------------------------------
Extraordinarily strong economic growth and the U.S. Federal Reserve Board's
efforts to restrain this growth and limit inflation dominated the fixed income
market in the United States during the 12 months ended June 30, 2000. In the
following discussion, Kenneth J. Taubes details the factors that influenced your
Fund's performance during the fiscal year. Mr. Taubes, co-head of Pioneer's
fixed income group, oversees the team responsible for the daily management of
Pioneer Bond Fund.
Q: Pioneer Bond Fund achieved positive returns during a period of rising
interest rates and falling prices for most types of fixed income
investments. What factors most affected performance?
A: The Fund's holdings in long-term Treasury bonds and other types of high-
quality long-term investments helped performance. However, corporate bonds
in general, especially high yield bonds, lagged Treasuries in performance
and detracted from Fund returns. Overall, the Fund's competitive yield
overcame price losses to result in positive total returns. On June 30,
2000, the Fund's 30-day SEC yield on Class A shares was 6.83%, an increase
from the 6.57% yield on December 31, 1999 and substantially higher than the
5.63% yield a year earlier. For the 12-month period, Class A shares
returned 1.30%, Class B shares returned 0.48% and Class C shares had a
total return of 0.36%, all at net asset value. In comparison, the average
return for the same period of the 173 funds in Lipper, Inc.'s Corporate
Debt A-rated category was 2.78%. (Lipper is an independent company that
tracks mutual fund performance.)
Q: Especially in the final six months of the period, U.S. Treasuries seemed to
gain in price even as most corporate securities lost value. What
contributed to this environment?
A: The main factors were the strong economy and the reactions to this
strength. We had high rates of Gross Domestic Product (GDP) growth and
falling unemployment rates. The Federal Reserve Board became increasingly
concerned that the growth rates were unsustainable and could drive up the
costs of resources, increasing inflationary pressures. Starting in June
1999, the Fed raised short-term interest rates six different times, by a
total of 1.75%. However, during the final six months of the fiscal
6
Pioneer Bond Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
period, the strong economy resulted in a rising revenue flow to the federal
government, which was able to reduce debt by buying back higher-coupon,
long-term Treasury bonds. This resulted in rising prices and declining
interest rates for both intermediate- and long-term Treasury obligations.
As a consequence, the yields on longer-term Treasury obligations actually
fell below those of shorter-term government notes. Investors in fixed
income securities call this an inversion of the yield curve. Under most
conditions the yield curve is characterized by higher yields for
longer-maturity securities. While long-term Treasuries rallied, corporate
bonds presented a much different situation. Lower credit quality securities
in general underperformed Treasuries as investors feared that economic
growth would eventually slow and undermine the financial health of
companies issuing bonds. Corporate securities, especially high-yielding,
lower quality bonds, fell in price and their yields rose. The difference -
or spread - between the yields of corporate securities and government
securities grew wider and corporate bonds underperformed government bonds
of comparable maturities. While investment grade corporate securities also
underperformed Treasuries, they still performed better than higher
yielding, lower quality bonds. Mortgage securities did better than
investment grade corporate bonds, although not as well as Treasuries.
Q: Did you make any changes in strategy during this period?
A: As the end of the fiscal year approached, the spread widening - or growing
difference in yields between Treasuries and non-Treasuries - resulted in
extremely attractive yields in the corporate sector, especially the high
yield sector. Believing that high yield securities offered very good value
after two years of underperformance, we increased our allocation to this
sector close to our mandated maximum of 20% of total assets. We did this by
redeploying assets, principally from mortgage securities that had been
performing well for the Fund. We invested where we saw the greatest
relative value at current prices. For the same reason, we also invested in
more intermediate-term securities, which had been underperforming. This
resulted in a lower average maturity and lower duration for the Fund, which
we thought made sense in a period following a rally in long-term
Treasuries.
7
Pioneer Bond Fund
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/00 (continued)
- --------------------------------------------------------------------------------
Q: What is your outlook?
A: During the closing months of the last fiscal year, we saw some signs that
economic growth was beginning to cool down in the United States. Growth in
consumer spending was lower, and the manufacturing sector was beginning to
slow. Investors in the bond market are beginning to think that the Fed
Board may be approaching the end of its series of interest-rate hikes,
although some further rate increases certainly are possible. While we don't
think the economy will slow dramatically, we do think growth will become
more moderate, providing a better opportunity for a decline in interest
rates later in the current fiscal year.
8
Pioneer Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/00
- --------------------------------------------------------------------------------
S&P's/Moody's
Principal Ratings
Amount (unaudited) Value
CONVERTIBLE CORPORATE BONDS - 1.0%
$ 800,000 B+/B1 Mascotech, Inc., 4.5%, 12/15/03 $ 604,000
1,007,000 BB-/B2 Pogo Producing Co., 5.5%, 6/15/06 840,261
----------
Total Convertible Corporate Bonds $1,444,261
----------
(Cost $1,468,178)
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.2%
847,697 AAA/Aaa Prudential Securities Secured Financing
Co., Series 1999-NRF1 A1, 6.074%,
1/15/08 $ 803,325
1,000,000 AAA/Aaa Prudential Securities Secured Financing
Co., Series 1999-NRF1 A1, 6.48%,
1/15/09 934,375
8,164 AAA/Aaa Resolution Trust Corp., Series 1992-5A6,
9.24%, 5/25/26 8,123
----------
Total Collateralized Mortgage Obligations $1,745,823
----------
(Cost $1,875,231)
CORPORATE BONDS - 66.4%
Basic Materials - 4.1%
Chemicals (Diversified) - 0.7%
1,000,000 B+/B2 Huntsman ICI Chemicals, 10.125%,
7/1/09 $1,005,000
----------
Chemicals (Specialty) - 0.6%
1,000,000 BB/Ba2 Arco Chemical Co., 9.8%, 2/1/20 $ 910,000
----------
Iron & Steel - 2.0%
1,000,000 AA-/A1 Nucor Corp., 6.0%, 1/1/09 (144A) $ 880,880
2,000,000 BBB-/Baa2 USX Corp., 8.125%, 7/15/23 1,988,900
----------
$2,869,780
----------
Metals Mining - 0.1%
1,000,000 CC/Ca AEI Resources, Inc., 11.5%, 12/15/06
(144A) $ 100,000
----------
Paper & Forest Products - 0.7%
1,000,000 A-/A3 Mead Corp., 8.125%, 2/1/23 $ 957,850
----------
Total Basic Materials $5,842,630
----------
The accompanying notes are an integral part of these financial statements. 9
Pioneer Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/00 (continued)
- --------------------------------------------------------------------------------
S&P's/Moody's
Principal Ratings
Amount (unaudited) Value
Capital Goods - 1.4%
Engineering & Construction - 0.6%
$ 895,000 B+/B2 Metromedia Fiber Network Inc., 10.0%,
11/15/08 $ 886,050
----------
Waste Management - 0.8%
1,000,000 B+/B2 Azurix Corp., 10.375%, 2/15/07 (144A) $ 965,000
300,000 BB-/Ba3 Browning-Ferris Industries, Inc., 6.375%,
1/15/08 234,000
----------
$1,199,000
----------
Total Capital Goods $2,085,050
----------
Communication Services - 2.0%
Cellular/Wireless Telecommunications - 1.3%
1,000,000 B/B3 Crown Castle International Corp., 9.0%,
5/15/11 $ 920,000
1,000,000 B/B2 NEXTLINK Communications, Inc., 10.75%,
6/1/09 987,500
----------
$1,907,500
----------
Telecommunications (Long Distance) - 0.7%
1,000,000 AA-/A1 AT&T Corp., 8.125%, 1/15/22 $ 968,120
----------
Total Communication Services $2,875,620
----------
Consumer Cyclicals - 6.6%
Automobiles - 1.6%
2,000,000 A/A2 General Motors Corp., 9.4%, 7/15/21 $2,276,280
----------
Building Materials - 1.0%
750,000 B/B2 NCI Building Systems, Inc., 9.25%, 5/1/09 $ 705,000
750,000 B+/B1 Nortek Inc., 9.125%, 9/1/07 695,625
----------
$1,400,625
----------
Hardware & Tools - 0.3%
500,000 B+/B1 Scott's Corp., 8.625%, 1/15/09 (144A) $ 475,000
----------
Homebuilding - 0.2%
370,000 BB+/Ba2 Toll Corp, 8.125%, 2/1/09 $ 333,000
----------
Publishing (Newspapers) - 1.1%
1,500,000 BBB-/Baa3 News America Holdings, Inc., 10.125%,
10/15/12 $1,615,350
----------
10 The accompanying notes are an integral part of these financial statements.
Pioneer Bond Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
S&P's/Moody's
Principal Ratings
Amount (unaudited) Value
Retail - 1.5%
$1,000,000 AA/Aa2 Wal-Mart Stores, Inc., 8.62%, 1/1/10 $ 1,056,680
1,000,000 AA/Aa2 Wal-Mart Stores, Inc., 8.5%, 9/15/24 1,045,390
-----------
$ 2,102,070
-----------
Services (Commerical & Consumer) - 0.2%
1,100,000 BBB/Baa3 Laidlaw Inc., 7.65%, 5/15/06 $ 275,000
-----------
Textiles (Apparel) - 0.7%
1,000,000 BBB-/Baa2 Jones Apparel Group, Inc., 7.875%,
6/15/06 $ 973,000
-----------
Total Consumer Cyclicals $ 9,450,325
-----------
Consumer Staples - 10.1%
Broadcasting (Television/Radio/Cable) - 5.7%
1,000,000 BBB-/Baa2 British Sky Broadcasting Corp., 8.2%,
7/15/09 $ 940,870
1,000,000 B+/B2 Charter Communications Holdings LLC,
8.25%, 4/1/07 885,000
2,200,000 BBB/Baa3 Continental Cablevision, Inc., 9.5%, 8/1/13 2,399,738
1,500,000 BBB+/Baa1 Cox Enterprises, 7.375%, 6/15/09
(144A) 1,406,610
1,040,000 B/B2 Echostar DBS Corp., 9.25%, 2/1/06 1,008,800
1,250,000 AA-/Ba1 Tele-Communications, Inc., 10.125%,
4/15/22 1,506,950
-----------
$ 8,147,968
-----------
Distributors (Food & Health) - 1.7%
500,000 B-/B3 Fisher Scientific International Inc., 9.0%,
2/1/08 $ 463,750
1,000,000 BBB+/Baa1 SUPERVALU Inc., 8.875%, 11/15/22 992,750
1,000,000 B/B2 Wesco Distribution Inc., 9.125%, 6/1/08 915,000
-----------
$ 2,371,500
-----------
Entertainment - 2.2%
1,000,000 B-/B3 Premier Parks, Inc., 9.75%, 6/15/07 $ 965,000
2,000,000 BBB/Baa3 Time Warner Inc., 9.15%, 2/1/23 2,187,460
-----------
$ 3,152,460
-----------
Household Products (Non-Durables) - 0.5%
750,000 B2/B Playtex Family Products, Inc., 9.0%,
12/15/03 $ 727,500
-----------
Total Consumer Staples $14,399,428
-----------
The accompanying notes are an integral part of these financial statements. 11
Pioneer Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/00 (continued)
- --------------------------------------------------------------------------------
S&P's/Moody's
Principal Ratings
Amount (unaudited) Value
Energy - 9.3%
Oil (Domestic Integrated) - 1.5%
$2,000,000 A-/A3 Phillips Petroleum Co., 9.18%, 9/15/21 $ 2,066,400
-----------
Oil (International Integrated) - 2.0%
1,580,000 AA+/Aa2 Imperial Oil Ltd., 8.75%, 10/15/19 $ 1,633,293
1,200,000 A+/A1 Texaco Capital Corp., 8.25%, 10/1/06 1,249,848
-----------
$ 2,883,141
-----------
Oil & Gas (Drilling & Equipment) - 2.3%
1,500,000 A-/A3 Nabors Industries Inc., 6.8%, 4/15/04 $ 1,450,575
750,000 B+/B1 Parker Drilling Co., 9.75%, 11/15/06 723,750
1,000,000 BB-/Ba3 RBF Finance Co., 11.0%, 3/15/06 1,075,000
-----------
$ 3,249,325
-----------
Oil & Gas (Production/Exploration) - 2.8%
1,000,000 BB/Ba2 EOTT Energy Partners L.P., 11.0%, 10/1/09 $ 1,010,000
2,000,000 BB-/Ba2 Gulf Canada Resources Ltd., 9.625%,
7/1/05 2,044,680
975,000 BB+/Ba1 Santa Fe Snyder Corp., 8.05%, 6/15/04 965,182
-----------
$ 4,019,862
-----------
Oil & Gas (Refining & Marketing) - 0.7%
1,000,000 BBB/Baa2 Ashland Oil Co., 8.8%, 11/15/12 $ 1,029,670
-----------
Total Energy $13,248,398
-----------
Financial - 18.4%
Banks (Major Regional) - 3.6%
1,000,000 AA-/Aa3 Barclays North America Capital Corp.,
9.75%, 5/15/21 $ 1,067,930
1,550,000 A-/A2 Corestates Capital Corp., 9.375%,
4/15/03 1,605,258
2,000,000 A+/A2 Mellon Bank NA, 7.375%, 5/15/07 1,952,440
500,000 A/A1 Republic New York Corp., 9.3%, 6/1/21 544,505
-----------
$ 5,170,133
-----------
Banks (Money Center) - 0.7%
1,000,000 AA-/Aa3 National Westminster Bancorp, Inc.,
9.375%, 11/15/03 $ 1,062,490
-----------
Banks (Regional) - 1.4%
2,000,000 A+/A1 Bank of Montreal, 7.8%, 4/1/07 $ 2,009,260
-----------
12 The accompanying notes are an integral part of these financial statements.
Pioneer Bond Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
S&P's/Moody's
Principal Ratings
Amount (unaudited) Value
Consumer Finance - 3.0%
$1,000,000 BB+/Baa3 Capital One Financial Corp., 7.125%,
8/1/08 $ 901,000
3,000,000 A+/A1 Ford Capital BV, 9.5%, 6/1/10 3,336,660
-----------
$ 4,237,660
-----------
Financial (Diversified) - 6.8%
2,500,000 A+/A2 American General Finance Corp., 8.125%,
8/15/09 $ 2,513,675
1,100,000 A+/A1 Associates Corp., 8.15%, 8/1/09 1,105,005
1,000,000 BBB+/Baa1 AvalonBay Communities Inc., 6.8%,
7/15/06 933,510
1,000,000 BBB-/Baa3 Colonial Realty L.P., 1.0%, 7/14/07 898,610
1,500,000 A/A3 Deere (John) Capital Corp., 8.625%,
8/1/19 1,469,400
1,500,000 A-/A3 Hertz Corp., 6.25%, 3/15/09 1,352,625
1,500,000 BBB/Baa3 Mack-Cali Realty, 7.25%, 3/15/9 1,360,755
-----------
$ 9,633,580
-----------
Insurance (Property/Casualty) - 2.9%
1,500,000 AAA/Aa1 GEICO Corp., 9.15%, 9/15/21 $ 1,584,360
1,535,000 AA/Aa2 National Re Corp., 8.85%, 1/15/59 1,598,979
1,000,000 BBB+/Baa1 W.R. Berkley, 8.7%, 1/1/22 938,600
-----------
$ 4,121,939
-----------
Total Financial $26,235,062
-----------
Healthcare - 3.9%
Healthcare (Diversified) - 0.9%
1,175,000 B/B3 King Pharmaceutical Inc., 10.75%,
2/15/09 $ 1,216,125
-----------
Healthcare (Hospital Management) - 0.8%
375,000 BB+/Ba2 Columbia/HCA Healthcare Corp., 7.25%,
5/20/08 $ 334,478
1,000,000 BB-/Ba3 Tenet Healthcare Corp., 8.125%, 12/1/08 920,000
-----------
$ 1,254,478
-----------
Healthcare (Medical Products/Supplies) - 2.2%
1,070,000 BB+/Ba1 Beckman Instruments, Inc., 7.05%, 6/1/26 $ 1,002,579
750,000 NR/NR Bio-Rad Labs Inc., 11.625%, 2/15/07 772,500
The accompanying notes are an integral part of these financial statements. 13
Pioneer Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/00 (continued)
- --------------------------------------------------------------------------------
S&P's/Moody's
Principal Ratings
Amount (unaudited) Value
Healthcare (Medical Products/Supplies) - (continued)
$1,500,000 A-/Baa1 Guidant Corp., 6.15%, 2/15/06 $ 1,392,150
-----------
$ 3,167,229
-----------
Total Healthcare $ 5,637,832
-----------
Technology - 0.6%
Computers (Hardware) - 0.6%
900,000 BBB+/Baa1 Sun Microsystems Inc., 7.65%, 8/15/09 $ 891,954
-----------
Total Technology $ 891,954
-----------
Transportation - 5.9%
Airfreight - 1.5%
2,000,000 BBB+/A3 Federal Express Corp., 8.4%, 3/23/10 $ 2,067,180
-----------
Airlines - 3.7%
1,481,649 BBB/A2 American Airlines, Inc., 9.71%, 1/2/07 $ 1,579,838
1,000,000 BB/Ba2 Northwest Airlines, Inc., 8.52%, 4/7/04 931,770
1,876,673 A/A1 Southwest Airlines Co., 7.67%, 1/2/14 1,884,968
1,000,000 BB+/Baa3 United Air Lines, Inc., 9.125%, 1/15/12 935,900
-----------
$ 5,332,476
-----------
Railroads - 0.7%
1,000,000 BBB+/Baa1 Norfolk Southern Corp., 9.0%, 3/1/21 $ 1,068,570
-----------
Total Transportation $ 8,468,226
-----------
Utilities - 4.1%
Electric Companies - 1.4%
1,000,000 BBB-/Baa3 Great Lakes Power Inc., 8.3%, 3/1/05 $ 987,770
1,000,000 A/A2 Virginia Electric and Power Co., 8.75%,
4/1/21 1,029,040
-----------
$ 2,016,810
-----------
Natural Gas - 2.7%
1,000,000 BBB-/Baa2 KN Energy Inc., 6.45%, 11/30/01 $ 983,510
1,000,000 A-/Baa1 Northern Natural Gas, 7.0%, 6/1/11
(144A) 943,470
1,000,000 A/A2 Oneok, Inc., 6.0%, 2/1/09 876,060
1,000,000 BBB/Baa2 Sonat Inc., 7.625%, 7/15/11 976,610
-----------
$ 3,779,650
-----------
Total Utilities $ 5,796,460
-----------
Total Corporate Bonds
(Cost $101,261,252) $94,930,985
-----------
14 The accompanying notes are an integral part of these financial statements.
Pioneer Bond Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount Value
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS - 29.5%
$ 12,930 Federal Home Loan Mortgage Corp.,
10.0%, 11/1/02 $ 13,041
25,501 Federal Home Loan Mortgage Corp.,
10.5%, 4/1/19 27,323
32,862 Federal Home Loan Mortgage Corp.,
REMIC Series 1988-24B, 9.5%, 1/15/05 33,517
118,142 Federal National Mortgage Association,
11.0%, 6/1/19 129,164
27,953 Federal National Mortgage Association,
10.0%, 7/1/19 29,547
169,717 Federal National Mortgage Association,
REMIC 1989-19A, 10.3%, 4/25/19 179,837
7,751 Federal National Mortgage Association,
REMIC 1989-19B, 10.3%, 4/25/19 8,439
21,024 Government National Mortgage Association,
9.5%, 5/15/20 21,851
193,966 Government National Mortgage Association,
10.0%, 1/15/18 to 7/15/20 205,012
8,441,987 Government National Mortgage Association,
8.0%, 11/15/29 to 1/15/30 8,537,465
9,316,210 Government National Mortgage Association,
7.5%, 5/15/27 to 2/15/30 9,254,545
8,680,904 Government National Mortgage Association,
7.0%, 7/15/29 to 12/15/30 8,447,293
66,619 Government National Mortgage Association I,
10.0%, 1/15/06 67,862
2,398,325 Government National Mortgage Association I,
8.0%, 5/15/30 2,425,450
30,038 Government National Mortgage Association II,
9.5%, 12/20/20 31,003
27,514 Government National Mortgage Association,
Midget, 10.0%, 5/15/04 28,035
1,500,000 Government National Mortgage Association,
REMIC Series 1998-21, 6.5%, 10/20/11 1,429,125
3,000,000 U.S. Treasury Bonds, 7.5%, 11/15/16 3,380,550
3,000,000 U.S. Treasury Bonds, 8.0%, 11/15/21 3,619,560
The accompanying notes are an integral part of these financial statements. 15
Pioneer Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/00 (continued)
- --------------------------------------------------------------------------------
S&P's/Moody's
Principal Ratings
Amount (unaudited) Value
U.S. Government and Agency
Obligations - (continued)
$ 400,000 U.S. Treasury Notes, 6.375%, 9/30/01 $ 399,436
1,000,000 U.S. Treasury Notes, 5.875%, 11/15/04 985,700
2,000,000 U.S. Treasury Notes, 7.0%, 7/15/06 2,073,280
750,000 U.S. Treasury Notes, 6.25%, 8/15/23 754,545
------------
Total U.S. Government and
Agency Obligations
(Cost $41,831,247) $ 42,081,580
------------
FOREIGN GOVERNMENT SPONSORED - 1.9%
1,500,000 A+/A2 Hydro-Quebec, 8.0%, 2/1/13 $ 1,565,595
1,000,000 A/A2 Province of Saskatchewan, 9.375%,
12/15/20 1,180,460
------------
Total Foreign Government Sponsored
(Cost $2,740,700) $ 2,746,055
------------
TOTAL INVESTMENT IN SECURITIES - 100.0%
(Cost $149,176,608) (a)(b) $142,948,704
============
144A Security is exempt from registration under Rule 144A of the Securities Act
of 1933. Such securities may be resold normally to qualified institutional
buyers in a transaction exempt from registration. At June 30, 2000, the
value of these securities amounted to $4,770,960 or 3.3% of total net
assets.
(a) At June 30, 2000, the net unrealized loss on investments, based on cost
for federal income tax purposes of $149,355,671 was as follows:
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $ 778,859
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (7,185,826)
-----------
Net unrealized loss $(6,406,967)
===========
(b) At June 30, 2000, the Fund had a net capital loss carryforward of
$6,644,799 which will expire between 2003 and 2008 if not utilized.
Note: The Fund's investments in mortgage-backed securities of the Government
National Mortgage Association (GNMA) and Federal National Mortgage
Association (FNMA) are interests in separate pools of mortgages. All
separate investments in these issuers which have the same coupon rate have
been aggregated for the purpose of presentation in this schedule of
investments.
Purchases and sales of securities (excluding temporary cash investments)
for the year ended June 30, 2000 were as follows:
Purchases Sales
----------- ------------
Long-term U.S. Government $76,112,571 $108,438,303
Other Long-term Securities 23,284,284 22,376,772
16 The accompanying notes are an integral part of these financial statements.
Pioneer Bond Fund
- --------------------------------------------------------------------------------
BALANCE SHEET 6/30/00
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (cost $149,176,608) $142,948,704
Cash 494,315
Receivables -
Fund shares sold 404,989
Interest 2,887,327
Other 477
------------
Total assets $146,735,812
------------
LIABILITIES:
Payables -
Fund shares repurchased $ 389,747
Dividends 208,957
Due to affiliates 142,183
Accrued expenses 113,160
------------
Total liabilities $ 854,047
------------
NET ASSETS:
Paid-in capital $162,604,600
Accumulated undistributed net investment income 55,980
Accumulated net realized loss on investments (10,550,911)
Net unrealized loss on investments (6,227,904)
------------
Total net assets $145,881,765
============
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $102,348,683/12,077,569 shares) $ 8.47
============
Class B (based on $37,268,744/4,413,872 shares) $ 8.44
============
Class C (based on $6,264,338/740,876 shares) $ 8.46
============
MAXIMUM OFFERING PRICE:
Class A $ 8.87
============
The accompanying notes are an integral part of these financial statements. 17
Pioneer Bond Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended 6/30/00
INVESTMENT INCOME:
Interest $13,264,833
-----------
EXPENSES:
Management fees $844,331
Transfer agent fees
Class A 294,305
Class B 160,089
Class C 55,266
Distribution fees
Class A 292,375
Class B 433,236
Class C 85,925
Administrative fees 44,975
Custodian fees 43,314
Registration fees 42,889
Professional fees 84,396
Printing 42,644
Fees and expenses of nonaffiliated trustees 25,432
Miscellaneous 9,495
--------
Total expenses $ 2,458,672
Less fees paid indirectly (39,376)
-----------
Net expenses $ 2,419,296
-----------
Net investment income $10,845,537
-----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments $(6,904,742)
Change in net unrealized loss on investments (2,601,649)
-----------
Net loss on investments $(9,506,391)
-----------
Net increase in net assets resulting from operations $ 1,339,146
===========
18 The accompanying notes are an integral part of these financial statements.
Pioneer Bond Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Years Ended 6/30/00 and 6/30/99
Year Ended Year Ended
FROM OPERATIONS: 6/30/00
6/30/99
Net investment income $ 10,845,537 $ 10,582,259
Net realized gain (loss) on investments (6,904,742) 937,466
Change in net unrealized gain or loss on investments (2,601,649) (10,260,323)
------------ ------------
Net increase in net assets resulting
from operations $ 1,339,146 $ 1,259,402
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ($0.58 and $0.56 per share, respectively) $ (7,812,946) $ (7,701,473)
Class B ($0.51 and $0.48 per share, respectively) (2,547,821) (2,283,992)
Class C ($0.46 and $0.48 per share, respectively) (456,721) (599,723)
------------ ------------
Total distributions to shareholders $(10,817,488) $(10,585,188)
------------ ------------
FROM FUND SHARE TRANSACTION
Net proceeds from sale of shares $ 90,338,479 $220,458,929
Reinvestment of distributions 8,109,094 7,689,631
Cost of shares repurchased (132,759,583) (182,879,191)
------------ ------------
Net increase (decrease) in net assets resulting
from fund share transactions $(34,312,010) $ 45,269,369
------------ ------------
Net increase (decrease) in net assets $(43,790,352) $ 35,943,583
NET ASSETS:
Beginning of year 189,672,117 153,728,534
------------ ------------
End of year (including accumulated undistributed net
investment income of $55,980 and $12,118,
respectively) $145,881,765 $189,672,117
============ ============
CLASS A '00 Shares '00 Amount '99 Shares '99 Amount
Shares sold 6,961,511 $ 59,973,090 16,837,950 $157,202,981
Reinvestment of distributions 710,968 6,121,497 638,020 5,941,487
Less shares repurchased (10,081,538) (86,763,886) (15,191,420) (141,713,341)
----------- ------------ ----------- ------------
Net increase (decrease) (2,409,059) $(20,669,299) 2,284,550 $ 21,431,127
----------- ------------ ----------- ------------
CLASS B
Shares sold 1,752,374 $ 15,137,966 4,694,027 $ 43,795,349
Reinvestment of distributions 195,908 1,681,866 160,668 1,489,392
Less shares repurchased (3,126,491) (26,892,331) (2,573,656) (23,845,332)
----------- ------------ ----------- ------------
Net increase (decrease) (1,178,209) $(10,072,499) 2,281,039 $ 21,439,409
----------- ------------ ----------- ------------
CLASS C
Shares sold 1,740,006 $ 15,227,423 2,092,821 $ 19,460,599
Reinvestment of distributions 35,624 305,731 27,934 258,752
Less shares repurchased (2,200,860) (19,103,366) (1,869,099) (17,320,518)
----------- ------------ ----------- ------------
Net increase (decrease) (425,230) $ (3,570,212) 251,656 $ 2,398,833
----------- ------------ ----------- ------------
The accompanying notes are an integral part of these financial statements. 19
Pioneer Bond Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 6/30/00
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
6/30/00 6/30/99 6/30/98 6/30/97 6/30/96
CLASS A
Net asset value, beginning of year $ 8.94 $ 9.37 $ 9.07 $ 9.08 $ 9.35
-------- -------- -------- ------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.58 $ 0.56 $ 0.59 $ 0.63 $ 0.64
Net realized and unrealized gain (loss) on investments (0.47) (0.43) 0.30 (0.01) (0.27)
-------- -------- -------- ------- --------
Net increase from investment operations $ 0.11 $ 0.13 $ 0.89 $ 0.62 $ 0.37
Distributions to shareholders:
Net investment income (0.58) (0.56) (0.59) (0.63) (0.64)
-------- -------- -------- ------- --------
Net increase (decrease) in net asset value $ (0.47) $ (0.43) $ 0.30 $ (0.01) $ (0.27)
-------- -------- -------- ------- --------
Net asset value, end of year $ 8.47 $ 8.94 $ 9.37 $ 9.07 $ 9.08
======== ======== ======== ======= ========
Total return* 1.30% 1.35% 10.04% 7.09% 4.02%
Ratio of net expenses to average net assets+ 1.18% 1.04% 1.18% 1.14% 1.19%
Ratio of net investment income to average net assets+ 6.68% 6.01% 6.34% 6.97% 6.80%
Portfolio turnover rate 60% 46% 44% 48% 39%
Net assets, end of year (in thousands) $102,349 $129,487 $114,326 $98,310 $101,957
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.15% 1.02% 1.17% 1.12% 1.18%
Net investment income 6.71% 6.03% 6.35% 6.99% 6.81%
* 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.
+ Ratios assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
20
Pioneer Bond Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 6/30/00
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
6/30/00 6/30/99 6/30/98 6/30/97 6/30/96
CLASS B
Net asset value, beginning of year $ 8.91 $ 9.33 $ 9.03 $ 9.02 $ 9.31
------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.50 $ 0.48 $ 0.51 $ 0.56 $ 0.57
Net realized and unrealized gain (loss) on investments (0.46) (0.42) 0.31 (0.01) (0.28)
------- ------- ------- ------- -------
Net increase from investment operations $ 0.04 $ 0.06 $ 0.82 $ 0.55 $ 0.29
Distributions to shareholders:
Net investment income (0.51) (0.48) (0.52) (0.54) (0.57)
In excess of net investment income - - - - (0.01)
------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ (0.47) $ (0.42) $ 0.30 $ 0.01 $ (0.29)
------- ------- ------- ------- -------
Net asset value, end of year $ 8.44 $ 8.91 $ 9.33 $ 9.03 $ 9.02
======= ======= ======= ======= =======
Total return* 0.48% 0.57% 9.21% 6.24% 3.15%
Ratio of net expenses to average net assets+ 2.05% 1.86% 1.98% 1.97% 1.96%
Ratio of net investment income to average net assets+ 5.81% 5.18% 5.52% 6.12% 6.01%
Portfolio turnover rate 60% 46% 44% 48% 39%
Net assets, end of year (in thousands) $37,269 $49,816 $30,888 $20,104 $14,843
Ratios assuming reduction for fees paid indirectly:
Net expenses 2.03% 1.83% 1.97% 1.96% 1.94%
Net investment income 5.83% 5.21% 5.53% 6.13% 6.03%
* 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.
+ Ratios assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
21
Pioneer Bond Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 6/30/00
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended 1/31/96 to
6/30/00 6/30/99 6/30/98 6/30/97 6/30/96
CLASS C
Net asset value, beginning of period $ 8.89 $ 9.31 $ 9.02 $ 9.02 $ 9.54
------ ------- ------ ------ ------
Increase (decrease) from investment operations:
Net investment income $ 0.48 $ 0.48 $ 0.52 $ 0.54 $ 0.23
Net realized and unrealized gain (loss) on investments (0.45) (0.42) 0.29 - (0.52)
------- ------- ------ ------ ------
Net increase (decrease) from investment operations $ 0.03 $ 0.06 $ 0.81 $ 0.54 $(0.29)
Distributions to shareholders:
Net investment income (0.46) (0.48) (0.52) (0.54) (0.22)
In excess of net investment income - - - - (0.01)
------ ------- ------ ------ ------
Net increase (decrease) in net asset value $(0.43) $ (0.42) $ 0.29 $ - $(0.52)
------ ------- ------ ------ ------
Net asset value, end of period $ 8.46 $ 8.89 $ 9.31 $ 9.02 $ 9.02
====== ======= ====== ====== ======
Total return* 0.36% 0.60% 9.12% 6.13% (3.00)%
Ratio of net expenses to average net assets+ 2.32% 1.86% 1.90% 2.05% 2.18%**
Ratio of net investment income to average net assets+ 5.53% 5.17% 5.58% 5.83% 5.79%**
Portfolio turnover rate 60% 46% 44% 48% 39%
Net assets, end of period (in thousands) $6,264 $10,369 $8,515 $4,588 $ 343
Ratios assuming reduction for fees paid indirectly:
Net expenses 2.30% 1.83% 1.89% 1.92% 2.13%**
Net investment income 5.55% 5.20% 5.59% 5.96% 5.84%**
* 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.
The accompanying notes are an integral part of these financial statements.
22
Pioneer Bond Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/00
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Bond Fund (the Fund) is a Delaware business trust registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The investment objective of the Fund is to seek current income
consistent with preservation of capital.
The Fund offers three classes of shares - Class A, Class B and Class C shares.
Shares of Class A, Class B and Class C each represent an interest in the same
portfolio of investments of the Fund and have equal rights to voting,
redemptions, dividends and liquidation, except that each class of shares can
bear different transfer agent and distributions fees and has exclusive voting
rights with respect to the distribution plans that have been adopted by Class A,
Class B, and Class C shareholders, respectively.
The Fund's financial statements have been prepared in conformity with generally
accepted accounting principles that require the management of the Fund to, among
other things, make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates. The following is a summary of significant accounting policies
consistently followed by the Fund, which are in conformity with those generally
accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Securities are valued
at prices supplied by independent pricing services, which consider such
factors as Treasury spreads, yields, maturities and ratings. Valuations may
be supplemented by dealers and other sources, as required. Principal
amounts of mortgage-backed securities are adjusted for monthly paydowns.
Premium and discount related to certain mortgage-backed securities are
amortized or accreted in proportion to the underlying monthly paydowns.
Interest income, including interest on income bearing cash accounts, is
recorded on the accrual basis. Temporary cash investments are valued at
amortized cost.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
It is the Fund's practice to first select for sale those securities that
have the highest cost and also qualify for long-term capital gain or loss
treatment for tax purposes.
23
Pioneer Bond Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/00 (continued)
- --------------------------------------------------------------------------------
B. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareholders. Therefore, no federal income tax provision is required.
The characterization of distributions to shareholders for financial
reporting purposes is determined in accordance with federal income tax
rules. Therefore, the source of the Fund's distributions may be shown in
the accompanying financial statements as either from or in excess of net
investment income or net realized gain on investment transactions, or from
paid-in-capital, depending on the type of book/tax differences that may
exist.
At June 30, 2000, the Fund has reclassified $15,813 from accumulated net
realized loss on investments to accumulated undistributed net investment
income. The reclassification has no impact on the net asset value of the
Fund and is designed to present the Fund's capital accounts on a tax basis.
C. Fund Shares
The Fund records sales and repurchases of its shares as of trade date.
Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the
Fund and an indirect subsidiary of The Pioneer Group, Inc. (PGI), earned
$20,714 in underwriting commissions on the sale of fund shares for the year
ended June 30, 2000.
D. Class Allocations
Distribution fees are calculated based on the average daily net asset
values attributable to Class A, Class B, and Class C shares of the Fund,
respectively. Shareholders of each class share all expenses and fees paid
to the transfer agent, Pioneering Services Corporation (PSC), for their
services, which are allocated based on the number of accounts in each class
and the ratable allocation of related out-of-pocket expense (see Note 3).
Income, common expenses, and realized and unrealized gains and losses are
calculated at the Fund level and allocated daily to each class of shares
based on the respective percentage of adjusted net assets at the beginning
of the day.
The Fund declares as daily dividends substantially all of its net
investment income. All dividends are paid on a monthly basis. Short-term
capital gain distributions, if any, may be declared with the daily
dividends.
24
Pioneer Bond Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Distributions to shareholders are recorded as of the ex-dividend date.
Distributions paid by the Fund with respect to each class of shares are
calculated in the same manner, at the same time, and in the same amount,
except that Class A, Class B and Class C shares can bear different transfer
agent and distribution fees.
2. Management Agreement
Pioneer Investment Management, Inc. (PIM), the Fund's investment adviser,
manages the Fund's portfolio and is a wholly owned subsidiary of PGI. Management
fees are calculated daily at the annual rate of 0.50% of the Fund's average
daily net assets.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting, and insurance
premiums, are paid by the Fund. At June 30, 2000, $63,758 was payable to PIM
related to management fees, administrative fees and certain other services.
3. Transfer Agent
PSC, a wholly owned subsidiary of PGI, provides substantially all transfer agent
and shareholder services to the Fund at negotiated rates. Included in due to
affiliates is $31,736 in transfer agent fees payable to PSC at June 30, 2000.
4. Distribution Plans
The Fund adopted a Plan of Distribution for each class of shares (Class A Plan,
Class B Plan and Class C Plan) in accordance with Rule 12b-1 of the Investment
Company Act of 1940. Pursuant to the Class A Plan, the Fund pays PFD a service
fee of up to 0.25% of the average daily net assets attributable to Class A
shares in reimbursement of its actual expenditures to finance activities
primarily intended to result in the sale of Class A shares. Pursuant to the
Class B Plan and the Class C Plan, the Fund pays PFD 1.00% of the average daily
net assets attributable to each class of shares. The fee consists of a 0.25%
service fee and a 0.75% distribution fee paid as compensation for personal
services and/or account maintenance services or distribution services with
regard to Class B and Class C shares. Included in due to affiliates is $46,689
in distribution fees payable to PFD at June 30, 2000.
In addition, redemptions of each class of shares may be subject to a contingent
deferred sales charge (CDSC). A CDSC of 1.00% may be imposed on redemptions of
certain net asset value purchases of Class A shares
25
Pioneer Bond Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/00 (continued)
- --------------------------------------------------------------------------------
within one year of purchase. Class B shares that are redeemed within six years
of purchase are subject to a CDSC at declining rates beginning at 4.00%, based
on the lower of cost or market value of shares being redeemed. Redemptions of
Class C shares within one year of purchase are subject to a CDSC of 1.00%.
Proceeds from the CDSCs are paid to PFD. For the year ended June 30, 2000, CDSCs
in the amount of $323,507 were paid to PFD.
5. Expense Offsets
The Fund has entered into certain expense offset arrangements resulting in a
reduction in the Fund's total expenses. For the year ended June 30, 2000, the
Fund's expenses were reduced by $39,376 under such arrangements.
26
Pioneer Bond Fund
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareowners and the Board of Trustees of Pioneer Bond Fund:
We have audited the accompanying balance sheet, including the schedule of
investments, of Pioneer Bond Fund as of June 30, 2000, and the related statement
of operations, the statements of changes in net assets, and the financial
highlights for the periods presented. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of June 30, 2000 by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer Bond Fund as of June 30, 2000, the results of its operations, the
changes in its net assets, and the financial highlights for the periods
presented, in conformity with accounting principles generally accepted in the
United States.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
August 11, 2000
27
Pioneer Bond Fund
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
Trustees Officers Trustees
John F. Cogan, Jr. John F. Cogan, Jr., Chairman and
Mary K. Bush President
Richard H. Egdahl, M.D. David D. Tripple, Executive Vice President
Margaret B.W. Graham Sherman B. Russ, Vice President
Marguerite A. Piret Eric W. Reckard, Treasurer
David D. Tripple Joseph P. Barri, Secretary
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Public Accountants
Arthur Andersen LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneering Services Corporation
28
Pioneer Bond Fund
- --------------------------------------------------------------------------------
THE PIONEER FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
For information about any Pioneer mutual fund, please contact your investment
professional, or call Pioneer at 1-800-225-6292. Ask for a free fund information
kit, which includes a fund prospectus. Please read the prospectus carefully
before you invest or send money.
Growth Funds Income Funds
United States Taxable
Pioneer Growth Shares Pioneer America Income Trust
Pioneer Micro-Cap Fund Pioneer Bond Fund
Pioneer Mid-Cap Fund Pioneer High Yield Fund
Pioneer Mid-Cap Value Fund Pioneer Limited Maturity Bond Fund
Pioneer Science & Technology Fund Pioneer Strategic Income Fund
Pioneer Small Company Fund
Pioneer Tax-Managed Fund Tax-Free
Pioneer Tax-Free Income Fund
International/Global
Pioneer Emerging Markets Fund Money Market Fund
Pioneer Europe Fund Pioneer Cash Reserves Fund*
Pioneer Indo-Asia Fund
Pioneer International Growth Fund
Pioneer World Equity Fund
Growth and Income Funds
Pioneer Fund
Pioneer II
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Real Estate Shares
* An investment in the Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Fund seeks to preserve the value of your investment at $1 per share, it is
possible to lose money by investing in the Fund.
29
- --------------------------------------------------------------------------------
HOW TO CONTACT PIONEER
- --------------------------------------------------------------------------------
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
Call us for:
Account information, including existing accounts,
new accounts, prospectuses, applications
and service forms 1-800-225-6292
FactFone(SM) for automated fund yields, prices,
account information and transactions 1-800-225-4321
Retirement plans information 1-800-622-0176
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
Write to us:
Pioneering Services Corporation
60 State Street
Boston, Massachusetts 02109
Our toll-free fax 1-800-225-4240
Our Internet e-mail address ask.pioneer@piog.com
(for general questions about Pioneer only)
Visit our web site: www.pioneerfunds.com
This report must be preceded or accompanied by a current
Fund prospectus.
[PIONEER LOGO]
Pioneer Investment Management, Inc.
60 State Street 8636-00-0800
Boston, Massachusetts 02109 (C) Pioneer Funds Distributor, Inc.
www.pioneerfunds.com [recycle bug] Printed on Recycled Paper
[PIONEER Investments(R) LOGO]
Pioneer Bond
Fund
SEMIANNUAL REPORT 12/31/00
Table of Contents
- --------------------------------------------------------------------------------
Letter from the President 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 6
Schedule of Investments 9
Financial Statements 18
Notes to Financial Statements 24
Results of Shareowner Meeting 28
Trustees, Officers and Service Providers 29
Pioneer Bond Fund
LETTER FROM THE PRESIDENT 12/31/00
Dear Shareowner,
- --------------------------------------------------------------------------------
The year 2000 ended amid turbulent markets and rancorous politics as the
election drama played out against a background of exceptional market volatility.
By the time you read this letter the new administration will be in place in
Washington, but it's less clear what will be happening on Wall Street. At
Pioneer we recognize that economics, not politics, is driving today's market
activity. Signs of a slowing economy and changing investor preferences are
everywhere. Periods like this accentuate the benefits of discipline and
fundamental analysis.
Meanwhile, value stocks have been staging a comeback after years of investor
obsession with growth. A slowing economy tends to bring valuations down to
earth, and Pioneer's style has always been to focus on value - we spend every
day searching for stocks and bonds whose potential is going unrecognized in the
marketplace.
As investor attention shifts from growth to value or from stocks to bonds, one
of the best suggestions I can make is that you set aside time to meet with your
investment professional. That meeting could be especially important if it has
been a while since you last reviewed your overall portfolio. Use the opportunity
to reevaluate your retirement plan contributions and decide whether a Roth or a
Traditional IRA is the better choice for you. Your financial professional will
also help you examine and assess your portfolio's exposure to different
investment categories in today's fast-changing markets.
An important announcement from Pioneer
I'm very happy to report that, on October 24, 2000, Pioneer Investment
Management became a wholly owned subsidiary of UniCredito Italiano S.p.A., one
of Italy's largest and most successful banking groups. Early in 2001, all of
UniCredito's investment operations will be combined to form Pioneer Global Asset
Management S.p.A., which through Pioneer and other subsidiaries will manage over
$110 billion for global individual and institutional clients under the name
Pioneer Investments[RegTM]. The new Pioneer Global will bring Pioneer greater
access to analytical resources that complement our broad set of investment
skills, reinforcing Pioneer's tradition of fundamental investment analysis and
sound long-term portfolio management. We believe fund shareholders will benefit
from this greater integration.
All of us at Pioneer appreciate your decision to invest with us and look forward
to helping you reach your financial goals.
Respectfully,
/s/ David Tripple
David Tripple
Pioneer Investment Management, Inc.
1
Pioneer Bond Fund
PORTFOLIO SUMMARY 12/31/00
Portfolio Quality
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[Start Pie Chart]
Treasury/Agency 26.8%
BBB 20.3%
BB 10.1%
B & Lower 8.8%
AA 6.0%
AAA 2.5%
Commercial Paper 0.5%
[End Pie Chart]
Portfolio Maturity
- --------------------------------------------------------------------------------
(Effective life as a percentage of total investment portfolio)
[Start Pie Chart]
4-6 Years 29.8%
6-8 Years 16.8%
8+ Years 15.6%
3-4 Years 15.4%
1-3 Years 15.3%
0-1 Year 7.1%
[End Pie Chart]
10 Largest Holdings
- --------------------------------------------------------------------------------
(As a percentage of long-term holdings)
1. U.S. Treasury Bonds, 8.0%, 11/15/21 2.90%
2. U.S. Treasury Bonds, 7.5%, 11/15/16 2.70
3. Ford Capital BV, 9.5%, 6/1/10 2.57
4. Government National Mortgage Association, 7.5%, 2/15/30 2.46
5. Government National Mortgage Association, 7.0%, 8/15/29 2.44
6. U.S. Treasury Notes, 5.75%, 8/15/10 2.23
7. Government National Mortgage Association I, 7.0%, 7/15/29 2.00
8. Government National Mortgage Association, 8.0%, 5/15/30 1.82
9. Continental Cablevision, Inc., 9.5%, 8/1/13 1.80
10. Time Warner, Inc., 9.15%, 2/1/23 1.73
2 Fund holdings will vary for other periods.
Pioneer Bond Fund
PERFORMANCE UPDATE 12/31/00 CLASS A SHARES
Share Prices and Distributions
- --------------------------------------------------------------------------------
Net Asset Value
per Share 12/31/00 6/30/00
$8.72 $8.47
Distributions per Share Income Short-Term Long-Term
(6/30/00 - 12/31/00) Dividends Capital Gains Capital Gains
$0.289 - -
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Bond Fund at public offering price, compared to the growth of the
Lehman Brothers Government/Credit Index.
Average Annual Total Returns
(As of December 31, 2000)
Net Asset Public Offering
Period Value Price*
10 Years 7.06 6.57
5 Years 4.70 3.75
1 Year 8.45 3.52
* Reflects deduction of the maximum 4.5% sales charge at the beginning of
the period and assumes reinvestment of distributions at net asset value.
[Mountain chart]
Lehman Brothers Government/
Pioneer Bond Fund* Credit Index**
12/90 $9,550 $10,000
$11,034 $11,610
12/92 $11,904 $12,490
$13,265 $13,871
12/94 $12,708 $13,384
$15,016 $15,961
12/96 $15,310 $16,421
$16,712 $18,023
12/98 $17,998 $19,731
$17,421 $19,306
12/00 $18,894 $21,594
[End mountain chart]
The Lehman Brothers Government/Credit Index is an unmanaged, composite index of
the U.S. bond market. The Index is composed of the Lehman Brothers Government
Bond Index and the Lehman Brothers Credit Index. The Lehman Brothers
Government/Credit Index is split into three composites: Aggregate, Intermediate
(maturities up to 10 years) and Long-Term Maturities (of 10 years and greater).
Only the Aggregate Index has market values. Index returns are calculated
monthly, assume reinvestment of dividends and, unlike Fund returns, do not
reflect any fees, expenses or sales charges. You cannot invest directly in the
Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
** The name of the Lehman Brothers Government/Corporate Bond Index was changed
to the Lehman Brothers Government/Credit Index on July 1, 2000.
3
Pioneer Bond Fund
PERFORMANCE UPDATE 12/31/00 CLASS B SHARES
Share Prices and Distributions
- --------------------------------------------------------------------------------
Net Asset Value
per Share 12/31/00 6/30/00
$8.69 $8.44
Distributions per Share Income Short-Term Long-Term
(6/30/00 - 12/31/00) Dividends Capital Gains Capital Gains
$0.238 - -
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Bond Fund, compared to the growth of the Lehman Brothers
Government/Credit Index.
Average Annual Total Returns
(As of December 31, 2000)
If If
Period Held Redeemed*
Life-of-Fund 5.17% 5.17%
(4/4/94)
5 Years 3.85 3.69
1 Year 7.30 3.30
* Reflects deduction of the maximum applicable contingent deferred sales charge
(CDSC) at the end of the period and assumes reinvestment of distributions. The
maximum CDSC of 4% declines over six years.
[Mountain chart]
Lehman Brothers Government/
Pioneer Bond Fund* Credit Index**
4/94 $10,000 $10,000
$9,927 $9,958
12/94 $9,938 $10,044
$10,976 $11,229
$11,637 $11,977
$11,321 $11,752
12/96 $11,766 $12,325
$12,028 $12,663
$12,753 $13,527
$13,136 $14,091
12/98 $13,622 $14,808
$13,211 $14,471
$13,098 $14,490
$13,275 $15,096
12/00 $14,054 $16,208
[End mountain chart]
+ Index comparison begins 4/30/94. The Lehman Brothers Government/Credit Index
is an unmanaged, composite index of the U.S. bond market. The Index is
composed of the Lehman Brothers Government Bond Index and the Lehman
Brothers Credit Index. The Lehman Brothers Government/Credit Index is split
into three composites: Aggregate, Intermediate (maturities up to 10 years)
and Long-Term Maturities (of 10 years and greater). Only the Aggregate
Index has market values. Index returns are calculated monthly, assume
reinvestment of dividends and, unlike Fund returns, do not reflect any
fees, expenses or sales charges. You cannot invest directly in the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than
their original cost.
** The name of the Lehman Brothers Government/Corporate Bond Index was changed
to the Lehman Brothers Government/Credit Index on July 1, 2000.
4
Pioneer Bond Fund
PERFORMANCE UPDATE 12/31/00 CLASS C SHARES
Share Prices and Distributions
- --------------------------------------------------------------------------------
Net Asset Value
per Share 12/31/00 6/30/00
$8.70 $8.46
Distributions per Share Income Short-Term Long-Term
(6/30/00 - 12/31/00) Dividends Capital Gains Capital Gains
$0.261 - -
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Bond Fund, compared to the growth of the Lehman Brothers
Government/Credit Index.
Average Annual Total Returns
(As of December 31, 2000)
If If
Period Held Redeemed*
Life-of-Fund 3.82% 3.82%
(1/31/96)
1 Year 7.55 7.55
* Assumes reinvestment of distributions. A 1% contingent deferred sales charge
(CDSC) applies to redemptions made within one year of purchase.
[Mountain chart]
Lehman Brothers Government/
Pioneer Bond Fund* Credit Index**
1/96 $10,000 $10,000
$9,679 $9,706
$9,700 $9,750
$9,831 $9,922
12/96 $10,081 $10,225
$9,971 $10,137
$10,294 $10,505
$10,607 $10,873
12/97 $10,904 $11,222
$11,024 $11,393
$11,233 $11,691
$11,700 $12,269
12/98 $11,653 $12,286
$11,515 $12,139
$11,300 $12,007
$11,277 $12,071
12/99 $11,179 $12,022
$11,246 $12,345
$11,341 $12,523
$11,621 $12,883
12/00 $12,023 $13,446
[End mountain chart]
The Lehman Brothers Government/Credit Index is an unmanaged, composite index of
the U.S. bond market. The Index is composed of the Lehman Brothers Government
Bond Index and the Lehman Brothers Credit Index. The Lehman Brothers
Government/Credit Index is split into three composites: Aggregate, Intermediate
(maturities up to 10 years) and Long-Term Maturities (of 10 years and greater).
Only the Aggregate Index has market values. Index returns are calculated
monthly, assume reinvestment of dividends and, unlike Fund returns, do not
reflect any fees, expenses or sales charges. You cannot invest directly in the
Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
** The name of the Lehman Brothers Government/Corporate Bond Index was changed
to the Lehman Brothers Government/Credit Index on July 1, 2000.
5
Pioneer Bond Fund
PORTFOLIO MANAGEMENT DISCUSSION 12/31/00
Most domestic fixed income securities, with the exception of lower-rated
corporate bonds, performed well during the final six months of 2000,
outperforming stocks for the first time in several years. In the following
discussion, Kenneth J. Taubes details the factors that influenced Pioneer Bond
Fund's performance during the six months. Mr. Taubes, head of Pioneer's Fixed
Income Group, oversees the team responsible for the daily management of the
Fund.
Q: What factors most contributed to the Pioneer Bond Fund's dramatically
improved performance in the final six months of 2000?
A: Strong performance by the portfolio's higher grade bonds helped sustain
returns in a period of declining interest rates and rising prices for
high-quality securities. Performance also was helped by sector selection in
corporate bonds and by our decision to extend duration, which is a measure of
a bond's susceptibility to price changes as interest rates move up or down.
Most interest rates fell during the period, and declining interest rates tend
to raise the prices of longer-duration bond funds. At the end of the period,
effective duration was 5.06 years. Throughout the period, the Fund delivered
healthy, competitive income. On December 31, 2000, the Fund's 30-day SEC
yield on Class A shares was 6.20%. The Fund's Class A shares had a total
return of 6.47% at net asset value for the six-month period while Class B
shares returned 5.86% and Class C shares returned 6.01%. In comparison, the
average return for the same period of the 187 funds in Lipper Inc.'s
corporate debt A-rated category was 6.56%. (Lipper is an independent company
that tracks mutual fund performance.)
Q: What was the environment like for the six months?
A: It was very positive for U.S. government, mortgage-backed securities and
high-grade corporate bonds. As the six-month period progressed, long-term
and intermediate-term interest rates declined among higher quality
securities, pushing up their prices. For a time, long-term Treasury yields
actually fell to lower levels than the yields of short-term securities,
reversing the normal relationship in which yields tend to be higher as
maturities are longer. Prior to the six-month period, the Federal Reserve
Board had steadily raised short-term interest rates in an effort to help
6
Pioneer Bond Fund
head off inflation and slow economic growth. At the same time, a lower
federal deficit diminished the supply of long-term U.S. Treasuries,
encouraging yields of long- and intermediate-term securities to fall and
prices to rise. Yields also fell on longer-maturity bonds because investors
began to anticipate that the Federal Reserve eventually would reverse its
policy and begin to lower short-term interest rates. All these factors helped
the performance of high-quality securities, which tended to rise in price. In
contrast, lower-rated corporate bonds performed poorly. Investors worried
that a slowing economy would cut into the ability of corporations to meet
their bond obligations. As a result, prices of lower-rated corporate bonds
fell.
Q: How did this environment affect strategy?
A: We focused on intermediate Treasury and government agency securities, which
we believed would have the greatest performance potential in an environment
that favored high-quality bonds. Within the corporate sector, we focused on
higher-rated corporate securities, and de-emphasized sectors, such as
banking, which were vulnerable to credit risks in a slowing economy. All
these steps tended to help performance. On December 31, 2000, Treasuries and
agencies accounted for 26.8% of net assets, while corporate securities rated
A or higher comprised 33.5% of assets. We also invested in select domestic
high-yield bonds, which accounted for 18.9% of net assets. We believe high
yield bonds afford the Fund another element of diversification while
providing a source of generous income. Although these securities detracted
from performance on a total return basis, their impact was muted by good
security and sector selection.
At the end of the six-month period, average credit quality was investment-
grade at A.
Q: What is your outlook?
A: We think we should see an improved environment for investing in corporate
bonds. As we entered 2001, corporate bonds were priced very cheaply,
reflecting investors' desire to avoid credit risk as corporate profits were
slowing. In effect, investors have priced corporate securities as if they
expect a recession. If the economy continues to grow, corporate
7
Pioneer Bond Fund
PORTFOLIO MANAGEMENT DISCUSSION 12/31/00 (continued)
bonds would be a particularly good value. In January 2001, the Federal Reserve
Board lowered short-term interest rates by 1.00% to help head off a recession
and stabilize the economy. We expect the Fed to lower rates even further in the
months ahead. As interest rates come down, corporations could begin to realize
the benefits of the lower costs of financing. This development would work to the
economy's advantage and help improve the performance of corporate bonds. The
Fund, with its allocations to both investment-grade and high-yield corporate
bonds, is very well positioned to benefit as the economy stabilizes and
corporate bond prices recover.
8
Pioneer Bond Fund
SCHEDULE OF INVESTMENTS 12/31/00 (unaudited)
Principal S&P/Moody's
Amount Ratings Value
CONVERTIBLE CORPORATE BONDS - 1.1%
$ 800,000 B/B2 Mascotech, Inc., 4.5%, 12/15/03 $ 470,000
1,007,000 BB-/B2 Pogo Producing Co., 5.5%, 6/15/06 969,912
------------
Total Convertible Corporate Bonds
(Cost $1,468,178) $ 1,439,912
------------
COLLATERALIZED MORTGAGE
OBLIGATIONS - 1.3%
1,000,000 AAA/Aaa National Realty Finance 1999-A2,
6.074%, 1/15/08 $ 808,112
815,374 AAA/Aaa National Realty Finance 1999-A2,
6.48%, 1/15/09 997,656
------------
Total Collateralized Mortgage Obligations
(Cost $1,834,451) $ 1,805,768
------------
CORPORATE BONDS - 68.1%
Basic Materials - 4.3%
Chemicals (Diversified) - 0.7%
1,000,000 B+/B2 Huntsman ICI Chemicals, 10.125%,
7/1/09 $ 960,000
------------
Chemicals (Specialty) - 0.7%
1,000,000 BB/Ba3 Arco Chemical Co., 9.8%, 2/1/20 $ 880,000
------------
Iron & Steel - 2.2%
1,000,000 AA-/A1 Nucor Corp., 6.0%, 1/1/09 (144A) $ 918,820
2,000,000 BBB/Baa1 USX Corp., 8.125%, 7/15/23 2,014,640
------------
$ 2,933,460
------------
Paper & Forest Products - 0.7%
1,000,000 A-/A3 Mead Corp., 8.125%, 2/1/23 $ 952,930
------------
Total Basic Materials $ 5,726,390
------------
Capital Goods - 1.3%
Engineering & Construction - 0.6%
895,000 B+/B2 Metromedia Fiber Network Inc.,
10.0%, 11/15/08 $ 760,750
------------
Waste Management - 0.7%
1,000,000 BB/Ba3 Azurix Corp., 10.375%, 2/15/07 $ 990,000
------------
Total Capital Goods $ 1,750,750
------------
The accompanying notes are an integral part of these financial statements. 9
Pioneer Bond Fund
SCHEDULE OF INVESTMENTS 12/31/00 (unaudited) (continued)
Principal S&P/Moody's
Amount Ratings Value
Communication Services - 1.4%
Cellular/Wireless Telecommunications - 0.7%
$1,000,000 B/B3 Crown Castle International Corp.,
9.0%, 5/15/11 $ 960,000
------------
Telecommunications (Long Distance) - 0.7%
1,000,000 A/A2 AT&T Corp., 8.125%, 1/15/22 $ 953,780
------------
Total Communication Services $ 1,913,780
------------
Consumer Cyclicals - 7.5%
Automobiles - 1.7%
2,000,000 A/A2 General Motors Corp., 9.4%, 7/15/21 $ 2,279,160
------------
Building Materials - 1.0%
750,000 B/B2 NCI Building Systems, Inc., 9.25%, 5/1/09 $ 682,500
750,000 B+/B1 Nortek Inc., 9.125%, 9/1/07 678,750
------------
$ 1,361,250
------------
Hardware & Tools - 0.3%
500,000 B+/B2 Scott's Corp., 8.625%, 1/15/09 (144A) $ 475,000
------------
Homebuilding - 0.3%
370,000 BB+/Ba2 Toll Corp., 8.125%, 2/1/09 $ 351,500
------------
Publishing (Newspapers) - 1.8%
1,000,000 BBB/Baa2 Harcourt General, Inc., 7.3%, 8/01/97 $ 835,710
1,500,000 BBB-/Baa3 News America Holdings, Inc., 10.125%,
10/15/12 1,642,590
------------
$ 2,478,300
------------
Retail - 1.7%
1,000,000 AA/Aa2 Wal-Mart Stores, Inc., 8.62%, 1/1/10 $ 1,088,970
1,000,000 AA/Aa2 Wal-Mart Stores, Inc., 8.5%, 9/15/24 1,177,140
------------
$ 2,266,110
------------
Textiles (Apparel) - 0.7%
1,000,000 BBB-/Baa2 Jones Apparel Group, Inc.,
7.875%, 6/15/06 $ 945,880
------------
Total Consumer Cyclicals $ 10,157,200
------------
10 The accompanying notes are an integral part of these financial statements.
Pioneer Bond Fund
Principal S&P/Moody's
Amount Ratings Value
Consumer Staples - 10.4%
Broadcasting (Television/Radio/Cable) - 5.4%
$1,000,000 BB+/Ba1 British Sky Broadcasting Corp., 8.2%,
7/15/09 $ 943,870
1,000,000 B+/B2 Charter Communications Holdings LLC,
8.25%, 4/1/07 915,000
2,200,000 A/A2 Continental Cablevision, Inc., 9.5%, 8/1/13 2,410,342
1,500,000 BBB/Baa1 Cox Enterprises, 7.375%, 6/15/09 (144A) 1,500,225
1,250,000 A/A2 Tele-Communications, Inc., 10.125%, 4/15/22 1,489,550
------------
$ 7,258,987
------------
Distributors (Food & Health) - 2.1%
750,000 B-/B3 Fisher Scientific International Inc.,
9.0%, 2/1/08 $ 686,250
1,000,000 BBB+/Baa1 SUPERVALU Inc., 8.875%, 11/15/22 992,320
1,250,000 B/B2 Wesco Distribution Inc., 9.125%, 6/1/08 1,100,000
------------
$ 2,778,570
------------
Entertainment - 2.4%
1,000,000 B-/B3 Premier Parks, Inc., 9.75%, 6/15/07 $ 965,000
2,000,000 BBB/Baa1 Time Warner Inc., 9.15%, 2/1/23 2,316,320
------------
$ 3,281,320
------------
Household Products (Non-Durables) - 0.5%
750,000 B/B2 Playtex Family Products, Inc.,
9.0%, 12/15/03 $ 716,250
------------
Total Consumer Staples $ 14,035,127
------------
Energy - 9%
Oil (Domestic Integrated) - 1.6%
2,000,000 BBB/Baa2 Phillips Petroleum Co., 9.18%, 9/15/21 $ 2,213,900
------------
Oil (International Integrated) - 1.8%
1,053,000 AA+/Aa1 Imperial Oil Ltd., 8.75%, 10/15/19 $ 1,090,308
1,200,000 A+/A1 Texaco Capital Corp., 8.25%, 10/1/06 1,319,508
------------
$ 2,409,816
------------
Oil & Gas (Drilling & Equipment) - 1.7%
1,500,000 A-/A3 Nabors Industries Inc., 6.8%, 4/15/04 $ 1,510,545
750,000 B+/B1 Parker Drilling Co., 9.75%, 11/15/06 755,625
------------
$ 2,266,170
------------
The accompanying notes are an integral part of these financial statements. 11
Pioneer Bond Fund
SCHEDULE OF INVESTMENTS 12/31/00 (unaudited) (continued)
Principal S&P/Moody's
Amount Ratings Value
Oil & Gas (Production/Exploration) - 3.1%
$1,000,000 BB/Ba2 EOTT Energy Partners LP, 11.0%, 10/1/09 $ 1,035,000
2,000,000 BB-/Ba2 Gulf Canada Resources Ltd.,
9.625%, 7/1/05 2,104,360
975,000 BB+/Ba1 Santa Fe Snyder Corp., 8.05%, 6/15/04 1,018,748
------------
$ 4,158,108
------------
Oil & Gas (Refining & Marketing) - 0.8%
1,000,000 BBB/Baa2 Ashland Oil Co., 8.8%, 11/15/12 $ 1,104,830
------------
Total Energy $ 12,152,824
------------
Financial - 17.8%
Banks (Major Regional) - 4%
1,000,000 AA-/Aa3 Barclays North America Capital Corp.,
9.75%, 5/15/21 $ 1,058,280
1,550,000 A-/A2 Corestates Capital Corp.,
9.375%, 4/15/03 1,634,708
2,000,000 A+/A2 Mellon Bank NA, 7.375%, 5/15/07 2,047,860
500,000 A/A1 Republic New York Corp., 9.3%, 6/1/21 564,595
------------
$ 5,305,443
------------
Banks (Money Center) - 0.8%
1,000,000 AA-/Aa3 National Westminster Bancorp, Inc.,
9.375%, 11/15/03 $ 1,078,660
------------
Banks (Regional) - 1.5%
2,000,000 A+/A1 Bank of Montreal, 7.8%, 4/1/07 $ 2,088,520
------------
Consumer Finance - 3.2%
1,000,000 BB+/Baa3 Capital One Financial Corp.,
7.125%, 8/1/08 $ 895,400
3,000,000 A+/A1 Ford Capital BV, 9.5%, 6/1/10 3,445,050
------------
$ 4,340,450
------------
Financial (Diversified) - 3.4%
1,000,000 A+/A2 American General Finance Corp.,
8.125%, 8/15/09 $ 1,064,980
1,100,000 A+/A1 Associates Corp., 8.15%, 8/1/09 1,179,585
1,000,000 BBB+/Baa1 AvalonBay Communities Inc.,
6.8%, 7/15/06 984,340
1,500,000 A-/A3 Hertz Corp., 6.25%, 3/15/09 1,398,525
------------
$ 4,627,430
------------
12 The accompanying notes are an integral part of these financial statements.
Pioneer Bond Fund
Principal S&P/Moody's
Amount Ratings Value
Insurance (Property-Casualty) - 3%
$1,500,000 AAA/Aa1 GEICO Corp., 9.15%, 9/15/21 $ 1,586,430
1,535,000 AA/Aa2 National Re Corp., 8.85%, 1/15/05 1,655,221
1,000,000 BBB+/Baa1 W.R. Berkley, 8.7%, 1/1/22 917,350
------------
$ 4,159,001
------------
Real Estate - 1.9%
1,000,000 BBB-/Baa3 Colonial Realty Senior Note, 7.00%, 7/14/07 $ 954,170
1,500,000 BBB/Baa3 Mack-Cali Realty, 7.25%, 03/15/09 1,467,120
------------
$ 2,421,290
------------
Total Financial $ 24,020,794
------------
Healthcare - 4.1%
Healthcare (Diversified) - 0.7%
861,000 B/B3 King Pharmaceutical Inc.,
10.75%, 2/15/09 $ 908,355
------------
Healthcare (Hospital Management) - 1%
375,000 BB+/Ba2 Columbia/HCA Healthcare Corp.,
7.25%, 5/20/08 $ 360,274
1,000,000 BB-/Ba3 Tenet Healthcare Corp., 8.125%, 12/1/08 1,010,000
------------
$ 1,370,274
------------
Healthcare (Medical Products/Supplies) - 2.4%
1,070,000 BB+/Ba1 Beckman Instruments, Inc., 7.05%, 6/1/26 $ 1,053,875
750,000 B/B2 Bio-Rad Labs Inc., 11.625%, 2/15/07 772,500
1,500,000 A-/Baa1 Guidant Corp., 6.15%, 2/15/06 1,424,385
------------
$ 3,250,760
------------
Total Healthcare $ 5,529,389
------------
Technology - 0.8%
Computer (Hardware) - 0.7%
900,000 BBB+/Baa1 Sun Microsystems Inc., 7.65%, 8/15/09 $ 924,885
------------
Communications Equipment - 0.1%
100,000 B+/B2 L-3 Communications Holdings Corp.,
8.50%, 5/15/08 $ 94,750
------------
Total Technology $ 1,019,635
------------
The accompanying notes are an integral part of these financial statements. 13
Pioneer Bond Fund
SCHEDULE OF INVESTMENTS 12/31/00 (unaudited) (continued)
Principal S&P/Moody's
Amount Ratings Value
Transportation - 6.5%
Airfreight - 1.6%
$2,000,000 BBB+/A3 Federal Express Corp., 8.4%, 3/23/10 $ 2,113,360
------------
Airlines - 4.1%
1,461,555 BBB/A2 American Airlines, Inc., 9.71%, 1/2/07 $ 1,562,081
1,000,000 BB/Ba2 Northwest Airlines, Inc., 8.52%, 4/7/04 963,560
1,876,673 A/A1 Southwest Airlines Co., 7.67%, 1/2/14 1,940,311
1,000,000 BB+/Baa3 United Air Lines, Inc., 9.125%, 1/15/12 1,000,860
------------
$ 5,466,812
------------
Railroads - 0.8%
1,000,000 BBB+/Baa1 Norfolk Southern Corp., 9.0%, 3/1/21 $ 1,132,550
------------
Total Transportation $ 8,712,722
------------
Utilities - 5%
Electric Companies - 2%
1,000,000 BBB-/Baa3 Great Lakes Power Inc., 8.3%, 3/1/05 $ 1,029,270
585,000 BBB/Baa2 NiSource Finance, 7.875%, 11/15/10 (144A) 617,467
1,000,000 A/A2 Virginia Electric and Power Co.,
8.75%, 4/1/21 1,068,770
------------
$ 2,715,507
------------
Natural Gas - 3%
1,000,000 BBB-/Baa2 KN Energy Inc., 6.45%, 11/30/01 $ 996,330
1,000,000 A-/Baa1 Northern Natural Gas, 7.0%,
6/1/11 (144A) 984,600
1,000,000 A/A2 Oneok, Inc., 6.0%, 2/1/09 928,470
1,000,000 BBB/Baa2 Sonat Inc., 7.625%, 7/15/11 1,044,350
------------
$ 3,953,750
------------
Total Utilities $ 6,669,257
------------
Total Corporate Bonds
(Cost $93,527,209) $ 91,687,868
------------
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS - 26.8%
8,224 AAA/Aaa Federal Home Loan Mortgage Corp.,
10.0%, 11/1/02 $ 8,288
25,223 AAA/Aaa Federal Home Loan Mortgage Corp.,
10.5%, 4/1/19 26,853
24,859 AAA/Aaa Federal Home Loan Mortgage Corp.,
REMIC Series 1988-24B, 9.5%, 1/15/05 25,481
14 The accompanying notes are an integral part of these financial statements.
Pioneer Bond Fund
Principal S&P/Moody's
Amount Ratings Value
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS - (continued)
$ 27,592 AAA/Aaa Federal National Mortgage Corp.,
11.0%, 6/1/19 $ 127,207
117,113 AAA/Aaa Federal National Mortgage Corp.,
10.0%, 7/1/19 28,927
145,186 AAA/Aaa Federal National Mortgage Corp., REMIC
1989-19A, 10.3%, 4/25/19 158,463
7,751 AAA/Aaa Federal National Mortgage Corp., REMIC
1989-19B, 10.3%, 4/25/19 8,653
47,152 AAA/Aaa Government National Mortgage Association I,
10.0%, 1/15/06 48,196
2,384,013 AAA/Aaa Government National Mortgage Association I,
8.0%, 5/15/30 2,443,375
29,807 AAA/Aaa Government National Mortgage Association II,
9.5%, 12/20/20 30,953
24,336 AAA/Aaa Government National Mortgage Association,
Midget, 10.0%, 5/15/04 24,844
147,845 AAA/Aaa Government National Mortgage Association,
10%, 1/15/18 to 7/15/20 155,505
20,826 AAA/Aaa Government National Mortgage Association,
9.5%, 5/15/20 21,852
6,806,188 AAA/Aaa Government National Mortgage Association,
7.5%, 5/15/27 to 2/15/30 6,921,907
918,408 AAA/Aaa Government National Mortgage Association,
8.00%, 1/15/30 941,276
7,544,067 AAA/Aaa Government National Mortgage Association,
7%, 12/15/13 to 2/15/30 7,579,519
892,149 AAA/Aaa Government National Mortgage Association,
8%, 11/15/29 914,364
1,941,652 AAA/Aaa Government National Mortgage Association,
7.5%, 8/15/29 1,973,708
1,899,999 AAA/Aaa Government National Mortgage Association,
7%, 11/15/28 1,914,743
1,500,000 AAA/Aaa Government National Mortgage Association,
Remic Series 1998-21, 6.5%, 10/20/11 1,481,715
750,000 U.S. Treasury Notes, 6.25%, 8/15/23 811,208
3,000,000 U.S. Treasury Bonds, 8.00%, 11/15/21 3,881,070
2,850,000 U.S. Treasury Bonds, 5.75%, 8/15/10 2,986,715
The accompanying notes are an integral part of these financial statements. 15
Pioneer Bond Fund
SCHEDULE OF INVESTMENTS 12/31/00 (unaudited) (continued)
Principal S&P/Moody's
Amount Ratings Value
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS - (continued)
$3,000,000 U.S. Treasury Notes, 7.5%, 11/15/16 $ 3,620,730
------------
Total U.S. Government and
Agency Obligations
(Cost $34,623,379) $ 36,135,552
------------
FOREIGN GOVERNMENT SPONSORED - 2.2%
1,500,000 A+/A2 Hydro-Quebec, 8.0%, 2/1/13 $ 1,683,285
1,000,000 A/A2 Province of Saskatchewan,
9.375%, 12/15/20 1,269,320
------------
Total Foreign Government Sponsored
(Cost $2,740,700) $ 2,952,605
------------
Temporary Cash Investment - 0.5%
607,000 AAA/Aaa American Express, 6.48%, Due 01/02/01 $ 607,000
------------
Total Temporary Cash Investment $ 607,000
------------
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $134,800,917) (a)(b) $134,628,705
------------
144A Security is exempt from registration under Rule 144A of the Securities Act
of 1933. Such securities may be resold normally to qualified institutional
buyers in a transaction exempt from registration. At December 31, 2000,
the value of these securities amounted to $4,496,112 or 3.3% of total net
assets.
(a) At December 31, 2000, the net unrealized loss on investments, based on
cost for federal income tax purposes of $134,800,917 was as follows:
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $ 3,023,920
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (3,196,132)
-----------
Net unrealized loss $ (172,212)
-----------
(b) At December 31, 2000 the Fund had a net capital loss carryforward of
$6,644,799 which will expire between 2003 and 2008 if not utilized.
Note: The Fund's investments in mortgage-backed securities of the Government
National Mortgage Association (GNMA) are interests in separate pools of
mortgages. All separate investments in this issuer which have the same
coupon rate have been aggregated for the purpose of presentation in this
schedule of investments.
16 The accompanying notes are an integral part of these financial statements.
Pioneer Bond Fund
Purchases and sales of securities (excluding temporary cash investments)
for the six months ended December 31, 2000, were as follows:
Purchases Sales
--------- -----
Long-term U.S. Government $15,601,350 $22,958,155
Other Long-term Securities 2,229,944 7,857,177
The accompanying notes are an integral part of these financial statements. 17
Pioneer Bond Fund
BALANCE SHEET 12/31/00 (unaudited)
ASSETS:
Investments in securities, at value (including temporary cash
investments of $607,000) (cost $134,800,917) $134,628,705
Cash 829,920
Receivables -
Investment securities sold 589,091
Fund shares sold 76,710
Interest 2,615,446
Other 3,776
------------
Total assets $138,743,648
------------
LIABILITIES:
Payables -
Investment securities purchased $ 800,392
Fund shares repurchased 464,178
Dividends 172,954
Due to affiliates 268,084
Accrued expenses 91,716
------------
Total liabilities $ 1,797,324
------------
NET ASSETS:
Paid-in capital $149,663,145
Accumulated undistributed net investment income 3,325
Accumulated net realized loss on investments (12,547,934)
Net unrealized loss on investments (172,212)
------------
Total net assets $136,946,324
------------
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $96,541,184/11,068,122 shares) $ 8.72
------------
Class B (based on $34,246,816/3,940,588 shares) $ 8.69
------------
Class C (based on $6,158,324/708,171 shares) $ 8.70
------------
MAXIMUM OFFERING PRICE:
Class A $ 9.13
------------
18 The accompanying notes are an integral part of these financial statements.
Pioneer Bond Fund
STATEMENT OF OPERATIONS (unaudited)
For the Six Months Ended 12/31/00
INVESTMENT INCOME:
Interest $ 5,569,962
------------
EXPENSES:
Management fees $356,124
Transfer agent fees
Class A 209,663
Class B 134,459
Class C 10,393
Distribution fees
Class A 126,046
Class B 177,219
Class C 30,855
Administrative fees 14,230
Custodian fees 15,272
Registration fees 184
Professional fees 3,052
Printing 33,120
Fees and expenses of nonaffiliated trustees 10,304
Miscellaneous 3,776
--------
Total expenses $ 1,124,697
Less fees paid indirectly (19,268)
------------
Net expenses $ 1,105,429
------------
Net investment income $ 4,464,533
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments $ (1,997,023)
Change in net unrealized loss on investments 6,055,692
------------
Net gain on investments $ 4,058,669
------------
Net increase in net assets resulting from operations $ 8,523,202
------------
The accompanying notes are an integral part of these financial statements. 19
Pioneer Bond Fund
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended 12/31/00 and Year Ended 6/30/00
Six Months Ended
12/31/00 Year Ended
FROM OPERATIONS: (unaudited) 6/30/00
Net investment income $ 4,464,533 $ 10,845,537
Net realized loss on investments (1,997,023) (6,904,742)
Change in net unrealized gain (loss) on investments 6,055,692 (2,601,649)
------------ ------------
Net increase in net assets resulting from operations $ 8,523,202 $ 1,339,146
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.29 and $0.58 per share, respectively) $ (3,349,756) $ (7,812,946)
Class B ($0.24 and $0.51 per share, respectively) (981,302) (2,547,821)
Class C ($0.26 and $0.46 per share, respectively) (186,130) (456,721)
------------ ------------
Total distributions to shareholders $ (4,517,188) $(10,817,488)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 38,440,344 $ 90,338,479
Reinvestment of distributions 3,395,993 8,109,094
Cost of shares repurchased (54,777,792) (132,759,583)
------------ ------------
Net decrease in net assets resulting from fund share
transactions $(12,941,455) $(34,312,010)
------------ ------------
Net decrease in net assets $ (8,935,441) $(43,790,352)
------------ ------------
NET ASSETS:
Beginning of period 145,881,765 189,672,117
------------ ------------
End of period (including accumulated undistributed net
investment income of $3,325 and $55,980,
respectively) $136,946,324 $145,881,765
------------ ------------
12/00 Shares 12/00 Amount
CLASS A (unaudited) (unaudited) 6/00 Shares 6/00 Amount
Shares sold 3,794,302 $ 32,423,357 6,961,511 $ 59,973,090
Reinvestment of distributions 306,741 2,629,815 710,968 6,121,497
Less shares repurchased (5,110,490) (43,691,778) (10,081,538) (86,763,886)
---------- ------------ ----------- ------------
Net decrease (1,009,447) $ (8,638,606) (2,409,059) $(20,669,299)
---------- ------------ ----------- ------------
CLASS B
Shares sold 442,308 $ 3,768,210 1,752,374 $ 15,137,966
Reinvestment of distributions 74,105 632,898 195,908 1,681,866
Less shares repurchased (989,697) (8,429,993) (3,126,491) (26,892,331)
---------- ------------ ----------- ------------
Net decrease (473,284) $ (4,028,885) (1,178,209) $(10,072,499)
---------- ------------ ----------- ------------
CLASS C
Shares sold 263,330 $ 2,248,777 1,740,006 $ 15,227,423
Reinvestment of distributions 15,581 133,280 35,624 305,731
Less shares repurchased (311,616) (2,656,021) (2,200,860) (19,103,366)
---------- ------------ ----------- ------------
Net decrease (32,705) $ (273,964) (425,230) $ (3,570,212)
---------- ------------ ----------- ------------
20 The accompanying notes are an integral part of these financial statements.
Pioneer Bond Fund
FINANCIAL HIGHLIGHTS 12/31/00
Six Months Ended
12/31/00 Year Ended
(unaudited) 6/30/00
CLASS A
Net asset value, beginning of period $ 8.47 $ 8.94
------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.29 $ 0.58
Net realized and unrealized gain (loss) on investments 0.25 (0.47)
------- --------
Net increase from investment operations $ 0.54 $ 0.11
Distributions to shareowners:
Net investment income (0.29) (0.58)
------- --------
Net increase (decrease) in net asset value $ 0.25 $ (0.47)
------- --------
Net asset value, end of period $ 8.72 $ 8.47
------- --------
Total return* 6.47% 1.30%
Ratio of net expenses to average net assets+ 1.28%** 1.18%
Ratio of net investment income to average net assets+ 6.53%** 6.68%
Portfolio turnover rate 26%** 60%
Net assets, end of period (in thousands) $96,541 $102,349
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.25%** 1.15%
Net investment income 6.56%** 6.71%
Year Ended Year Ended Year Ended Year Ended
6/30/99 6/30/98 6/30/97 6/30/96
CLASS A
Net asset value, beginning of period $ 9.37 $ 9.07 $ 9.08 $ 9.35
-------- -------- ------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.56 $ 0.59 $ 0.63 $ 0.64
Net realized and unrealized gain (loss) on investments (0.43) 0.30 (0.01) (0.27)
-------- -------- ------- --------
Net increase from investment operations $ 0.13 $ 0.89 $ 0.62 $ 0.37
Distributions to shareowners:
Net investment income (0.56) (0.59) (0.63) (0.64)
-------- -------- ------- --------
Net increase (decrease) in net asset value $ (0.43) $ 0.30 $ (0.01) $ (0.27)
-------- -------- ------- --------
Net asset value, end of period $ 8.94 $ 9.37 $ 9.07 $ 9.08
-------- -------- ------- --------
Total return* 1.35% 10.04% 7.09% 4.02%
Ratio of net expenses to average net assets+ 1.04% 1.18% 1.14% 1.19%
Ratio of net investment income to average net assets+ 6.01% 6.34% 6.97% 6.80%
Portfolio turnover rate 46% 44% 48% 39%
Net assets, end of period (in thousands) $129,487 $114,326 $98,310 $101,957
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.02% 1.17% 1.12% 1.18%
Net investment income 6.03% 6.35% 6.99% 6.81%
* 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.
+ Ratio assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 21
Pioneer Bond Fund
FINANCIAL HIGHLIGHTS 12/31/00
Six Months Ended
12/31/00 Year Ended
(unaudited) 6/30/00
CLASS B
Net asset value, beginning of period $ 8.44 $ 8.91
------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.24 $ 0.50
Net realized and unrealized gain (loss) on investments 0.25 (0.46)
------- -------
Net increase from investment operations $ 0.49 $ 0.04
Distributions to shareowners:
Net investment income (0.24) (0.51)
In excess of net investment income - -
------- -------
Net increase (decrease) in net asset value $ 0.25 $ (0.47)
------- -------
Net asset value, end of period $ 8.69 $ 8.44
------- -------
Total return* 5.86% 0.48%
Ratio of net expenses to average net assets+ 2.37%** 2.05%
Ratio of net investment income to average net assets+ 5.48%** 5.81%
Portfolio turnover rate 26%** 60%
Net assets, end of period (in thousands) $34,247 $37,269
Ratios assuming reduction for fees paid indirectly:
Net expenses 2.36%** 2.03%
Net investment income 5.49%** 5.83%
Year Ended Year Ended Year Ended Year Ended
6/30/99 6/30/98 6/30/97 6/30/96
CLASS B
Net asset value, beginning of period $ 9.33 $ 9.03 $ 9.02 $ 9.31
------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.48 $ 0.51 $ 0.56 $ 0.57
Net realized and unrealized gain (loss) on investments (0.42) 0.31 (0.01) (0.28)
------- ------- ------- -------
Net increase from investment operations $ 0.06 $ 0.82 $ 0.55 $ 0.29
Distributions to shareowners:
Net investment income (0.48) (0.52) (0.54) (0.57)
In excess of net investment income - - - (0.01)
------- ------- ------- -------
Net increase (decrease) in net asset value $ (0.42) $ 0.30 $ 0.01 $ (0.29)
------- ------- ------- -------
Net asset value, end of period $ 8.91 $ 9.33 $ 9.03 $ 9.02
------- ------- ------- -------
Total return* 0.57% 9.21% 6.24% 3.15%
Ratio of net expenses to average net assets+ 1.86% 1.98% 1.97% 1.96%
Ratio of net investment income to average net assets+ 5.18% 5.52% 6.12% 6.10%
Portfolio turnover rate 46% 44% 48% 39%
Net assets, end of period (in thousands) $49,816 $30,888 $20,104 $14,843
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.83% 1.97% 1.96% 1.94%
Net investment income 5.21% 5.53% 6.13% 6.03%
* 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.
+ Ratio assuming no reduction for fees paid indirectly.
22 The accompanying notes are an integral part of these financial statements.
Pioneer Bond Fund
FINANCIAL HIGHLIGHTS 12/31/00
Six Months Ended
12/31/00 Year Ended
(unaudited) 6/30/00
CLASS C
Net asset value, beginning of period $ 8.46 $ 8.89
------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.26 $ 0.48
Net realized and unrealized gain (loss) on investments 0.24 (0.45)
------- -------
Net increase from investment operations $ 0.50 $ 0.03
Distributions to shareowners:
Net investment income (0.26) (0.46)
In excess of net investment income - -
------- -------
Net increase (decrease) in net asset value $ 0.24 $ (0.43)
------- -------
Net asset value, end of period $ 8.70 $ 8.46
------- -------
Total return* 6.01% 0.36%
Ratio of net expenses to average net assets+ 1.95%** 2.32%
Ratio of net investment income to average net assets+ 5.86%** 5.53%
Portfolio turnover rate 26%** 60%
Net assets, end of period (in thousands) $ 6,158 $ 6,264
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.92%** 2.30%
Net investment income 5.89%** 5.55%
Year Ended Year Ended Year Ended 1/31/96 to
6/30/99 6/30/98 6/30/97 6/30/96
CLASS C
Net asset value, beginning of period $ 9.31 $ 9.02 $ 9.02 $ 9.54
------- ------ ------ ------
Increase (decrease) from investment operations:
Net investment income $ 0.48 $ 0.52 $ 0.54 $ 0.23
Net realized and unrealized gain (loss) on investments (0.42) 0.29 - (0.52)
------- ------ ------ ------
Net increase from investment operations $ 0.06 $ 0.81 $ 0.54 $(0.29)
Distributions to shareowners:
Net investment income (0.48) (0.52) (0.54) (0.22)
In excess of net investment income - - - (0.01)
------- ------ ------ ------
Net increase (decrease) in net asset value $ (0.42) $ 0.29 $ - $(0.52)
------- ------ ------ ------
Net asset value, end of period $ 8.89 $ 9.31 $ 9.02 $ 9.02
------- ------ ------ ------
Total return* 0.60% 9.12% 6.13% (3.00)%
Ratio of net expenses to average net assets+ 1.86% 1.90% 2.05% 2.18%**
Ratio of net investment income to average net assets+ 5.17% 5.58% 5.83% 5.79%**
Portfolio turnover rate 46% 44% 48% 39%
Net assets, end of period (in thousands) $10,369 $8,515 $4,588 $ 343
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.83% 1.89% 1.92% 2.13%**
Net investment income 5.20% 5.59% 5.96% 5.84%**
* 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.
+ Ratio assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 23
Pioneer Bond Fund
NOTES TO FINANCIAL STATEMENTS 12/31/00 (unaudited)
1. Organization and Significant Accounting Policies
Pioneer Bond Fund (the Fund) is a Delaware business trust registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The investment objective of the Fund is to provide current income from
an investment grade portfolio with due regard to preservation of capital and
prudent investment risk. The Fund also seeks a relatively stable level of
dividends; however, the level of dividends will be maintained only if consistent
with preserving the investment grade quality of the Fund's portfolio.
The Fund offers three classes of shares - Class A, Class B and Class C shares.
Shares of Class A, Class B, and Class C each represent an interest in the same
portfolio of investments of the Fund and have equal rights to voting,
redemptions, dividends and liquidation, except that each class of shares can
bear different transfer agent and distributions fees and has exclusive voting
rights with respect to the distribution plans that have been adopted by Class A,
Class B, and Class C shareowners, respectively.
The Fund's financial statements have been prepared in conformity with accounting
principles generally accepted in the United States that require the management
of the Fund to, among other things, make estimates and assumptions that affect
the reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting periods. Actual results
could differ from those estimates. The following is a summary of significant
accounting policies consistently followed by the Fund, which are in conformity
with those generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Securities are valued at
prices supplied by independent pricing services, which consider such factors
as Treasury spreads, yields, maturities and ratings. Valuations may be
supplemented by dealers and other sources, as required. Principal amounts of
mortgage-backed securities are adjusted for monthly paydowns. Premium and
discount related to certain mortgage-backed securities are amortized or
accreted in proportion to the underlying monthly paydowns. Interest income,
including income on interest bearing cash accounts, is recorded on the
accrual basis. Temporary cash investments are valued at amortized cost.
24
Pioneer Bond Fund
As required, effective July 1, 2001, the Fund will adopt the provision of the
AICPA Audit & Accounting Guide for Investment Companies and began amortizing
discount or premium for all debt securities. This change will have no impact
on the Fund's total net assets and is expected to result in an immaterial
reduction in the cost of securities and a corresponding increase in net
unrealized appreciation (depreciation), based on the securities held by the
Fund on July 1, 2001.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The characterization of distributions to shareowners for financial
reporting purposes is determined in accordance with federal income tax
rules. Therefore, the source of the Fund's distributions may be shown in
the accompanying financial statements as either from or in excess of net
investment income or net realized gain on investment transactions, or from
paid-in-capital, depending on the type of book/tax differences that may
exist.
C. Fund Shares
The Fund records sales and repurchases of its shares as of trade date.
Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Fund
and a majority owned indirect subsidiary of UniCredito Italiano S.p.A.,
(UniCredito Italiano), earned $5,504 in underwriting commissions on the sale
of fund shares for the six months ended December 31, 2000.
D. Class Allocations
Distribution fees are calculated based on the average daily net asset value
attributable to Class A, Class B, and Class C shares of the Fund,
respectively. Shareowners of each class share all expenses and fees paid to
the transfer agent, Pioneering Services Corporation (PSC), for their
services, which are allocated based on the number of accounts in each class
and the ratable allocation of related out-of-pocket expenses
25
Pioneer Bond Fund
NOTES TO FINANCIAL STATEMENTS 12/31/00 (unaudited) (continued)
(see Note 3). Income, common expenses, and realized and unrealized gains and
losses are calculated at the Fund level and allocated daily to each class of
shares based on the respective percentage of adjusted net assets at the
beginning of the day.
The Fund declares as daily dividends substantially all of its net
investment income. All dividends are paid on a monthly basis. Short-term
capital gain distributions, if any, may be declared with the daily
dividends. Distributions to shareowners are recorded as of the ex-dividend
date. Distributions paid by the Fund with respect to each class of shares
are calculated in the same manner, at the same time, and in the same
amount, except that Class A, Class B, and Class C shares can bear different
transfer agent and distribution fees.
2. Management Agreement
Pioneer Investment Management, Inc. (PIM), the Fund's investment adviser,
manages the Fund's portfolio and is a majority owned subsidiary of UniCredito
Italiano. Management fees are calculated daily at the annual rate of 0.50% of
the Fund's average daily net assets.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting, and insurance
premiums, are paid by the Fund. At December 31, 2000, $61,653 was payable to PIM
related to management fees, administrative fees and certain other services.
3. Transfer Agent
PSC, a majority owned indirect subsidiary of UniCredito Italiano, provides
substantially all transfer agent and shareholder services to the Fund at
negotiated rates. Included in due to affiliates is $161,108 in transfer agent
fees payable to PSC at December 31, 2000.
4. Distribution Plans
The Fund adopted a Plan of Distribution for each class of shares (Class A Plan,
Class B Plan and Class C Plan) in accordance with Rule 12b-1 of the Investment
Company Act of 1940. Pursuant to the Class A Plan, the Fund pays PFD a service
fee of up to 0.25% of the average daily net assets attributable to Class A
shares in reimbursement of its actual expenditures to finance activities
primarily intended to result in the sale of Class A shares. Pursuant to the
Class B Plan and the Class C Plan, the Fund pays PFD 1.00% of the average daily
net assets attributable to
26
Pioneer Bond Fund
each class of shares. The fee consists of a 0.25% service fee and a 0.75%
distribution fee paid as compensation for personal services and/or account
maintenance services or distribution services with regard to Class B and Class C
shares. Included in due to affiliates is $45,323 in distribution fees payable to
PFD at December 31, 2000.
In addition, redemptions of each class of shares may be subject to a contingent
deferred sales charge (CDSC). A CDSC of 1.00% may be imposed on redemptions of
certain net asset value purchases of Class A shares within one year of purchase.
Class B shares that are redeemed within six years of purchase are subject to a
CDSC at declining rates beginning at 4.00%, based on the lower of cost or market
value of shares being redeemed. Redemptions of Class C shares within one year of
purchase are subject to a CDSC of 1.00%. Proceeds from the CDSCs are paid to
PFD. For the year ended December 31, 2000, CDSCs in the amount of $1,802,167
were paid to PFD.
5. Expense Offsets
The Fund has entered into certain expense offset arrangements resulting in a
reduction in the Fund's total expenses. For the period ended December 31, 2000,
the Fund's expenses were reduced by $19,268 under such arrangements.
27
Pioneer Bond Fund
RESULTS OF SHAREOWNER MEETING
On September 11, 2000, Pioneer Bond Fund held a special meeting of shareowners
to approve a new management contract between the Fund and Pioneer Investment
Management, Inc., the Fund's investment adviser. Shareowners also voted to elect
trustees. Both proposals passed by shareowner vote. The new management contract
took effect when UniCredito Italiano S.p.A. completed its acquisition of The
Pioneer Group, Inc. on October 24, 2000. Here are the detailed results of the
votes.
Proposal 1 - To approve a new management contract.
Affirmative Against Abstain
10,160,481.085 395,063.384 408,368.926
Proposal 2 - To elect trustees.
Nominee Affirmative Withheld
M. K. Bush 10,639,533.112 324,380.283
J. F. Cogan, Jr. 10,688,437.484 275,475.911
Dr. R. H. Egdahl 10,692,649.693 271,263.702
M. B.W. Graham 10,688,546.181 275,367.214
M. A. Piret 10,693,067.897 270,845.498
D. D. Tripple 10,688,855.688 275,057.707
S. K. West 10,691,131.768 272,781.627
J. Winthrop 10,678,918.432 284,994.963
28
Pioneer Bond Fund
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
Trustees Officers
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
Mary K. Bush David D. Tripple, Executive Vice President
Richard H. Egdahl, M.D. Vincent Nave, Treasurer
Margaret B.W. Graham Joseph P. Barri, Secretary
John W. Kendrick
Marguerite A. Piret
David D. Tripple
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Public Accountants
Arthur Andersen LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
29
HOW TO CONTACT PIONEER
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
Call us for:
Account information, including existing accounts,
new accounts, prospectuses, applications
and service forms 1-800-225-6292
FactFone(SM) for automated fund yields, prices,
account information and transactions 1-800-225-4321
Retirement plans information 1-800-622-0176
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
Write to us:
PIMSS
P.O. Box 9014
Boston, Massachusetts 02205-9014
Our toll-free fax 1-800-225-4240
Our Internet e-mail address ask.pioneer@piog.com
(for general questions about Pioneer only)
Visit our web site: www.pioneerfunds.com
This report must be preceded or accompanied by a current Fund prospectus.
[PIONEER
Investments(R)
LOGO]
Pioneer Investment Management, Inc. 9619-00-0201
60 State Street (C) Pioneer Funds Distributor, Inc.
Boston, Massachusetts 02109 Underwriter of Pioneer Mutual Funds
www.pioneerfunds.com [recycle logo] Printed on Recycled Paper
EXHIBIT E
PIONEER BOND FUND
PRO FORMA SCHEDULE OF INVESTMENTS
DECEMBER 31, 2000
(UNAUDITED)
PIONEER PIONEER
LIMITED LIMITED
PIONEER MATURITY PIONEER MATURITY
BOND BOND BOND BOND
FUND FUND PRO FORMA FUND FUND PRO FORMA
CONVERTIBLE CORPORATE BONDS
800,000 800,000 B/B2 Mascotech, Inc., 4.5%, 12/15/03 470,000 470,000
1,007,000 1,007,000 BB-/B2 Pogo Producing Co., 5.5%, 6/15/06 969,912 969,912
-----------------------------------------
Total Convertible Corporate Bonds 1,439,912 1,439,912
-----------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS
1,000,000 407,687 1,407,687 AAA/Aaa National Realty Finance 1999-A2,
6.074%, 1/15/08 808,112 404,056 1,212,168
815,374 815,374 AAA/Aaa National Realty Finance 1999-A2,
6.48%, 1/15/09 997,656 997,656
46,399 46,399 AAA/Aaa Mortgage Capital Funding Inc., 1995-MCI
Class A1B, 7.6%, 5/25/27 47,255 47,255
-----------------------------------------
Total Collateralized Mortgage Obligations 1,805,768 451,311 2,257,079
-----------------------------------------
CORPORATE BONDS
Asset-Backed
187,022 187,022 AAA/Aaa Advanta Mortgage Loan Trust, Series
93-4A, 5.55%, 3/25/10 184,297 184,297
400,000 400,000 AAA/Aaa Americredit Automobile Receivables Trust,
Series 1999-B A4, 5.96%, 3/5/06 400,520 400,520
250,000 250,000 AAA/Aaa Boston Edison Company, 1999-1 A4,
6.91%, 9/15/09 258,895 258,895
500,000 500,000 AAA/Aaa California Infrastructure SCE-1, Series
1997-1, 6.28%, 9/25/05 503,140 503,140
246,192 246,192 AAA/Aaa Carco Auto Loan Master Trust, Series
1997-1A, 6.689%, 8/15/04 246,414 246,414
350,000 350,000 AAA/Aaa Citibank Credit Card Master Trust I, Series
1999-5A, 6.1%, 5/15/08 348,439 348,439
250,000 250,000 AAA/Aaa Comed Transitional Funding Trust, Series
1997- RA1, 5.34%, 3/25/04 248,303 248,303
398,576 398,576 A-/Baa1 Continental Airlines, Series 1998-3 Pass
Through Trust, C-1, 7.08%, 11/1/04 399,158 399,158
282,804 282,804 AAA/Aaa CoreStates Home Equity Trust, Series
1994-1, 6.65%, 5/15/09 279,405 279,405
500,000 500,000 AAA/Aaa Discover Card Master Trust, Series
1998-7A, 5.6%, 5/15/06 495,145 495,145
392,766 392,766 AAA/Aaa Discover Card Master Trust, Series
1997-2, 6.792%, 4/16/10 407,309 407,309
500,000 500,000 AAA/Aaa Greenpoint Manufactured Housing, Series
1999-1A2, 6.01%, 8/15/15 499,465 499,465
37,960 37,960 AAA/Aaa Premier Auto Trust, Series 1997-1A4,
6.35%, 4/6/02 37,747 37,747
-----------------------------------------
Total Asset-Backed 4,308,237 4,308,237
-----------------------------------------
Basic Materials
Chemicals (Diversified)
1,000,000 1,000,000 B+/B2 Huntsman ICI Chemicals, 10.125%, 7/1/09 960,000 960,000
500,000 500,000 BBB/Baa1 USX Corp., 7.2%, 2/15/04 503,665 503,665
-----------------------------------------
960,000 503,665 1,463,665
-----------------------------------------
Chemicals (Specialty)
1,000,000 1,000,000 BB/Ba3 Arco Chemical Co., 9.8%, 2/1/20 880,000 880,000
-----------------------------------------
Iron & Steel
1,000,000 1,000,000 AA-/A1 Nucor Corp., 6.0%, 1/1/09 (144A) 918,820 918,820
2,000,000 2,000,000 BBB/Baa1 USX Corp., 8.125%, 7/15/23 2,014,640 2,014,640
-----------------------------------------
2,933,460 2,933,460
-----------------------------------------
Paper & Forest Products
1,000,000 1,000,000 A-/A3 Mead Corp., 8.125%, 2/1/23 952,930 952,930
-----------------------------------------
Total Basic Materials 5,726,390 503,665 6,230,055
-----------------------------------------
See accompanying notes to pro forma financial statements.
PIONEER PIONEER
LIMITED LIMITED
PIONEER MATURITY PIONEER MATURITY
BOND BOND BOND BOND
FUND FUND PRO FORMA FUND FUND PRO FORMA
Capital Goods
Engineering & Construction
895,000 895,000 B+/B2 Metromedia Fiber Network Inc.,
10.0%, 11/15/08 760,750 760,750
-----------------------------------------
Waste Management
1,000,000 1,000,000 BB/Ba3 Azurix Corp., 10.375%, 2/15/07 990,000 990,000
325,000 325,000 BBB/Ba1 USA Waste Services, 6.5%, 12/15/02 318,552 318,552
-----------------------------------------
990,000 318,552 1308552
-----------------------------------------
Total Capital Goods 1,750,750 318,552 2,069,302
-----------------------------------------
Communication Services
Cellular/Wireless Telecommunications
1,000,000 1,000,000 B/B3 Crown Castle International Corp.,
9.0%, 5/15/11 960,000 960,000
700,000 700,000 A-/A2 Deutsche Telekom International Finance,
7.75%, 6/15/05 713,468 713,468
450,000 450,000 B/B2 CitiGroup Inc., 7.125%, 10/15/04 449,793 449,793
100,000 100,000 BBB-/Baa3 Union Pacific Corp., 6.125%, 1/15/04 98,197 98,197
-----------------------------------------
960,000 1,261,458 2,221,458
-----------------------------------------
Telecommunications (Long Distance)
1,000,000 1,000,000 A/A2 AT&T Corp., 8.125%, 1/15/22 953,780 953,780
-----------------------------------------
Total Communication Services 1,913,780 1,261,458 3,175,238
-----------------------------------------
Consumer Cyclicals
Automobiles
2,000,000 2,000,000 A/A2 General Motors Corp., 9.4%, 7/15/21 2,279,160 2,279,160
500,000 500,000 BBB-/Baa3 A. H. Belo Corp., 6.875%, 6/1/02 495,705 495,705
500,000 500,000 BBB/Baa2 Delphi Auto Systems, 6.125%, 5/1/04 479,885 479,885
500,000 500,000 A/A2 General Motors Acceptance Corp.,
6.70%, 12/10/07 513,735 513,735
200,000 200,000 BBB-/Baa3 Penny (J.C.) & Co., Inc., 6.5%, 6/15/02 170,324 170,324
1,000,000 1,000,000 BBB-/Baa3 Shopko Stores, 6.5%, 8/15/03 620,000 620,000
-----------------------------------------
2,279,160 2,279,649 4,558,809
-----------------------------------------
Building Materials
750,000 750,000 B/B2 NCI Building Systems, Inc., 9.25%, 5/1/0 682,500 682,500
750,000 750,000 B+/B1 Nortek Inc., 9.125%, 9/1/07 678,750 678,750
-----------------------------------------
1,361,250 1,361,250
-----------------------------------------
Hardware & Tools
500,000 500,000 B+/B2 Scott's Corp., 8.625%, 1/15/09 (144A) 475,000 475,000
-----------------------------------------
Homebuilding
370,000 370,000 BB+/Ba2 Toll Corp., 8.125%, 2/1/09 351,500 351,500
-----------------------------------------
Publishing (Newspapers)
1,000,000 1,000,000 BBB/Baa2 Harcourt General, Inc., 7.3%, 8/01/97 835,710 835,710
1,500,000 1,500,000 BBB-/Baa3 News America Holdings, Inc.,
10.125%, 10/15/12 1,642,590 1,642,590
-----------------------------------------
2,478,300 2,478,300
-----------------------------------------
Retail
1,000,000 1,000,000 AA/Aa2 Wal-Mart Stores, Inc., 8.62%, 1/1/10 1,088,970 1,088,970
1,000,000 1,000,000 AA/Aa2 Wal-Mart Stores, Inc., 8.5%, 9/15/24 1,177,140 1,177,140
-----------------------------------------
2,266,110 2,266,110
-----------------------------------------
Textiles (Apparel) - 0.7%
1,000,000 1,000,000 BBB-/Baa2 Jones Apparel Group, Inc.,
7.875%, 6/15/06 945,880 945,880
-----------------------------------------
Total Consumer Cyclicals 10,157,200 2,279,649 12,436,849
-----------------------------------------
Consumer Staples
1,000,000 1,000,000 BB+/Ba1 British Sky Broadcasting Corp.,
8.2%, 7/15/09 943,870 943,870
1,000,000 350,000 1,350,000 B+/B2 Charter Communications Holdings LLC,
8.25%, 4/1/07 915,000 320,250 1,235,250
2,200,000 2,200,000 A/A2 Continental Cablevision, Inc., 9.5%, 8/1/13 2,410,342 2,410,342
1,500,000 1,500,000 BBB/Baa1 Cox Enterprises, 7.375%, 6/15/09 (144A) 1,500,225 1,500,225
1,250,000 1,250,000 A/A2 Tele-Communications, Inc., 10.125%, 4/15/22 1,489,550 1,489,550
-----------------------------------------
7,258,987 320,250 7,579,237
-----------------------------------------
See accompanying notes to pro forma financial statements.
PIONEER PIONEER
LIMITED LIMITED
PIONEER MATURITY PIONEER MATURITY
BOND BOND BOND BOND
FUND FUND PRO FORMA FUND FUND PRO FORMA
Distributors (Food & Health)
750,000 750,000 B-/B3 Fisher Scientific International Inc.,
9.0%, 2/1/08 686,250 686,250
1,000,000 1,000,000 BBB+/Baa1 SUPERVALU Inc., 8.875%, 11/15/22 992,320 992,320
350,000 350,000 BBB+/Baa1 SUPERVALU Inc., 9.75%, 6/15/04 370,122 370,122
1,250,000 1,250,000 B/B2 Wesco Distribution Inc., 9.125%, 6/1/08 1,100,000 1,100,000
-----------------------------------------
2,778,570 370,122 3,148,692
-----------------------------------------
Entertainment
1,000,000 500,000 1,500,000 B-/B3 Premier Parks, Inc., 9.75%, 6/15/07 965,000 482,500 1,447,500
2,000,000 2,000,000 BBB/Baa1 Time Warner Inc., 9.15%, 2/1/23 2,316,320 2,316,320
-----------------------------------------
3,281,320 482,500 3,763,820
-----------------------------------------
Household Products (Non-Durables)
750,000 750,000 B/B2 Playtex Family Products Corp.,
9.0%, 12/15/03 716,250 716,250
-----------------------------------------
Total Consumer Staples 14,035,127 1,172,872 15,207,999
-----------------------------------------
Energy
Oil (Domestic Integrated)
2,000,000 2,000,000 BBB/Baa2 Phillips Petroleum Co., 9.18%, 9/15/21 2,213,900 2,213,900
200,000 200,000 BBB-/Baa3 Valero Energy Corp., 7.375%, 3/15/06 204,396 204,396
-----------------------------------------
2,213,900 204,396 2,418,296
-----------------------------------------
Oil (International Integrated)
1,053,000 1,053,000 AA+/Aa1 Imperial Oil Ltd., 8.75%, 10/15/19 1,090,308 1,090,308
1,200,000 1,200,000 A+/A1 Texaco Capital Corp., 8.25%, 10/1/06 1,319,508 1,319,508
-----------------------------------------
2,409,816 2,409,816
-----------------------------------------
Oil & Gas (Drilling & Equipment)
1,500,000 500,000 2,000,000 A-/A3 Nabors Industries Inc., 6.8%, 4/15/04 1,510,545 503,515 2,014,060
750,000 750,000 B+/B1 Parker Drilling Co., 9.75%, 11/15/06 755,625 755,625
-----------------------------------------
2,266,170 503,515 2,769,685
-----------------------------------------
Oil & Gas (Production/Exploration)
1,000,000 1,000,000 BB/Ba2 EOTT Energy Partners LP, 11.0%, 10/1/09 1,035,000 1,035,000
2,000,000 2,000,000 BB-/Ba2 Gulf Canada Resources Ltd.,
9.625%, 7/1/05 2,104,360 526,090 2,630,450
975,000 300,000 1,275,000 BB+/Ba1 Santa Fe Snyder Corp., 8.05%, 6/15/04 1,018,748 313,461 1,332,209
-----------------------------------------
4,158,108 839,551 3,962,659
-----------------------------------------
Oil & Gas (Refining & Marketing)
1,000,000 1,000,000 BBB/Baa2 Ashland Oil Co., 8.8%, 11/15/12 1,104,830 1,104,830
-----------------------------------------
Total Energy 12,152,824 1,547,462 13,700,286
-----------------------------------------
Financial
Banks (Major Regional)
1,000,000 1,000,000 AA-/Aa3 Barclays North America Capital Corp.,
9.75%, 5/15/21 1,058,280 1,058,280
1,550,000 1,550,000 A-/A2 Corestates Capital Corp.,
9.375%, 4/15/03 1,634,708 1,634,708
2,000,000 2,000,000 A+/A2 Mellon Bank NA, 7.375%, 5/15/07 2,047,860 2,047,860
500,000 500,000 A/A1 Republic New York Corp., 9.3%, 6/1/21 564,595 564,595
-----------------------------------------
5,305,443 5,305,443
-----------------------------------------
Banks (Money Center)
1,000,000 1,000,000 AA-/Aa3 National Westminster Bancorp, Inc.,
9.375%, 11/15/03 1,078,660 1,078,660
-----------------------------------------
Banks (Regional)
2,000,000 2,000,000 A+/A1 Bank of Montreal, 7.8%, 4/1/07 2,088,520 2,088,520
-----------------------------------------
Consumer Finance
1,000,000 500,000 1,500,000 BB+/Baa3 Capital One Financial Corp.,
7.125%, 8/1/08 895,400 447,700 1,343,100
3,000,000 3,000,000 A+/A1 Ford Capital BV, 9.5%, 6/1/10 3,445,050 3,445,050
300,000 300,000 A/A2 Ford Motor Credit Corp., 6.7%, 7/16/04 299,949 299,949
250,000 250,000 AAA/Aaa General Electric Capital, 6.50%, 12/10/07 256,072 256,072
-----------------------------------------
4,340,450 1,003,721 5,344,171
-----------------------------------------
See accompanying notes to pro forma financial statements.
PIONEER PIONEER
LIMITED LIMITED
PIONEER MATURITY PIONEER MATURITY
BOND BOND BOND BOND
FUND FUND PRO FORMA FUND FUND PRO FORMA
Financial (Diversified)
1,000,000 1,000,000 A+/A2 American General Finance Corp.,
8.125%, 8/15/09 1,064,980 1,064,980
1,100,000 1,100,000 A+/A1 Associates Corp., 8.15%, 8/1/09 1,179,585 1,179,585
1,000,000 1,000,000 BBB+/Baa1 AvalonBay Communities Inc.,
6.8%, 7/15/06 984,340 984,340
1,500,000 1,500,000 A-/A3 Hertz Corp., 6.25%, 3/15/09 1,398,525 1,398,525
200,000 200,000 A+/A1 Goldman Sachs Group, 7.35%, 10/1/09 204,336 204,336
-----------------------------------------
4,627,430 204,336 4,831,766
-----------------------------------------
Insurance (Property-Casualty)
1,500,000 1,500,000 AAA/Aa1 GEICO Corp., 9.15%, 9/15/21 1,586,430 1,586,430
1,535,000 1,535,000 AA/Aa2 National Re Corp., 8.85%, 1/15/05 1,655,221 1,655,221
1,000,000 1,000,000 BBB+/Baa1 W.R. Berkley, 8.7%, 1/1/22 917,350 917,350
-----------------------------------------
4,159,001 4,159,001
-----------------------------------------
Real Estate
1,000,000 1,000,000 BBB-/Baa3 Colonial Realty Senior Note,
7.00%, 7/14/07 954,170 954,170
1,500,000 1,500,000 BBB/Baa3 Mack-Cali Realty, 7.25%, 03/15/09 1,467,120 1,467,120
500,000 500,000 BBB-/Baa2 The Rouse Co., 8.05%, 3/23/01 499,865 499,865
800,000 800,000 BBB/Baa2 SPieker Properties L.P., 6.8%, 12/15/01 798,656 798,656
-----------------------------------------
2,421,290 1,298,521 3,719,811
-----------------------------------------
Total Financial 24,020,794 2,506,578 26,527,372
-----------------------------------------
Healthcare
Healthcare (Diversified)
861,000 861,000 B/B3 King Pharmaceutical Inc.,
10.75%, 2/15/09 908,355 908,355
-----------------------------------------
Healthcare (Hospital Management)
375,000 375,000 BB+/Ba2 Columbia/HCA Healthcare Corp.,
7.25%, 5/20/08 360,274 360,274
1,000,000 1,000,000 BB-/Ba3 Tenet Healthcare Corp., 8.125%, 12/1/08 1,010,000 1,010,000
-----------------------------------------
1,370,274 1,370,274
-----------------------------------------
Healthcare (Medical Products/Supplies)
1,070,000 1,070,000 BB+/Ba1 Beckman Instruments, Inc., 7.05%, 6/1/26 1,053,875 1,053,875
750,000 750,000 B/B2 Bio-Rad Labs Inc., 11.625%, 2/15/07 772,500 772,500
1,500,000 500,000 2,000,000 A-/Baa1 Guidant Corp., 6.15%, 2/15/06 1,424,385 474,795 1,899,180
-----------------------------------------
3,250,760 474,795 3,725,555
-----------------------------------------
Total Healthcare 5,529,389 474,795 6,004,184
-----------------------------------------
Technology
Computer (Hardware)
900,000 250,000 1,150,000 BBB+/Baa1 Sun Microsystems Inc., 7.65%, 8/15/04 924,885 252,953 1,177,838
-----------------------------------------
Communications Equipment
325,000 325,000 Computer Science Corp., 7.5%, 8/8/05 335,566 335,566
100,000 150,000 250,000 B+/B2 L-3 Communications Holdings Corp.,
8.50%, 5/15/08 94,750 142,125 236,875
-----------------------------------------
94,750 477,691 572,441
-----------------------------------------
Total Technology 1,019,635 730,644 1,750,279
-----------------------------------------
Transportation
Airfreight
2,000,000 2,000,000 BBB+/A3 Federal Express Corp., 8.4%, 3/23/10 2,113,360 2,113,360
-----------------------------------------
Airlines
1,461,555 1,461,555 BBB/A2 American Airlines, Inc., 9.71%, 1/2/07 1,562,081 1,562,081
1,000,000 500,000 1,500,000 BB/Ba2 Northwest Airlines, Inc., 8.52%, 4/7/04 963,560 481,780 1,445,340
1,876,673 1,876,673 A/A1 Southwest Airlines Co., 7.67%, 1/2/14 1,940,311 1,940,311
1,000,000 1,000,000 BB+/Baa3 United Air Lines, Inc., 9.125%, 1/15/12 1,000,860 1,000,860
-----------------------------------------
5,466,812 481,780 5,948,592
-----------------------------------------
Railroads
1,000,000 1,000,000 BBB+/Baa1 Norfolk Southern Corp., 9.0%, 3/1/21 1,132,550 1,132,550
-----------------------------------------
Total Transportation 8,712,722 481,780 9,194,502
-----------------------------------------
See accompanying notes to pro forma financial statements.
PIONEER PIONEER
LIMITED LIMITED
PIONEER MATURITY PIONEER MATURITY
BOND BOND BOND BOND
FUND FUND PRO FORMA FUND FUND PRO FORMA
Utilities
Electric Companies
1,000,000 250,000 1,250,000 BBB-/Baa3 Great Lakes Power Inc., 8.3%, 3/1/05 1,029,270 257,318 1,286,588
585,000 150,000 735,000 BBB/Baa2 NiSource Finance, 7.875%, 11/15/10 (144A) 617,467 158,325 775,792
1,000,000 1,000,000 A/A2 Virginia Electric and Power Co.,
8.75%, 4/1/21 1,068,770 1,068,770
-----------------------------------------
2,715,507 415,643 3,131,150
-----------------------------------------
Natural Gas
1,000,000 500,000 1,500,000 BBB-/Baa2 KN Energy Inc., 6.45%, 11/30/01 996,330 498,165 1,494,495
1,000,000 1,000,000 A-/Baa1 Northern Natural Gas, 7.0%,
6/1/11 (144A) 984,600 984,600
1,000,000 1,000,000 A/A2 Oneok, Inc., 6.0%, 2/1/09 928,470 928,470
1,000,000 1,000,000 BBB/Baa2 Sonat Inc., 7.625%, 7/15/11 1,044,350 1,044,350
-----------------------------------------
3,953,750 498,165 4,451,915
-----------------------------------------
Total Utilities 6,669,257 913,808 7,583,065
-----------------------------------------
Total Corporate Bonds 91,687,868 16,499,500 108,187,368
-----------------------------------------
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS
21,884 21,884 Federal Home Loan Mortgage Corp.,
8.00%, 5/15/06 21,880 21,880
28,573 28,573 Federal Home Loan Mortgage Corp.,
7.00%, 7/15/06 28,560 28,560
291,016 291,016 Federal Home Loan Mortgage Corp.,
8.00%, 9/15/06 301,012 301,012
124,602 124,602 Federal Home Loan Mortgage Corp.,
7.00%, 3/15/21 125,212 125,212
497,865 497,865 Federal Home Loan Mortgage Corp.,
7.00%, 7/1/30 504,895 504,895
84,363 84,363 Federal National Mortgage Corp., REMIC
6.50%, 7/15/08 84,473 84,473
500,000 500,000 Federal National Mortgage Corp., REMIC
7.00%, 02/15/20 506,230 506,230
333,432 333,432 Federal National Mortgage Corp., REMIC
6.50%, 10/15/21 335,515 335,515
464,740 464,740 Federal National Mortgage Corp., REMIC
6.50%, 04/15/28 460,897 460,897
200,000 200,000 Federal National Mortgage Corp., REMIC
7.30%, 08/24/06 201,528 201,528
300,000 300,000 Federal National Mortgage Corp., REMIC
6.22%, 06/24/08 293,529 293,529
258,583 258,583 Federal National Mortgage Corp., REMIC
7.15%, 07/25/03 259,095 259,095
430,765 430,765 Federal National Mortgage Corp., REMIC
6.70%, 07/25/19 430,881 430,881
38,932 38,932 Federal National Mortgage Corp., REMIC
6.75%, 06/25/19 38,770 38,770
469,656 469,656 Federal National Mortgage Corp., REMIC
6.50%, 04/25/08 476,038 476,038
302,837 302,837 Federal National Mortgage Corp., REMIC
7.00%, 10/25/07 313,688 313,688
520,235 520,235 Federal National Mortgage Corp., REMIC
6.50%, 09/25/08 510,980 510,980
16,399 16,399 Federal National Mortgage Corp., REMIC
7.50%, 07/25/18 16,341 16,341
350,000 350,000 Federal National Mortgage Corp., REMIC
5.90%, 06/19/03 348,296 348,296
250,000 250,000 Federal National Mortgage Corp., MTN,
6.16%, 03/02/09 241,965 241,965
244,120 244,120 Federal National Mortgage Corp., REMIC
7.50%, 08/01/20 248,799 248,799
391,335 391,335 Federal National Mortgage Corp.,
7.50%, 04/01/30 396,739 396,739
499,950 499,950 Federal National Mortgage Corp., REMIC
7.00%, 12/01/30 500,355 500,355
699,931 699,931 Federal National Mortgage Corp., REMIC
6.50%, 04/15/28 700,498 700,498
500,000 500,000 AAA/Aaa Federal Home Loan Mortgage Corp.,
7.00%, 11/1/02 500,720 500,720
8,224 8,224 AAA/Aaa Federal Home Loan Mortgage Corp.,
10.0%, 11/1/02 8,288 8,288
See accompanying notes to pro forma financial statements.
PIONEER PIONEER
LIMITED LIMITED
PIONEER MATURITY PIONEER MATURITY
BOND BOND BOND BOND
FUND FUND PRO FORMA FUND FUND PRO FORMA
25,223 25,223 AAA/Aaa Federal Home Loan Mortgage Corp.,
10.5%, 4/1/19 26,853 26,853
24,859 24,859 AAA/Aaa Federal Home Loan Mortgage Corp.,
REMIC Series 1988-24B, 9.5%, 1/15/05 25,481 25,481
27,592 27,592 AAA/Aaa Federal National Mortgage Corp.,
11.0%, 6/1/19 127,207 127,207
117,113 117,113 AAA/Aaa Federal National Mortgage Corp.,
10.0%, 7/1/19 28,927 28,927
145,186 145,186 AAA/Aaa Federal National Mortgage Corp., REMIC
1989-19A, 10.3%, 4/25/19 158,463 158,463
7,751 7,751 AAA/Aaa Federal National Mortgage Corp., REMIC
1989-19B, 10.3%, 4/25/19 8,653 8,653
654,912 654,912 AAA/Aaa Government National Mortgage Association
7.50%, 8/20/28 663,065 663,065
426,864 426,864 AAA/Aaa Government National Mortgage Association
7.50%, 3/20/26 432,712 432,712
89,222 89,222 AAA/Aaa Government National Mortgage Association
6.50%, 3/20/29 87,963 87,963
856,429 856,429 AAA/Aaa Government National Mortgage Association II
7.00%, 1/20/29 857,192 857,192
185,176 185,176 AAA/Aaa Government National Mortgage Association II
6.50%, 2/20/29 182,564 182,564
454,612 454,612 AAA/Aaa Government National Mortgage Association
7.50%, 10/15/29 462,118 462,118
310,235 310,235 AAA/Aaa Government National Mortgage Association
7.50%,2/15/26 316,132 316,132
599,940 599,940 AAA/Aaa Government National Mortgage Association
7.00%, 12/15/30 602,532 602,532
261,113 261,113 AAA/Aaa Government National Mortgage Association
6.50% , 2/15/29 258,324 258,324
500,000 500,000 AAA/Aaa Government National Mortgage Association
7.00%, 12/15/30 502,160 502,160
923,623 923,623 AAA/Aaa Government National Mortgage Association
7.00%, 4/15/29 927,613 927,613
457,724 457,724 AAA/Aaa Government National Mortgage Association
7.75%, 2/15/30 467,199 467,199
392,536 392,536 AAA/Aaa Government National Mortgage Association
Remic Series 1998-24, 6.50%, 11/20/24 398,640 398,640
47,152 47,152 AAA/Aaa Government National Mortgage Association
10.0%, 1/15/06 48,196 48,196
2,384,013 2,384,013 AAA/Aaa Government National Mortgage Association
8.0%, 5/15/30 2,443,375 2,443,375
29,807 29,807 AAA/Aaa Government National Mortgage Association
9.5%, 12/20/20 30,953 30,953
24,336 24,336 AAA/Aaa Government National Mortgage Association,
Midget, 10.0%, 5/15/04 24,844 24,844
147,845 147,845 AAA/Aaa Government National Mortgage Association,
10%, 1/15/18 to 7/15/20 155,505 155,505
20,826 20,826 AAA/Aaa Government National Mortgage Association,
9.5%, 5/15/20 21,852 21,852
6,806,188 6,806,188 AAA/Aaa Government National Mortgage Association,
7.5%, 5/15/27 to 2/15/30 6,921,907 6,921,907
918,408 918,408 AAA/Aaa Government National Mortgage Association,
8.00%, 1/15/30 941,276 941,276
7,544,067 7,544,067 AAA/Aaa Government National Mortgage Association,
7%, 12/15/13 to 2/15/30 7,579,519 7,579,519
892,149 892,149 AAA/Aaa Government National Mortgage Association,
8%, 11/15/29 914,364 914,364
1,941,652 1,941,652 AAA/Aaa Government National Mortgage Association,
7.5%, 8/15/29 1,973,708 1,973,708
1,899,999 1,899,999 AAA/Aaa Government National Mortgage Association,
7%, 11/15/28 1,914,743 1,914,743
1,500,000 1,500,000 AAA/Aaa Government National Mortgage Association,
Remic Series 1998-21, 6.5%, 10/20/11 1,481,715 1,481,715
750,000 750,000 U.S. Treasury Notes, 6.25%, 8/15/23 811,208 811,208
3,000,000 3,000,000 U.S. Treasury Bonds, 8.00%, 11/15/21 3,881,070 3,881,070
2,850,000 2,850,000 U.S. Treasury Bonds, 5.75%, 8/15/10 2,986,715 2,986,715
3,000,000 3,000,000 U.S. Treasury Notes, 7.5%, 11/15/16 3,620,730 3,620,730
500,000 500,000 U.S. Treasury Bonds 7.875%, 11/15/07 521,445 521,445
800,000 800,000 U.S. Treasury Notes, 6.625%, 5/15/07 862,912 862,912
500,000 500,000 U.S. Treasury Notes, 6.00%, 8/15/09 527,725 527,725
1,050,000 1,050,000 U.S TREASURY NOTES 1,108,023 1,108,023
-----------------------------------------
Total U.S. Government and
Agency Obligations 36,135,552 17,025,215 53,160,767
-----------------------------------------
See accompanying notes to pro forma financial statements.
PIONEER PIONEER
LIMITED LIMITED
PIONEER MATURITY PIONEER MATURITY
BOND BOND BOND BOND
FUND FUND PRO FORMA FUND FUND PRO FORMA
FOREIGN GOVERNMENT SPONSORED
1,500,000 1,500,000 A+/A2 Hydro-Quebec, 8.0%, 2/1/13 1,683,285 1,683,285
1,000,000 1,000,000 A/A2 Province of Saskatchewan,
9.375%, 12/15/20 1,269,320 1,269,320
-----------------------------------------
Total Foreign Government Sponsored 2,952,605 2,952,605
-----------------------------------------
Temporary Cash Investment
607,000 1,271,000 1,878,000 AAA/Aaa American Express, 6.48%, Due 01/02/01 607,000 1,271,000 1,878,000
-----------------------------------------
Total Temporary Cash Investment 607,000 1,271,000 1,878,000
-----------------------------------------
TOTAL INVESTMENT IN SECURITIES
AND TEMPORARY CASH INVESTMENTS 134,628,705 35,247,026 169,875,731
-----------------------------------------
Investments in Securities at Cost 134,800,917 35,499,052 170,299,969
-----------------------------------------
See accompanying notes to pro forma financial statements.
PIONEER BOND FUND
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2000
(UNAUDITED)
PIONEER
LIMITED
PIONEER MATURITY PRO PRO
BOND BOND FORMA FORMA
FUND FUND ADJUSTMENTS COMBINED
ASSETS:
Investment in securities, at value
(Pro forma combined cost of $170,299,969) $134,628,705 $35,247,026 $169,875,731
Cash 829,920 - 829,920
Foreign currencies, at value - - -
Receivables - -
Investment securities sold 589,091 1,193,000 1,782,091
Fund shares sold 76,710 390,197 466,907
Forward foreign currency settlement
hedge contracts - net - - -
Interest 2,615,446 350,128 2,965,574
Other 3,776 59,501 63,277
--------------------------- -------------
Total assets $138,743,648 $37,239,852 $175,983,500
--------------------------- -------------
LIABILITIES:
Payables -
Investment securities purchased $ 800,392 $ 1,771,286 $ 2,571,678
Fund shares repurchased 464,178 68,989 533,167
Dividends 172,954 178,393 351,347
Due to bank - 124 124
Due to affiliates 268,084 53,615 300,321 (b) 622,020
Accrued expenses 91,716 55,995 (44,310) (a) 103,401
--------------------------- -------------
Total liabilities $ 1,797,324 $ 2,128,402 $ 4,181,737
--------------------------- -------------
NET ASSETS:
Paid-in capital $149,663,145 $41,389,096 $191,052,241
Accumulated undistributed net investment
loss 3,325 1,761 (256,011) (b)(a) (250,925)
Accumulated net realized loss on investments (12,547,934) (6,027,381) (18,575,315)
Net unrealized gain (loss) on investments (172,212) (252,026) (424,238)
--------------------------- -------------
Total net assets $136,946,324 $35,111,450 $171,801,763
=========================== =============
OUTSTANDING SHARES:
(Unlimited number of shares authorized)
Class A 11,068,122 7,839,659 (4,606,576) (c) 14,301,205
=========================== -------------
Class B 3,940,588 1,783,122 (1,044,230) (c) 4,679,480
=========================== -------------
Class C 708,171 - 708,171
=========================== -------------
Class Y - 75,107 (43,904) (c) 31,203
=========================== -------------
NET ASSET VALUE PER SHARE:
Class A $ 8.72 $ 3.62 $ 8.72
=========================== =============
Class B $ 8.69 $ 3.62 $ 8.69
=========================== =============
Class C $ 8.70 $ - $ 8.70
=========================== =============
Class Y $ - $ 3.64 $ 8.72
=========================== =============
MAXIMUM OFFERING PRICE:
Class A $ 9.13 $ 3.71 $ 9.13
=========================== =============
(a) Reflects reduction in expenses due to elimination of duplicate services.
(b) Management fees conformed to Pioneer Bond Fund's management contract.
(c) Reflects net shares retired.
See accompanying notes to pro forma financial statements.
PIONEER BOND FUND
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
(UNAUDITED)
PIONEER
LIMITED
PIONEER MATURITY PRO PRO
BOND BOND FORMA FORMA
FUND FUND ADJUSTMENTS COMBINED
INVESTMENT INCOME:
Interest $11,799,452 $ 2,913,419 $14,712,871
--------------------------- ------------
EXPENSES:
Management fees $ 743,648 $ 208,009 $ 951,657
Transfer agent fees
Class A 360,712 163,910 524,622
Class B 221,190 18,376 239,566
Class C 32,044 32,044
Class Y 103 103
Distribution fees
Class A 261,768 86,659 348,427
Class B 373,594 66,887 440,481
Class C 66,639 - 66,639
Administrative fees 34,124 29,800 63,924
Custodian fees 38,218 22,502 60,720
Registration fees 11,026 37,184 48,210
Professional fees 27,934 28,502 (28,502)(a) 27,934
Printing 59,730 16,715 76,445
Fees and expenses of nonaffiliated trustees 21,752 15,808 (15,808)(a) 21,752
Miscellaneous 10,079 8,624 18,703
--------------------------- ------------
Total expenses $ 2,262,458 $ 703,079 $ 2,921,227
Less management fees waived by Pioneer
Investment Management, Inc. - (300,321) 300,321 (b) -
Less fees paid indirectly (42,579) (13,986) (56,565)
--------------------------- ------------
Net expenses $ 2,219,879 $ 388,772 $ 2,864,662
--------------------------- ------------
Net investment income $ 9,579,573 $ 2,524,647 $11,848,209
--------------------------- ============
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments $(5,152,827) $(1,609,239) $(6,762,066)
Change in net unrealized gain (loss) on
investments 6,570,293 1,704,216 8,274,509
--------------------------- ------------
Net gain on investments $ 1,417,466 $ 94,977 $ 1,512,443
--------------------------- ------------
Net increase in net assets resulting
from operations $10,997,039 $ 2,619,624 $13,360,652
---------------============ ============
(a) Reflects reduction in expenses due to elimination of duplicate services.
(b) Management fees conformed to Pioneer Bond Fund's management contract.
See accompanying notes to pro forma financial statements.
Pioneer Bond Fund
NOTES TO FINANCIAL STATEMENTS 12/31/00 (unaudited)
1. GENERAL
The accompanying pro forma financial statements are presented to show the
effect of the proposed acquisition of Pioneer Limited Maturity Bond Fund by
Pioneer Bond Fund, as if such acquisition had taken place on January 1, 2000.
Financial information presented in accompanying pro forma financial statements
has been prepared in conformity with Regulation S-X.
Under the terms of an Agreement and Plan of Reorganization, the combination
of Pioneer Bond Fund and Pioneer Limited Maturity Bond Fund will be treated as a
tax-free business combination and accordingly will be accounted for by a method
of accounting for tax-free mergers of investment companies. The acquisition will
be accomplished by an acquisition of the net assets of Pioneer Limited Maturity
Bond Fund in exchange for shares of Pioneer Bond Fund at net asset value. The
statement of assets and liabilities and the related statement of operations of
Pioneer Limited Maturity Bond Fund and Pioneer Bond Fund have been combined as
of and for the fiscal year ended December 31, 2000.
The following notes refer to the accompanying pro forma financial
statements as if the above mentioned merger of Pioneer Limited Maturity Bond
Fund and Pioneer Bond Fund had taken place as of January 1, 2000.
2. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Pioneer Bond Fund (the Fund) is a Delaware business trust registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The investment objective of the Fund is to provide current income from
an investment grade portfolio with due regard to preservation of capital and
prudent investment risk. The Fund also seeks a relatively stable level of
dividends; however, the level of dividends will be maintained only if consistent
with preserving the investment grade quality of the Fund's portfolio.
The Fund offers four classes of shares - Class A, Class B, Class C and Class Y
shares. Each class of shares represents an interest in the same portfolio of
investments of the Fund and have equal rights to voting, redemptions, dividends
and liquidation, except that the level of transfer agent and distribution fees
may differ among classes. Class A, Class B and Class C shareowners have
exclusive voting rights with respect to the distribution plan for each class.
There is no distribution plan for Class Y shares.
The Fund's financial statements have been prepared in conformity with accounting
principles generally accepted in the United States that require the management
of the Fund to, among other things, make estimates and assumptions that affect
the reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting periods. Actual results
could differ from those estimates. The following is a summary of significant
accounting policies consistently followed by the Fund, which are in conformity
with those generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Securities are valued at
prices supplied by independent pricing services, which consider such factors
as Treasury spreads, yields, maturities and ratings. Valuations may be
supplemented by dealers and other sources, as required. Principal amounts of
mortgage-backed securities are adjusted for monthly paydowns. Premium and
discount related to certain mortgage-backed securities are amortized or
accreted in proportion to the underlying monthly paydowns. Interest income,
including income on interest bearing cash accounts, is recorded on the
accrual basis. Temporary cash investments are valued at amortized cost.
As required, effective July 1, 2001, the Fund will adopt the provision of the
AICPA Audit & Accounting Guide for Investment Companies and began amortizing
discount or premium for all debt securities. This change will have no impact
on the Fund's total net assets and is expected to result in an immaterial
reduction in the cost of securities and a corresponding increase in net
unrealized appreciation (depreciation).
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The characterization of distributions to shareowners for financial
reporting purposes is determined in accordance with federal income tax
rules. Therefore, the source of the Fund's distributions may be shown in
the accompanying financial statements as either from or in excess of net
investment income or net realized gain on investment transactions, or from
paid-in-capital, depending on the type of book/tax differences that may
exist.
C. Fund Shares
The Fund records sales and repurchases of its shares as of trade date.
Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Fund
and a majority owned indirect subsidiary of UniCredito Italiano S.p.A.
(UniCredito Italiano), earns underwriting commissions on the sale
of Fund shares.
D. Class Allocations
Distribution fees are calculated based on the average daily net asset
value attributable to Class A, Class B, and Class C shares of the Fund,
respectively. Shareowners of each class share all expenses and fees paid
to the transfer agent, Pioneer Investment Management Shareholder Services,
Inc. (PIMSS), for their services, which are allocated based on the number
of accounts in each class and the ratable allocation of related out-of-
pocket expenses (see Note 5). Income, common expenses, and realized and
unrealized gains and losses are calculated at the Fund level and allocated
daily to each class of shares based on the respective percentage of
adjusted net assets at the beginning of the day.
The Fund declares as daily dividends substantially all of its net
investment income. All dividends are paid on a monthly basis. Short-term
capital gain distributions, if any, may be declared with the daily
dividends. Distributions to shareowners are recorded as of the ex-dividend
date. Distributions paid by the Fund with respect to each class of shares
are calculated in the same manner, at the same time, and in the same
amount, except that Class A, Class B, Class C and Class Y shares can bear
different transfer agent and distribution fees.
3. PRO FORMA ADJUSTMENTS
The accompanying pro forma financial statements reflect changes in fund
shares as if the merger had taken place on January 1, 2000. Adjustments have
been made to expenses for duplicated services that would not have been incurred
if the merger took place on January 1, 2000. In addition, adjustments have been
made to expenses to reflect management fees incurred and no longer waived as if
the merger had taken place on January 1, 2000.
4. Management Agreement
Pioneer Investment Management, Inc. (PIM), the Fund's investment adviser,
manages the Fund's portfolio and is a majority owned subsidiary of UniCredito
Italiano. Management fees are calculated daily at the annual rate of 0.50% of
the Fund's average daily net assets.
In addition, under the management and administration agreements, certain
other services and costs, including accounting, regulatory reporting, and
insurance premiums, are paid by the Fund. At December 31, 2000, $376,348 was
payable to PIM related to management fees, administrative fees and certain other
services.
5. Transfer Agent
PIMSS, a majority owned indirect subsidiary of UniCredito Italiano, provides
substantially all transfer agent and shareholder services to the Fund at
negotiated rates. Included in due to affiliates is $184,330 in transfer agent
fees payable to PIMSS at December 31, 2000.
6. Distribution Plans
The Fund adopted a Plan of Distribution for each class of shares (Class A
Plan, Class B Plan and Class C Plan) in accordance with Rule 12b-1 of the
Investment Company Act of 1940. Pursuant to the Class A Plan, the Fund pays PFD
a service fee of up to 0.25% of the average daily net assets attributable to
Class A shares in reimbursement of its actual expenditures to finance activities
primarily intended to result in the sale of Class A shares. Pursuant to the
Class B Plan and the Class C Plan, the Fund pays PFD 1.00% of the average daily
net assets attributable to each class of shares. The fee consists of a 0.25%
service fee and a 0.75% distribution fee paid as compensation for personal
services and/or account maintenance services or distribution services with
regard to Class B and Class C shares. Included in due to affiliates is $61,342
in distribution fees payable to PFD at December 31, 2000.
In addition, redemptions of each class of shares may be subject to a contingent
deferred sales charge (CDSC). A CDSC of 1.00% may be imposed on redemptions of
certain net asset value purchases of Class A shares within one year of purchase.
Class B shares that are redeemed within six years of purchase are subject to a
CDSC at declining rates beginning at 4.00%, based on the lower of cost or market
value of shares being redeemed. Redemptions of Class C shares within one year of
purchase are subject to a CDSC of 1.00%. Proceeds from the CDSCs are paid to
PFD.
7. Expense Offsets
The Fund has entered into certain expense offset arrangements resulting in a
reduction in the Fund's total expenses. For the period ended December 31, 2000,
the Fund's expenses were reduced by $56,565 under such arrangements.
OTHER INFORMATION
Item 15. Indemnification
Except for the Agreement and Declaration of Trust dated January 5, 1999
establishing the Fund as a Trust under Delaware law, there is no contract,
arrangement or statute under which any director, officer, underwriter or
affiliated person of the Fund is insured or indemnified. The Declaration
provides that no Trustee or officer will be indemnified against any liability of
which the Fund 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 Fund pursuant to the foregoing provisions, or
otherwise, the Fund 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 Fund of expenses incurred or
paid by a Trustee, officer or controlling person of the Fund in the successful
Item 16. Exhibits
Exhibit Reference
1. Agreement and Declaration of Trust(1)
1.1 Certificate of Trust(1)
1.2 Establishment and Designation of Classes(1)
2. Amended and Restated By-Laws(5)
3. Not applicable.
4. Agreement and Plan of Reorganization(1)
4.1 Form of Agreement and Plan of Reorganization (5)
5. Specimen Stock Certificate (1)
6. Management Contract(5)
7. Underwriting Agreement(5)
7.2 Form of Dealer Sales Agreement(5)
8. Not applicable.
9. Custodian Agreement with Brown Brothers
Harriman & Co.(2)
9.1 Form of Amendment to Custody Agreement(1)
10. Amended Class A Distribution Plan(5)
10.1 Class B Distribution Plan(1)
10.2 Class C Distribution Plan(1)
11. Opinion and Consent of Counsel (legality of securities
being registered)(5)
12. Form of Opinion of Counsel (supporting tax matters in
the prospectus) (5)
13. Administration Agreement(3)
13.1 Investment Company Service Agreement(5)
14. Consent of Independent Public Accountants(5)
15. None
16. Powers of Attorney (5)
17 Form of Multi-Class Plan Pursuant to
Rule 18f-3 Plan(1)
- -----------------------
(1) Incorporated by reference from the exhibits filed with Post-Effective
Amendment No. 28 to the Registration Statement (file No. 2-62436) with the
Securities and Exchange Commission (the "SEC") on May 14, 1999 (accession number
0000276776-99-000013).
(2) Incorporated by reference from the exhibits filed with Post-Effective
Amendment No. 23 to the Registration Statement on October 27, 1995 (accession
number 0000276776-95-000016).
(3) Incorporated by reference from the exhibits filed with Post-Effective
Amendment No. 27 to the Registration Statement with the SEC on March 5, 1999
(accession number 0000276776-99-000007).
(4) Incorporated by reference from the exhibit filed with Post-Effective
Amendment No. 30 to the Registration Statement with the SEC on September 28,
2000 (Accession number 0000276776-00-000010).
(5) Filed herewith.
Item 17. Undertakings
(1) The Registrant agrees that prior to any public reoffering of the
securities registered through the use of a prospectus which is a part of this
registration statement by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c) of the Securities Exchange Act of 1934, the
reoffering prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as part of an amendment to the registration
statement and will not be used until the amendment is effective, and that, in
determining any liability under the 1933 Act, each post-effective amendment
shall be deemed to be a new registration statement for the securities offered
therein, and the offering of the securities at that time shall be deemed to be
the initial bona fide offering of them.
SIGNATURES
As required by the Securities Act of 1933, this registration statement has
been signed on behalf of the registrant, in the City of Boston, and the
Commonwealth of Massachusetts on the 3rd day of July 2001.
PIONEER BOND FUND
By: /s/ David D. Tripple
David D. Tripple
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated:
Signature Title
John F. Cogan, Jr.* Chairman of the Board )
John F. Cogan, Jr. and President )
(Principal Executive )
Officer) )
)
)
Vincent Nave * Chief Financial Officer )
Vincent Nave and Treasurer (Principal )
Financial and Accounting )
Officer) )
)
)
Trustees: )
)
)
Mary K. Bush* )
Mary K. Bush )
)
)
John F. Cogan, Jr.* )
John F. Cogan, Jr. )
)
)
)
Richard H. Egdahl* )
Richard H. Egdahl )
)
)
Margaret BW Graham* )
Margaret B. W. Graham )
)
)
Marguerite A. Piret* )
Marguerite A. Piret )
)
)
/s/ David D. Tripple )
David D. Tripple )
)
)
Stephen K. West* )
Stephen K. West )
)
)
John Winthrop* )
John Winthrop )
)
)
*By: /s/ David D. Tripple Dated: July 3, 2001 )
David D. Tripple
Attorney-in-fact
Exhibit Index
Exhibit
Number Document Title
2. Amended and Restated By-Laws
4. Form of Agreement and Plan of Reorganization between
Pioneer Bond Fund and Pioneer Limited Maturity Bond
Fund
6. Management Contract
7. Underwriting Agreement
10. Amended Class A Distribution Plan
11. Opinion of Counsel (legality of securities being
registered)
12. Form of Opinion of Counsel (supporting tax matters in the
Prospectus)
13.1 Investment Company Service Agreement
14. Consent of Independent Public Accountants
16. Powers of Attorney